To Study the Company Analysis - Hyundai
CIA 3
Strategic Management
Master of Business Administration
By
Syed Bismillah Ahmed Bokhari
2027334
F1
Under the guidance of
Prof [Link]
School of Business and
Management CHRIST (Deemed to be
University), Bengaluru
2021-2022
Introduction:
Hyundai Motor Company was formed in 1967 and introduced the Pony in 1976 as Korea's first
vehicle, which was sold to Ecuador the same year. In 1983 and 1985, the business began
operations in Canada and the United States, respectively. By 2009, Hyundai had expanded its
operations all over the world, selling 2 million automobiles and ranking 60th out of the top
hundred companies in the world.
The company's management strategy has associated with a boundless sense of accountability to
identify all possibilities with regard to humanity and to preserve its fundamental principles
directed to the customer, challenges, collaboration, and people, and globalisation in order to rank
among the top car makers. Under the global financial crisis, the firm has demonstrated
exceptional development, with a brand value of US$ 5 billion, since 2010; nevertheless, the
company is facing significant sustainability challenges, for which the company must align with a
new strategy.
Vision:
Hyundai Motor Company strives to offer everyone the freedom to travel by investing in mobility
services, forming strong relationships with top mobility service providers, and expanding their
position outside the automotive transportation industry.
Vision of Hyundai is to become an esteemed multinational business corporation by attaining the
following short-term goals:
Figure 1: Hyundai’s vision. Source: Hyundai Motor Company (2011).
Challenges:
According to Hyundai Motor Company, the company identified 2010 as a year of new
challenges to respond to environmental sustainability and to produce eco-friendly vehicles, while
in 2011, the company aligned all plants to develop the company as an organic company with
appropriate emphasis on the innovation of new environmentally friendly vehicles.
To handle such issues, it is necessary to have a competitive advantage in technical innovation, as
well as to develop managerial skills and increase investment in green technology in order to
compete with rivals both at home and abroad. Meanwhile, the firm has been competing with
competitors in the local market, while the developing market of India has severe dangers of both
eco-friendly and cost-effective car solutions. On the other hand, while it has been stated that the
global financial crisis has ended, the US market trend indicates that it will continue to cause
significant shocks in the overall market, for which Hyundai Motor Company must reengineer its
strategies in order to gain a competitive advantage from the diversified strategy.
According to GLC (2009), the company has been suffering from a high risk of accounting fraud,
and in 2007, the CEO, Mr. Chung, was found to have engaged in a personal fraud of KRW 90
billion from the company and another KRW 360 billion cheating through earning management,
for which the Seoul District Court sentenced him to three years in prison. To mitigate such
dangers, Hyundai Motor Company required a specific accounting standard to safeguard the
unholy alliance of management, accountants, and auditors.
Opportunities:
1. Improving the economy of the United States
Signs of a stronger economy and growing consumer confidence have resulted in the biggest gain
in new car sales in the United States market in more than a decade. In 2015, 17.5 million new
units were sold, a 5.7 percent increase over 2014. Interest rates in the United States have
been historically low for some years and are expected to remain so for the foreseeable future. In
such economic conditions, Hyundai has a chance to acquire a larger market share and grow sales.
2. The timing and frequency with which new models are released
The timing and frequency of new model launches have a major influence on automobile firms'
market share. Historically, new models have received substantial updates every 4 or 5 years, with
relatively minor changes in between. However, given growing customer expectations for in-car
technology and the competitive character of the business, there is a case to be made for more
regular model upgrades. With its present emphasis on R&D, Hyundai is well-positioned to do so.
The key will be its capacity to deploy technological projects at a low cost in order to gain a
competitive edge.
