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1207423

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350754123_Hyundai_Motor's_global_market_strategy/links/606feabb4585150fe993c2c6/Hyundai-
Motors-global-market-strategy.pdf

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376203954_Charging_Innovation_A_global_business_analysis_of_Hyundai's_electric_future/links/
656e7333b832b6599df2b67c/Charging-Innovation-A-global-business-analysis-of-Hyundais-electric-
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Structural FEA in the Automotive Industry - Digital Engineering 24/7 (digitalengineering247.com)

1
 Paper Presentation on

HYUNDAI

Submitted to

Global Business Management -MS

Executive Master of Business Administration

Submitted by

B. Karthikeyan – Ms23w017
Lalith- Ms23w018

Indian Institute of Technology Madras

Chennai – 600 113.

2
 Table of Contents
Abstract

1.Introduction about the Automotive Industry

2. Structural Analysis of the Automotive Industry
3. Value Chain Analysis
4. About Hyundai and Competitor Analysis

5. Global strategies adopted by the company

6. Growth Drivers
7. Performance Benchmarking
8. Challenges and opportunities Faced

9. Future Industry and Business Analysis

10. Recommended Glide pathe for the Company

3
Abstract

4
 1 - Introduction about Automotive Industry

Automotive Industry comprises a wide range of companies and Organizations involved in the
Design, Development, Manufacturing, Marketing, Selling, Repairing and Modification of
Motor vehicles. It is on of the largest industries by revenue (from 16% to 40%).

The automotive industry begun in the 1860s with hundreds of pioneering the horseless
carriage. Early car manufacturing involved the manual assembly by human worker. The
process involved from engineers working on a stationary car, to a conveyor belt system where
the car passed through multiple stations more specialized engineers. Starting in then1960s,
robotic equipment was introduced to the process, and today most cars are produced largely
with automated machinery.

For Many decades, the United States led the world in total automobile production, with U.S,
Big Three General Motors Ford Motor Company and Chrysler being the World’s largest auto
manufacturers for a time, And GM and Ford remaining the two largest until mid-2000. In
1929, before the great Depression, 90% automobiles were produced by the U.S. In 1980, the
U.S was overtaken by Japan and the became a world leader again in 1994. Japan narrowly
passed the U.S. in production the years 2006 and 2007, and also in China, which in 2009 took
the top spot with 13.8 million units. China reached its top record of more than 29million
produced vehicles, which was so far largest margin from that of the U.S.

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2 - Structural Analysis of Automotive Industry
Structural analysis in the automotive industry encompasses various aspects. It includes
Vehicle cross simulation, Market structure and Innovation, Vehicle structural analysis
Challenges and Trends. Structural analysis using FEA allows engineers to evaluate the
strength, stiffness, and durability of vehicle components and assemblies. It involves
simulating the response of various structures, such as chassis, body frames, suspension
systems, and safety features, to different loading conditions.

2.1 – Vehicle Crash Simulation.

One of the most critical simulations in automotive design vehicle crash analysis. The
requirement for a crash simulation is regulated through specific accident scenarios and safety
targets. The objective of vehicle crash design is to allow energy absorption to take place
throughout the vehicle. Instead of designing a civilian armoured vehicle, where all is swept
before it, the vehicle is designed to progressively crumple at even modest impact levels.

Every component in the chain of events is designed to crumple, crush or in some way absorb
energy. Modeling requires sufficient mesh fidelity and accurate material strain rate behaviour
to provide realistic responses, as components evolve in the overall design.

Finite element analysis (FEA) of vehicle crash uses explicit analysis (described in “Impact,
Drop and Crash Testing and Analysis,” Desktop Engineering, August 2013). The size and
complexity of crash models have now reached the stage where sophisticated pre- and post-
processing is required. For example, an engineer must identify and visualize response of the
hundreds of components in the vehicle assembly during impact—using transparency, section
cutting, dissection, etc. Physical test result videos are overlaid on simulation animation for
correlation. Graphical plots of force, displacement or acceleration against time are spawned
interactively from key points to compare against test data

Crash test dummy simulation is now a mature area within vehicle crash analysis. Specific
models include gender, age and percentile range of height, weight, etc., and provide
standardization and repeatability. Dummy-based prediction is a simplification of real-world
response of occupants in a crash, of course, and there is research to move beyond this. But it’s
a difficult and challenging area from many perspectives.

