B300b Business Behavior In Changing World Fall Semester 2

B300b Business Behaviour In Changing World Iifall Semester 2012 2

This tutor-marked assignment draws mainly on Book “Strategy for Business”. It also reflects on Book “Policy Issues for Business”. It consists of four questions and accounts for 20% of the total grade assigned to the course. This assignment will be graded out of 100 marks, of which 80% of these marks will be allocated to your answer for the different questions. The remaining 20% will be distributed among the following criteria: 5% for proper referencing 5% for presentation of ideas and organization of the answer 5% for adherence to specified word count 5% for the use of the E-library/External resources.

In this TMA, you are expected to demonstrate your knowledge and understanding of the importance of strategic management in acquiring and improving the market position of organizations. You are also, required to apply various learned concepts in innovation, knowledge management, and global strategy. In addition, you should be able to recognize the importance of science and technology policy for, individuals, businesses and nations. In your answer, your work is expected to show critical, analytical and justification skills of the subject matter, rather than purely descriptive. Your answer should be within the specified range of words, and you must follow the Harvard Style of Referencing.

You are expected to present a well-structured and organized piece of work that is of your own. Plagiarism will not be tolerated, and plagiarized work will receive 0 marks. Hyundai Motor Company Based on your understanding of the case, answer the followings.

Paper For Above instruction

Question 1: Hyundai Motor Company’s Challenges and Strategic Improvements

During the 1980s and 1990s, Hyundai Motor Company (HMC) faced significant difficulties that impacted its market position and brand image, particularly within its U.S. subsidiary, Hyundai Motor America (HMA). These challenges primarily stemmed from issues related to product quality, brand perception, and competitive pricing strategies. Hyundai initially gained a reputation for offering affordable vehicles, but this often came at the expense of perceived lower quality, which inhibited its acceptance in the highly competitive American automobile market.

The quality concerns, compounded by inconsistent service standards and weak brand equity, led to declining sales and diminished trust among consumers. Furthermore, Hyundai’s early strategies lacked alignment with established automotive industry standards, causing skepticism about their durability and reliability. The media’s portrayal of Hyundai vehicles as unreliable further exacerbated the problem, creating a significant barrier for increased market penetration.

In response to these issues, Hyundai adopted several strategic initiatives aimed at revamping its market stance. A primary focus was improving product quality through rigorous quality control processes and increased investment in research and development. Hyundai also worked to revitalize its brand image by launching targeted marketing campaigns emphasizing quality and reliability, notably through the “Hyundai Assurance” program, which assured consumers of vehicle safety and after-sales support. The company also expanded its after-sales service network and focused on customer satisfaction and loyalty programs to improve consumer perceptions.

On the domestic front, Hyundai increased localization of production capacities, which lowered costs and enabled more competitive pricing strategies. Globally, Hyundai pursued strategic alliances and joint ventures in key markets such as the United States and Europe, to enhance technological capabilities and expand distribution channels. These efforts were complemented by diversification of its product portfolio, including the development of new models that met international standards and consumer preferences.

The strategies aimed at quality enhancement, marketing repositioning, and local production localization contributed significantly to Hyundai’s turnaround. By the early 2000s, Hyundai’s brand perception had notably improved, and its market share increased. In the U.S., Hyundai transitioned from an economy brand to one perceived as offering reliable, value-for-money vehicles, thus regaining competitiveness in a fiercely contested market. However, these improvements faced ongoing challenges, such as maintaining quality standards amidst rapid expansion and ensuring brand consistency across multiple markets.

The success of Hyundai’s strategic response is evidenced by its rapid growth in market share, improved brand ratings, and acceptance in new markets. Nonetheless, continual innovation and quality enhancement remain crucial to sustain this growth, as competitors also pursue aggressive modernization and branding strategies. Overall, Hyundai’s adaptive strategies during this period illustrate a profound understanding of the importance of strategic management in overcoming initial setbacks and positioning itself as a prominent global automobile manufacturer.

Question 2: Hyundai’s Approach to Global Strategy

Hyundai’s global strategy has been characterized by a deliberate combination of localization, differentiation, and cost leadership principles. The company’s approach emphasizes tailoring products and marketing strategies to meet diverse regional demands while maintaining competitive cost structures across its markets. Central to Hyundai’s global strategy has been its commitment to establishing a strong worldwide presence through manufacturing facilities, strategic alliances, and a broad distribution network.

One key element of Hyundai’s global strategy is localization. Hyundai has invested heavily in establishing manufacturing plants in key regions such as the United States, China, India, and Eastern Europe. By localizing production, Hyundai reduces logistical costs, benefits from favorable trade policies, and aligns product offerings with local consumer preferences. For instance, in the U.S., Hyundai’s manufacturing plant in Montgomery, Alabama, helped it to consolidate its presence and improve quality control, which, in turn, enhanced its reputation and customer trust.

Hyundai also emphasizes differentiation through technological innovation and design. The company invests substantially in research and development to introduce advanced features such as hybrid and electric vehicles, infotainment systems, and safety technologies. Its global models are increasingly tailored to regional markets’ specific needs, emphasizing fuel efficiency in markets where fuel prices are high, and safety features in regions with strict safety regulations.

Cost leadership remains a vital component of Hyundai’s strategy, achieved through economies of scale, efficient supply chain management, and standardization of parts. Hyundai leverages its large production volumes and low-cost manufacturing bases in Korea and abroad to offer high-quality vehicles at competitive prices. This approach has allowed Hyundai to penetrate price-sensitive markets effectively, especially in developing countries and emerging economies.