3. Low gasoline prices are allowing Hyundai to enter new markets.
Fuel costs are currently at their lowest in a decade. As a result of this predicament, people have
been compelled to purchase large, inefficient cars such as SUVs and pickup trucks. Hyundai,
which is mostly known for its sedan models, is at a disadvantage in a low-fuel condition. The
firm has its own SUVs, which are smaller than typical SUVs, but no pickup truck lines, which
are now driving the expansion of automobile companies in the United States.
The trend of low gasoline costs is expected to continue, and Hyundai may expand its SUV lineup
or even explore launching a pickup truck line.
ANALYSIS OF THE IMPACT OF CHALLENGES ON DIVISIONAL AND
CORPORATE LEVEL STRATEGY
● Hyundai is up against increasing competition from both conventional and new players in
the automobile industry. New home-based Chinese manufacturers are competing in
China, the major company's market, by offering lower pricing and nearly identical
features. Hyundai's worldwide competitors, such as Toyota, Ford, GM, and
Volkswagen, have all actively expanded in China, the United States, and Europe’s
markets.
● New firms like Tesla, which makes electric cars, and even Google, which is working
on self-driving cars, are posing a threat to the traditional automotive industry.
● The fact that global car production capacity considerably exceeds demand fuels the
competition even more. In 2015, the worldwide excess manufacturing capacity
was expected to be 31 million units.
● Hyundai generates more than half of its income from international markets, which
means that the company's profitability and revenue are strongly influenced by currency
rates. Currency exchange rates are frequently volatile and are influenced by a variety of
factors that Hyundai has little control over. In 2016, the Korean Won increased in value
against other currencies, and this trend is expected to continue in the next few years.
Hyundai's sales and earnings would suffer because of this scenario.
● Many governments throughout the world are working to reduce greenhouse gas
emissions and promote fuel efficiency efforts. There is always the possibility that
such environmental initiatives may increase automobile manufacturers' production
costs, which will not be recoverable in such a competitive and price-sensitive
industry.
● If Hyundai fails to come up with something new, competitors will be able to simply catch
up and beat the corporation. Global trade laws and regulations are also a major threat to
the company.
ANALYSIS OF THE IMPACT OF OPPORTUNITIES ON DIVISIONAL AND CORPORATE
LEVEL STRATEGY
● The greatest gain in new vehicle sales in the US market in more than a decade reflects
signs of a strengthening economy and increased consumer confidence. In 2015, 17.5
million new units were sold, up 5.7 percent from 2014. Interest rates in the United States
have been low for some years and are expected to remain low for some time. In such
economic conditions, Hyundai has a chance to get a larger market share and grow sales.
● The timing and frequency of new model launches have a considerable impact on
automotive firms' market share. Historically, large improvements to new models have
occurred every 4 to 5 years, with very minor changes in between. However, given
increased consumer expectations for in-car technology and the industry's competitive
character, there is a case to be made for releasing improved models more regularly.
With its present concentration on R&D, Hyundai is in a good position to do so. The
ability to cost-effectively adopt technology projects to gain a competitive advantage will
be critical.
● Fuel prices are currently at their lowest point in a decade. As a result of this
circumstance, buyers have been urged to purchase large, fuel-inefficient cars such as
SUVs and pickup trucks. In a low-fuel condition, Hyundai, which focuses primarily on
sedans, is at a disadvantage. The company produces its own SUVs, which are smaller
than standard SUVs, but no pickup truck lines, which are currently driving the rise of
the automobile industry in the United States.
● The trend of low fuel prices is likely to continue, and Hyundai may expand its SUV
lineup or even explore launching a pickup truck line.
● The strategists have decided to expand the product line to include a variety of money-
generating vehicles.
● Higher profit margins would result from expanding the business into other potential
countries.
Hyundai's global strategies include the following:
● Organizational Structure
● Policy and Planning Systems
● Employee Skills
● Staff’s Profile
● Core Communication Style
● Shared Value
Hyundai is positioned in a specialized industry, according to global market analysis, where their
global plans are based on three major facts, namely —
A. Find and analyses viable worldwide markets to penetrate
B. Strategizing for market penetration as well as market development
C. As a market follower, you should focus on quick product innovation.
Hyundai's organizational structure is primarily bureaucratic, with the complete organizational
hierarchy positioned in multiple levels with varying job responsibilities, and the firm's primary
drawback is the automobile industry's slower decision-making tendencies.
