Hyundai Motor Company The Worlds Fourth Largest

Automaker Marketing Essay

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Established in 1967, Hyundai Motor Company has sustained, grown and become the world's fourth
largest automaker in terms of units sold. Automobile manufacturing industry is in the maturity stage and
exposed to a lot of difficulties. To survive and develop, the company needs to identify and develop key
factors of success such as innovation, technology development, quality improvement, and customer
service; associated with cutting costs and diversify products. Moreover, the company needs to take into
account 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 and
experiences. On the other hand, Hyundai also has to minimize weaknesses that are cultural
differences, commodity price risk, late entrant, diversity and currency fluctuation. In addition, there are
some opportunities for Hyundai to take advantages consist of new segment of hybrid car, governmental
support, buyers' emphasis on low cost & design, competitor's weakness and potential market. While
avoid threats that comprise global economic crisis, new entrants, low market growth, environmental
requirement and political instability.
Hyundai must consider strategy for short, intermediate and long term. Firstly, to minimize adverse
impact of global economic crisis, company should reduce costs & expenses. Secondly, Hyundai should
take advantage of core strengths as advanced technology such as eco-friendly energy to comply with
environmental issues. Lastly, the company should target into potential markets from developing
countries. In addition, it is important to improve the structure, system and policy. Continuous
decentralization of management structures and the strategy of diversification should be applied
associated with new system to enhance the availability of back-end data, improving customer service
and lowered system management costs. Finally, hiring policy and global environmental management
policy 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 most
recognizable and trusted firms. Today, Hyundai stand the world's fourth largest automaker in terms of
units sold and one of the Big Asian. Hyundai Motor is operating globally and provides diverse product
portfolio supported by its 6,000 sales points and 23 overseas manufacturing plants and distributors in
180 countries worldwide. The total revenue of company has recorded as 31 December 2008 is
US$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 of
the Hyundai brand has been transformed as a result of dramatic improvements in the quality of
Hyundai vehicles which are sold with reasonable price. While others competitors are facing with losses
and struggling with economic downturn, Hyundai still make profit and has come up impressively as a
phenomenon in automobile industry.

Main strategic issues facing the company:

Coping with climate change and complying with regulations on CO2 emissions. Decreasing
environmental 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, accounted
for 14.4% in production, 13.4% in export, and 14.3% in employment. Hyundai has created 56,204
employees in South Korea and contribute about 70% to Korean automobile industry and 5.4 % to
Korea's GDP.

Company's contribution to the regional economy:

There are 22,066 overseas employees under Hyundai Motor Company, comprise of 6,956 employees
in North America, 5,101 employees in China, 5,457 employees in India, 4,694 employees in Europe
and 218 in other countries.

Recent strategic dilemma:

In applying of "Blue Strategy", some of its eco-friendly cars were developed to meet environmental
regulations set by European Union, the performance of vehicle is meant to deteriorate when he carbon
dioxide 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 with
quality 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 toward
sustainability approach and to comply with regulation on emission issue.

Source of Information on Company

Hyundai Motor Annual Report
http://worldwide.hyundai.com/
(375 Words)

Industry life cycle

Time
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, the
industry does not grow as much as last 5 or 6 years. The market is very competitive, many
manufacturer offering their products, the producers continue with the product differentiation in many
segments and hence, the market result in saturation with many manufacturers offering many models of
the product. In this stage, only the best efficient and effective company survives. There are about 806
million cars and light truck on the road in 2007, the number is increasing rapidly especially in China and
India. The biggest market currently is in North America which is about 250 million vehicles, following
are Asia and Europe market. In 2009, with stable economic growth, China is going to become the
largest automobile producer and market in the world.
The automobile industry crisis and oil shock in 2008 is a part of global financial recession. It affected
Asian and Europe automobile manufacturers but it is primarily felt in American automobile
manufacturing industry. With rapidly rising oil price, automobile industry is experiencing high pricing
pressure from raw material costs and changes in consumer buying habits. Also, there is an increase in
external competition from public transport sectors and consumers are re-evaluating their private
vehicle usage. Moreover, the social expectation and related concerns regarding carbon emissions had
lead to the restricted standard setting that automakers have to be fulfil in order to penetrate into these
high requirement markets.
In addition, customers now are seeking a car with higher quality demand, more functional and price is
crucial factor. In combination with the challenging economic environment, the companies' strategy has
to be more effective, innovative, cost reduction as well as making product differentiation and improve
customer services. Also, automobile companies have to implement more creative marketing strategies
to lure consumers as most of them are experienced decline in sales.The response to climate change
may have a greater impact on the automobile manufacturing industry than all the other factors. It leads
automaker to develop toward "green technology" and alternative fuel and material to lessen impact of
automobile 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
Innovation
0.17
4.00
0.68
3.50
0.59
3.00
0.51