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2.2 – Market Structure and Innovation
The automotive industry is well-suited to investigate the interaction between innovation and
market structure in a strategic context. Demand estimates—see for example Berry et al.
[1995] and Goldberg [1995]—reveal that markups over marginal costs tend to be large,
consistent with the view that fixed costs are important in this industry. Innovation is an
important source of product differentiation as firms’ competitive positions are improved
through higher product quality, greater reliability and the introduction of new product
features. In addition, the industry is the poster child for the importance of process innovations
that continually boost productivity (Van 4 Beiderbecke [2003]). Developing and producing
automobiles is a highly research-intensive activity: in 2006, more than 13% of all R&D in the
OECD was spent in ISIC industry 34 ‘Motor Vehicles’, more than in any other industry.
Statistics in Table 1 highlight the importance of automotive R&D in the five most research-
intensive economies. Except for the U.S. where it is fourth, the industry is first or second in
terms of R&D spending in all countries. The top 13 firms in the auto industry spent more than
55 billion dollars on R&D in 2005. The industry is also a heavyweight on the output side of
the innovation process. In the last 25 years, those same 13 firms were awarded more than
50,000 patents by the U.S. patent office.2 The industry is concentrated worldwide, making it
likely that firms will take actions of competitors into account when deciding on their own
innovative activities. In 2004, more than 95% of all vehicles were sold by the 13 largest
firms, which were active in all major regions of the world.3 The global automobile industry
has seen significant consolidation over the last few decades. Many of the industry giants have
found it beneficial to join hands with some of their former rivals. The mergers between
Daimler-Benz and Chrysler and between Hyundai and Kia, the association between Renault
and Nissan and the takeover of Mazda, Jaguar and Volvo by Ford are but a few examples of
this consolidation.4 On the one hand, this consolidation is the result of increased competition
and high research intensity, which has made it harder for smaller firms to survive on their
own. On the other hand, consolidation has an impact on the intensity of competition as well.
With fewer firms around, standard economic models would predict less competition.
However, the emerging groups are more evenly matched in terms of research intensity and
they are more likely to compete head-on over their entire product range.
At the aggregate level, the equilibrium relationship between market structure and aggregate
innovation suggests that more competition is associated with less innovation. The raw data, in
the top-left panel of Figure 1, shows a negative relationship between the number of active
firms and the total number of patents granted in the industry. Patenting was a lot more intense
in the last years of the sample period, with 13 active firms, than in the earlier years, with 23
active firms. The negative relationship is only slightly less pronounced if patents divided by
revenue is used a measure of innovation, as shown in the bottom-left panel.5 It is well known
however, that the rate of patenting has increased over time in all industries, especially after
1984 (Hall [2004]). If we purge the innovation variable on the vertical axis from a flexible
time trend with a cubic series and plot the residual instead, the pattern is not as clear-cut.
Patenting now appears to be stronger in early years and the relationship between the number
of firms and the total number of patents becomes U-shaped. Using patents by revenue as
innovation measure, the relationship remains downward-sloping—less innovation when more
firms are active— but now at a decreasing rate

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3.3 – Vehicle Structural Analysis

The vehicle body, often referred to as the “skeleton,” is a highly complex multi-material
structure. As the automotive industry focuses on lightweighting, the vehicle body becomes
even more intricate. It must operate robustly for decades. Structural engineers optimize the
body structure for durability, stiffness, and weight reduction. Modern vehicles use a mix of
materials (steel, aluminium, composites) to achieve these goals.

Vehicles endure years of use, so their structures must remain robust. Durability testing
involves cyclic loading, corrosion resistance, and exposure to extreme conditions. Fatigue
analysis ensures components won’t fail prematurely.

3.4 – Challenges and Trends

The automotive industry faces challenges related to complexity, cost pressure,

and regulatory requirements. Platform sharing, modular systems, and aggressive project
timescales are common trends. Innovations and adaptations will continue to shape the
industry beyond 2020, with a focus on sustainability and efficiency. Overall, the global
automotive industry is in better shape than it was five years ago, especially in the US, where
profits and sales have recovered following the recent economic crisis, and in China, where
growth remains strong. This progress will likely continue. By 2020, global profits for
automotive OEMs are expected to rise by almost 50 percent. The new profits will come
mainly from growth in emerging markets and, to a lesser extent, the US. Europe, Japan, and
South Korea will be stagnant in terms of profit growth.

There are four key challenges that OEMs need to address to get a piece of future profitability.
The analysis of this report projects to 2020, but these challenges will shape the industry until
at least 2025.

