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THE HYUNDAI GROUP I.

PROBLEM The main problem is the authoritarian style of management which has been adopted and practiced by the Hyundai Group for decades has hindered them from growing with the changing times. Secondary problem includes: 1. Hyundais strategy of low wages and hard work no longer suffices in the face of rising competition from other developing nations and swelling demands from the countrys more independent youth generation. 2. Hyundai started to move away from Koreas slumping construction and shipbuilding industries and faced a troubled transition to a high-tech, high-waged future. II. AREAS OF CONSIDERATION a. Strengths i. Served as the principal mover behind South Koreas development ii. Diverse product lines iii. Workers are like a disciplined, para-military, single-minded, self-sufficient machine iv. Workers do their jobs faster than anyone else b. Weaknesses i. Merely shape the lengthened shadow of its founder, Chung Ju-Yung ii. Poor investment decision iii. The companys $20 million investment in Silicon Valley was a losing proposition from the start iv. Continued bout of labor strife has hurt production resulting to losses and created an image of a company that is unwilling to change with the times v. Has been cited as the allegedly one of the most antilabor of the large companies in Korea c. Opportunities i. Semiconductors industry ii. Declining competitiveness of Japanese electronics products because of the strong yen iii. Growth of Hyundai Motor Co. --- exports in 1987 reached 403,000 cars, compared with 18,000 in 1983

iv. Earnings of Hyundais Inchon & Steel Co. in 1987 were $18 million on revenue of $471 million compared with a 1986 profit of $5.9 million on revenue of $400 million. d. Threats i. Collapse of oil prices and the Iran-Iraq war severely hurt the companys shipbuilding industry. ii. U.S. pressure for the won to appreciate causes inflation iii. Stagnation of the ratio of profits to revenue in recent years iv. Marginal possibility that overseas construction and shipbuilding will ever regain their former glory v. Workers solidified their right to collective bargaining as part of Koreas democratic liberizations vi. The nationwide uprising for democracy in 1986 brought a radical change to the relationship between employers and workers vii. The political force in South Korea is so strong that it had managed to push ways up rapidly in the midst of an unprecedented surplus of highly educated labor which normally should depress wages III. ALTERNATIVE POSSIBLE SOLUTIONS a. Retain its current management style and fire all workers who participated in the labor strike. i. Advantages 1. Labor strike will stop as well as continued losses incurred from stop of production due to labor strike 2. Firing workers means hiring new ones that can be trained according to their management style ii. Disadvantages 1. Hiring of new workers is time consuming and is costly due to trainings and seminars needed to aid them with their jobs. b. Management should be reorganized and arranged into one that acknowledges the importance of employees or workers in achieving companys goals. i. Advantages 1. This will lessen the possibility of repeated occurrence of labor strikes. 2. Better working relationship increases efficiency and productivity ii. Disadvantages 1. Adjusting to the new management set-up might give a hard time to the management and the workers

c. Retain its current management style and offer higher salary to the workers. i. Advantages 1. Labor strike will stop 2. Operations will continue ii. Disadvantages 1. Higher salary entails higher costs which means higher prices for their products and services 2. Higher salary might be only temporary for stopping labor strikes because workers may ask for more IV. RECOMMENDATION Among the three alternatives given above, the third alternative is the most appropriate action to be taken because its advantages outweigh its disadvantages. Firstly, a good working relationship or environment between the employer and employee increases efficiency and productivity because it allows each one to air their suggestions that would be beneficial for the company, or concerns that would be in turn detrimental. Secondly, a good employer-employee relationship will make any employee feel that they are really part of the company and would make them do their jobs step ahead of what is expected of them. The best advertising strategy a company could have would be no more than motivated employees. Lastly, adjusting to the new management style might be hard at first, but it is only temporary and would be easily overcome by the company if they are really committed in changing for the best. ACTION PLAN Program Activities 1. Management should 1. The management should permit labor unions meet up with the work force representative to hear their side 2. Draft a Collective Bargaining Agreement that would be beneficial to both the management and the labor union 2. Annual meeting with the 1. Management will management & the labor discuss current union representatives companys goal and with the purpose of objectives. aligning the companys 2. Labor representatives goals & objectives with will give their comments the labor force and suggestions to help the company achieve its goals.

V.

Time Frame 1 week

2 weeks

1-3 days

1-3 days

3. Review of management 1. The management and and labor union current the labor union policies representatives will review their existing policies in order to see if they are still effective in achieving their goals and if not, then draft new ones.

1 week