Marathon Motor Engineering PLC (MME) was founded in 2008 and officially inaugurate in

February 2009 as importer and distributor of Hyundai passenger, commercial vehicles and
genuine parts in Ethiopia.

2009 was year of inception to MME  and it starts by importing parts for existing Hyundai cars,
provide services and support current owners of Hyundai to earn their confidence and to use their
reference. On the same time there was a challenge of shortage of hard currency. It was the
commencement of the global financial crisis that led to the economic recession and ultimately
created the social crisis that changes the lives of millions in number of countries. Major
institutions that have been successfully in business for years, even decades, had started losing
revenue, downsizing and many of them even closed down. Transactions slowed down,
businesses shrank, economies crumbled, and families struggled to survive.

2010 was year of earning. Despites its brief existence, MME started crating a positive image for
Hyundai and building a name as a strong competitor in the automotive market of the country.
Parallel to this there were challenges of lack of local market trust. The Ethiopian car market has
been dictated for decades solely by car brokers and also dominated by only one brand. Even if
the competition is tougher MME starts winning tenders to supply fleets for big government and
non-government projects.

MME’s commitment, competency and noteworthy success won the confidence of Hyundai. After
three years of venture with only letter of intent, Hyundai granted MME a distributorship of
agreement. Through diligent and outstanding performance in customer care in sells, parts and
service MME’s turnover has increased considerably. Our target ‘’Bigger, Better and Stronger’’:
Bigger investment, Better facilities and services, Stronger performance. It reinforced mobile
workshops, intensive care as well as roadside assistance; it laid the foundation of 3S facilities
Sells, Spare-parts and Services.

MME would like to reassure that the future is more brighter with Hyundai’s New Thinking New
Possibilities. Hyundai strongly believes that its distributors across the globe to be lifetime
partners. Similarly, MME would like to establish a lifetime partnership with its customers.

MME is also exclusive agents of SAME Tractor from Italy Since, 2016 and we import different
type of tractors Explorer3 115, Especial Explorer 95 and Laser tractor 130.
On 25th May, 2017 MME signed SKD assembly technical assistance agreement with Hyundai
motor company. The assembly plant will produce 5000  in one shift, and 10,000 at full capacity
assorted models of cars per year.
Our 3 fully equipped facilities are

 Saries, Nifas silk lafto sub city

 Megenagna Infront of diaspora round about , Yeka sub city
 Haile road Haile building
 Hawassa, SNNPRS

Hyundai Motor Company(HMC) is a Korean automaker which along with Kia, which was
acquired in 1998, comprises the Hyundai Kia Automotive Group, the world’s fourth largest
automaker as of 2009. Chung Ju-Yung founded the Hyundai Engineering and Construction
Company in 1947, HMC was later established in 1967. As of 2009, it is the world’s fastest
growing automaker. In 2008, Hyundai (without Kia) ranked as the eighth largest automaker.
Headquartered in Seoul, South Korea, Hyundai operates the world’s largest integrated
automobile manufacturing facility in Ulsan, which is capable of producing 1.6 million units
annually. The company employs about 75,000 persons around the world. HMC vehicles are sold
in 193 countries through some 6,000 dealerships and showrooms worldwide. In 2010, Hyundai
sold over 1.7 million vehicles worldwide [1] .

Distinctive competence

HMC’s distinctive competence is its ability to produce its models with its own technology. The
company’s first model, the Cortina, was released in cooperation with Ford Motor Company in
1968. When HMC wanted to develop their own car, they hired George Turnbull, the former
Managing Director of Austin Morris at British Leyland. He in turn hired five other top British
car engineers. In 1975, the Pony, the first Korean car, was released, with styling by Giorgio
Giugiaro of ItalDesign and powertrain technology provided by Japan’s Mitsubishi Motors.
However, after years of in-depth research and development, HMC began to produce models with
its own technology from 1988 beginning with the midsize Sonata. While other domestic motor
companies such as Kia at that time still relied on foreign companies like Ford or Mazda, HMC’s
independence of technology was and still is a strong distinctive competence.

