Hyundai Motor Company The Worlds Fourth LargestAutomaker Marketing Essay

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Established in 1967, Hyundai Motor Company has sustained, grown and become the world's fourthlargest automaker in terms of units sold. Automobile manufacturing industry is in the maturity stage andexposed to a lot of difficulties. To survive and develop, the company needs to identify and develop keyfactors of success such as innovation, technology development, quality improvement, and customerservice; associated with cutting costs and diversify products. Moreover, the company needs to take intoaccount the characteristic of forces driving industry competition on the way to success.

To sustain competitive, Hyundai needs to maximize its strengths that include advanced technology,valuable branding experience, qualified labor force, cost efficiency, marketing flexibility andexperiences. On the other hand, Hyundai also has to minimize weaknesses that are culturaldifferences, commodity price risk, late entrant, diversity and currency fluctuation. In addition, there aresome opportunities for Hyundai to take advantages consist of new segment of hybrid car, governmentalsupport, buyers' emphasis on low cost & design, competitor's weakness and potential market. Whileavoid threats that comprise global economic crisis, new entrants, low market growth, environmentalrequirement and political instability.

Hyundai must consider strategy for short, intermediate and long term. Firstly, to minimize adverseimpact of global economic crisis, company should reduce costs & expenses. Secondly, Hyundai shouldtake advantage of core strengths as advanced technology such as eco-friendly energy to comply withenvironmental issues. Lastly, the company should target into potential markets from developingcountries. In addition, it is important to improve the structure, system and policy. Continuousdecentralization of management structures and the strategy of diversification should be appliedassociated with new system to enhance the availability of back-end data, improving customer serviceand lowered system management costs. Finally, hiring policy and global environmental managementpolicy should be applied to bring Hyundai to success.

(309 words)

Brief of company:Since its establishment in 1967, Hyundai Motor Company has grown into one of Korea's mostrecognizable and trusted firms. Today, Hyundai stand the world's fourth largest automaker in terms ofunits sold and one of the Big Asian. Hyundai Motor is operating globally and provides diverse productportfolio supported by its 6,000 sales points and 23 overseas manufacturing plants and distributors in180 countries worldwide. The total revenue of company has recorded as 31 December 2008 isUS$35,053,637 thousand and return on investment is 3.38%.

Reason for selecting:From the beginning to recent time, Hyundai has made significant inroads in building its brand from the"Worst Car Ever Made" to a 72nd ranking in the 2007 Best Global Brand survey. Public perception ofthe Hyundai brand has been transformed as a result of dramatic improvements in the quality ofHyundai vehicles which are sold with reasonable price. While others competitors are facing with lossesand struggling with economic downturn, Hyundai still make profit and has come up impressively as aphenomenon in automobile industry.

Main strategic issues facing the company:Coping with climate change and complying with regulations on CO2 emissions. Decreasingenvironmental impact and promoting recycling.

Difficult economic environment that restricts number of car consumers and high oil prices.

Company's contribution to the National Economy:As of December 2008, automobile industry which is vital to Korean manufacturing industry, accountedfor 14.4% in production, 13.4% in export, and 14.3% in employment. Hyundai has created 56,204employees in South Korea and contribute about 70% to Korean automobile industry and 5.4 % toKorea's GDP.

Company's contribution to the regional economy:There are 22,066 overseas employees under Hyundai Motor Company, comprise of 6,956 employeesin North America, 5,101 employees in China, 5,457 employees in India, 4,694 employees in Europeand 218 in other countries.

Recent strategic dilemma:In applying of "Blue Strategy", some of its eco-friendly cars were developed to meet environmentalregulations set by European Union, the performance of vehicle is meant to deteriorate when he carbondioxide emission is reduced, it lessen Hyundai's products' competitiveness as compared to its rivals.

Recent strategic choice:Hyundai is taking approach toward increasing quantitative growth through global in combination withquality and brand management to enhance global competitiveness and further raising sales results.

Hyundai applies strategy of "Green Management" by plan of "Blue Drive" as the key towardsustainability approach and to comply with regulation on emission issue.