Technology
0.21
3.50
0.73
4.50
0.94
3.50
0.73

Low-cost manufacturing
0.11
3.50
0.38
4.50
0.49
3.00
0.33

Quality & Safety

0.13
4.00
0.52
4.00

0.52
3.00
0.39

Design
0.12
4.00
0.48
4.00
0.48
3.00
0.36

Advertising and distribution

0.10
3.50
0.35
4.00
0.40
3.00
0.30

Customer service
0.09
3.50
0.31
5.00
0.45
3.00
0.27

Diversity
0.07
3.50

0.24
4.00
0.28
3.00
0.21

Total
1.00
3.69
4.15
3.10
The factors listed above are some of the most important factors that company needs to achieve in
order to be successful in the industry. Nowadays, Toyota is the most successful company in automobile
industry because they achieve key factors successfully. Among all factors, innovation is the most
important 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 score
of Toyota is highest, following is Hyundai then Nissan. Among all of the factors, technology is the most
important as automobile industry is under pressure of high competition and the issue of climate
change. Technology is not simply satisfying customers with a simple car, it need to bring a car with
more functions, more model and technological. Also, technology needs to enable the company to
develop car in combination with new material and fuel. Leading technology with above average rating
of 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 more
about the appearance of the car, more innovative is needed. New models are required to have more
impressive design and that will help company to gain market share and increasing sales value. In term
of innovation, Hyundai has launch new models with remarkable improvement of design that is more
attractive to the customers over the past few years. It helps Hyundai gaining more market share in
compare 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 when
making buying decision. Hyundai has done it well since the past few years. They receive good signs
from customer's perception of company's brand that is improvement of quality & safety. Price is crucial
factor; 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 of
product to compete with others and to enjoy economy of scale and scope. To be more successful in
improving brand of company, not only design, quality and price but also customer service needs to get
betters. Customers want a good after-sale service that they can rely on. Company has to take these
factors as a basis in combination with economic situation to develop suitable strategy in order to grow
successfully 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 and
creditors
External stakeholders: government, partner firms, clients and potential
investor
Provide feedbacks & opinion
Force Driving Industry Competition
Suppliers
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 global
competition, rivalry among existing firms is high. Rival companies compete on prices, quality and
customer service; a company watches very carefully every movement of rivals in order to adapt
appropriately. 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 to
keep working their competitive advantages, launching strategy to reduce cost, better service to suit
with this sluggish economic condition, keeping up with developing of new design, quality and especially
looking answer for technology toward "Green Environment" that I predict it will be a crucial factor in
near future.

Threat of new entrants (Low)

Automobile industry is highly capital and labour intensive, it require very high fixed cost as well as
R&D, so threat of new entrants is low. It is not easy to enter automobile industry and it is harder since
the economy downturn is happened that decrease the demand of customer. Brand loyalty of customer
is 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 all
over 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 satisfied
then they will lose their buyers to competitors. Nowadays, there are various brand and models that
buyers can choose, buyers have many choices so that their requirements are high. The factors that
affect 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 such
as Singapore, New York, having a car is not necessary because those cities has good infrastructure of
public transportation and there are policy to reduce number of car in order to reduce heavy traffic, avoid
traffic jam and protect environment. However, the need of automobile is always great. Developing
countries 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. Automobile
companies work to maintain cost strategies so that suppliers must compete on price with one another
to acquire contracts with them. Since it is very competitive among number of suppliers, an automobile
company 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 potential
investors. Internal stakeholders help company to apply strategy in proper way while external
stakeholders helping with feedbacks, opinions and require responsibility of company. As the company
is 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 with
enhancing 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
Strengths
Hyundai has core strength of innovative technology and becomes a leader in developing environment
friendly technology to compete in the recent time when the impact of cars to environment are highly
concerned and high requirement of buyers on innovation, quality and design. Along with innovative
technology, Hyundai is well managed on costs and expenses that enable company to compete on price
with 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 company
effectively. Hyundai has strong corporate philosophy that focus on "customer first", flexible marketing
strategy and rich experience of producing car for export market. Finally, its value of global branding
experience is raising that enable Hyundai gaining more market shares.