Complexity and cost pressure. There will be more platform sharing and more modular
systems. At the same time, regulatory pressures will tighten, and prices in established markets
are likely to be flat.

Diverging markets. OEMs need to adapt to changing regional and segment patterns of
supply and demand with respect to their production and supply base foot- prints, supply
chains, and product portfolios; and the emerging Chinese aftersales market offers new growth
opportunities.

Digital demands. Consumers want more connectivity, are focused on active safety and ease
of use, and are increasingly using digital sources in making their purchase decisions.

Shifting industry landscape. Suppliers will add more value in alternative powertrain
technologies and in innovative solutions for active safety and infotainment; Europe needs to
restructure and adjust its capacity to better match demand; and competition is emerging from
China.

8
To capture future growth and find profit from these challenges – and to mitigate their risks –
OEMs cannot simply turn to their traditional toolbox. They need to review and adjust their
strategic priorities, deploy the appropriate investments and resources, and develop new skills
to execute these strategic objectives.

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 3 - Value chain Analysis

The value chain is the activities that take from any product's conception until it is delivered to
the final destination, the customer. It is basically the creation of a product throughout all its
phases. It encompasses all the steps involved in the production and it is primarily to increase
the efficiency of a company by delivering maximum value for the lowest cost possible,
without compromising the quality of the product. When it comes to the automotive industry
value chain, it works just like that. Taking all the raw materials use for production and find
ways to get to the end product and eventually to the customers through the lowest possible
cost. It is important for companies to analyse their value chain and find competitive
opportunities.

3.1 - Primary Activities in Automotive Industry Value

Chain Analysis

The primary activities of the automotive industry chain are many and can differ from other
companies but they encompass:

Inbound Logistics:

Consisting in receiving raw materials from suppliers and distribute them through their
production line to start production. Here is essential to have a good partnership with the
supplier to get the lowest cost materials.

Operations:

This step involves taking those raw materials previously delivered and transform them into
the product the company is designing. Many manufacturers have their operations in different
points of the globe for cheaper shipping into several regions and faster delivery.

Outbound Logistics:

The outbound logistics in the automotive industry value chain consists in collecting,
handling, storing and distributing the product to its destination. This process is valuable for
the overall management of the company. It must focus in lowering costs and time of
production and at the same time remain reliable to the customers and the company’s values.
As this can be a great way of adding value, it is important that structured transportation and
delivery are at the highest standards to conform with the customers’ demands.

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Marketing and Sales:

Marketing and sales are a vital part of the value chain as it is when the product get the
customers’ attention. That can happen through advertising or promotion, management of the
relationship with customers and also distribution and management of sales. The goal here is
to target the right consumer as well as make them aware of the product and drive profits up.

Service:

In the last activity in the automotive industry value chain, the company offers customer
support after selling the product and a continuous platform for the maintenance of the
product. This activity also provides customer retention and improves brand image. A
carefully managed customer service is the face of a company toward the public and its
consumers.

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3.2- Support Activities in Automotive Industry Value
Chain Analysis

Support Activities in Automotive Industry Value Chain consists of activities that allow the
primary occupations to be performed.

Infrastructure:

It is the management of the company's culture and organizational structure. It is important to

know who is responsible for each department and to ensure the financial side of the company
is well taken care of to create higher profits.

Human Resource Management:

It is a valuable section of the company as enthusiastic and well-managed people are vital for
the success of the brand. This part encompasses things such as control of performance,
recruitment and training of human capital.

Technology Development:

Nowadays, technology is everything in the automotive industry including the first and the last
step of the automotive industry value chain. Technology development aims to reach vehicle
design, the safety of passengers and control over emissions that is a growing concern in the
industry and in the world.

Procurement:

The management of procurement aims to reduce costs of raw materials from suppliers and it
is important to keep costs low throughout the process of the value chain of the company. It
also improves reliability for the customer, as they already know what quality to expect when
buying a product from the company, as well as efficiency of the product.

In the automotive industry value chain are, among others, that innovation is at the core of
everything, and it is something that should be focused on if the goal is to surpass other
competitors and improve the quality of the products. Partner up with suppliers to achieve the
best raw material at the lowest cost and still maintain the highest quality of the end product
that the consumer is used to. Word of mouth from satisfied customers might be the best
marketing model to follow but knowing what the clients are looking for and promote it
accordingly, as well as maintaining great customer service even after selling the product
makes the customers come back. The diversification of the product line across different
markets and the logistics of parts makes a huge impact when it comes to saving costs and
getting the product faster into a region or market.

