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Case Study of
Hyundai Motors
ABSTRACT
Hyundai Motors was founded in 1967. It has grown dramatically and become
one of the biggest companies in the world these days. We will examine the factors
that made Hyundai Motors successful. Moreover, based on what we learned in
Class, we will find sources of innovation factors and classify types. We will also find
Hyundais technological innovation strategies for next generation cars and
collaboration strategies. After grasping these concepts, we will analyze Hyundais
present situation by some tools such as SWOT analysis and Five -force model.
Through the analysis, our goal is to suggest future strategies for Hyundai Motors.
1 Introduction
1.1 Worldwide industry description
2 Key Innovation
Quality
2.1 Background & development
Compared with other global motor companies, Hyundai motor company had
no competitive power on technology because Hyundai started car industry more
than a hundred years later compared with Europe car companies. To survive in
car markets, they need some competitive power
Like this, 6-sigma is a process which improves quality. After they benchmarked
companies which implemented 6-sigma successfully, they made their own 6sigma system, Q-star.
including foreign partners and local partners adding two hundred gold stars every
year.
As a result, in 2003, they completed their 6 sigma Q-star. They also
increased first pass yield from 90 percent to 99 percent and reduced 50 percent
of claim cost.
2.3 Advantage
In 2000, Hyundai cars income was 18.23 trillion KW and net profit was about
667 billion KW. In 2003, they recorded sales 25 trillion and net profit about 1 ,740
billion. This improvement was because the profit from exportation is much larger
than the profit from domestic sales. In same period, domestic sales was from 10
trillion 468 billion to 10 trillion 646 billion. It was slightly increasing but exportation
was from 7,762 billion to 14,321 billion. It was surprising increase.
to exportation
quality study) during 6 years. IQS is the response on quality satisfaction from
consumers purchased car 3 months ago.
It means that if IQS index is low, it would have the better quality. In 1998,
Hyundais IQS was 257 point. In 2000, after Hyundai Motors innovated Q-star,
IQS recorded 189 point. In that year, average car companys IQS recorded 157
point and they promoted Q-star the next every year.
As a result, in 2003, Hyundai cars IQS recorded 143 points. In that year,
average car companys IQS was 133 points. They could record around average.
In this year, Hyundai cars IQS record 102 points, numerical value that exceed
car average IQS, and Toyota record 101 points. . Comparing with global car
company Toyota, it is just 1 point difference. This was surprising results and
connected to sales increase.
Productivity
2.1 Background & Development
Hyundai car judged that they couldnt survive the 21 st-century car market with
Ulsan manufacturing system so they benchmarked balanced lean-manufacturing
system in Kyushu. After the benchmark, they built Asan plant.
2.2 Technology
Ulsan plant was larger than Asan plant so it was meaningless to compare
productive volume so lets consider operating ratio.
3 Innovation
3.2 Sources of Innovation
3.2.1 Quality
3.2.1.1
Benchmarking
3.2.2 Productivity
3.2.2.1
Benchmarking
3.3.2.3
Hyundai Asan Plant, the new manufacturing plant with lean-type system
is radical innovation to Hyundai itself. The system is totally different from
the original system in Ulsan plant and it was selected in Hyundai Asan
Plant for the first in Korea. Lean-type system allows self-control of
workers by shortening the manufacturing lines and allowing buffers. It
was radical challenge for Hyundai.
3.3.2.4
as
3.3.4.3
The word, infotainment, is came from combining of two word, information and
entertainment. It offers drivers information about driving condition, car condition
and also music player, game and so on. The best known infotainment system
today is telematics (telecommunications and informatics). Telematics enables us
to use computer system with interne t. So we can send or receive e-mail and
search some information in car.
On-star which is the joint-venture company between General Moters(GM)
and Motorola, is the first mover in this field. They already develop GPS(global
positioning system) by using a artificial satellite. And there are several early
Hologram HUD
This futuristic technology places various
useful information in front of the driver on
the windshield using a 3D hologram
Auto-pilot Driving
Hyundai is researching a car that
features an automatic parking system,
cruise
control
and
sensors
for
maintaining a safe distance from other
cars to prevent out of lane driving.
Ultimately, the goal is to create a car that
can assess the traffic situation and
operate without any manipulation from
the driver.
Hyundai started worlds first mass production of LPI hybrid electric vehicles
in July 2009. They expect that higher vehicle cost can be recovered after
approximately two years of driving.
ignition
is
started.
During
first small si zed SUV, sportage, mechanical direct spread engine of Carnival and
so on. Through collaboration, Hyundai could absorb Kias technology and also,
reduced R&D cost.
Third, Hyundai could restrain foreign companies from holding domestic
market. Foreign company had problems in supply chain and brand value in
Korea market. But they could solve these problems by collaboration with Kia. So
if foreign company absorbed Kia, probably Hyundai would meet a big rival in
domestic market. If Kia were absorbed by foreign co mpany, probably domestic
market situation would be changed a lot from present. Hyundai - Kia
collaboration was a very successful case.
