1.

a)
Porters competitive advantage theory:
Demand conditions:
Refers to the nature of home-market demand for the specific products and services

 Korean customers are demanding for the high-quality products

 Lower cost of production
 Korea has growing workforce with high skills and cost-effective knowledge workers
in design, features and production.
 Technology like 3D/4D printing, Collaborative Robots, Artificial Intelligence for
Driverless/Autonomous cars
 Logistics – Great distribution network.
 Korea is world center for new technology development.
 Abundance factors of production, knowledge workers.
Factor endowments:
Describes the nations position in factors of production (labour, technology capital)

 Inexpensive high quality labour

 Key input from low cost suppliers
 High skilled labour
 New technology is used and easily accessible
 ready supply of capital to fund R a& D
 Presence of many manufacturers and suppliers
Related and supported industries:
Refers to the presence of clusters of suppliers, competitors’ firms that excel industries

 High saving rates with massive inward FDI which ensures supply of capital for
carmakers.
 Suppliers and manufactures of vehicle parts.
 R&D is continuous
 Designing education institutions.
 Government support
 Power Industry

Firm strategy, structure and rivalry:

 Refer to nature of domestic rivalry and conditions in nation that determine how
firms are created, organized and managed.
 Intelligent market diversification compared to Toyato and Honda who focus on Us
sales
 Marketing campaigns and automotive sponsors
  Several conglomerates like Hyundai, Samsung etc.

