Hyundai and kia fined for misleading customers fuel economy
Answer
Introduction
Threat of Substitutes: This threat is moderate for Hyundai Motor as the substitute products of the company are public vehicles and rivals’ cars (Gupta 2013).
Bargaining Power of the Customers: This threat is high for Hyundai Motor as the rival companies are providing same quality of motors in competitive prices.
Economic: The effects of global recession has negative impact on Hyundai Motor due to the decrease in the purchasing power and demand in the market.
Social: The operations of Hyundai Motor are affected by the continuous change in the social trends as it affects the demands (Zimmerman and Blythe 2013).
Value Chain Analysis
Primary Activities
Support Activities
Technology: It is a crucial aspect for Hyundai Motor as the company invests heavily in advanced technologies. As a result, Hyundai Motor owns some of the best manufacturing plants. The firm has been investing hugely in new technologies along with research and development.
Analysis of Business Level Strategy
It needs to be mentioned that Hyundai Motor is one of the most successful automobile manufacturer all over the world and the presence of certain business level of competitive level strategies can be considered as the main reason behind the success of the company. These competitive level strategies are discussed below:
Brand Equity in the Business Level Strategy of Hyundai Motor: One major aim of Hyundai Motor has been to associate with the renowned international events like FIFA, UEFA, ICC matches in T20 format and one day international matches along with different other events with the aim to create high visibility to the customers all over the globe (hyundai.com 2018).
Competitive Analysis of the Business Level Strategy of Hyundai Motor: It needs to be mentioned that all the companies operating in the auto manufacturing industry have adopted the red ocean strategies rather than the adoption of innovation-based strategies to become successful. Major companies in this industry like Hyundai Motor, Suzuki, Honda, Fiat, Ford and others are giving tough competition to each other to eat up their market shares.
Suitability: Suitability is the most crucial factor in SAF strategy model as it provides the companies with the idea whether their existing strategies will achieve their organizational goals. It needs to be mentioned that that the above-discussed strategies of Hyundai Motor are using the strengths of the company that are the brand image and equity, global presence, strong manufacturing as well as innovation capabilities and others. However, the above-discussion also shows the weakness of Hyundai Motor in entering in the SUV segment. Thus, Hyundai Motor needs to consider redesigning their strategies related to the SUV segment (Hill, Jones and Schilling 2014).
Acceptability: Acceptability is considered as an important factor for the assessment of the risk and return as it is strongly related to the expectations of the stakeholders. The recent financial performance of Hyundai Motor questions the acceptability of the existing strategies to their major stakeholders. Decrease in the global pant sales can be seen for Hyundai Motor in 2017 (hyundai.com 2018). The presence of -0.4% growth can be seen in total assets along with the reduction in the shareholders equity. Profit growth for the year is -20.5% with a massive decrease in basis earnings per share (hyundai.com 2018). In the presence of all these aspects, it can be said that the existing strategies of Hyundai Motor have almost failed to increase the wealth of the stakeholders along with increasing the risk factor of business.
1st Case: Hyundai Motor had to pay a fine of $100 million and forfeit $200 million in credits as the company misled their customers about the fuel economy of more than 1 million cars sold in United States (US). Hyundai Motor had to pay this fine to the Environmental Protection Agency (EPA) and the Justice Department (theguardian.com 2018).
2nd Case: The Chairman of Hyundai Motor, Chung Mong-koo was handed a three-year suspension sentence by the South Korean appeals court as he was using the funds of the company in fraudulent manner (reuters.com 2018).
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Goldenberg, S. (2014). Hyundai and Kia fined $100m for misleading customers on fuel economy. [online] the Guardian. Available at: https://www.theguardian.com/business/2014/nov/03/hyundai-and-kia-fined-100m-for-misleading-customers-on-fuel-economy [Accessed 8 Dec. 2018].
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