Hyundai started its America subsidiary, Hyundai Motor America, in February 1986 in Garden Grove, California, and sold its first car which name is subcompact Excel in the US Market. In the early year Hyundai concentrated its sales hard work principally on the west and east coasts and in the southern states. Following are the main four centers of Hyundai that are located in difference countries:
Problems of HMA
Quality problems in excel car
In the very beginning the customers of excel cars found that the excel had number of quality problems. It was not rare to see one stopped on the street with its engine blown. They frequently observed that car bodies rusted fast and air conditioners stopped working on the hot days.
In 1989 Hyundai sales fell
In 1989 Hyundai sales fell to 183261 units, a decline of 30.66 percent. Such a big drop in sales was a serious gust to Hyundai business in the United States. In the latter half of 1989, Hyundai Motor America lost two COOs. Dealer profits plummeted and a number of showcase Hyundai dealerships stopped in 1989.
Difficulties in finding lenders
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Problems in finding lenders to finance Hyundai consumer loans compel Hyundai Motor America to create its own financing arm in 1990.
Hyundai received low quality rating in 1990
J.D. Power and Associates started to make public its rating of Hyundai cars in 1990 to create situation worst. Hyundai cars acknowledged a normal quality score of 2.0 in 1990 that was very less. A joint edition of The Detroit News and Detroit Free Press reported that the IQS showed Hyundai ended last out of 29 sales divisions with 230 problems per hundred vehicles. The Excel was one of the bottom 10 car models. The Excel models were also rated the most horrible cars overall for damage claims based on the analyses of insurance reporting and claims data by the Highway Loss Data Institute. Bottom score of 1.0 in 1991 given by the quality ratings Consumer Reports.
Hyundai Motor Company HISTORY AND ORGANIZATION
Hyundai Motor Company was established by Ju-Young Chung in 1967 as a subsidiary of Hyundai Corporation that is the biggest Korean Chaebol untill1990s. Hyundai Motor Company amplified its size by getting Kia Motors in 1998. Even though Hyundai and Kia sustained to operate separately. Hyundai Motor Company was the auto sales leader in the Korean domestic market and exported vehicles to over 190 countries. Hyundai Motor Company operated the world major incorporated vehicle industrialized facility in Ulsan, on Korea southeast coast.
Problems of HMC
Unsuccessful in Canada
Hyundai Motor Company made a plant in Quebec, Canada in 1989. Just after only five years of operation it broken in a total fiasco. That was a great lesson for the Hyundai Motor Company to make accurate strategies to stay in the market.
Converting from a functional organization to a divisional organization was the most obvious modify in the organization chart that intended for well-organized control and evaluation, developing management inspiration and aptitude, civilizing the potential to manage with market diversification and cost reduction. These changes allowed Hyundai Motor Company to downsize.
Labor management disputes
The democratization of Hyundai also created a number of problems for Hyundai Motor Company by the political democratization movements in Korean society during the 1980. Even though the optimistic result of this societal change, most Korean Chaebols faced a series of labor management disputes. Hyundai Motor Company was not an exemption. The Hyundai Motor Company first labor union was born at the Ulsan plant in 1987. It took the major role of transmission workers voices to the management group. Even though Se Young Chung forced that the steady, positive, labor management association is the preliminary point for sustaining growth. Hyundai Motor Company was strained into the unparalleled eddy of labor strikes in 1987 and 1988. Due to which a huge loss occur in sales.
Difficulties in implementing its strategic decisions
Hyundai Motor Company labor union had been regarded as the sign of the Korean labor movement and had always been in the front line of nationwide walkouts. This surely contributed to the progression of management labor family members in Korea but presented Hyundai Motor Company with many problems in imposing its planned decisions.
East Asian crisis
Always on Time
Marked to Standard
The 1997 East Asian crisis dealt a serious carry to Korean Chaebols. Half of the top 30 Korean Chaebols, including Daewoo went into insolvency in 1997 and 1998.