Hyundai's corporate skills, on the other hand, include multidimensional skills of aggregate
employees who patronized improved organizational performance through production,
marketing, sales, and market development; however, staffs are featured with multidimensional
skills, dynamic, loyal, well-motivated, and proficient in teamwork as well as individual success
plans. Hyundai focuses on competitive spirits through diligence as well as thrust for climbing to
the top of the industry through shared values. Style represents a downward communication
approach that delivered diverse hierarchical influences according to managerial responsibility;
however,
through shared values, Hyundai focuses on competitive spirits through diligence as well as thrust
for climbing to the top of the industry.
Blue ocean strategy for mapping the opportunities to strategies.
The blue ocean strategy aims to differentiate organizations and brands such as Hyundai Motor
Company in order to raise awareness and presence in a new market and generate consumer
demand. The blue ocean strategy focuses on developing demand in uncontested market area,
effectively distancing itself from the competitors. Through their plans and activities, industry
participants such as Hyundai Motor Company are able to reconstruct market boundaries as well
as industry structure using the blue ocean strategy. The industry structures are assumed to be
flexible rather than rigid in the blue ocean model and framework.
The blue ocean concept and framework have enabled Hyundai Motor Company to explore new
market spaces that have not been competitively exploited or actively employed by businesses in
the current business environment. Hyundai Motor Company was able to create new demand
instead of fighting over and encroaching on current competition space by doing so. Hyundai
Motor Company has been able to achieve quick expansion as well as greater earnings as a result
of this. When Hyundai Motor Company implements a blue ocean strategy, it alters the terms of
the game and eliminates the competition, making them irrelevant environmental elements.
BCG Matrix for mapping the opportunities to strategies.
Hyundai's BCG Matrix will aid in the implementation of business-level strategies for its business
units. The research will begin by determining where Hyundai's strategic business divisions lie
within the BCG Matrix.
STARS
In Hyundai's BCG matrix, the financial services strategic business unit is a shining star. It works
in a market that has the potential to grow in the future. This SBU contributes a major portion of
Hyundai's revenue. Hyundai should vertically integrate its supply chain by acquiring other
companies. As this Strategic business unit has potential, it will be able to produce higher
earnings as a result of this.
Cash Cows
In Hyundai's BCG matrix, the strategic business unit of supplier management services is a cash
cow. This has been in operation for decades and has generated enormous revenue for Hyundai.
Hyundai has a large market share, but the entire market is shrinking as corporations manage
their suppliers rather than outsourcing them. Hyundai should halt additional investment in this
industry and continue to operate this important business unit as long as it is profitable.
Question Marks
Hyundai's strategic business unit for local foods is a question mark in the BCG matrix.
Consumers are increasingly focusing on local foods, according to recent market trends. As a
result, this market is experiencing rapid growth. Hyundai, on the other hand, has a little market
share in this segment. Hyundai's best strategy is to invest in research and development in order to
produce new features. This product development approach will ensure that this strategic business
unit becomes a cash cow in the future, bringing earnings to the corporation.
Dogs
In Hyundai's BCG matrix, the strategic business unit for plastic bags is a dog. For the past five
years, this critical business unit has been losing money. It also competes in a market that is
contracting as a result of rising environmental concerns. Hyundai's best bet is to sell this crucial
business segment and cut its losses as much as possible.
Bowman’s Strategy:
Bowman's Strategy Clock is a methodology that a company uses to examine its competitive
position in contrast to competitors' offers when developing marketing strategy. It's a visual
depiction that depicts the relationship between customer value and price. Companies use
Bowman's strategy clock as a framework for gaining a competitive advantage. As I previously
stated, this map allows firms to travel in eight directions in order to figure out what they can give
customers at what rates.