Source of Information on CompanyHyundai Motor Annual Report

http://worldwide.hyundai.com/

(375 Words)

Industry life cycleTime

Automobile manufacturing industry

Industry output

Introduction

Growth

Maturity

Decline

Automobile manufacturing industry is in the maturity stage of the industry life cycle. In this period, theindustry does not grow as much as last 5 or 6 years. The market is very competitive, manymanufacturer offering their products, the producers continue with the product differentiation in manysegments and hence, the market result in saturation with many manufacturers offering many models ofthe product. In this stage, only the best efficient and effective company survives. There are about 806million cars and light truck on the road in 2007, the number is increasing rapidly especially in China andIndia. The biggest market currently is in North America which is about 250 million vehicles, followingare Asia and Europe market. In 2009, with stable economic growth, China is going to become thelargest automobile producer and market in the world.

The automobile industry crisis and oil shock in 2008 is a part of global financial recession. It affectedAsian and Europe automobile manufacturers but it is primarily felt in American automobilemanufacturing industry. With rapidly rising oil price, automobile industry is experiencing high pricingpressure from raw material costs and changes in consumer buying habits. Also, there is an increase inexternal competition from public transport sectors and consumers are re-evaluating their privatevehicle usage. Moreover, the social expectation and related concerns regarding carbon emissions hadlead to the restricted standard setting that automakers have to be fulfil in order to penetrate into thesehigh requirement markets.

In addition, customers now are seeking a car with higher quality demand, more functional and price iscrucial factor. In combination with the challenging economic environment, the companies' strategy hasto be more effective, innovative, cost reduction as well as making product differentiation and improvecustomer services. Also, automobile companies have to implement more creative marketing strategiesto lure consumers as most of them are experienced decline in sales.The response to climate changemay have a greater impact on the automobile manufacturing industry than all the other factors. It leadsautomaker to develop toward "green technology" and alternative fuel and material to lessen impact ofautomobile industry to environment.

Key factors of success (KFS)

Key factors of

success

Weight

Hyundai

Toyota

Nissan

Rating

Weighted score

Rating

Weighted score

Rating

Weighted score

Innovation0.17

4.00

0.68

3.50

0.59

3.00

0.51

Technology0.21

3.50

0.73

4.50

0.94

3.50

0.73

Low-cost manufacturing0.11

3.50

0.38

4.50

0.49

3.00

0.33

Quality & Safety0.13

4.00

0.52

4.00

0.52

3.00

0.39

Design0.12

4.00

0.48

4.00

0.48

3.00

0.36

Advertising and distribution0.10

3.50

0.35

4.00

0.40

3.00

0.30

Customer service0.09

3.50

0.31

5.00

0.45

3.00

0.27

Diversity0.07

3.50

0.24

4.00

0.28

3.00

0.21

Total

1.00

3.69

4.15

3.10The factors listed above are some of the most important factors that company needs to achieve inorder to be successful in the industry. Nowadays, Toyota is the most successful company in automobileindustry because they achieve key factors successfully. Among all factors, innovation is the mostimportant factor contributes to the success of company. In contrast, Nissan had average performance.Hyundai is in the middle, growing stably and strikingly. As we see from above, the total weighted scoreof Toyota is highest, following is Hyundai then Nissan. Among all of the factors, technology is the mostimportant as automobile industry is under pressure of high competition and the issue of climatechange. Technology is not simply satisfying customers with a simple car, it need to bring a car withmore functions, more model and technological. Also, technology needs to enable the company todevelop car in combination with new material and fuel. Leading technology with above average ratingof 4.5 enables Toyota to be more successful than Hyundai and Nissan.

Innovation is second important factor that lead to the success of company. As customers concern moreabout the appearance of the car, more innovative is needed. New models are required to have moreimpressive design and that will help company to gain market share and increasing sales value. In termof innovation, Hyundai has launch new models with remarkable improvement of design that is moreattractive to the customers over the past few years. It helps Hyundai gaining more market share incompare with less innovative Toyota and Nissan. So the company need to keep up this advantage,more skilled workers are needed and necessitate of a breakthrough idea.

In addition, Quality and safety is one of important factor that customers always bear in mind whenmaking buying decision. Hyundai has done it well since the past few years. They receive good signsfrom customer's perception of company's brand that is improvement of quality & safety. Price is crucialfactor; an impressive design only attracts customers if it comes with reasonable price. Thereby,company always need to develop strategy toward cost reduction. Company should have diversity ofproduct to compete with others and to enjoy economy of scale and scope. To be more successful inimproving brand of company, not only design, quality and price but also customer service needs to getbetters. Customers want a good after-sale service that they can rely on. Company has to take thesefactors as a basis in combination with economic situation to develop suitable strategy in order to growsuccessfully and stably.