Scope of operations

The scope of operation of HMC is significantly broad across numerous regions of the world. Its
first export was in 1976, with its first Korean car Pony, to Ecuador and soon to the Benelux
countries. During the following years, it exported small compact vehicles such as Excel to
Canada and the US and gained huge success. The US market is still increasing and growing
while the Europe market is still in the starting level although it has achieved some success with
the i-series. China and India are also attractive markets for HMC with the increase of demand on
cars with the development of the economy in those regions. Other emerging markets such as
Africa-Middle East & Latin America are achieving consistent sales volume growth through the
years. Currently, HMC has production plants in the US, China, India, Czech, Turkey, and Russia
which started performance from 2011 [2] . The global demand of Hyundai’s cars is increasing
every year (2010:70,143ƒ 2011:74,901) and to fulfill the demand, its production capacity of
overseas plants is increasing as well (2010:1,882ƒ 2011:2,070) [3] .

Resource deployment

Given that HMC will compete in the above regions with other companies, resource deployment
varies among geographical regions with certain product lines. The US market has shown increase
in demand for compact and middle size vehicles rather than big size SUVs. Therefore, HMC will
focus on meeting the demand on these cars. In the Europe market, despite the declining industry
demand, market shares have increased due to new models such as the i-series
(2007:1.8%ƒ 2009:2.4%) [4] which leads the company to establish direct sales subsidiaries to
increase sales momentum in key markets. The China and India are attractive markets due to their
growth in economy which will naturally increase the demand of cars. HMC will focus on optimal
dealer distribution to capture fast growing demand from small & medium cities in China.

Synergy
The automotive industry is a tough capital-intensive mature sector. Heavy fixed costs are
necessary for R&D, so getting a bigger scale is inevitable. In 2008 HMC (including Kia Motors
and all of its subsidiaries) rank fifth in the world’s automakers, ahead of Honda. HMC and Kia
Motors dominate Korean car-making capability with 75-80% local market share. As a group
level, they export to 200 countries, primarily from Korean facilities. Local capacity is 1.83m
units for HMC and 1.4m for Kia, with a normal 40/60 domestic/export split(as of 2010). HMC
includes Kia, Mobis, Hyundai Steel, Hysco, Glovis, and Hyundai Capital among others.

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After merging with Kia motors, HMC successfully launched its R&D center’s integration and
openly shared its manufacturing platforms and components. On behalf of its successful post
merger integration, HMC’s sales figure is leveled off after topping out in 2010. Kia, which is
placing its brand imagine as dynamic and innovative, is taking a different brand positioning from
HMC. So far, their brand positioning gets along quite well.

With the recovery of world demand in automotive sector, for the all of its player including HMC
group, it is time to survive as the major player, or to lose its share and fade away. It is positive
that both their export figures of finish car and outside Korea’s capacity are increasing. With the
start of Russia plant’s production, Hyundai steel and newly entered subsidiary, Hyundai
construction, it is anticipating that there is a much room to make a sales leap with the momentum
is keep encouraged.

SWOT Analysis

Strengths

Weaknesses

-Dominant local presence in Korea, a source of less competition and therefore higher margins
-Quality service across 1036 cities, In the J.D. Power CSI Study Hyundai scored the highest
across all 7 parameters

-Leading global automaker in “Chindia” in terms of their combined presence in India (19%
share) and China (6%)

-Have done an excellent job in improving technologies / quality of their line-up, and in recent
years the designs are also improving

-Lagging Japanese on hybrid technology, expecting to roll out their first hybrid dedicated model
in 2012, similar to Toyota’s Prius, although question marks over the profitability of such in
initial years

-Dominated by family ownership, so likely that MK Chung’s son is groomed to fill the Chairman
role. But MK Chung is notorious for his embezzlement in early 2007.

-Higher exposure in commodity price risk due to changes in prices of inputs such as steel,
aluminum, plastics and rubber, which go into the production of automobiles

Opportunities

Treat(Risk)

-Strong presence in Chindia, but use to be strong in Russia, but experienced a setback when govt
imposed more import taxes, the new domestic Russia plant likely helps build up their Russian
franchise

-In last few years, company led the growth in the passenger car sector. In north America market,
their sales figures is soaring by changing Canadian distribution chain from 65% “exclusive”
dealers to close to 100%(Moved Canadian market-share from 5% to 8.2% in last two years), and
also working to improve this in USA
– Currency is always a risk. Hyundai is exposed to the risks associated with fluctuations in
foreign exchange rates mainly of import of components & raw materials and export of vehicles.
(currently it is in their favour)

-The automotive industry is very capital intensive. Such investments require a certain scale of
operation to generate viable returns. Merge with the Hyundai construction could be a harmful
event, which prevent further capital injection in automotive industry.

