Hyundai Motor Company was founded in 1967. It produced Korea’s first locally designed car in 1976, and now produces close to four million cars and commercial vehicles a year. Several articles about this company has been selected to present different management theories, particularly discussing their strategy and structure, that include SWOT analysis, Porter’s five forces model, related diversification and low cost strategy. The essay concludes with giving an overall picture about the impact of current strategies that Hyundai is adopting.
SWOT analysis is a planning exercise in which manager identify organizational strengths and weaknesses, environment ...view middle of the document...
It grew its market share in Europe from 2.9% in 2011 to 3.5% in 2012. This growth led to a competitive advantage over its rivals, Toyota and Volkswagen that were incapable to grow their operations (Madslien 2013).
On the other hand, company has some weaknesses to overcome. For example, in 2012, Hyundai has been accused over inflated fuel economy numbers. Now the company will face federal lawsuit and will have to reimburse all the damage done to the customers. This can negatively impact Hyundai’s reputation and could erode its competitive advantage.
Hyundai Motors are famous for making fuel efficient cars with innovative designs and are appreciated all over the world. Company is seeking to exploit new market segments especially luxury car markets. Hyundai will look forward to use their resources and skills to gain market share in that segment by charging premium price for the luxury cars. This Opportunity is recognized by Hyundai Motor America President and CEO John Krafcik who recently unveiled Genesis concept (HCD-14) car and said that they are all set to compete with German luxury car makers and to become a global player its necessary for the company to seek new opportunities (Hyundai Blog 2013). Company is also heavily investing in research and development department in order to come up with most innovative and highly efficient cars. Hyundai has also noticed increase demand in foreign markets and thus has decided to expand its core business by developing new plants in China and Brazil as the company aims to achieve increase in global sales by 6 percent to 4.66 million vehicles this year (The Asahi Shimbun 2013).
Hyundai motor is also facing some threats in the global market. One of the main threats Hyundai is facing currently, is the exchange rate fluctuations that can make a huge impact on Hyundai’s profits if the Korean ‘WON’ would appreciate against other currencies. In addition, raw metal prices are rising due to increasing global demand, negatively affecting automotive firms’ profits. Also, use of natural gas as an alternative to fuel is predicted to raise in future that can make hybrid and fuel efficient cars, one of the main core competencies of Hyundai, less attractive.
Michael Porter’s Five Forces Model
Porter’s Five Forces allows managers to analyze the external environment by examining five major factors: the level of rivalry between organizations in an industry, the barriers to entry into an industry, the power of suppliers, the power of buyers, and the threat of substitute products (Waddell et al, 2011). By analyzing an industry using this tool, managers can identify both opportunities and threats that exist in that industry.
Rivalry among competitors
Industry has cut throat competition for its products, with its products targeting the segment and positioned in a similar way. Industry is leaded by a small number of automakers and each company’s decisions are influenced by the decisions of the other companies. Competition...