Source:[Link]
directions-for-edge/
Hyundai is placed in the 3rd as it offers products at a low cost, but offers products with a higher
perceived value than those of other low cost competitors. Volume is an issue here but these
companies build a reputation of offering fair prices for reasonable goods. The quality and value
is good and the consumer is assured of reasonable prices. This combination builds customer
loyalty.
MARKETING STRATEGIES OF HYUNDAI MOTORS INDIA
1. Target Markets
Hyundai marketing strategy is based on differentiated marketing. The primary consumer
target is consisting of middle to upper-income professionals, who wants value for their
money and comfortable ride in city conditions. The secondary consumer target group is
college students who always need style and speed. The primary business target is of mid
sized to large sized corporates that always want to help their managers and employees by
providing them a car with ease of [Link] secondary business target is for
entrepreneurs and small business owners who want to provide discounts to managers
buying a new car.
2. Marketing Communications
By passing all messages through media, Hyundai reinforced the brand name & main
points about the product differentiation. Research about media consumption patterns
help the advertising agency to choose appropriate media and timing to reach prospects
before & during the product introduction. advertising helps to maintain brand awareness
and communicate various differentiation messages. The agency co-ordinate public
relation efforts to build Hyundai brand & support the differentiation of message. To
attract attention & encourage purchasing, the Hyundai offers limited time, registration &
insurance. To attract, retain & motivate channel partners for a push strategy, Hyundai
uses trade sales promotions and personal selling channel partners.
3. Road shows
The company roadshows to display vehicles in the pavilions during various college
festivals and exhibitions. This will appeal to youngsters more and attract them towards
the cars of Hyundai.
4. Television advertisements
Advertisement to promote and market the product and market the products will be shown
on the leading television channel. Major music and sports channels will promote and they
will promote and they will reach out to the youth will be promoted through Star, Zee,
Sony and Door darshan etc as it has more viewers, to promote a product like Creta.
5. Workshops and Seminars
Workshops and seminars will be held in colleges and big corporate to make people aware
about the company's past performance and products features their affordability and
usage,vast distribution [Link] shows will be conducted where free trials of the
cars would be given
6. Rural Marketing
Hyundai Motors India has introduced a new marketing initiative – ‘Ghar Ghar Ki
Pehchaan’ to tap the India rural car market. The company has rolled out special schemes
for government employees in rural areas and members of gram panchayats on the
purchase of the New Santro.
Hyundai Motor is keen to expand its market to rural areas by setting up 300 new rural
sales outlets. Currently Hyundai is balancing its standard with 325 dealership outlets
overall within cities and this new expansion strategy could make the rural outlet number
network of India extend to 1,000.
CONCLUSION
Automobile market in India today is very dynamic & competitive with a range of players and
products. There are many reasons for the impressive growth of the Indian passenger car Industry
in the past couples of years. In today‘s cutthroat competition it is very difficult to survive in this
market. Stiff competition has forced manufacturers to be innovative and responsive for customer
demands and needs and for future satisfaction.
Hyundai motorsIndia is a leading company in Indian Automobile sector which occupies
prominent place due to its innovative strategic marketing, promotional, Brand positioning,
advertising strategies. In today‘s scenario the success of a company lies in structuring and
restructuring the marketing strategies according to products and continuous innovation of the
product services.
India’s largest car maker Maruti Suzuki India Ltd has an unlikely admirer — its fiercest rival is
Hyundai Motor India Ltd. Maruti has focused on bringing down costs and weight with every new
model that it introduces. Hyundai needs to learn how to do that in order to maintain cost
efficiency that will match the price structure of the market leader.
Hyundai is pretty much advanced and optimised for rural and urban market point, the goal is
towards the maximum market share with export and including import.
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