Weaknesses
On the other hand, there are some weaknesses that need to be taken into consideration. Drawbacks
occur due to differences between national and business cultures. For example, the national culture of
Korea 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, Hyundai
is also exposed to the risks related to fluctuations of currencies in countries where company doing
manufacture. When making buying decision, customers seek information and feedbacks from previous
buyers; 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 in
many automobile segments, especially in luxury automobile segment.

External Factor Analysis Summary (EFAS Table):

External strategic factors
Weight
Rating
Weighted score
Comments
Opportunities
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

Threats
T1 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
Opportunities
Strong research & development and advanced technology leading in producing car in hybrid segment
enable Hyundai to take advantage to expand market share and gain more profits. As high tax
contributor, Hyundai enjoy governmental supported policy in domestic market, thus enjoy less
competitiveness from competitors and spreads its wings to enfold domestic market. Sluggish economic
condition makes buyers focus more on low cost & design in which Hyundai has reputation of
improvement of quality & design associated with lower cost of products as compare to other
competitors. Moreover, crisis of key rival - Toyota on quality create big opportunity to Hyundai focusing
on quality improvement and reputation. The company should put more emphasis on potential markets
from developing countries provide promising opportunity for the company to expand and gaining profit
in the future.

Threats
On the other hand, the company is facing with some threats indicated above. Global economic crisis
and 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 auto
demand has created low growth market, decrease sales and profits. More pressure of competition
when there are some new entrants enter into market, targeting into some specific segments and
acquire market share portion. Additionally, environmental requirement puts more pressure to the
company to technological change toward eco-friendly energy. Finally, economic implication of political
instability 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

R
T
I
N
T
E
R
M
E
D
I
A
T
E
L
O
N
G
Comments
S1 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

X
X
X
X
X
X
Quality 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 term
The global economic crisis and oil shock affect the company in short term. It put brakes on automobile
demand, increasing cost of fuel and raw materials, reducing investment and R&D cost while putting
pressure on cutting price of products hence require strategy of the company toward reducing operating
expenses and workforce. In this situation, well manage costs and expenses become the core strength
of Hyundai in competing with other competitors and attracting more customers. In addition, the crisis of
key competitor as broken top-quality image creates opportunity to Hyundai by launching campaign
focusing more on quality improvement, gaining reputation and boost sales value.

Intermediate term
Hyundai 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 products
that are more interested from customers nowadays. Late enter into automobile manufacturing industry
making less information and feedbacks of Hyundai products so that the company need to launch
strategy of marketing brand value, raising level of perception of customers. Furthermore, potential
markets from developing countries should be considered and prepared in intermediate term in order to
expand business and gain market share.

Long term
Environmental effect is the most concern of all people and society and it affects all industry, not just
automobile manufacturing industry. Therefore, advanced technology toward eco-friendly energy is the
most concern of the company in long term as well. Not only improving quality, design and function of
products but also company needs to put more emphasis on reducing impact of car to environment as a
means of sharpening its competitive advantage. Moreover, the company should be able to create more
new models to compete with competitors especially in luxury and hybrid car segments which are less
competitive areas but very profitable areas. Similarly, targeting into potential market from developing
countries should be considered for long term strategies as they have such a lot of potential demands
and 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 strategies
Focus on research and development
Build up strong brand image.
Expand business to potential market

WO strategies
Set 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 strategies
Use eco-friendly fuel
Cutting costs & expenses
Focus on marketing and public relation

WT strategies
Increase advertisement
Reduce ineffective distributor to minimize costs
Improve market research

SO strategies
To strengthen company's survival ability, company need to use its own strengths to take advantages of
opportunities. Firstly, Hyundai should focus on research and development to reach out the potential
hybrid car segment trend by taking advantages of its own advanced technology. Furthermore, Hyundai
needs 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 and
organisational experience, Hyundai may identify the problems and avoid same mistakes that can be
made; hence building up new and strong brand images associated with lower price. With a branding
experience and qualified labour force, Hyundai may gain a large market share from these potential

markets.

WO strategies
To take advantages of opportunities to overcome weaknesses, Hyundai can set up more distribution
channels and plants in new markets and segments. One of Hyundai's weaknesses is the lacking
competitiveness 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 an
average income that put high emphasis on low price & design and willing to purchase an affordable car
instead of a luxury car. Moreover, late entrance to the market can be covered by the appearance of
innovative products, which are hybrid car segment which Hyundai has focused and developed.