1.b
Primary Activities:
The primary value chain activities of Hyundai are directly involved in producing and selling
the product to targeted customers. Analysis of primary value chain activities can improve
the performance of Hyundai as explained below
Inbound Logistics:
It is important to develop strong relationships with suppliers as their support is necessary to
receive, store and distribute the product. Without analysing the in-bound logistics, Hyundai
can face various challenges in product development phases. Analysis of in-bound logistics
requires a company to focus on every aspect of transformation from raw material to
finished product. Some examples of inbound logistics are retrieving raw material, storing the
inputs and internally distributing the raw material and components to start production.
Operations:
The importance of analysing operational activities raises when raw material arrives, and
Hyundai is ready to process the raw material into the end product and launch it in the
market. Some examples of operational activities are machining, packing, assembling and
testing. Equipment repair and maintenance also falls into this category.
It includes both- manufacturing and service operations. Analysis of operational activities is
important for improving productivity, maximising the efficiency and ensuring the
competitive success of Hyundai. The increased productivity can help Hyundai to achieve
consistent economic growth, increase profitability and set a powerful basis for competitive
advantage.
Outbound Logistics:
Outbound logistics include the activities that deliver the product to the customer by passing
through different intermediaries. Some outbound logistics activities are material handling,
warehousing, scheduling, order processing, transporting and delivering to the destination.
Hyundai can analyse and optimise the outbound logistics to explore competitive advantage
sources and achieve its business growth objectives.
Because, when outbound activities are timely managed with optimal costs and product
delivery processes put a minimum negative effect on the quality, it maximises the customer
satisfaction and increases growth opportunities for the firm. Hyundai should pay specific
importance to its outbound value chain activities when its offered products are perishable
and require quick delivery to the end customer.
Marketing and Sales:
At this stage, Hyundai will highlight the benefits and differentiation points of offered
products to persuade the customers that its offering is better than competitors. Only
producing a high-quality product at affordable costs and distinctive features cannot create
value until Hyundai invests on the marketing and sales activities. The sales agents and
marketers play an important role here.
Some examples of Hyundai's marketing and sales activities are- sales force, advertising,
promotional activities, pricing, channel selection, quoting and building relations with
channel members. The company can use the marketing funnel approach to structure its
marketing and sales activities. The marketing strategies can either be push or pull in nature,
depending on the Hyundai’s business objectives, brand image, competitive dynamics and
current standing in the market.
Effective and wisely integrated marketing activities can develop the brand equity of Hyundai
and help it stand out from the competition. However, Hyundai must avoid making false
commitments about product features that cannot be fulfilled by the production
department. It indicates the need to ensure coordination between different value chain
activities.
Services:
The pre-sale and post-sale services offered by the Hyundai will play an important role in
developing customer loyalty. The modern customers consider post-sale services as
important as marketing and promotional activities. The power of negative e-WOM due to
poor support service cannot be undermined in the current technologically advanced era.
The company must analyse its support activities to avoid damaging brand reputation, and
instead use it as a tool to spread positive word of mouth due to quick, timely and efficient
support services.
Secondary Activities:
The support activities play an important role in coordinating and facilitating the primary
value chain activities. Hyundai can also benefit from analysis of its support activities as
explained below.
Firm infrastructure:
The firm infrastructure denotes a range of activities, such as- quality management, legal
matters handling, accounting, financing, planning and strategic management. Effective
infrastructure management can allow Hyundai to optimise the value of the whole value
chain. Hyundai can control the infrastructure activities to strengthen the competitive
positioning in the market.
Human resource management:
Hyundai can analyse human resource management by evaluating different HR aspects,
including- recruiting, selecting, training, rewarding, performance management and other
personnel management activities. The effective HR management can allow Hyundai to
reduce competitive pressure based on motivation, commitment and skills of its workforce.
The company can also achieve its cost minimisation objectives by analysing hiring and
training costs with their relative return. The heavy dependence of Hyundai on employees'
talent will increase the importance of this value chain support activity.
Technology development:
In a modern, technological advanced era, almost all value chain activities depend on
technological support. The technological integration in production, distribution, marketing
and human resource activities requires Hyundai to realise the importance of technology
development. It can be divided into product and process technological development
activities. Some examples are- automation software, technology-supported customer
service, product design research and data analytics. The research and development
department of Hyundai is classified in this category.
Procurement:
The procurement in value chain denotes the processes involved in purchasing the inputs
that may range from equipment, machinery, raw material, supplies, raw material and other
items necessary for producing the finished product. Due to its linkage with multiple value
chain activities, Hyundai should carefully consider its procurement activities to optimise the
inbound, operational and outbound value chain.
As mentioned above, the application of Porter Value Chain model depends on
understanding the importance of all activities. After understanding the relative importance
of identified value chain activities, Hyundai should highlight areas where value can be
added, cost efficiency can be achieved, differentiation basis can be set, or processes can be
optimised.
Inbound logistics:
possible differentiation basis for Hyundai are:
 Procure high quality inputs to offer high quality finished product
 Effective incoming input handling to reduce damage
Operations: possible differentiation basis for Hyundai are:
 Flexible manufacturing system
 Wide product range
 Improved product appearance
 Prevention of product pre-mature failure
 Quick response to unique specifications
 Improved customer satisfaction through lower defect rate
 Improved product performance due to conformance to technical specifications
Outbound logistics: possible differentiation basis for Hyundai are:
 Effective handling and better shipping to reduce product damage
 Timely product delivery
 Flexible delivery capabilities
 Effective order processing procedure
Marketing and sales: possible differentiation basis for Hyundai are:
 Improved relationships with suppliers and customers
 Enhanced communication with customers by offering high quality information.
 Brand awareness, reputation and image development due to extensive and effective
advertising.
 Effective coordination among product, research and marketing departments.
  Wider sales force coverage.
Services: possible differentiation basis for Hyundai are:
 Superior service quality
 High quality technical assistance
 Reliable and quick repair/maintenance service
secondary value chain activities
Hyundai can also analyse the secondary value chain activities to set differentiation basis:

Firm Infrastructure: Hyundai can set differentiation basis through:

 Extensive database development for effective marketing
 Advanced information system to get deeper customer insights.
Human Resource Management- Hyundai can set differentiation basis through:
 Attractive rewards to encourage creativity and maximise productivity
 Personnel training for effective interaction and superior customer service
Technological development- Hyundai can set differentiation basis through:
 Quick new product development
 Innovation integration in product designing
 Innovative product features with patented technology
Procurement- Hyundai can set differentiation basis through:
 Reliable transportation to ensure quick delivery
 Procure high quality raw material and replacement parts.