Threat of new entrants:

Sluggish state of economy

Requirement of high R&D and fixed cost

Difficulty in accessing to distribution channels

Few newer with low competition

Relative power of other stakeholder

Internal stakeholders: shareholders, management, employees andcreditors

External stakeholders: government, partner firms, clients and potentialinvestor

Provide feedbacks & opinion

Force Driving Industry CompetitionSuppliers

Other stakeholders

Buyers

Substitutes

Industry competitors

Rivalry among existing firm

Rivalry among existing firm

Rivalry among existing firm:Highly competitive of technologies, costs and services

High number of competitors

Diversity of products

Slow growth, high fixed cost

Threat of substitute:The cost of automobiles and environmental issues lead to many transportation options

Bargaining power of buyers:Price sensitive

Require improvement of quality.

Nice design & better service requirement

Impact of cars to health and environment

Need for alternative fuel

Potential Entrants

Bargaining power of suppliers:The automobile supply business is quite fragmented

Suppliers have little responsibility

Rivalry among existing firms (High)Hyundai dominates the Korean automobile market and has low domestic rivalry. However, in globalcompetition, rivalry among existing firms is high. Rival companies compete on prices, quality andcustomer service; a company watches very carefully every movement of rivals in order to adaptappropriately. There are high numbers of competitors and they diversify into many market segments.Company earns lower profit when cost of competition is high. To be more successful, Hyundai has tokeep working their competitive advantages, launching strategy to reduce cost, better service to suitwith this sluggish economic condition, keeping up with developing of new design, quality and especiallylooking answer for technology toward "Green Environment" that I predict it will be a crucial factor innear future.

Threat of new entrants (Low)Automobile industry is highly capital and labour intensive, it require very high fixed cost as well asR&D, so threat of new entrants is low. It is not easy to enter automobile industry and it is harder sincethe economy downturn is happened that decrease the demand of customer. Brand loyalty of customeris also an obstacle; there are wide choices for customer. Moreover, the requirement of innovation,technology and product diversification makes it more difficult to enter the market. Established in 1967,Hyundai has a long time experience and enjoying benefit of economies of scale through operation allover the world so new entrants are not a pressure for a company.

Bargaining power of buyers (High)The bargaining power of buyers is high. The manufacturers depend on them to stay in business.Buyers purchase a significant proportion of output. If manufacturers cannot keep their buyers satisfiedthen they will lose their buyers to competitors. Nowadays, there are various brand and models thatbuyers can choose, buyers have many choices so that their requirements are high. The factors thataffect buyers to make buying decision are: the design, quality, price and environmental effect.Especially, current time is under economic recession and climate change issues, decrease in buyers'demand and their consideration of impact on environment creates more pressure on company.

Threat of substitute products or services (Low)It is true that there are many of transportation that can be a substitution of an automobile such as bus,train, bicycle, motorbike, etc. Substitute products depend on geographical location. In some cities suchas Singapore, New York, having a car is not necessary because those cities has good infrastructure ofpublic transportation and there are policy to reduce number of car in order to reduce heavy traffic, avoidtraffic jam and protect environment. However, the need of automobile is always great. Developingcountries are potential market and the need in those countries is getting greater.

Bargaining power of suppliers (Low)Hyundai had a good supply chain management system and had long relationship with suppliers.Suppliers have little power in automobile industry because there are numerous component suppliers

that help company to avoid shortage of material and selecting suppliers with lower cost. Automobilecompanies work to maintain cost strategies so that suppliers must compete on price with one anotherto acquire contracts with them. Since it is very competitive among number of suppliers, an automobilecompany could easily switch to other supplier along with high requirement of price and quality.

Relative power of other stakeholders (Medium)The internal stakeholders of Hyundai include the shareholders, management, employees and creditors.The external stakeholder of the company is the government, partner firms, clients and potentialinvestors. Internal stakeholders help company to apply strategy in proper way while externalstakeholders helping with feedbacks, opinions and require responsibility of company. As the companyis very large, it has great effects to stakeholders. In response to them, company develops strategy of"Blue Drive" that represents commitment to develop environmental-friendly vehicle along withenhancing basic features of products.