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4

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4 - About Hyundai & its Evolution

In 1947, the Hyundai Engineering and Construction Company was founded. The name
‘Hyundai’ means ‘modern times’, deriving from the Korean word ‘Hyun’ which means
‘modern’ or ‘present’ and ‘Dai’ which refers to ‘era’ or ‘generation’. Following the liberation
of South Korea in 1945, the company was awarded major government construction contracts
and became responsible for building much of the country’s transportation infrastructure as the
nation rapidly industrialised. It built the Kyeong-bu expressway, among other important
structures.

4.1 1960s-1970s: the era of mass production

In 1967, Hyundai Motor Company was founded. The following year, the construction of the
company’s Ulsan assembly plant was completed. Today, it is the world’s largest integrated
automobile manufacturing facility, with an annual production capacity of 1.6 million units.
With a global vessel fleet operated by Hyundai Gloves and its own steel-making affiliate,
Hyundai Motor Group controls the whole value chain. In 1968, the Cortina was the very first
vehicle successfully assembled by Hyundai at its Ulsan plant, in cooperation with Ford Motor
Company. Hyundai set a record for the quickest time between ground-breaking and full-scale
operations for any Ford assembly plant around the world – just under six months.

Following the Cortina’s initial success and eventual dominance of the European market,
Hyundai decided to develop its own car. The company hired George Turnbull, the former
Managing Director of Austin Morris at British Leyland in February 1974. He immediately
hired six European chief engineers to assist him, including a body designer, two chassis
designers, two production engineers and a test engineer. Together they created the Pony,
which was presented at the Turin Motor Show in October 1974, before it was later introduced
to the market in December 1975. The car was nicknamed ‘kukmincha’, which means ‘car for
the people’. Featuring styling by Giorgetti Giugiaro, this compact rear-wheel drive
automobile was the first mass-produced South Korean car. It became Hyundai’s flagship
vehicle for many years.

Hyundai started exporting the Pony to Chile, Argentina, Colombia and Egypt in 1976.
European exports to Belgium and the Netherlands began in 1978, with Greece added shortly
afterwards.

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4.2 1980s: International expansion

The 1980s was a time of rapid international expansion for Hyundai as the company became a
fast follower while competing with more established automakers. In 1982, the company
entered the British market for the first time. Sales of the Pony began in the United Kingdom
in February of that year, making it the first Korean car to be sold there.

In 1984, Hyundai began exporting the Pony to Canada, where sales greatly exceeded
expectations. At one point, it was the top-selling car on the Canadian market. The following
year, the first-generation Hyundai Sonata was introduced, and the company’s one-millionth
car was built.

By 1986, the Pony Excel became the first Hyundai model sold in the United States. It was the
first front-wheel drive car produced by the company and, like the original Pony, designed by
Giorgetto Giugiaro. It sold 168,000 units in its first year of sales in the US, setting an all-time
record that still stands to this day. Fortune magazine nominated the car as ‘Best Product #10’,
thanks in part to its affordability.

4.3 - 1990s: Quality management

In the spring of 1990, aggregate production of Hyundai automobiles reached the four million
marks. Then, in 1991, the company reached another milestone, as it developed its first
proprietary gasoline engine, the four-cylinder Alpha, as well as its own transmission. This
paved the way for technological independence. The Alpha engine debuted in the 1992
Hyundai Scope. During this decade, Hyundai continued to evolve and consolidate its position
as a leading international manufacturer of cars. Hyundai introduced many popular models in
this time period, including the Accent, Dynasty and Tiburon.

In 1994, the company began operating a newly-established R&D centre in Germany. This is
responsible for monitoring technology developments in Europe, as well as designing and
engineering new cars for the European market. In September 1997, Hyundai opened its first
manufacturing plant on the continent in Izmit, Turkey. It is Hyundai’s longest-running
overseas production facility. The 1990s saw Hyundai experiment with a number of electric
and hybrid vehicles. The company’s first pure electric car was the Sonata Electric Vehicle
prototype in 1991. After conducting its first experiments with hybrid propulsion systems in
1994, the hybrid-electric FGV-1 was unveiled at the 1995 Seoul Motor Show. This car
featured full-time electric drive technology. Flexible-fuel vehicles were being developed in

15
1998, while the company’s fuel cell electric vehicle activities were also started in the late
1990s.In 1999, Chairman Mong-Koo Chung was inaugurated as the Hyundai Motor Group
Chairman, and decided to put an emphasis on product quality which paved the way for the
company to position itself as a serious global contender.