Analysis on Automobile Industry and Hyundai Motor Company

Configuration and Coordination Analysis

Configuration

HMC is one of the most multinational companies in the world. It is currently operating in 193
countries which are widely spread throughout Asian Pacific, Europe, Middle East, Africa, North
America, and Central & South America [5] . There are nine types of operating departments:
headquarters, Regional headquarters, Regional Office, Distributor, Overseas Subsidiaries,
Overseas Sales Subsidiaries, R&D Center, Production Facilities, and CKD Assembly
Facilities [6] .

International cost differences

In Asia Pacific and Europe, most of the functions listed above exist due to the maturity of the
automobile industry in these regions. Therefore, in terms of transportation, the cost would be
relatively low since transport only takes place within the continent. However, in European
countries, wage rates are relatively high which could result in an international cost difference.

In Middle East, Africa, and Central & South America, most of the functions that exist are
distributors with one regional headquarter and one or two CDK assembly facilities in each
continent. This means that they are importing automobile parts, not the final products, and
assembling them locally. This could result in relatively low cost since importing parts is less
expensive than importing final goods and assembly facilities are smaller in scale than actual
plants. Moreover, these areas have low wage rates which also lead to low cost.
North America is a very special case because it does not have distributors unlike most parts of
the world. Instead, it has two regional offices, two R&D centers, two overseas subsidiaries, and
two overseas sales subsidiaries and one production facility. This shows that the countries in
North America are focusing on research and international business strategies and producing final
goods locally. Therefore, it could be implied that their reliance on headquarter in Seoul, Korea is
relatively low and they are focusing on their own operation. Such localization would result in
high cost and wage rates in North America are also high.

Business environment

Since HMC is operating in 193 countries, it faces different business environments throughout the
globe. However, there still are some main business environments that have large influence upon
HMC. These include strict regulation on trade and international business in some parts of the
world, such as China, instable economy and politics in Middle East and North Africa, and the
most current issue of Japan’s large tsunami [7] . HMC could face some challenges in such
environments. On the contrary, the automobile industry is still a very mature and stable one
throughout the world and there are opportunities in emerging markets such as China, India,
Russia, and Brazil [8] .

Cluster effects

HMC is widely spread out across globe and operating in most of the countries; however, level of
concentration in each country is not equivalent. Currently, the company is focusing on China,
India, and Russia which are growing markets and have high potential and the United States
which has shown steady growth due to recent recovery from the financial crisis [9] . On the
contrary, in Middle East, Africa, and Central & South America, the focus is very minimal and
the company is relying heavily on distributors instead of direct engagement.

Digitization of products and services

HMC has shown great attempts to follow the trend of digitization in its products. The company is
offering various options and showing cars running online. However, because of the nature of the
product category, such digitization in products was limited. Nevertheless, in services, HMC has
recently adapted use of social media which include facebook, twitter, and blogs to better
communicate with its consumers [10] .

Economies of Scale

Since the products and the parts are uniform and universal in every part of the world, there exists
high need for economies of scale. To achieve economies of scale in order to reduce cost by mass
production, HMC has formed an alliance, and realignment, with DaimlerChrysler which is a
German car corporation with large resources [11] .

Customer needs

There are many factors behind customers’ different needs in different countries. One of these
factors is the country’s economic status which could result in preference for cheap or premium
cars. Also, another factor is the development of infrastructure and public transportation which
could result in the frequency of using cars. Moreover, customers in different countries have
different needs and wants for designs, functions, benefits, and so on. Therefore, there is high
necessity for meeting different customer needs in different countries.

Coordination

By having regional headquarters in each continent, HMC shows efforts towards coordinating
global activities.

Operational obstacles

In terms of operation, HMC needs to deal with different environments in different parts of the
world. In order to overcome these operational obstacles, HMC has received advice from firms
that have specialized expertise in each field. For example, to better deal with various obstacles in
logistics, HMC receives advice from Glovis, which is a logistics firm part of HMC [12] .

Cultural differences
Even though the products of HMC are quite uniformed across the globe, there still exist needs to
adapt to cultural differences in various countries. These include different usage of automobiles,
different frequencies of using cars, different preferences for car types, and so on. Moreover, not
only products, but also services and marketing methods need to reflect such cultural aspects.
HMC has to take into consideration of what kind of services customers value and what
marketing method would be effective in each country. As a result, there is high need for
coordination of different cultures throughout the countries in which HMC is operation.