Internal Factor Analysis Summary (IFAS Table)

Internal strategic factors

Weight

Rating

Weighted score

Comments

Strengths

S1 Advanced technology

S2 Branding experience

S3 Qualified labour force

S4 Cost efficiency

S5 Marketing flexibility & experience

Weaknesses

W1 Cultural difference W2 Commodity price risk

W3 Late entrant

W4 Diversity

W5 Currency fluctuation

0.15

0.13

0.09

0.14

0.08

0.08

0.06

0.11

0.09

0.07

4.50

3.50

3.50

4.50

4.00

3.50

3.00

4.00

4.00

3.00

0.67

0.45

0.31

0.63

0.32

0.28

0.18

0.44

0.36

0.21

Advantage to quality & innovation

Raising valuable global branding

Source to gain competitive advantage

Well manage costs and expenses

Strong corporate philosophy focus on "customer first"

Difference between business culture

Adverse effect of commodity price change

Less feedbacks & information from buyers

Limited ability in adding new models

Fluctuation of currency in country doing manufacture

Total scores

1.00

3.85

StrengthsHyundai has core strength of innovative technology and becomes a leader in developing environmentfriendly technology to compete in the recent time when the impact of cars to environment are highlyconcerned and high requirement of buyers on innovation, quality and design. Along with innovativetechnology, Hyundai is well managed on costs and expenses that enable company to compete on pricewith its rivals; it is such a significant advantage especially in this economic downturn condition.Qualified labour force helps Hyundai to gain competitive advantage, manage and operate companyeffectively. Hyundai has strong corporate philosophy that focus on "customer first", flexible marketingstrategy and rich experience of producing car for export market. Finally, its value of global brandingexperience is raising that enable Hyundai gaining more market shares.

WeaknessesOn the other hand, there are some weaknesses that need to be taken into consideration. Drawbacksoccur due to differences between national and business cultures. For example, the national culture ofKorea is collective while it is highly individualist in America. Hyundai commodity price risks arise from

changing price effect of inputs such as steel, glass, plastics and rubber. As a global company, Hyundaiis also exposed to the risks related to fluctuations of currencies in countries where company doingmanufacture. When making buying decision, customers seek information and feedbacks from previousbuyers; late enter into market means lesser information and feedback, hence provide drawback.Finally, Hyundai has limited ability in adding new models in order to diversify products and compete inmany automobile segments, especially in luxury automobile segment.

External Factor Analysis Summary (EFAS Table):

External strategic factors

Weight

Rating

Weighted score

Comments

OpportunitiesO1 Hybrid car segment

O2 Governmental support

O3 High emphasis of buyers on low cost & design

O4 Competitor's weakness

O5 Potential market from developing countries

ThreatsT1 Global economic crisis

T2 New entrants

T3 Low market growth

T4 Environmental requirement

T5 Political instability

0.08

0.10

0.11

0.09

0.12

0.15

0.07

0.10

0.12

0.06

4.50

4.00

4.50

3.00

4.00

4.00

3.00

3.50

4.00

3.00

0.36

0.40

0.49

0.27

0.48

0.60

0.21

0.35

0.48

0.18

Taking advantage of technology

Being supported in domestic market

Advantage to gain market share

Crisis from key rivals

Opportunity for gaining market share

Increase costs and risks

Increased competition

Breaks on worldwide auto demand

More pressure from society

Increase cost & decrease security of capital and goods

Total scores

1.00

3.82

OpportunitiesStrong research & development and advanced technology leading in producing car in hybrid segmentenable Hyundai to take advantage to expand market share and gain more profits. As high taxcontributor, Hyundai enjoy governmental supported policy in domestic market, thus enjoy lesscompetitiveness from competitors and spreads its wings to enfold domestic market. Sluggish economiccondition makes buyers focus more on low cost & design in which Hyundai has reputation ofimprovement of quality & design associated with lower cost of products as compare to othercompetitors. Moreover, crisis of key rival - Toyota on quality create big opportunity to Hyundai focusingon quality improvement and reputation. The company should put more emphasis on potential marketsfrom developing countries provide promising opportunity for the company to expand and gaining profitin the future.