Hyundai Microsoft
In May2008, Hyundai collaborated with Microsoft to develop infotainment for
next generations car together. They had discussed about diverse aspect of
cooperation and long term vision since 2006. Through this collaboration,
Microsoft will focus on developing software platform for car and Hyundai will
adopt those technologies in car for the first time in the world. Car infotainment
technology
will
enable
drivers
to
experience
innovative
information,
Hyundai- LG telecom
In Dec 2005, Hyundai collaborated with LG telecom to start navigation
service, telematics, based on cellular phone. Service provided various
information, such as road guidance, dangerous region information, and famous
restaurant. It would also provide voice recognition to prevent driver from danger
caused by using cell phone during driving. Through service, Hyundai and LG
telecom would like to gather new customers.
Strength
High brand awareness
In 2009 World best 100 brands which is Researched by Interbrand, the
English rand consulting company, shows that Hyundai Motors is 69 th rank which
is similar to rank of Audi(65 th rank) and even higher rank than Porsche(74 th rank)
and Ferrari(88th rank). It says that Hyundai Motors brand awareness is very high.
Weakness
Frequent recalls
Hyundai has been recalling over 500,000 times. Some blogger in U.S. posted
about Hyundais frequent recall. He complained about this kind of Hyundai
Motors policy. This kind of Hyundais recall is more frequent in over sea market.
Needless to say, recall is good policy, but frequent recall could occur lose of
customer and it would become weakness.
Opportunity
Solved Labor & Management problems
Threat
Decreasing world automotive brand value
Worlds car market has been slightly decreased since economy crisis, in 2008.
So many car companies in U.S.A went bankrupt. And this market situation would
be critical threaten for Hyundai. Until now, Hyundai could use this crisis for their
opportunity to expand their market power. But if this situation will be last longer,
then Hyundai would get serious damage, too.
Potential Entrants
In domestic market, except some china car companies which are going to
enter the domestic market, there would be no new entrants. Car industry largely
depends on scale of economy and high technologies. So it is very difficult to
found a new Car company. It is also same in world market situation. It is possible
that some developing countries establish a car company by helping from
government. But still, generally there is a very low possibility of new entrants.
Bargaining Power of Buyer
Hyundai Motors Buyers are Korean buyers and foreign buyers. Bargaining
power of buyer is high in car industry. Because there are lots car companies,
customers choices are very wide. Until now, even though there are lots of
choices, Hyundai could occupy aro und 75% of Korean market because of their
domestic company merit, price and quality. So actually, compared with car
industry, bargain power was relatively low in Korea. But as foreign cars price go
down bargaining power gradually goes up these days.
Bargaining Power of Supplier
Suppliers in Hyundai car are Korean or foreign car components companies.
Because lots of car component companies are existed, bargaining power of
supplier would be low.
But like car infotainment, if Hyundai car develop new technology, it would be
high because they depend on a software company. Finally, According to situation,
bargaining power of supplier is determined.
Hyundai Motors have some vision. Global orientation, respect for human
values, customer satisfaction, technology innovation, cultural creation are that.
For making these kinds of vision succeed, Hyundai Motors set objectives in
some perspectives. First, in financial perspective, their objective is increasing
sales amounts. In financial field, the most important thing is earned money from
selling product. So, increasing sales amounts can occur to increasing earned
money. Next perspective is customer perspective. In this perspective, reducing
the recall rate is their objective. We already saw Hyundai Motors frequent recall
problem in SWOT analysis part. Customers are complain in that problem, and if
they reduce the recall rate, then customer satisfaction would be increased. In
internal business perspective, they care about labor and management problems.
For that reason, their objective in internal business perspective is making familiar
business environment. We can easily find the news that Hyundai Motors effort to
find solution about labor and management problems in recent news. Last
perspective is innovation and learning perspective. In this perspective, their
objective is green car strategy. Because of fuel shortage, develop green car has
high probability of purchasing.
For reach the objectives, in each perspective, they find the critical success
factors which are called targets. For selling lots of amount of cars, they need
special feature of car. It needs to develop the new technology. To increase
customer satisfaction, they need to keep connection with customer, so they
should do continuous customer management, and then they would consider
about recall and customer satisfaction. In labor and management problems, well
employees management is only solution, for that reason, they should manage
employees well then rate of strike in a year would be decreased. In innovation
and learning perspective, they need to develop hybrid cars and fuel-cell cars.
Reference
-
http://worldwide.hyundai.com/
http://www.wikipedia.org
http://www.autoblog.com/2009/04/20/multiple-hyundai-recalls-for-brake-lamps-andrust-issues-affect/
http://www.interbrand.com/best_global_brands.aspx?year=2009&langid=1000