Generation and transfer of knowledge in global subsidiary networks

The charts (see Appendix) show the organizational structure of HMC. The darker colored
divisions represent the ones that deal with international business of the company. Especially for
China, there exists Chinese Business Division specifically designed for this country only.
Moreover, as mentioned previously, there is at least one regional headquarter in each continent
that directly reports to headquarter in Seoul, South Korea or provides information to other
countries. Therefore, since there are divisions which provide connections between international
divisions and the home country, or even among international divisions themselves, it can be
assumed that there is high generation and transfer of knowledge in global subsidiaries.

High Foreign Investment with Extensive Coordination among Subsidiaries

Through the analysis of configuration and coordination of HMC by each determining factor, it
can be concluded that both configuration and coordination of activities are high. Thus, on the
matrix, HMC is located in the upper-right side which indicates high foreign investment with
extensive coordination among subsidiaries.

Global Integration-Local Responsiveness Analysis

When choosing the main international business strategy, there are countervailing forces: global
integration and local responsiveness. Company must first think where it is positioned, and then
analyze further to select the right strategy.

Global Integration
Globalization of markets

People buy cars mostly for means of transportation and they prefer those having high quality.
Therefore to some extent, HMC can minimize costs and maximize benefits by producing similar
products. For instance, compact cars are in fad, so HMC is also focusing on producing these
cars. [13] 

Globalization of productions

For an automobile company economics of scales is very crucial. Through having economics of
scales, company can reduce its production costs. HMC also has some pressures for achieving
economics of scales and this pressure goes stronger when the company wants to expand its
business globally.

Local Responsiveness

Customer Divergence

Differences in culture, national attitudes, and economic and usage conditions are also important
factors that HMC must consider when it penetrates foreign market. For example, people in
America prefer SUVs since they emphasize the capacity a car has. In India, people prefer
compact cars which are well matched to their current economic status. [14] Thus HMC has to
focus on SUVs when it wants to improve its sales in American market but for Indian market,
HMC should put emphasis on selling compact cars.

Host Government Policies

Different countries have different regulations for an automobile industry. Some has favorable
situations for foreign companies but others do not. For example Chinese government is currently
alleviating its regulations to encourage automobile production in China. [15] Therefore HMC has
made Chinese Business Division hoping cost reduction and sales increase [16] .

Transnational Strategy
As we have discussed above, HMC is located in the upper-right side. It seeks the benefits of
global scale efficiencies and the benefits of local responsiveness. Thus HMC is currently using
Transnational Strategy.

Emerging Market_Industry analysis

Recently, the automobile industry in emerging markets, such as China, India, Russia, and Brazil
has shown a high growth rate. Especially in China and India, the revenue in these emerging
markets have reached its maximum at the end of 2010. Moreover, although not as dramatic as in
case of China and India, Russia is also steadily increasing its potential for an attractive
automobile market as more policies and marketing strategies are adapted. Furthermore, in 2010,
Brazil has established itself as the fourth largest car industry after China, the US, and Japan.
Consequently, many automobile companies show a trend of targeting these new emerging
markets

Emerging Market_Company specified analysis

Diversifying the markets to emerging countries

According to the HMC’s sales performance over the world, sales from emerging markets are
highly roared during recent years. As well as the population of emerging market is large enough
to support future sales potential, the economic growth rate is getting high in the countries like
China, India, and other countries in East Asia. One of the strength of HMC is that it has highly
diversified markets compared with other peer company like Toyota, Honda and so on [17] .
These diversified markets are one of the main reasons that HMC can be better off during the
global economic crisis.

Chindia Market

Market attractiveness

Chindia, which stands for the combination of China and India, is world most attractive market in
any industry present days. HMC has already established its production plant both in China and
India, while its demand for HMC car increases as well.
Demand sustainability from economic growth

As China and India both have highly growing economy, the demand for car is positively
correlated with economy. According to the company survey, the demand growth rate expected in
the Chidia market is above 10% for several years from now [18] . The Potential in Chindia
market must be a major part of HMC’s future sales performance.

Dealer distribution for small and medium cities.

HMC has established its dealers in small and medium cities to capture fast growing demand from
these cities. Automobile industry demand by region shows that the growth rate of demand in
small-medium cities is dominating that of large cities.

