Hyundai case

Group – 12

NO. Name Enrolment NO.

1 Krusha Sampat AU1811224
2 Nancy Asrani AU1811261
3 Aryan Jain AU1811265
4 Shimool Shah AU1811272
5 Deep Adesara AU1811298

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Summary
After the launch of Hyundai motor co. In Korea people soon began to position the cars as a cheap
vehicle and told that they are just for the lower class of people. After some years they began to see a
rapid improvement in terms of content and performance. The issue that they face was the gap that was
between perceived value and actual value of Hyundai cars. The main target was to change Hyundai's
brand identity from economical car brand to quality-oriented car brand. While the structure of Hyundai
was patriarchal and was led by Chung who was also the reason of quick expansion to US. The phase
was very different than other car brands. It had gone from success to failure and then again success for
the period of 17 years. In the initial stage the car sales were high accounting to 263,610 cars and 2.58%
market share this was because of the gap of entry level cars and because the market was dominated by
high end cars. Then the next stage came upon as a failure where customers came to understand the
quality issues of cars and resulting to that Hyundai sales fell down and the publicity made it even worse.
The low quality and low price were associated with Hyundai. They relied upon many strategies like
launching high priced models. Then came the recovery period when sales began increasing again
because of their improvements. The improvement of brand image definitely worked for Hyundai and
its market position.

Industry Analysis- Porter's 5 forces and PESTEL

Porters five forces: -

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 1. Bargaining power of buyers (High):

In the automobile industry due to high competition, customers can easily choose from various
competitors’ products if the service provided by one company is not appropriate. Also, they can opt for
Ola and Uber which has also increased the bargaining power of buyers.
2. Bargaining power of suppliers (Low):

The bargaining power of suppliers is low as big company like Hyundai have many suppliers to choose
form but the suppliers have limited companies for supply. Thus, one supplier cannot influence the
market price of its materials.
3. Threat of New Entrants (Low):

A lot of capital investment is required initially and throughout its life for commencement and Research
and Development purpose which is a threat for new entrants. Also threat of failure can be a great threat
for the new entrants.
4. Threat of Substitute (moderate):

The treat of substitute is moderate as car (Hyundai) has substitutes like public transport like bus, train,
even private companies like Ola, Uber etc. but places where these services are not available there the
threat of substitute is low.
5. Competitive rivalry (high):

There are many big players like Toyota, Suzuki etc. which has competition with Hyundai who are
having cut throat competition among them in terms of marketing, sales and R&D. To survive this
competition Hyundai has to invest a lot in these areas.
PESTLE: -

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 1. Political:

Political factors which affect Hyundai can be different political parties of different countries can have
different norms to follow, different permissions to approve etc. which can be difficult to imply globally.
2. Economical:

The high tax rate on luxury products like car for domestic sales and for imports and exports, economic
slowdown in one country affects overall sales of company etc. can be economical factors affecting
Hyundai.
3. Social:

In this case Hyundai were able to sell more cars by attaching ‘Made in USA’ in USA which tells that
social factor like priority to one’s own country can affect the sales. Also, car sales can be high in under
developed and developing nations where people consider car as socially acceptable status symbol. Thus,
social factors like status, priority to own country’s product can affect Hyundai.
4. Technological:

Many of the automobile companies invest huge in R&D process focusing on innovation and
technological upgradation. Changing trend of car market from fuel cars to EVs can be a factor affecting
car companies. The faster Hyundai adapts to EV the more efficiently it can survive in future.
5. Environmental:

Due to emission norms toughened by government Hyundai has to incur huge cost to maintain its
emission level to acceptable standard. Also creating less pollution as a part of CSR is a factor affecting
business.
6. Legal:

Due to many legal factors like taking all the legal permissions before introducing a new product in
market, various copyright issues, legal papers etc. takes a lot of time which affects the product cycle,
involves huge cost for completing all legal paper works which affect car manufacturing company like
Hyundai.

RBV, SWOT, and Value chain analysis

SWOT analysis
Strengths

 Brand image and equity-worldwide Hyundai has a strong friendly image, based on trust and
customer service.
 Global presence-Hyundai sells its product in various regions like Asia pacific to Europe, Brazil
to North America and its suppliers are also present around the world from China to North
America. Because of this the product and manufacturing costs are low.
 Large product portfolio

Weakness

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  Increased expenditure on marketing- the costs of R&D and marketing goes very high due
to increased competition.