The Hyundai Motor Company also suffered a liquidity crisis. In response to requirements from the IMF and foreign companies, the Korean government started to follow a main improvement of the Chaebol system and pressed Chaebolsto recover their managerial clearness and professionalism and spin off unconnected businesses. The Hyundai Motor Company was also pressed into an unparalleled reformation of its businesses. About 70 affiliates of the Hyundai group were spun off in 1999 and 2000.
The Hyundai Motor Company was disposed to public disapproval because its reformation was listening carefully mostly on the sharing of possessions among the Chung family rather than on the validation of management.
In summer 2003 Hyundai Motor Company suffered from almost seven weeks of labor strike and caved in to almost all the union demands to end the strike. In particular Hyundai Motor Company permitted the labor union to contribute in key management decisions.
Strategies of Hyundai Motor Company
The Best Warranty
In November 1998 Hyundai Motor Company launched national commercials which are called the industry best warranty, which offered 10-year, 100000-mile power train security to original owners. The United States car manufacturing was confused with this crazy tactic but it actually turned things around. Sales soared, dealers became profitable, and Hyundai Motor Company started to get accolade.
The Packaging Strategy
Bob Martin said Hyundai also had to come up with a solution to how to keep away from the cheap car image. In 1998 executives in Hyundai Motor America began to suppose that Hyundai cars would not be able to change their cheap car image as their retail prices are lower than competitor. Hyundai Motor America faced a problem. The answer Hyundai Motor America brought out was to discriminate the standard equipment of its cars from other makers which was called the packaging strategy by people working with Hyundai Motor America.
Discuss and analyze the approach that Hyundai has adopted for its global strategy (20 marks - 750 words).
Central region office near Chicago
Hyundai extended into the middle portion of the United States opening a central region office near Chicago in 1987. As Hyundai expanded and upgraded its product line then the Hyundai Motor America started to made countrywide operations and service networks to more efficiently serve the needs of dealers and customers.
Parts distribution center in Ontario
Hyundai Motor America a lunched $21 million, 300000 square foot parts distribution center in Ontario California in 1988.
Complex and parts distribution center in Aurora, Illinois
Just after one year Hyundai Motor America opened a $16.6 million, 342000 square-foot office complex and parts distribution center in Aurora Illinois.
New 18-acre site in Fountain Valley, California
Hyundai Motor America enthused its national headquarters to a new 18-acre site in Fountain Valley, California in 1990. In addition to corporate offices, this headquarters also housed Hyundai Motor America western regional office. Hyundai had four regional offices and about 600 dealerships nationwide in 2002.
Comparative production system
Hyundai started to face rising worldwide rivalry both at home and abroad from the 1990 onwards. In 1980s Hyundai has adopted a relative production system which name is lean production system for the purpose of to improve quality and productivity.
Hyundai began to rationalize their efficient logistics with the help of modern information and communication technologies like value added network. They made justification of logistics in 1994 that belonged to 329 firms of their suppliers. With the development of this system Hyundai can totally manage the logistics chain consequently they will amplify the softness of the logistic plan. Because of this vitalization of just in time delivery the time-unit of delivery scheduling was basically concerted from months to days and then to hours. Average inventory of 0.6 days of production.
Full-line automotive importer/distributor
Hyundai Motor Company took a major step to becoming a full-line automotive importer/distributor in 1989 with the introduction of its midsize sedan, the Sonata. after 10 years in the American market the excel car was replaced by the all new subcompact Accent in 1995. The compact Elantra sedan debuted in 1991 as a 1992 model and it rapidly became Hyundai best selling model in the America. Hyundai Motor Company lunched the sporty Tiburon coupe in 1997 that emerged from the Hyundai California Design Center two concept roadsters, HCD-I and HCD-II. In the fall of 2000 Hyundai Motor America further two new vehicles to its lineup:
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the Santa Fe sport utility vehicle
The XG300 sedan.
For 2002 the engine displacement of the XG300 moved from 3.0 (XG300) to 3.5 liters (XG350).
