Operations Strategy : Hyundai Automotive Industry

Operations Strategy : Hyundai Automotive Industry

Question 1.

The automotive industry is one of the main ingredients of the Korean national growth. In 2004, Hyundai Motor Company had $57.2 billion in sales in South Korea making it the country's second largest corporation. It is also the world's seventh largest car maker.

In 1998, Hyundai acquired rival Kia Motors. This acquisition brings the first element of the firm competitive strategy. The Hyundai motor company is today aiming to establish clear and distinct identities for the two brands so that they don't compete between each other in the market. The company competitive strategy is influenced by the differenciation strategy within the two brands in the same automotive group. However, this strategy also affects the overall strategy of the Hyundai Motor Company within the Automotive Market. The Hyundai brand is positioned as the "refined and confident" nameplate. Kia, on the other hand, has an identity of a sportier, more youthful brand. However, the competitive strategy is also influenced by the lower cost strategy. Whereas Kia previously built vehicles on Hyundai platforms to save money, the automaker is now developing "standardized integrated platforms" for both brands that allow for different styling.

Since the years 2000, because of high pressures at home (domestic market growing at under five percent and Korean government imposing heavy vehicle excise duty), Hyundai and the other Korean automakers have become more aggressive in terms of pricing and quality, and begun developing larger cars, and broadening their product ranges to meet diverse customer preferences. Hyundai is known for affordable line of cars ...

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Secondly, Hyundai's firm operation is highly linked with the acquisition of Kia. The company is taking advantage of the economies of scale and managing not to standardise the cars and losing

each brand identity. It allows the company to maintain their own brands for field full vehicle ranges and maintain individual sales and marketing approaches throughout Korean and world markets. In this context, Hyundai will focus on increasing the synergy effects from the acquisition of Kia Motors (and sister company Asia Motors) through the pooled platforms of Hyundai and Kia, exchange of auto parts, joint use of sales outlets and reductions in the development of new car models.

Sources:

l French Embassy in Korea, economic and business bureau

l Business week Online

l The Economist Online

l Hyundai Motor Company Website

l Strategy Mag

l Challenge Magazine