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

WT strategies
There are some strategies Hyundai may use to minimize weaknesses and avoid threats. Firstly, global
economic crisis has affected many industries and companies, Hyundai is not the exception. Under
economic crisis, minimize unnecessary and ineffectively costs plays an important role to maintain
company business. At the same time, company should increase advertisements to gain more
reputation and build up their brand images. Last but not least, Hyundai should do more market
research if they are planning to expand their business to other countries, in order to avoid unwanted
political 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 and
globalization. The company is facing a low market growth compared with their competitors due to late
entrant to the market. Hence they need to manage their capital and expenses effectively by cutting all
unnecessary costs, operating expenses and other utilities costs. Moreover, globalization strategy
should 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 occur
during the plan.
On the other hand, Hyundai must concentrate on long term strategies. Nowadays, the hybrid car
segment has become the new trend in automobile market. Thus research and development
department should be improved to reach the potential market trend, based on its existing advanced
technology. From the improvement of R&D department, a new innovative product may appear to
distinguish Hyundai from other companies. Furthermore, health care and impact of cars to environment
are being concerned by customers. Hyundai need to come up with new green and eco-friendly fuel
such 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 more
marketing programs such as offering loyal customer's reward system and new advertisement
campaign. These advertisements should be located at all available media which are being concerned
by public, like newspaper, television, radio and over the internet. They need to learn useful strategies
from their competitors as well. One way to the success is to increasing more options of products along
with improving online ordering services. Hyundai may also offer more options available to customers
through online service to maximize their customers' satisfaction.

Assessment of company's performance:

Efficiency
Despite sluggish domestic sales amid the global economic downturn, Hyundai Motor expanded its
global market share last year and the 2009 net profit was an all-time annual high. Hyundai had
achieved 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 has
jumped 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 units
sold.

Effectiveness:
Hyundai has implemented many strategies to increase company's effectiveness. Hyundai is seeking
reductions of as much as 20% in consideration of supplier, volume and parts involved. The company is
cutting costs not only by rationalizing its domestic plants, but also more and more by manufacturing in
areas 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 Hyundai
Motor share, Hyundai is very aggressive in spending as R&D and marketing. In general, Hyundai is
implementing its strategies effectively.

Return on investment:
Hyundai has raised its global share in recent years, even as it has maintained a stable position in
Korea and well balanced market portfolio and currency settlement. However, in 2009, there are some
decreases 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 dividend
payout level was maintained at the 16%. Hyundai enjoyed a rise in market share as the result of
innovative marketing and successful launch of new models. In the first three months, the company's
global market share rose to 4.7%, compared to 4% a year earlier. The company is expected to
continue its' success along with improved performance in key markets.

Recommendations for Implementation of Strategies

Structure
The current economy is under sluggish condition that requires the company to make judgements and a
need of improving organizational structure. Company's structure needs to work toward operational
efficiency in association with quality and technological improvement. Continuous decentralization of
management structures and the strategy of diversification of output helped the company in coping with
economic 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 and
safety regulations effectively.

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

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

Usefulness of strategic management models:

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

Key success factors

Key success factors model is being used significantly to present or identify a few critical factors that a
company should focus on to be successful. Identifying key success factor is important as it allows firms
to focus their efforts on building their capabilities to meet the factors, or even allow firms to decide if
they have the capability to build the requirements necessary to meet key success factors. By
understanding this model, companies can know which the most important factors are, how well the
companies 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 within
any industry; they are threat of new entrants, rivalry among existing firms, threat of substitute products
or services, bargaining power of buyers, bargaining power of supplier and lastly relative power of other
stakeholders. By understanding the important levels of these forces, the company may identify the
pressures and come up with new strategies to cope with it. Moreover, by rating the importance from
low 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 a
basic understanding about company's background. SWOT model helps the company to be aware of
current 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 suitable
strategies.

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 on
internal 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. Understanding
and analyzing all these factors is important to developing strengths into competitive advantages over
competition 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's
strength or opportunity to cover its threat and weakness. By identifying this matrix, a company can
develop and improve their strategies to suit with the current situation which they are facing with. They
also may know the priority option which they should concentrate on to maximize its own strengths and
weaknesses, as well as minimize all weaknesses and threats.
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