hyundai leading the way in the global auto industry

One huge competitive advantage of Hyundai is that they launched step by step, since the late 1990’s several factories and plants. In 1997 they established a factory in Turkey, later a plant in India and in 2002 was opened a factory in China. Later on in the years after 2006 Hyundai build more factories in the following countries like Iran, Sudan, Venezuela, Taiwan, Vietnam as well as in two U. S. states. These factories ensure a presents in different parts of the world to cover the supply worldwide. Further Hyundai joyed a partnership with Guangzhou Motor Group in order to expand their network.

This partnership also gives Hyundai an entry into the Chinas automotive industry. In this ways and with the fact that Hyundai has on three continents: Europa, Asia and North America their research and development centers including distribution centers and marketing subsidiaries, the competitive advantages are on a high level. Added to the R&D centers the three names location has Hyundai headquarters. Another tool to be better than the others, more competitive and to guarantee control over production and marketing Hyundai internalized may of their operations.

To be further more competitive Hyundai employs inexpensive and with high labor quality. They buy all key input, engines and tiers from low coast suppliers to discount the prices. Beside this the company is active in having different ventures for a huge network and to exchange and develop their knowledge and technologies. To be really different Hyundai creates a marketing innovation in 2009 und the name “Assurance Program” in which the customers could return recently purchased cars in the case the buyers lost their job. This program makes Hyundai kind of unique. 2.

The Hyundai Motor Company (HMC) is able to take benefits from many competitive advantages South Korea is providing to its industry. Cost effective and high knowledge workers help to create a on the one side highly specialized and on the other side for many people affordable product. Thanks to a high inward FDI rate the country is also able to supply the research sector with a lot of money to ensure that the region is remaining one of the leading technology-­? centers in the world. Without these excellent production factors, Korean car companies would struggle hard to remain competitive to European or American car companies.

The fact that the Korean government holds a strong control over its top industries and restricts various kinds of imports is contradictable to Heckschers Factor Proportions Theory. 3. Firm strategy In a very tight market with many strong competitors in the whole world, HMC is in a continuous struggle for market share, as high as possible margins and for every single customer. But having a look on the past decade on the world car market we can see that HMC developed in a very good way, especially regarding on the crisis.

The most important factor, which influenced this good development of the company is the company’s strategy. Starting to internationalize in the 1990s was a big step forward to get new possibilities of producing and to find new markets, establishing a world-­? wide network of administration and distribution. When it comes to the time of crisis in 2008 and later the strategy of the firm also revealed as the right one. Instead of hiding in such times of uncertainty, what means to fire people, wait for better times and try to survive without losing too much money, the heads of HMC decided to attack.

That means that they started to invest in new technologies, market 1 researches and product development. They simply tried to get more attractive for customers than their competitors. Entering numerous collaborative ventures with suppliers all over the world allowed HMC additionally new insights into new markets, technologies and know-­? how. Also the decision of a wider product diversification introducing for example the new model Genesis brought HMC customers which were not interested in this brand before. Factor conditions Besides of the existing beneficial factor conditions in South Korea like cheap and high-­?

quality labor, new technologies and a high amount of capital, HMC improved its position in this point by internationalizing and cooperating with other companies. Internationalization gave HMC the chance to use the good factor conditions of the countries they were investing in, for example to produce parts (like tires or seats) more cost effectively. Demand conditions HMC quickly realized that remaining only on the domestic Korean market would be a big mistake because the production capacity of the industry is much higher than the local demand. So they started to export.

At first HMC successfully entered the US market with its mode Excel. Realizing in the 1990s that things are going into the wrong direction, they did the right thing to start researches about customer expectations and developments of the demand in the car industry. HMC has also the advantage that it is not so much dependent from the US market nowadays, like for example Japanese car companies, because their graphical sales diversification with balanced demand in many parts of the world allows them to not to be afraid of a US-­? car-­? market collapse.

Related and supporting industries HMC has a good working network of suppliers and cooperative companies all over the world. Guangzhou Motor Group in China provides HMC with an access to the Chinese market. Daimler Chrysler helps to develop new technologies and to improve supply chain management. 4. In terms of national industrial policy, the Korean government has supported Hyundai by setting a high savings rate, with massive inward FDI, which ensures a ready supply of capital for Hyundai to fund R&D and other ventures. The government cooperates closely with the business sector, protecting some industries, ensuring funds and sponsoring.

In the case of Hyundai, the Korean government promoted imports of raw materials and technology at the expense of consumer goods and encouraged savings and investment over consumption. Partly due to these efforts, Korea is home to a substantial industrial cluster for the production of cars and car parts. To encourage future success at Hyundai the Korean government in the first place can keep the current policies in motion. Secondly they can open up the Korean automotive market to more foreign investment and try to gain access into the Chinese market.

To support development or maintenance of a strong auto industry in my country the government can invest in education, R&D and infrastructure. Another thing could be to encourage partnerships with 2 more developed automotive companies. The government can foster an environment of innovation and entrepreneurship by lower the loan rates and set tax incentives. In Germany for example the government extracted a certain amount of money to car owners if they would bring their old car (from a certain year of manufactory and older) to demolition. In the Netherlands people who would buy a new car with a low Co2-­?

emission didn’t had to pay road taxes for a few years. 5. Consistent with Dunning’s Eclectic Paradigm, the ownership-­? specific advantages, the location-­? specific advantages and the internalization advantages held by Hyundai can be described in the following way: Ownership-­? specific advantages – comparative advantages a company holds over other firms within its industry • • Technology patents, trademarks & brands, managerial skills, access to significant finances Korean economy’s high inward FDI Internalization advantages – benefits a company gains from internalizing all its overseas-­?

based businesses for any level in value chain (manufacturing, distribution, etc. ) It can cross national borders without sharing profits with foreign companies/entities. Reasons for internalizing: • • • Keeping tight control over operation knowledge Ensure quality control from start to finish of production Greater net returns Hyundai’s IA (R&D headquarters in North America, Japan and Europe; factories in Turkey, Sudan, China etc.

) allows them to focus on quality, energy efficiency, cost control and customer satisfaction. Location-­? specific advantages – specific to being in a particular foreign country versus another one • • • • • • • Skilled low-­? cost labor, natural resources and cheap capital Hyundai’s LSA – built factories in Turkey and in the middle east India China – 20% of Chinese market Partnership with Guangzhoo Motor Group to enter commercial-­? vehicle market in China Emerging markets – low-­? cost/high-­?

quality labor Regional headquarters and R&D centers in Europe, Japan and North America Regarding to the ownership-­? specific advantages Hyundai’s famous brands and marketing of the Hyundai Assurance Program of 10 year Warranty worked towards the company’s favor because it was unprecedented in the auto industry. This strategy was a major turning point for the firm. Because of this reason and technology patents and knowledge of the company the ownership-­? specific advantages has been most instrumental for the firm’s success.

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