1.4 - 2000s: Bringing higher value products

By the turn of the millennium, Hyundai had begun to overhaul its image in order to establish
itself as a world-class brand. Its parent company, Hyundai Motor Group invested heavily in
the quality, design, manufacturing and long-term research of its vehicles, particularly in
Europe. The Hyundai European Design Center was established in 2001, and this was
followed in 2003 with the Hyundai Motor Europe Technical Centre and the Namyang Design
Centre.

Hyundai launched its first SUV, the Santa Fe, in 2000. Named after the city in New Mexico,
it proved a hit with American buyers and quickly became the company’s best-selling car.
This was followed in 2004 with the launch of another SUV, the Tucson. In 2007, the i30 was
introduced. Designed, developed and manufactured in Europe, it is Hyundai Motor’s DNA
car on the continent. The following year, Hyundai Motor Manufacturing Czech (HMMC) was
established. HMMC is Europe’s most modern production plant, with 500 high-tech robots
producing 1,500 Hyundai cars each day.

The hybrid electric Sonata, which featured lithium polymer battery technology, made its
debut at the 2008 Los Angeles International Auto Show, before going on sale in the US in
2011.

1.5 - 2010s and beyond: pioneers in future mobility

Throughout the 2010s, Hyundai has increasingly turned its attention towards environmentally
friendly vehicles and technology. Going forward, the company aims to lead the pollution-free
mobility era by improving fuel efficiency and seeking new energy possibilities. At the
beginning of the decade, Hyundai launched Blue On, its first production electric car, in Seoul
in September 2010. Sold in South Korea, Blue On was based on the Hyundai i10 and was
equipped with a 16.4 kWh lithium polymer battery pack with a six-hour charging time.

In 2013 Hyundai celebrated a key milestone in eco-mobility, as the ix35 Fuel Cell became the
first commercially mass-produced hydrogen fuel cell vehicle in the world. The vehicle’s

16
quick refuelling time and long driving range, combined with its environmental conservation,
provide greater benefits for all.

The same year, the company also expanded into motor racing, with the launch of the
Hyundai Motorsport World Rally Championship team. In 2015, Hyundai announced the
high-performance Hyundai N sub-brand, which has resulted in the subsequent
development of award-winning production cars including the i30 N and i30 Fastback N
in 2017 and 2018.

In 2016, Hyundai introduced the IONIQ, the world’s first car to offer three electrified
powertrains – hybrid, plug-in hybrid and full electric. Its name derives from the word’s ‘ion’
and ‘unique’. This was followed in 2018 by the launch of the Kona Electric, Europe’s first
all-electric subcompact SUV, and NEXO, Hyundai’s second-generation fuel cell vehicle.

So far, the 2010s have seen Hyundai establish itself as a leader in the automotive industry
when it comes to future mobility. This can be seen in the company’s new ‘Progress’
communication campaign, which demonstrates how Hyundai’s 50-year heritage formed the
progressive spirit that allows it to continue to innovate today and meet the challenges of the
future, under the tagline “Next Awaits”.

In January 2019, Hyundai Motor Group’s Executive Vice Chairman Eui sun Chung was
appointed co-chair of the Hydrogen Council, a CEO-led partnership of companies from
various industry and energy sectors focused on accelerating the development and deployment
of hydrogen technologies around the globe. He has since called for increased international
cooperation to help tackle global climate challenges. Looking towards the future, Hyundai
Motor Group seeks to leverage its fuel cell technologies through ‘FCEV Vision 2030’. This
includes a plan to drastically boost its annual fuel cell systems production capacity to 700,000
units by 2030 and explore new business opportunities to supply them to other transportation,
power generation and storage system sectors.

17
5 - Global Strategies Adopted by Hyundai
Chung Ju-yung

From his founding of the Hyundai company in 1947 until he transferred

leadership to his son in 1999, Chung Ju-yung established and ran the Hyundai
Motor Group. In addition to founding many of the satellite companies under
the Hyundai umbrella, Chung Ju-yung developed the PONY, the first Korean
car that led to the launch of Hyundai Motor Co. He was known for being
uncommonly philanthropic while also paving the way for the Korean business
market as a whole. He died in 2001. Many of his brothers and children head
Hyundai-owned subsidiaries.