ThreatsOn the other hand, the company is facing with some threats indicated above. Global economic crisisand oil price shock have adverse impact to automobile manufacturing industry as well as the Hyundai,reducing investment and raising cost of fuel and raw materials. Also, the brake on worldwide autodemand has created low growth market, decrease sales and profits. More pressure of competitionwhen there are some new entrants enter into market, targeting into some specific segments andacquire market share portion. Additionally, environmental requirement puts more pressure to thecompany to technological change toward eco-friendly energy. Finally, economic implication of politicalinstability increases transaction costs and insurance cost associated with security and flow of capital,goods between many countries.

Strategic Factor Analysis Summary (SFAS) Matrix:

Duration

Strategic factors

Weight

Rating

Weighted score

S

H

O

RT

I

N

T

E

R

M

E

D

I

A

T

E

L

O

N

G

CommentsS1 Advanced technology

S2 Cost efficiency

W3 Late entrant

W4 Diversity

O4 Competitor's weakness

O5 Potential market

T1 Global economic crisis

T4 Environmental requirement

0.16

0.13

0.12

0.09

0.12

0.14

0.14

0.10

4.50

4.00

4.00

3.50

4.00

3.50

4.00

3.50

0.72

0.52

0.48

0.31

0.48

0.49

0.56

0.35

X

X

X

X

X

XX

X

X

X

XQuality advantage

Well manage costs & expenses

Less information & reputation

Limited ability in adding new models

Crisis from rivals

Large demands & potential customers

Increase costs and risks

Technological trend toward eco-friendly energy

Total Scores

1.00

3.91

Short termThe global economic crisis and oil shock affect the company in short term. It put brakes on automobiledemand, increasing cost of fuel and raw materials, reducing investment and R&D cost while puttingpressure on cutting price of products hence require strategy of the company toward reducing operatingexpenses and workforce. In this situation, well manage costs and expenses become the core strengthof Hyundai in competing with other competitors and attracting more customers. In addition, the crisis ofkey competitor as broken top-quality image creates opportunity to Hyundai by launching campaignfocusing more on quality improvement, gaining reputation and boost sales value.

Intermediate termHyundai can take advantage of advanced technology in intermediate term as well as in the long term.Advanced technology is core competency of company to compete on quality and functions of productsthat are more interested from customers nowadays. Late enter into automobile manufacturing industrymaking less information and feedbacks of Hyundai products so that the company need to launchstrategy of marketing brand value, raising level of perception of customers. Furthermore, potentialmarkets from developing countries should be considered and prepared in intermediate term in order toexpand business and gain market share.

Long termEnvironmental effect is the most concern of all people and society and it affects all industry, not justautomobile manufacturing industry. Therefore, advanced technology toward eco-friendly energy is themost concern of the company in long term as well. Not only improving quality, design and function ofproducts but also company needs to put more emphasis on reducing impact of car to environment as ameans of sharpening its competitive advantage. Moreover, the company should be able to create morenew models to compete with competitors especially in luxury and hybrid car segments which are lesscompetitive areas but very profitable areas. Similarly, targeting into potential market from developingcountries should be considered for long term strategies as they have such a lot of potential demandsand providing valuable source of profitability.

TOWS Matrix

Internal

Factors

External (IFAS)

Factors

(EFAS)

Strengths (S)S1 Advanced technology

S2 Branding experience

S3 Qualified labour force

S4 Cost efficiency

S5 Flexibility marketing & experiences

Weaknesses (W)W1 Cultural difference

W2 Commodity price risk

W3 Late entrant

W4 Diversity

W5 Currency fluctuation

Opportunities (O)O1 Hybrid car segment

O2 Governmental support

O3 High emphasis of buyers on low cost & design

O4 Competitor's weakness

O5 Potential market from developing countries

SO strategiesFocus on research and development

Build up strong brand image.

