Business Behaviour in Changing World

Topics: Automotive industry, Hyundai Motor Company, Ford Motor Company Pages: 10 (3047 words) Published: September 13, 2013
Arab Open University

Faculty of Business Studies

B300B – Business Behaviour in Changing World
(II)

Fall Semester 2012 -2013

Tutor-Marked Assignment, TMA

MounirAbboud

Question 1
Hyundai Motor Company (HMC) went through some difficulties during the 1980s and 1990s that affected its market position and brand image, in particular its U.S subsidiary, Hyundai Motor America (HMA).Identify the problems faced by HMC and the strategies it has adopted to improve its competitive position (on both domestic and foreign markets). Discuss to what extent these strategies were successful (25 marks - 1000 words).

“Hyundai Car” developedinto a synonym for a cheap car, which is used only by the lower class or a cheapskate. Its content, performance and reputation has been through rosy and rough times.
In 1986, Hyundai Motor America was launched in California, and sold its first car which is called subcompact Excel. In 1987, Hyundai expanded and opened a central state office beside Chicago. After a year, HMA started in Ontario, California, a $21 million distribution center. Afterwards, it opened a distribution center in Illinois. Hyundai’s sales increased in the U.S by 315 percent rise over 1998-2002. This company was first lead Ju-Young Chung, which is the founding chairman on this company. He was had an authoritarian style of leadership, top-down management, with a centralized and unified management structure. The initial ownership structure was dominated only by Mr. Chung, and his heirs. Additionally, there was a centralized decision-making process, and the strategic goals were only controlled by the Chung’s family. This centralized and patriarchal management structure and ownership facilitated Hyundai to pursue more autonomy over the external relationships. For instance, when HMC made a strategic alliance with Ford, Ju-Young Chung refused to move his managerial authority to Ford. However, the patriarchal and dominant style of leadership did now allow the employees to express their opinions or object if they saw anything wrong.

Afterwards, Se-Young Chung,Ju-Young Chung younger brother lead HMC. The new leader tried a new management style which can be summarized by harmonious human relations, responsibility and autonomous management, and equal opportunity. He delegated responsibility and authority to executives and managers, and tried to implement a more focused strategy. Se-Young Chung improved production efficiency by reorganizing or merging the job functions division. He converted the functional organization to a divisional one. The aim was to efficiently control, evaluate, and develop management ability and motivation. He also intended to improve the competencein order to cope with a diversified market and to reduce the costs. Horizontal leadership was being applied. The new style took a long time to adapt to, customers lost confidence in Hyundai, while employers were comfortable the way they were before.Equal opportunity allowed more creativity and helped in the development of the company. Also, the horizontal and autonomous management one increased cooperation, communication, and an easier reporting process.

Later, Se-Young Chung gave the title of Chairmanship to his son, Mong-Kyu Chung. His son used the same leadership style which allowed a smooth transition with little organizational chaos. Moreover, the effort to make Hyundai a reliable company with a stable and constructive labor-management relationship continued. A new vision was established and worked upon, which was, making Hyundai “top-10 automaker ranking in the 21st century by occupying four percent of the world auto market”. The strategy adopted wasa one of product quality movement, value management and the globalization to different markets. Thus, improving the brand image and customer satisfaction is steps towards achieving the new vision.

In 1997-1998, HMC faced liquidity problems. The Hyundai group was pressured to restructure its...

References: CHUNG, M.-k. (2000). GLOBALIZATION STRATEGIES OF KOREAN MOTOR VEHICLE INDUSTRY: A CASE STUDY. Actes du GERPISA n°22.
Freyssenet Michel, L. Y. (1996). Between Globalization and Regionalizatoin: What Future fo Automobile Industy. Actes du Gerpisa, 39-68.
Jo, H. J. (2010, June). The Hyundai Way: The Evolution of a. Retrieved December 10, 2012, from http://www.globalasia.org/V5N2_Summer_2010/Hyung_Je_Jo.html?PHPSESSID=1b2f7e7b704db6561ffb4445649a45fa
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