Chung Mong-koo

Since 1999, Chung Mong-koo has served a substantial role in turning Hyundai
into the global success it is today. As Chairman and CEO of Hyundai Kia
Automotive Group, Chung Mong-koo has been instrumental in the rapid growth
and modernization of Hyundai Motors. Although being nearly 80 years old,
Chung Mong-koo is known for being heavily involved in executive meetings
and spending numerous hours in his office or making rounds.

Chung Eui-sun

While not CEO of Hyundai Motor Co. yet, Chung Eui-sun is the only son of
aging Chung Mong-koo and is regarded as the heir apparent. Currently
serving as a Vice Chairman for the Hyundai Motor Company, Chung Eui-sun
used to be President of the Kia Motor Corp from 2005-2009. He’s relatively
young considering his inevitable promotion, having more scholarly education
than substantial business experience.

https://www.hyundai.news/eu/articles/press-releases/euisun-chung-
inaugurated-as-chairman-of-hyundai-motor-group.html

https://www.hyundai.com/worldwide/en/newsroom/detail/0000000496

The induction ceremony was attended by Hyundai Motor Group Chairman Euisun Chung, who
participated in Honorary Chairman Mong-Koo Chung’s place. Chairman Chung received the
induction trophy and made a speech on behalf of his father.

“Honorary Chairman Chung grew Hyundai Motor group into the world’s fifth largest automaker
from its humble beginning. If my father were here, he would say he owes this honor to our
employees, dealers and fantastic customers,” said Euisun Chung. “My father continued the legacy
of my grandfather Ju-yung Chung, who founded Hyundai. He expanded the Group’s presence

18
globally and continued to pursue excellence in quality. He made the Group something that
employees and customers can all be proud of.”

Chairman Chung also did not forget to mention his vision for the future.

“As Hyundai embraces the challenges and the opportunities of the 21st century, we will continue
to strive for excellence, challenge convention and lead the evolution of smart mobility. We will
realize progress for humanity,” said the Chairman.

According to the Automotive Hall of Fame, Hyundai Motor Group’s success owes much to
Honorary Chairman Chung, and his legacy is on par with other legends of the industry who have
launched and guided automotive firms to global growth and renown. Through his leadership,
Hyundai Motor Group became the world’s fifth-largest automotive group.

The Automotive Hall of Fame also took note of Chung’s many accomplishments, including:
 · Acquiring Kia Motors Corporation into Hyundai Motor Group
 · Spearheading the Group’s growth with new plants in key regions, including United
States, Europe, China, India, Brazil and Russia
 · Creating a highly efficient, vertically integrated business structure that produces
everything from steel to vehicles

The Automotive Hall of Fame was established in 1939 to honor notable business leaders who
have contributed significantly to the advancement of the automotive industry and mobility.
Chung becomes the first Korean to receive this honor, which was first announced in February
2020. The Automotive Hall of Fame previously honored Chung with its Distinguished Service
Citation Award in 2001.

Due to COVID-19 restrictions, this year’s Automotive Hall of Fame Induction Ceremony
celebrated the inductees for the years 2020 and 2021. Inductees announced in 2020 include
Thomas Gallagher, former CEO of Genuine Parts Company; Jay Leno, automotive heritage
leadership through his Jay Leno’s Garage series on CNBC; and Helene Rother, one of the first
women in automotive interior design for General Motors, Nash Motors. The class of 2020 also
included Mobility Innovator Awardee Harold Goddijn, CEO and co-founder of TomTom
technologies.

Inductees announced in 2021 include C.R. Patterson and Frederick Patterson, leaders of the
U.S.’s first and only African American owned auto manufacturer; and Charlie Wiggins, a barrier-
breaking motorsports racer and engineer.

During the Induction ceremony, a tribute video was played to show the Honorary Chairman’s
accomplishments and contributions to the automotive industry. In the meantime, NEXO and
IONIQ 5 were on display to demonstrate Chung’s contribution to spearheading the industry’s
efforts to advance hydrogen fuel cell technology and electrification.

19
The day before the induction ceremony, an engraving of Chairman Chung’s signature was placed
on permanent display at the Automotive Hall of Fame along with the signatures of the other
inductees.

Mong-Koo Chung: Passion and relentless drive for quality

Mong-Koo Chung, Honorary Chairman of Hyundai Motor Group, championed the development
of the Korean economy and the automotive industry while also growing Hyundai Motor Group
into one of the top five automotive groups globally – achieved in an historically short period of
time for the sector.