Expand business to potential market

WO strategiesSet up more distribution channels & plants

Globalization

Innovative products

Threats (T)T1 Global economic crisis

T2 New entrants

T3 Low market growth

T4 Environmental requirement

T5 Political instability

ST strategiesUse eco-friendly fuel

Cutting costs & expenses

Focus on marketing and public relation

WT strategiesIncrease advertisement

Reduce ineffective distributor to minimize costs

Improve market research

SO strategiesTo strengthen company's survival ability, company need to use its own strengths to take advantages ofopportunities. Firstly, Hyundai should focus on research and development to reach out the potentialhybrid car segment trend by taking advantages of its own advanced technology. Furthermore, Hyundaineeds to know the competitors and how they operate, as well as exploit their weakness. For example,exploit weakness of Toyota that has been facing a crisis of quality. With flexibility marketing andorganisational experience, Hyundai may identify the problems and avoid same mistakes that can bemade; hence building up new and strong brand images associated with lower price. With a brandingexperience and qualified labour force, Hyundai may gain a large market share from these potential

markets.

WO strategiesTo take advantages of opportunities to overcome weaknesses, Hyundai can set up more distributionchannels and plants in new markets and segments. One of Hyundai's weaknesses is the lackingcompetitiveness in luxury car segment. Thereby, strategy which should be applied here is globalization;they may aim to export their products to developing countries, where customers mostly have anaverage income that put high emphasis on low price & design and willing to purchase an affordable carinstead of a luxury car. Moreover, late entrance to the market can be covered by the appearance ofinnovative products, which are hybrid car segment which Hyundai has focused and developed.

ST strategiesCompany always faces various threats from both internal and external factors. There is a need tocover the threats using company's' own strength. Nowadays, environmental requirements fromcustomers are getting higher since they are starting to concern about health care and impact of cars toenvironment. By using their advanced technology, Hyundai should develop technology toward eco-friendly energy such as bio-diesel, liquefied petroleum gas and electric energy to combine theirengines and social expectation. By making advantages of cost efficiency, Hyundai may cover their lowmarket growth; however they have to manage their capital and expenses wisely and effectively. Newentrant is always a big threat facing a company. However, by having a good brand experience andflexible marketing, Hyundai can surpass their competitors by focusing on marketing and public relationsto gain more market share.

WT strategiesThere are some strategies Hyundai may use to minimize weaknesses and avoid threats. Firstly, globaleconomic crisis has affected many industries and companies, Hyundai is not the exception. Undereconomic crisis, minimize unnecessary and ineffectively costs plays an important role to maintaincompany business. At the same time, company should increase advertisements to gain morereputation and build up their brand images. Last but not least, Hyundai should do more marketresearch if they are planning to expand their business to other countries, in order to avoid unwantedpolitical instability and cultural differences.

Review of strategic options available to company:There are several strategic options which are currently available for the success of Hyundai. Firstly,Hyundai should focus on short term strategies, such as operational efficiency program andglobalization. The company is facing a low market growth compared with their competitors due to lateentrant to the market. Hence they need to manage their capital and expenses effectively by cutting allunnecessary costs, operating expenses and other utilities costs. Moreover, globalization strategyshould be concerned to gain more market share from potential market in developing countries.However, they need to be aware of the cultural differences and political instabilities which may occurduring the plan.

On the other hand, Hyundai must concentrate on long term strategies. Nowadays, the hybrid carsegment has become the new trend in automobile market. Thus research and developmentdepartment should be improved to reach the potential market trend, based on its existing advancedtechnology. From the improvement of R&D department, a new innovative product may appear todistinguish Hyundai from other companies. Furthermore, health care and impact of cars to environmentare being concerned by customers. Hyundai need to come up with new green and eco-friendly fuelsuch as bio-diesel, liquefied petroleum gas and electric energy to follow the trend.

Recommend for future direction:For future direction, Hyundai should pay attention to improve their brand images, by running moremarketing programs such as offering loyal customer's reward system and new advertisementcampaign. These advertisements should be located at all available media which are being concernedby public, like newspaper, television, radio and over the internet. They need to learn useful strategiesfrom their competitors as well. One way to the success is to increasing more options of products alongwith improving online ordering services. Hyundai may also offer more options available to customersthrough online service to maximize their customers' satisfaction.

Assessment of company's performance:

EfficiencyDespite sluggish domestic sales amid the global economic downturn, Hyundai Motor expanded itsglobal market share last year and the 2009 net profit was an all-time annual high. Hyundai hadachieved 2.96 trillion won ($2.57 billion) in 2009, compared with a net profit of 1.44 trillion won in 2008.In 2009, Hyundai sold a record 3.1 million vehicles, up 11.7 percent from 2008. In 2008, Hyundai hasjumped up to fifth in the global standing of the world's largest automobile manufacturers. However,latest sales figures in 2009 that place Hyundai to the world's fourth largest automaker in terms of unitssold.

