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Global Strategic Management

Global Strategic Management

Executive summary

Hyundai is the most popular automobile manufacturer in all over the world.   The global automobile market has grown due to the advanced technology. Hyundai has an extraordinary global presence and manufacturing capabilities. The report examines the internal and external environment of the company.  The report analysis business strategies of Hyundai and also evaluate strategic option for future growth. On the basis of SAF model, Hyundai is required to adopt global expansion and joint venture or acquisition strategy to grow in future.

Introduction

In a competitive environment, strategic analysis helps to bring significant information about development of business environment.  Strategic analysis helps the organization to reveal opportunities and threats in order to make strategic decisions. Strategic decision is considered as the most significant part of the management that helps to accomplish survival and success of the organization. It helps to access initial situation in order to evaluate inside and outside environment of the company. The strategic performance of the company depends on its resources and capabilities (Capar, et. al., 2013). The aim of the report is to provide a brief understanding of strategic management of the company to improve decision making.  The chosen company for this assignment is Hyundai Motors.  The report examines internal and external environment of the company. The report also examines strategic analysis of the company to identify strategy option to grow. Hyundai is one of the leading automotive manufacturers located in Seoul, South UK.  The company was founded by Chung Ju-Yung in 1967. The company is able to operate world largest automobile manufacturing facility with a production capacity of 1.6 million units.  The company also focuses on advanced technology in order to fulfill preferences of the customer. Hyundai also provides eco-friendly vehicles in order to meet changing demand of the potential customers (Hyundai, 2018).

External environment

The growth of global automotive industry has been increased over the past few years.  It is expected that the profits and sales of the company would increase by 2020.  It is because several trends are shaping the growth of the automotive industry.  It has been observed that the market of automotive industry would cross the threshold of 100 million units by 2019. In 2016, the company is able to grow its sales globally with its highest sales in Asia (St, 2009).

Pestle Analysis

Political factors:  the political forces and changes in the political environment have direct impact on the business environment of Hyundai. The company is able to meet political requirements of UK by participating in the green growth plan of the country. The government is able to introduce green technology with the support Hyundai.  It has been observed that the company has faced problem in the UK market by offering competitive price of vehicles.   It also decreases the sales in the UK market due to the expensive manufacturing (Jin, and lienert, 2015).

Economic factors: the economic factors also have a direct impact on business environment of automotive industry.  It has been observed that economy of UK is depending on foreign imports for per capita energy and energy consumption.    Hyundai has produced Sonata electric in 1991 and stated hybrid production in 1995. The company is also planning to mass produce hybrid by 2009. The company is also able to increase high growth Hyundai vehicles in the Asian markets by providing luxury and SUK vehicles globally.

Social factors: social factors play a most significant role to grow operation of the business. The change in the social trends also affects demand of the products across the world. It has been observed that most of the customers are demanding for SUVs and luxury car in the Asian Pacific markets. In the context of this, Hyundai is able to implement its marketing strategies based on local culture and society in the UK market (Jin, 2017). The company is also able to offer vehicles that perceived social status of customers. The company also offers better safety; improve driving experience on the basis of customer requirements.

Technological factors: technological factors have an impact on the growth of the business in 21st century. It is because customers preferred high tech products to enhance driving experience. In the context of this, Hyundai has invested in research and development which include automated driving, artificial intelligence and sustainable vehicles. It has been observed that the company has invested 2,352 billion on R&D (Kolios, & Read, 2013).

Environmental factors:   the environmental factors have grown its importance in the 21st century.  It is necessary for the organization to create laws related to the growing air pollution which is caused by fuel-guzzling vehicles. In the context of this, Hyundai gives more emphasis on hybrids and electric vehicles in order to offer eco-friendly vehicles to customers.

Legal factors: it is necessary for the organization to understand legal factors as non-compliance can cause the penalty of billions of dollars (Hashmi, & Van Biesebroeck, (2010) . Hyundai focuses on emission standards in order to carbon dioxide and implements road emission tests. The company also focuses on legal compliances for employees such as fair remuneration, career opportunities and avoids discrimination.

Internal environment

Value chain analysis

Primary activities

Operations:  Hyundai is considered as the world largest automobile manufacturer and also has a single largest manufacturing plant in Ulsan. The company also has manufacturing plants in Alabama, India, Brazil, China and Russia (Nunes, & Bennett, 2010).

Inbound logistics: The supplier of Hyundai motors are scattered around the world. The suppliers of the company help to provide good quality of raw materials.  The company also believes to provide sustainable value to the suppliers for continuous growth in the market.