Hyundai in Canada
In cooperation with Mitsubishi Hyundai Motor Company opened its first overseas plant in Quebec, Canada in the 1985. For the purpose of to collect the mid sized front wheel drive Sonata model. The aim was to profit from Hyundai Motor Company unique attainment in Canada in 1984. When Hyundai Motor Company became the main car importer in the country. Sales to Canada accounted for 30 per cent of Hyundai Motor Company production that year. By establishing a presence in North America, Hyundai Motor Company wanted to increase its sales and keep away from the burden of import quotas.
Hyundai in India
Hyundai Motor Company recognized a 100 per cent owned supplementary in the 1996. The Hyundai Motor Company of India to manufacture cars in India. It showed an investment of more than USD 450 million. Construction of a plant with the capacity to produce 120000 passenger cars per year was finished in Chennai. In 2000 the Chennai plant was producing 100000 vehicles per year and had captured 14 per cent of the Indian market. Hyundai in India produced two models in Chennai:
Both got about one quarter of their particular market segments during the first four months of 2000. Hyundai in India started its operation in Chennai with a workforce of 1400 operating in a one shift production system in 1998. It had become one of the fastest growing auto manufacturers in India
Reference to the material presented in book Strategy for Business, which theory/concept that the strategies of Hyundai were based on. You need to critically justify your argument (20 marks - 750 words).
Hyundai Motor Company was instinctive under the authoritarian, charismatic leadership of Ju-Young Chung, the founding chairman of Hyundai Motor Company, and as a result with a combined and central management structure. Since the first ownership structure was completely restricted by Ju-Young Chung and his heirs, the management and ownership of Hyundai Motor Company completely overlap. It's planned goal and decision making processes were conquered by the Chung family's centralized dominance and emperorship. However, such a patriarchal possession and management structure allowed Hyundai Motor Company to pursue more independence over its outside relationships. Like when Hyundai Motor Company entered into a strategic association with Ford, Ju-Young Chung declined to move his decision-making authority to Ford. Hyundai Motor Company picked Mitsubishi in 1972, rather than a member of the America Big-3 or Toyota as its joint venture partner because this made it easier for Hyundai Motor Company to protected strategic independence over its personal technological and market development. And the full financial and personnel support from Hyundai Motor Company Mother Company the Hyundai Engineering and Construction Company which was also owned and managed by the Ju-Young Chung provided him with leverage to steer Hyundai Motor Company his way.
Low cost leadership
Hyundai was not sure about either it could keep such momentum. Hyundai competitors such as Chrysler and Mazda had started to imitate its 10 year 100000 miles warranty and devised a diversity of talented marketing strategies. It seemed that the advantage stemming from the warranty would disappear soon. And though Hyundai packaging strategy helped it perform its cheap car image. This could be regarded as another version of price cutting strategy and amount to no more than short term plans.
The Best Warranty
Right after the promotion of Finbarr O'Neill to president and CEO from CO in 1998. Hyundai Motor America launched national commercials for what it called the industry best warranty which offered 10-year 100000-mile power train protection to original owners. The America auto industry was perplexed with this crazy tactic but it really turned things around. Sales soared, dealers became profitable and Hyundai started to get accolades
The Packaging Strategy
Bob Martin said Hyundai also had to come up with a solution to how to avoid the cheap car image. Executives in Hyundai Motor America started to think that Hyundai cars would not be able to change their cheap car image as long as their retail prices are lower than competitors in 1998. Hyundai Motor America faced an impasse. The solution Hyundai Motor America brought out was to differentiate the standard equipment of its cars from other makers that was called the packaging strategy by people working with Hyundai Motor America.