Chung led the acquisition of Kia Corporation and turned it into a profitable company within the
first year of acquisition. With his passion for quality and a determination to foster its own R&D
capabilities, he created Korea’s first and only automotive group while simultaneously growing
the auto parts and materials industries.

Honorary Chairman Chung often emphasized that the best quality is a virtue that cannot be
compromised. Through his continued focus on quality, Hyundai and Kia vehicles now receive
favorable reviews from global quality assessment agencies around the globe. The 10-year,
100,000-mile powertrain warranty implemented in the U.S. market in 1998, one of Chung’s
initiatives, laid the foundation for Hyundai to grow into a global powerhouse.

Despite concerns over large-scale investment, Chung spearheaded global expansion of the
Group’s production capabilities and R&D network. Under his leadership, Group’s production
facilities expanded its presence across the world including the U.S., Europe, China, Russia, Brazil
and Mexico, creating a system for rapid growth and endurance. A global network of production
and R&D gave Hyundai Motor Group a competitive edge that allowed it to survive through
numerous global economic crises.

He also helped to develop Korea’s materials industry by building an integrated steel mill that
maximized synergy across the Group, and created the world's first resource-circulating business
structure, presenting a new ideal for sustainable management.

Honorary Chairman Chung recognized the potential in hydrogen energy and encouraged the
development of hydrogen fuel cell electric vehicles ahead of other manufacturers, allowing the
company to introduce the world’s first mass-production hydrogen fuel cell electric vehicle in
2013.

His innovative leadership and business philosophy has been recognized and celebrated through
various awards over the years, including Korea Management Association’s CEO of the Year
Award (1996), Business Week’s Auto CEO of the Year (2004), Automotive News’ Top

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Automotive CEO in Asia (2005), Van Fleet Award (2009), and inclusion in Harvard Business
Review’s ‘CEO 100’.

■ Honorary Chairman Mong-Koo Chung Profile

Education
Bachelor’s degree in Industry Business Administration, Hanyang University

Experience
2020.9 ~ Honorary Chairman, Hyundai Motor Group
2000 ~ 2020 Chairman, Hyundai Motor Group
1999 ~ 2000 CEO & Chairman, Hyundai Motor Co. & Kia Motors Corp.
1996 ~ 2000 Chairman, Hyundai Group
1987 ~ 1996 Chairman of Hyundai Precision Industry, Hyundai Motor Service, Hyundai
Pipe, Hyundai Development Company and Incheon Iron & Steel
1970 Manager, Hyundai Motor Compan

The current issue in the world economy is characterized by globalization. Corporations have
built up a world-wide network economy by promoting production and trade. An important
cause for the globalizing trend of the world economy lies in relocation of production sites and
management strategies of business. Firms need not only partnership with foreign companies
in the form of direct investment and joint ventures, but they need also to develop cross-border
buyer supplier relations. These trends also provide opportunities for the sharing of risks and
costs in R&D and production. Globalization is driven by strategic alliances that reflect a shift
of company
strategies.

Globalization is an increasingly important aspect of the automobile industry. In the past

decades, the automobile industry has been one of the mains driving forces in globalization.
The pattern of globalization followed by the major car makers can so far be split into three
stages. The first stage is export. At this stage the goal is to create a car that fits into a
worldwide car category. The second stage of globalization comes after the expansion of
export. This is the setting up of transplant in major market regions. The last stage of
globalization is complete localization of transplants on one hand and the establishment of a
global business network on another hand.

5.1 - GLOBALIZATION, FIRM ORGANIZATION AND INTERFIRM

MARKET RELATIONS

Exports are the engine of the contemporary Korean motor vehicle industry's success. Hyundai
exported a total of 560,169 units, up 13% from the 1995 figure of 494,479. In the 1980s,
Hyundai began to explore strategies to increase access to the overseas market. The strategy of

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internationalization in the first stage was to develop joint ventures with advanced foreign car
makers that would allow them to develop a world market sales car. The growth in production
and exports requires closely linking both the advanced product design and process
technology. For this project Hyundai began technical cooperation with Mitsubishi. They
obtained chassis components and other parts that were difficult to manufacture, such as gears
and engines, directly from Mitsubishi, but fabricated the cylinder head and blocks, housing,
and transmission case in house. In the early 1980s, Hyundai constructed a new plant for the
first front wheel drive car in Korea and created the "Excel Phenomena" in 1985 and
successfully entered the market in the United States in 1986. In the next phase, Hyundai saw
the need for diversification of the overseas market. Their efforts intensified after the loss of
the U.S. market engendered by the end of the 1980s and domestic market's saturation.
Regional sales for the year 1996 were 133,009 units in North America, occupying 24% of all
exported vehicles; 178,328 units in Europe with 32%; and the rest of the regions occupying
44% with 248,832 units.