Marketing and sales: Hyundai Motors spends lot on marketing strategies of its products, services and brand. It has been observed that the company has spent 2460 Billion on marketing. It helps the company to enhance brand awareness in the national and international market (Bolwig,et. al., 2010). The marketing strategy of Hyundai also helps to meet changing demand of the customers by investing in advanced technology.

Outbound logistics: Hyundai has provided one-stop logistics services which include storage of products, import, and packaging which is based on information system and worldwide network of the company. The company is able to provide accurate and swift information globally.  The produced vehicles of the company have sent to the dealer of Hyundai throughout the various corners of the world (Soosay, et. al., 2012).

Support activities

Technology: Hyundai Motors gives more emphasis on innovative human resource management in which the company is able to employees more than 118320 workforce and 66890 employees are there in the UK. Along with this, the company is also using advanced technology in order to take corrective action for environment and customers effectively (Lind, et. al., 2012).

Procurement:  the procurement team is able to procure raw material for Hyundai from all over the world. In the context of this, each employee has dedicated area and specializes in tools, parts, consumables and materials required by the different departments. The team members of procurement department believe to maintain strong relationship with the suppliers.

Firm Infrastructure: Hyundai is able to become one of the leading and most popular automobile manufacturer in all over the world. The company also has large infrastructure that starts from manufacturing plants to research and development facilities.

On the basis of above analysis, Hyundai is able to achieve competitive advantage by meeting demands of the customers in UK. Along with this, the weak currency of the country also helps to gain competitive advantage as the company is able to increase its operating profits effectively. the company is also able to take advantage of cost-effective labor as the employee's wages are less as compared to the others. The UK government is also able to attract cluster of suppliers and manufacturer that helps Hyundai to get quality of raw material from the suppliers around the world (Lee, 2011).. The company also get the advantage of geographical diversification as the company is able to expand globally, build plants, develop research and development centers, employing FDI, marketing subsidiaries and others.

Strategic analysis

Analysis of business strategies

Hyundai motors focus on the business strategies to grow in the market effectively. The biggest concern of the company to keep the costs low and adopt advanced technology. It helps to provide advanced driving assist system to the customer with the combination of fully automated. Following are the business strategies of Hyundai.

Global business strategy:  the global strategy is considered as the most significant strategy for Hyundai as it helps to export products and services in the global market. It has been observed that the exporting to overseas are the key factors to grow in the international market. The company is also able to export its vehicles from Ulsan plants (Shim, & Steers, 2012). Hyundai has a joint venture while entering in the international market which includes Malaysia, China and Turkey.  It helps the company to expand its market share in the international market. The company also implemented sustainable development globally in order to accelerates global management initiatives. It helps the company to construct second manufacturing plant in India and China.

Distribution strategy:   the company is able to follow an effective distribution strategy as the company is able to make its offering through 6000 dealership and showrooms.  The company is also creating customer engagement opportunities in order to delivery revolutionized experience of the brand.

Positioning strategy: Hyundai is able to position itself as the biggest automotive manufacturer in the world. The company is able to elevate Hyundai brand in the eyes of customer in UK. It has been observed that the company is received high profile category awards from AJAC that grab attention of the customers in UK (Wesseling, et. al., 2015).  The company also believed to deliver best experience to the customers that exceed expectations. In the context of this, the company is able to deliver award-winning quality, convenience systems, advanced engineering, safety and others.

Evaluation of strategy

SAF model

Suitability: the global expansion strategy is suitable for Hyundai as it is matched to the current strategy of Hyundai.  It has been observed that the globalization strategy is also implemented in the past by the Hyundai in terms of expansion.  The global expansion strategy is considered as the best strategic option to grow in the international market. It helps the company to increase brand awareness in the internal market. Although, Hyundai is considered as the smart leader in the UK, but the company is not able to provide affordable price of vehicles to the customers that also decreases volume of sales in the UK market (Todd, et. al., 2012). In the context of this, the global expansion strategy is best for Hyundai for the next five years. It helps the company to retain its leadership position in the market. It will help the company to understand current requirements of the customers related to the price. It helps the company to enhance level of profitability and sales.  Along with this, the strategy of joint venture or acquisition will be the best strategic option for Hyundai to grow in the market. It is the best strategy for Hyundai as the company is able to execute its showrooms in the past. But Hyundai is required to perform extensive market research.

Acceptability: the global expansion strategy of Hyundai will help the company to deal with the major risks in adopting and implementing global expansion strategy in the future. Along with this, it is easy for the stakeholders are ready to accept this strategy in order to make a strategic decision for the company. S the stakeholders are aware of the success of business. Initially, the major costs of extension will affect productivity and profitability of the company. Joint venture or acquisition with the competitors will help to open new doors to explore opportunities for Hyundai (Pollet, et. al., 2012).