Opportunities

 AI and automated driving-Hyundai can invest in these arrears to increase its customer base
by providing better vehicles and can be the first in automated driving.

Threats

 High competition- due to high competition the company will have to invest more in product
quality and marketing to retain its market share.

Value chain analysis

1. Primary activities
 Inbound logistics-Hyundai vendors are spread around the world, from which it imports raw
materials of good quality.
 Operations-Hyundai is known for having single largest manufacturing plant in Ulsan.
 Outbound logistics-The automobiles manufactured at these plants are sent to the Hyundai
dealers who are spread across the world's various corners.
 Marketing and sales- hyundai spends a lot on marketing to maintain its image.
 Service-The Hyundai's pre-sale and post-sale offerings can an important role in increasing
customer loyalty.
2. Support activities
 Technology-Hyundai is very much interested in technology. It has some of the best in class
manufacturing facilities and is investing in new technology as well as R&D.
 Human resources-Hyundai is also focused on creative handling of Human Resources. By
the end of 2016, the company had hired 118320 employees, 66890 of whom were in Korea.
 Procurement-the raw materials are procured from around the world.
 Firm infrastructure-The Company owns a very large infrastructure from production
facilities to R&D facilities, and more.

VRIN analysis
Value-Hyundai has unique advantages because demand comes from Korea's regional customers, and
the weak currency also lets them achieve competitive advantage in comparison with their domestic
rivals. In turn, low-cost labour-power for Hyundai produces low production costs. The other important
factor is Hyundai's joint ventures and financial capability.
Rare-The company's resources should be more powerful and limited than its rivals. Despite massive
changes in the current trends in the automotive industry, alternative engines tend to follow. Nonetheless,
strong rivals like Tesla Motor and Toyota's hybrid cars, for now Hyundai has no recognizable product
or services. According to Hyundai's future plans and key capital it is not appropriate and beneficial
consonance for the business.
Imitability-Outcomes of the company should be heterogeneous instruments which other organizations
cannot mimic. The electric and other types of vehicles require a high level of technology such as long-
life batteries and a new kind of materials. Only with a high level of research and development achieve
this kind of aspect. Hyundai can use this inner force to create imitable imperfectness.
Non-substantiality- Due to the good customer base of Hyundai the brand value and brand recognition
are the non-substitutable resource.

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Porter's Generic Strategy followed by the company

Porter’s Generic Strategy HYUNDAI

Hybrid
focus
strategy
Cost Differentiation
leadership

Porter's
Generic
Strategy
Hyundai

Cost leadership:
Cost leadership is a involves achieving competitive advantages by the reducing the
cost. It permits Hyundai motor company to increase market share by targeting the bourgeoisie class
which in most countries constitutes the big proportion of most off the consumer market mix. The
company’s main focus is higher the profit and lower the cost. Normally overestimate the pricing factor
and cost leadership is the important strategy to meet the needs of this consumer segment. And In
addition to lowering production costs and lowering prices and maximizing prices efficiency in supply
chain, Hyundai often offers exemption to handle competitive pressure by its nearest competitor to
achieve sales achievements. Hyundai’s low price should be interpreting as low value.

Differentiation:
Differentiation is very popular and commonly used strategies for a creating
competitive advantages. Basically, it is a new product and good services. The company used the
distinction in combination with the cost-led strategy to accomplish development aim. Company used
many differentiation strategies like adopting the difference as a different general strategy ratify Hyundai
motor company to aggrandize its customer base by the emphasizing unique product features. Hyundai
motor company adopts a strategy to attention on both the lower price and the needs of specific separate
part of the at the market low price and low-cost attention strategy is adopted.

Hybrid focus strategy:

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 Third generic strategy is Hybrid focus strategy. Hybrid means mix of the both
strategies. It’s explained a target segmentation. Hyundai motor company are focus on the less price and
good quality. More less price and needs of niche market fulfils. Their time management is good they
deliver the product time to time. Hyundai’s product are different to other product that is their main
strategy.

Recommendations for the company to create a sustained

competitive advantage:

 Hyundai should remain on strengthening its competitive advantage in the global

markets and product quality given the sinking revenues.
 Hyundai should focus on EVs because their demand continues increase in current
market.
 Hyundai needs to focus on innovation so they can grow up in global market.
 Hyundai should enter into joint venture with other company so the market price of
Hyundai will increase and also get access to new market.