As the domestic vehicle market gradually matures, Hyundai is trying to explore more
overseas markets through the expansion of car production bases in foreign countries. In
particular, developing countries are becoming more important markets for Korean auto
makers, taking into account the nearly saturated status of the domestic car market, cheap
labour costs of foreign workers and the toughened trade barriers built by advanced countries
on the imports of cars. Hyundai has focused their efforts on the developing overseas markets
because they know that they can no longer depend on the domestic market for sustained
growth.1Hyundai began to face increasing global competition both at home and abroad from
the 1990s onwards.

Since the late 1980s, Hyundai has adopted a comparative production system, namely lean
production system, in order to improve quality and productivity. In this point of view,
Hyundai started to rationalize their reorganized logistics through the use of modern
information and communication technologies like "value added network". They set up
rationalization of logistics in 1994 that belonged to 329 firms of their suppliers.
With the development of this system Hyundai can completely control the logistics chain, so
they will increase the flexibility of the logistic plan. As a result of the revitalization of JIT
delivery 2 the time-unit of delivery scheduling was radically reduced from months to days
and then to hours. By 1993 approximately 76.4% of the total parts bought (in volumes) were
delivered daily, 17.1% of its weekly, and 6.5% of it monthly.3 Hyundai has an average
inventory of 0.6 days of production.

As an initial step towards a collaborative relationship, Hyundai and their suppliers can begin
with joint value analysis. An import outcome of this shift in subcontracting from unilateral to
bilateral relationships imply recognizing the strategic role of subcontractors in determining
the quality and costs of cars.4 In 1985, Hyundai introduced a Japanese style subcontracting
system and began a supplier association. Approximately 265 firms were participating in

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1994. This organization is the most important mechanism for supplier coordination and
development. Hyundai must be regarded as one of the primary innovators
in the use of supplier associations, so called "Hyung Dong hoe".

With global linkages growing and globalization continuing to make progress, national and
international markets are beginning to compete with one other. Nowadays, no car maker is
able to dominate the world. In fact, competitive pressure is forcing all the automakers in the
world to adopt the best production processes and product innovation. Consequently, Hyundai
is trying to preserve as many essential features of their home-grown model as possible to
retain their competitiveness with globalization strategy both at home and overseas.

5.2 - THE TRANSITION TO MULTI-REGIONAL STRATEGY IN THE

LATE 1990S

The implementation of multi-regional strategy involved the decision to integrate Southeast

Asia operations in terms of products and manufacturing. Ultimately, Hyundai created a single
vehicle, launched in India in 1998 and the following year in Indonesia and Thailand. An
organizational structure is emerging which is based on three worlds regions: Asia, North &
South America and Europe. Hyundai has made significant regional advances as far as its
Asia-Pacific operations are concerned, as it has attempted to co-ordinate the activities of its
various subsidiaries spread out among the ASEAN countries.
Hyundai is in tune with the global trend of offshore expansion and is setting a precedent in
the world's auto industry. Particularly, 16 Korean parts and components suppliers to Hyundai
will be setting up their facilities jointly with their local Indian partner near the Chennai Plant.
Suppliers also faced pressure to contain or reduce costs in order to reduce the cost of
assemblers. They belong to two typologies firm within the Hyundai Group or independent
Korean suppliers. In the parallel direction of internalization of production by assembler, the
supplier industry also moves forward to the relocation of their production sites with low wage
costs like China and Southeast Asian countries.9 The investment strategy of suppliers is
initially of a follow-the client type, actually encouraged by Hyundai, aiming at diversification
of world clients. Obviously, this parallel overseas penetration of suppliers with assembler has
improved the economies of scale. This strategy will help to establish the global sourcing that
is becoming a leitmotiv of Hyundai. Hyundai Motor India plans to export cars and key parts,
such as engines and transmission, to the KD plants and neighbouring Southeast Asian
countries.

https://www.hyundainews.com/en-us/releases/3218

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