Feasibility: As strategic options, global expansion strategy is one of the most strategic options for Hyundai in terms of technology, HR and Finance. It has been observed that the superstores have great level of funding resources, skills and human and technology in order to implement this strategy effectively. the strategy related to the acquisition or joint venture is feasible for Hyundai to implement an integration strategy. Hyundai is considered as financially sound that would help the company to form joint venture or acquisition (Jin, and lienert, 2015).

Conclusion

From the above discussion, it can be concluded that strategic analysis helps the company to explore various opportunities.  Hyundai is able to sustain leadership position in the market. Hyundai is the world largest automotive manufacturer in the world.   The company is required to develop its strategy to maintain its leadership position in the future.  The company is required to reduce its price so that customers are able to enjoy the experience of Hyundai.   On the basis of SAF model, the company is required to adopt global expansion strategy and joint venture or acquisition to grow in the market effectively. It will help the company to decrease its costs successfully.

References

Bolwig, S., Ponte, S., Du Toit, A., Riisgaard, L., & Halberg, N. (2010). Integrating poverty and environmental concerns into value‐chain analysis: a conceptual framework. Development Policy Review28(2), 173-194.

Capar, I., Kuby, M., Leon, V. J., & Tsai, Y. J. (2013). An arc cover–path-cover formulation and strategic analysis of alternative-fuel station locations. European Journal of Operational Research227(1), 142-151.

Hashmi, A. R., & Van Biesebroeck, J. (2010). Market structure and innovation: A dynamic analysis of the global automobile industry (No. w15959). National Bureau of Economic Research.

Hyundai (2018) About Hyundai [Online] Available at: http://www.hyundai.com/in/en/AboutUs/AboutHyundai/index.html (Accessed: 18 December 2018)

Jin, H. (2017) Hyundai plans long-range premium electric car in strategic shift [Online] Available at: https://uk.reuters.com/article/us-hyundai-motor-electric-vehicle/hyundai-motor-to-launch-electric-vehicle-with-500-km-range-after-2021-idUKKCN1AX039 (Accessed: 18 December 2018)

Jin, H. and lienert, P. (2015) Hyundai Is Setting A Blistering Pace For Innovation [Online] Available at: https://www.businessinsider.com/r-global-patents-reflect-advances-in-connected-and-self-driving-cars-2015-1?IR=T (Accessed: 18 December 2018)

Kolios, A., & Read, G. (2013) A political, economic, social, technology, legal and environmental (PESTLE) approach for risk identification of the tidal industry in the United Kingdom. Energies6(10), 5023-5045.

Lee, K. H. (2011). Integrating carbon footprint into supply chain management: the case of Hyundai Motor Company (HMC) in the automobile industry. Journal of cleaner production19(11), 1216-1223.

Lind, L., Pirttilä, M., Viskari, S., Schupp, F., & Kärri, T. (2012). Working capital management in the automotive industry: Financial value chain analysis. Journal of purchasing and supply management18(2), 92-100.

Nunes, B., & Bennett, D. (2010). Green operations initiatives in the automotive industry: An environmental reports analysis and benchmarking study. Benchmarking: An International Journal17(3), 396-420.

Pollet, B. G., Staffell, I., & Shang, J. L. (2012). Current status of hybrid, battery and fuel cell electric vehicles: From electrochemistry to market prospects. Electrochimica Acta84, 235-249.

Shim, W. S., & Steers, R. M. (2012). Symmetric and asymmetric leadership cultures: A comparative study of leadership and organizational culture at Hyundai and Toyota. Journal of World Business47(4), 581-591.

Soosay, C., Fearne, A., & Dent, B. (2012). Sustainable value chain analysis–a case study of Oxford Landing from “vine to dine”. Supply Chain Management: An International Journal17(1), 68-77.

St, W. (2009) Hyundai: America's Most Successful Car Company [Online] Available at: http://content.time.com/time/business/article/0,8599,1882987,00.html (Accessed: 18 December 2018)

Todd, N. J., Solis-Trapala, I., Jones, S. H., & Lobban, F. A. (2012). An online randomised controlled trial to assess the feasibility, acceptability and potential effectiveness of ‘Living with Bipolar’: a web-based self-management intervention for bipolar disorder: trial design and protocol. Contemporary Clinical Trials33(4), 679-688.

Wesseling, J. H., Niesten, E. M. M. I., Faber, J., & Hekkert, M. P. (2015). Business strategies of incumbents in the market for electric vehicles: Opportunities and incentives for sustainable innovation. Business Strategy and the Environment24(6), 518-531.

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