1.c)
The various entry strategies adopted by Hyundai in different countries:
Hyundai was expanding internationally to earn greater returns from their competencies,
transferring the skills and products derived from their core competencies to foreign markets
where indigenous competitors lack those skills. The optimal entry mode for these firms
depends to some degree on the nature of their core competencies. A distinction can be
drawn between firms whose core competency is in technological know-how and those
whose core competency is in management know-how.
As per the case both technological and management know-how were enjoyed by the
Hyundai in Korea. Hence to utilize these strategic advantages, Hyundai can take Wholly
owned subsidiaries and joint ventures as entry mode. And this is what they have taken as
well as per the case. Hence the various entry strategies adopted by Hyundai are as follows
Wholly Owned subsidiaries:
In a wholly owned subsidiary, the firm owns 100 percent of the stock. Establishing a wholly
owned subsidiary in a foreign market can be done two ways. The firm either can set up a
new operation in that country, often referred to as a greenfield venture, or it can acquire an
established firm in that host nation and use that firm to promote its products. In this case
also in order to protect the technology of Hyundai, they have taken this strategic decision
and in 1997, it built a car factory in Turkey, giving the access to the key markets in the
middle east and Europe. Also, Hyundai opened branch each in India and China.
Advantages:
• Protection of technology
• Ability to engage in global strategic coordination
• Ability to realize location and experience economies
Disadvantages:
• High costs and risks
• Need for ore human and nonhuman resources, interaction and integration with local
employee.
Joint Ventures:
A joint venture entails establishing a firm that is jointly owned by two or more otherwise
independent firms. Fuji Xerox, for example, was set up as a joint venture between Xerox and
Fuji Photo. Establishing a joint venture with a foreign firm has long been a popular mode for
entering a new market. The most typical joint venture is a 50–50 venture, in which there are
two parties, each of which holding a 50 percent ownership stake and contributing a team of
managers to share operating control. This was the case with the Fuji–Xerox joint venture
until 2001; it is now a 25–75 venture, with Xerox holding 25 percent.
In this case also the firm established a plant for commercial vehicles through a 50-50joint
ventures with Guangzhou Motor group in China. In addition to gaining access to low-cost,
high quality labor in emerging markets, Hyundai hopes its presence in local showrooms will
improve consumer awareness and drive new sales.
Advantages:
• Access to local partners knowledge
• Shares development costs and risks
• Politically acceptable
• Typically, no ownership restrictions
Disadvantages:
• Lack of control over technology
• Inability to engage in global strategic coordination
• Inability to realize location and experience economies
1.d
The benefits are as follows:
  Increased employment and economic growth:
HMI began its operation in Chennai with a workforce of 1,400 operating in a one shift
production system in October 1998. By January 2001, the workforce-had increased to 3,000
workers on a three-shift system. It had become one of the fastest growing auto
manufacturers in India and shared the lead with Ford o f India in its market segments.
Hyundai plant employs a total of 9,500 employees. Given the lower labour costs in India
there is more reliance on labour-intensive methods and less use of automation. Given the
lower levels o f education and skill among the Indian workforce, compared with Korea or
Canada, there has been a much greater presence of Korean managers and technical advisers
in Chermai, particularly during the first year or so of operation. The lines of demarcation
between different segments of the workforce are also greater in India as the labour force is
more segmented and there is a more hierarchical structure in the Indian company. The
experience of the Hyundai M motor Company in India is analyzed about human resource
policies and practices, industrial relations and the internal labour market arrangements.
 Human resource development:
HMI uses a variety of HR policies and procedures to align the attitudes of its
employees with the corporate culture. Like other Korean chaebol, training programs
within HMI emphasize the paternalistic nature within the company and the
importance of developing a strong work ethic. New recruits are given two-day basic
orientation training before being allocated to a specific department. Most of the
initial work skills are taught on the production line.
 Development of backward areas
 Provision of finance and technology:
The company had imported technology for the cars from Hyundai Motor Company
-Korea. In 2009 - 10 there was a major revamp of the machineries in Paint Shop #1 to
upgrade to latest technological developments.
 Increased in exports
 Exchange rate stability
 Stimulation of Economic development
 Improved capital flow
 Creation of competitive market