Effectiveness:Hyundai has implemented many strategies to increase company's effectiveness. Hyundai is seekingreductions of as much as 20% in consideration of supplier, volume and parts involved. The company iscutting costs not only by rationalizing its domestic plants, but also more and more by manufacturing inareas with lower production costs in oversea countries. As a result, company completed a 3 trillion won($2.2 billion) cost-reduction program in 2008. Possessing about $7.1 billion in assets including HyundaiMotor share, Hyundai is very aggressive in spending as R&D and marketing. In general, Hyundai isimplementing its strategies effectively.

Return on investment:Hyundai has raised its global share in recent years, even as it has maintained a stable position inKorea and well balanced market portfolio and currency settlement. However, in 2009, there are somedecreases in term of return on investment due to the negative impacts of sluggish economic condition.Total dividend payout was KRW235.7 billion, down 14.6% from the previous year. However dividendpayout level was maintained at the 16%. Hyundai enjoyed a rise in market share as the result ofinnovative marketing and successful launch of new models. In the first three months, the company'sglobal market share rose to 4.7%, compared to 4% a year earlier. The company is expected tocontinue its' success along with improved performance in key markets.

Recommendations for Implementation of Strategies

StructureThe current economy is under sluggish condition that requires the company to make judgements and aneed of improving organizational structure. Company's structure needs to work toward operationalefficiency in association with quality and technological improvement. Continuous decentralization ofmanagement structures and the strategy of diversification of output helped the company in coping witheconomic crisis. Hyundai needs to establish R&D centres to take advantage of research infrastructure,so that the company can develop its products to satisfy the requirements of the environmental andsafety regulations effectively.

SystemHyundai is multinational automobile manufacturing company; customers demand high-quality,customized services and they also look for different types of information when making buyingdecision. Thereby, its service needs to be differentiated and improved. The company needs the newsystem to enhance the availability of back-end data, improve customer service and lowered systemmanagement costs. Additionally, Hyundai needs to have an effective environmental managementsystem to implement environmental strategy for the entire value chain of the auto industry includingR&D, purchasing, manufacturing, logistics, sales and customer service.

PolicyTo implement new strategies, it is necessary for Hyundai to improve hiring policy. Sluggish economiccondition places a need of being more efficient and effective to the company, so that keeping theworkforce sufficient and competent in order to implement strategies on the right ways and operate thesystem effectively and efficiently. Also, it is important for Hyundai having global environmentalmanagement policy, apply environmental management strategy across the entire value chain of theautomobile industry that forms the basis of sustainable development, minimizing impact of cars toenvironment. (3575 words)

Usefulness of strategic management models:

Industry life cycle modelIndustry life cycle model is a useful tool for analyzing the effects of an industry's evolution oncompetitive forces. The four distinct stages of an industry life cycle are: introduction, growth, maturityand decline. Industry life cycle model helps us to identify the company's situation in the industry as wellas the characteristics of its industry in current period. Therefore, company may develop new strategiesto cope with current situation and prepare for the next stage in its business. It is important forcompanies to understand the use of the industry lifecycle because it is a survival tool for businesses tocompete in the industry effectively and successfully.

Key success factorsKey success factors model is being used significantly to present or identify a few critical factors that acompany should focus on to be successful. Identifying key success factor is important as it allows firmsto focus their efforts on building their capabilities to meet the factors, or even allow firms to decide ifthey have the capability to build the requirements necessary to meet key success factors. Byunderstanding this model, companies can know which the most important factors are, how well thecompanies do and which factors need improvement.

Porter's five forces:Porter's five forces model identify various internal and external factors that affect the company withinany industry; they are threat of new entrants, rivalry among existing firms, threat of substitute productsor services, bargaining power of buyers, bargaining power of supplier and lastly relative power of otherstakeholders. By understanding the important levels of these forces, the company may identify thepressures and come up with new strategies to cope with it. Moreover, by rating the importance fromlow to high, the company may set the priority option to deal first.

SWOT analysis:SWOT analysis is used to evaluate the strengths and weaknesses of the company, as well as the

opportunities and threats that company is facing. Identification of SWOT is essential as it provides abasic understanding about company's background. SWOT model helps the company to be aware ofcurrent situation, in both internal and external factors; therefore they can prepare properly strategies.By understanding SWOT model, company can develop TOWS matrix to generate the suitablestrategies.