Furthermore, Hyundai’s digital marketing campaigns and after-sales service networks across regions reinforce its global image as a reliable and innovative automaker. The company’s strategic focus on sustainability, including green vehicle development and adherence to environmental standards, complements its global strategy by appealing to environmentally conscious consumers worldwide.

Overall, Hyundai’s approach to global strategy reflects a balanced blend of localization, differentiation, and cost leadership, supported by significant infrastructural investments, technological innovation, and a comprehensive understanding of regional market dynamics. This approach has enabled Hyundai to expand rapidly into international markets, increase brand recognition, and foster long-term competitive advantages.

Question 3: Theoretical Foundations Underpinning Hyundai’s Strategies

Hyundai’s strategic initiatives align closely with several established theories and concepts in strategic management, notably Porter’s Generic Strategies and the Resource-Based View (RBV). Analyzing Hyundai’s strategy through these frameworks provides insight into the underpinning principles guiding its international growth and competitive positioning.

Porter’s Generic Strategies outline three primary strategic options—cost leadership, differentiation, and focus. Hyundai’s approach is predominantly anchored in both cost leadership and differentiation. Cost leadership is evident in Hyundai’s emphasis on efficient manufacturing, economies of scale, and supply chain management, allowing it to offer vehicles at competitive prices without compromising quality. This aligns with Porter’s assertion that firms pursuing cost leadership seek to serve broad markets while maintaining cost advantages. Hyundai’s aggressive expansion into emerging markets further demonstrates the application of this strategy.

Simultaneously, Hyundai pursues differentiation through technological innovation, design, and enhanced customer experience. Its investments in green technologies and safety features are reflective of differentiation strategies that aim to create unique value propositions, fostering brand loyalty and higher profit margins.

The Resource-Based View (RBV) emphasizes leveraging unique internal capabilities and resources to sustain competitive advantage. Hyundai’s investment in R&D, manufacturing capabilities, and brand development are critical resources that have enabled it to innovate and adapt to diverse markets effectively. Its global manufacturing footprint and extensive distribution network serve as valuable, inimitable resources that contribute to its competitive edge.

Furthermore, Hyundai’s strategic use of alliances, joint ventures, and acquisitions demonstrates a dynamic capability approach—adapting its resource base to exploit emerging opportunities while mitigating risks. For instance, its partnerships in technological innovation and localization in different regions exhibit a strategic flexibility consistent with RBV principles.

Critically, Hyundai’s strategies also reflect a proactive approach aligned with Ansoff’s Growth Matrix, particularly through market penetration, product development, and market development. This multi-faceted strategic orientation exemplifies how Hyundai critically integrates multiple theoretical frameworks to navigate complex global markets.

In conclusion, Hyundai’s strategic strategies are grounded in well-established theories of competitive advantage, primarily Porter’s Generic Strategies and RBV, which facilitate understanding of its resource leverage, market positioning, and sustainable growth. These theories underscore the importance of internal capabilities and strategic differentiation in Hyundai’s success story.

Question 4: Technology and Policy Influences on Hyundai’s Performance

Hyundai's technological policies have played a pivotal role in its global success, particularly in the development of green vehicles, safety technologies, and manufacturing innovation. The company’s emphasis on continuous R&D investment has led to the commercialization of hybrid, electric, and fuel-efficient vehicles, aligning with global environmental trends and regulatory standards.

Hyundai adopted a comprehensive technology policy centered on innovation and sustainability. Its investment in electric vehicle (EV) technology and hydrogen fuel cell systems illustrates its commitment to reducing greenhouse emissions and transitioning toward a low-carbon transportation sector. For example, Hyundai launched models like the Kona Electric and Ioniq Electric, which benefited from substantial technological advancements supported by Hyundai’s dedicated R&D centers in Korea and abroad.

Furthermore, Hyundai's strategy to integrate Industry 4.0 principles—such as automation, data analytics, and digital manufacturing—has enhanced operational efficiency, product quality, and supply chain resilience. These technological innovations have allowed Hyundai to maintain cost competitiveness while improving product reliability, thus strengthening its global market position.

On the policy side, Korea’s domestic policies significantly influenced Hyundai’s corporate strategies. Government incentives for green technology adoption, tax benefits for electric vehicles, and support for innovation provided Hyundai with a conducive environment for investment in sustainable technologies. In addition, Korea’s trade policies, such as free trade agreements with key markets, have facilitated Hyundai’s export expansion and international supply chain integration.

International policies, including environmental standards set by the European Union, the U.S. Clean Air Act, and emission regulations across Asia, compelled Hyundai to innovate continuously and adhere to strict standards. These policies accelerated Hyundai’s technological development, especially in vehicle emissions control and safety features, to meet diverse regulatory requirements worldwide.

Trade disputes, tariffs, and geopolitical tensions also impacted Hyundai's operational decisions. For example, U.S.-China trade tensions prompted Hyundai to diversify its manufacturing bases and supply chains to mitigate risks and ensure continued market access.

In summary, Hyundai’s technology policy has fostered innovation and sustainability, supported by both Korean and international policies that created a strategic environment for growth. The interplay of government incentives, environmental regulations, and trade policies has driven Hyundai to continuously innovate and adapt, underpinning its global competitiveness and ongoing industry leadership.

References

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• Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. Free Press.
• Prahalad, C. K., & Hamel, G. (1990). The core competence of the corporation. Harvard Business Review, 68(3), 79-91.
• Ghemawat, P. (2001). Distance Still Matters: The Hard Reality of Global Expansion. Harvard Business Review, 79(8), 137-147.
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• World Economic Forum. (2022). The Future of Mobility: Leadership and Policy. WEF Reports.