Hyundai wanted a growth strategy until the late 1980 for the purpose to be the number 1 Korean automakers and this strategy fixed well with what we call Chung mode of bulldozer leadership. But it also seems to be true that we educated that projects initiated through personal goal lead to poor preparation
Hyundai broke ground in Montgomery, Alabama for its first America car assembly plant in 2002, a $1.14 billion investment scheduled to open in 2005 and employ 2000 people. The facility to be built on 1600 acres was predictable to produce 300000 vehicles per year at maximum capacity. Hyundai planed to increase the capacity to 500000 in 2010. This plant was considered by Hyundai and outsiders as a key element in Hyundai plan to become one of the world top five manufacturers.
After successfully seeing Hyundai Motor Company enter the North American market, Ju-Young Chung handed over the Chairmanship of the Hyundai group and Hyundai Motor Company to his younger brother Se-Young Chung in 1987. The new leadership infused Hyundai Motor Company with a different organizational culture from Ju-Young Chung regime. Se-Young Chung tried to inspire Hyundai Motor Company with the new spirit of harmonious human relations independent management, responsibility management, and equal opportunity and therefore drive out the previous owner-oriented emperor leadership by delegating responsibility and authority to professional executives and managers. The change in leadership also led to a change in strategic focus.
From 1987 to 1988 Se-Young Chung redesigned the Hyundai Motor Company organization with the goal of improvement in production efficiency by merging the division of job functions. The most obvious change in the organization chart was converting from a functional organization to a divisional organization that purpose for well-organized control and evaluation, developing management motivation and ability, improving the capability to cope with market diversification and cost reduction. These changes allowed Hyundai Motor Company to downsize
Identify and analyze (i) the technology policy that was adopted and implemented by Hyundai and (ii) the local (i.e., Korean) and international policies that affected Hyundai's performance (15 marks - 500 words).
Following are the technologies used by Hyundai
Aiming for world-best chassis
Hyundai organize cutting edge materials and new technologies in the development of chassis parts to protected unrivalled riding comfort, driving performance and safety. Chassis parts that have undergone advanced virtual analyses and passed numerous tests and standards deliver world-best performance.
The suspension works to ease any impression or shocks from the road while driving to provide a contented ride and make sure that the car drives, brakes and turns according to the driver's will by improving handling performance
The steering system is directly controlled by the driver and acts as a two-way communication system between the driver and the vehicle. The system relays accurate information on the road to the driver, and the driver's intention to the vehicle. This enables the vehicle to nimbly respond to the driver's steering inputs for optimal driving convenience and handling.
Kinetic energy of the vehicle in motion is warped into heat energy using friction to decrease the speed of the vehicle. There is a rising number of brake applications linked to electronic systems to make sure better safety. The Anti-lock Brake System improves braking safety while Electronic Stability Control enhances vehicle stability.
Active Geometry Controlled Suspension
When the vehicle rolls because of unexpected rotating. The vehicle speed and information from the steering wheel angle sensor actively control the angle of the outer rear wheel to improve cornering stability.
Eco-friendly exhausts systems
The idea of power train middle is to improve ignition competence, reduce weights, develop low friction and improved motor efficiency technologies. And accelerates the development of power trains for hybrid vehicles for the purpose to obtain improved fuel efficiency and minimize air pollution caused by gas emissions. And a highly efficient drain gas cleaning system is being developed, which decrease the damaging gases emitted from low pollution engines one more time which not only responds to the rising limits on emissions but also leads the way in the production of eco friendly vehicles
Driven State Monitoring
Driven State Monitoring employs facial recognition engine technology to decide the driver state by monitoring changes in the driver eye movements and facial muscles with an infrared camera installed inside the car. By measuring the driver blinking and facial direction patterns, it sounds an alarm sound and relays strong vibrations to the seat when abnormal states are detected
Self-healing scratch shield
Scratch Recovery Clear uses the elasticity of special chemically composed matters in a clear paint that has self healing properties. Scratches are automatically fixed over a period of time.
Pre crash headrests help keep away from driver collar injuries with the help of detecting possible stern collisions. with the help of rear facing camera that is made into the vehicle. When a possible crash is detected the cushion mechanically moves earlier to the driver head for added protection. Once the risk has passed, the headrest then returns to its normal position after a convinced period of time.