Middle East, Africa, and Latin America Market

Market attractiveness

As growing numbers of population can afford to purchase their own car resulting from
developing economy, Middle East, Africa and Latin America are now very prospective market
for any industry. To capture these growing consumption, HMC have invested in emerging
market in developing countries by diversifying the market structure.

Growing Sales volume

As HMC expected from these emerging market at the initiation of their investment, the sales
have been increasing steadily for several periods. The amount of sales from these markets is not
as much as those of from US or Europe market, but the growth rate is much greater than matured
markets.

Types of car_Industry analysis

Across the globe, especially in South Korea, India, and the United States, sales of compact cars
have shown significant increase due to high oil prices. Firstly, In the 2011 Detroit Show held by
the American Big 3 (GM, Ford, Buick), the new models that were introduced were mostly
compact and small cars. This focus on compact cars is necessary not only to target the American
market, but also and more importantly, the markets in developing countries. Secondly, the high
growth of the Indian automobile market, which is one of the most attractive markets as of now,
was mostly due to high sales of compact cars. Moreover, this trend is also apparent in the Korean
market as the sales of compact cars and semi-middle-size cars have shown an outstanding
growth.

Types of car_Company specified analysis

Variety of cars from Hyundai Motor

HMC has made a lot of car models ranging from compact-sized car to luxurious sedan, or SUV.
The interesting this is that, the car model reflects the consumers’ preferences or affordability to a
car. HMC currently has about 10 representative car models globally; Accent, Elantra, Sonata,
Azera, Genesis, Equus, Genesis Coupe, i-series, Tucson, Santa-Fe, etc. To capture various tastes
of global demands, HMC has been successfully developed its customized model. As increasing
number of new models are launched or will be launched in a year [19] , HMC has been
recognized to more consumers over the world.

Different demand structures among the markets

Interestingly, one big successful model in certain market does not guarantee consecutive success
in another market. For example, Elantra and Sonata are dominating models in American markets
among HMC’s car, which means Americans prefers sedan-type cars. In European market,
however, the total sales of these sedan models is almost less than 5% of sales of US market. In
contrast, a lot of European consumers have chosen i-series which is hatchback model. By
developing more cars those are more popular than other markets, Hyundai Motor can be
recognized well compared with past when they only displayed only few models. With these
different market preferences, HMC launched new sedan model in U.S. markets, while they
launched new i-series model in European market.

Global Manufacturing System_Industry analysis

As automobile industry expands globally, each company is eager to build its own plant in the
host country. Having globalized plant brings several advantages to the automobile company: 1)
low or even no tariff, 2) glocalization, 3) low influence of exchange rate, 4) cost effectiveness, 5)
high quality. Thus many companies are building their plant overseas. For example, Volkswagen
is planning to build a plant in Chattanooga, Tennessee to improve its sales in America according
to Volkswagen’s ‘Strategy 2018’ and Toyota is going to build new plants in China and Brazil to
produce compact cars.

Global Manufacturing System _Company specified analysis

International Manufacturing Plants

HMC grows continuously with sales as well as demand, which is resulted from the expansion of
overseas plant. Growing portion of HMC’s total production is produced from the plant in
overseas countries, not in domestic. By construct international manufacturing system around the
world, it enables company to produce efficiently along with demand from nearby markets. As the
global demands trends are various from market to market, HMC can move flexibly by producing
from local manufacturing system.

Increasing number of overseas plants

HMC now has 5 overseas manufacturing plants and the one in Russia is going to start producing
cars from 2011. Compared with early 2000s, now HMC has enough capacity to meet its global
demand and along with increasing demand, HMC keep investing in expanding its capacity
around the world. Not only in U.S. market and Europe market, but the emerging market like
Chindia or Middle-East can be covered by plants in China, India and Turkey.

Recommendations

As recommendations for future international strategies of HMC, our team focused on analyzing
the automobile industry trend and countries that have high potential of success.

Future automobile industry Trend

The automobile companies have gone through high level of globalization due to globalization of
the industry. However, according to Korean Automobile Industry Research Center, the near
future of the industry will show different features. They predicted that in 2020, the globalization
of automobile companies will reach its highest point and there will be no further need for
globalizing the companies. Instead, the main focus will be shifted to developing environment-
friendly cars, such as hybrid cars, and smart cars that can provide more improved functions