Strategic factor analysis summary matrix:There are a number of tools or methods used as the foundation for strategic analysis of a business;strategic factor analysis strategy is one of the most popular methods because not only does it focus oninternal strengths and weaknesses but also on the external environment the company is operating in.The most important external factors and internal factors will be located in this matrix. Understandingand analyzing all these factors is important to developing strengths into competitive advantages overcompetition and improving certain weaknesses that hinder a company's efficiency and growth.

TOWS matrix:The TOWS Matrix indicates four conceptually distinct alternative strategies, which will use a company'sstrength or opportunity to cover its threat and weakness. By identifying this matrix, a company candevelop and improve their strategies to suit with the current situation which they are facing with. Theyalso may know the priority option which they should concentrate on to maximize its own strengths andweaknesses, as well as minimize all weaknesses and threats.

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Hyundai Motor Company The Worlds Fourth Largest Automaker Marketing EssayBrief of company:Reason for selecting:Main strategic issues facing the company:Company's contribution to the National Economy:Company's contribution to the regional economy:Recent strategic dilemma:Recent strategic choice:Source of Information on CompanyIndustry life cycleKey factors of success (KFS)Key factors ofsuccessWeightHyundaiToyotaNissanRatingWeighted scoreRatingWeighted scoreRatingWeighted scoreInnovationTechnologyLow-cost manufacturingQuality & SafetyDesignAdvertising and distributionCustomer serviceDiversityTotal1.003.694.153.10Threat of new entrants:Sluggish state of economyRequirement of high R&D and fixed costDifficulty in accessing to distribution channelsFew newer with low competitionRelative power of other stakeholderInternal stakeholders: shareholders, management, employees and creditorsExternal stakeholders: government, partner firms, clients and potential investorProvide feedbacks & opinionForce Driving Industry CompetitionRivalry among existing firm:Threat of substitute:Bargaining power of buyers:Bargaining power of suppliers:Rivalry among existing firms (High)Threat of new entrants (Low)Bargaining power of buyers (High)Threat of substitute products or services (Low)Bargaining power of suppliers (Low)Relative power of other stakeholders (Medium)Internal Factor Analysis Summary (IFAS Table)Internal strategic factorsWeightRatingWeighted scoreCommentsStrengthsS1 Advanced technologyS2 Branding experienceS3 Qualified labour forceS4 Cost efficiencyS5 Marketing flexibility & experienceWeaknessesW1 Cultural difference W2 Commodity price riskW3 Late entrantW4 DiversityW5 Currency fluctuation0.150.130.090.140.080.080.060.110.090.074.503.503.504.504.003.503.004.004.003.000.670.450.310.630.320.280.180.440.360.21Advantage to quality & innovationRaising valuable global brandingSource to gain competitive advantageWell manage costs and expensesStrong corporate philosophy focus on "customer first"Difference between business cultureAdverse effect of commodity price changeLess feedbacks & information from buyersLimited ability in adding new modelsFluctuation of currency in country doing manufactureTotal scores1.003.85StrengthsWeaknessesExternal Factor Analysis Summary (EFAS Table):External strategic factorsWeightRatingWeighted scoreCommentsOpportunitiesThreatsTotal scores1.003.82OpportunitiesThreatsStrategic Factor Analysis Summary (SFAS) Matrix:DurationStrategic factorsWeightRatingWeighted scoreSHORTINTERMEDIATELONGCommentsXXXXXXXXXXXTotal Scores1.003.91Short termIntermediate termLong termTOWS MatrixInternalFactorsExternal (IFAS)Factors(EFAS)Strengths (S)Weaknesses (W)Opportunities (O)SO strategiesWO strategiesThreats (T)ST strategiesWT strategiesSO strategiesWO strategiesST strategiesWT strategiesReview of strategic options available to company:Recommend for future direction:Assessment of company's performance:EfficiencyEffectiveness:Return on investment:Recommendations for Implementation of StrategiesStructureSystemPolicyUsefulness of strategic management models:Industry life cycle modelKey success factorsPorter's five forces:SWOT analysis:Strategic factor analysis summary matrix:TOWS matrix: