Hyundai Motor Company(ASIA)

SIC Code: 5012 - Automobiles and other Motor

Vehicles

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OUTLINE:
1. Introduction
2. PESTLE
3. 5 Forces
4. Resources & Capability
5. SWOT Analysis
Founded December 29, 1967
Logo:
Industry name Hyundai Motor Group
Industries served Automotive (Cars, Commercial Vehicles, Busses)
Geographic areas served Worldwide (186 countries)
Headquarters Seoul, South Korea
Current CEO Mong Koo Chung,Won Hee Lee,Gap Han Yoon
Employees 163,204 (2016)
Products automobiles, construction, engineering, aerospace, defense, steel
 Hyundai-Doing good things, together.

"To pursue excellence and "to become a “lifetime partner

deliver cars that inspire" in automobiles and beyond”"

To Customer:
Provide customers with the best customer care and
automotive lifestyle solutions.
To Employees: "A leading Hyundai
Commit to provide benefits that will motivate them to work dealership who cares and
passionately at their best. delivers perpetually
To Stakeholders: enhanced, happy and safe
Commit to function as a good corporate citizen on a local
motoring lifestyle."
and national basis in all areas.
 PESTLE
PESTLE Analysis Analysis
 PESTLE Analysis
POLITICAL
-Duterte administration's proposed tax reform will lead to a slowdown in sales in 2018 as taxes on new cars increase. As a result, new car sales to grow 9.0% in 2018, down from a projected 19.2% in 2017.

That being said, growth in new car sales in the Philippines will still outperform the Association of South East Asian Nations (ASEAN) regional average vehicle sales forecast of 7.8% for 2018.

-BMI notes that Pakistan is expected to be a global leader in auto sales as a result of the government’s Automotive Development Policy 2016-2021 which offers tax incentives to new market entrants in the car making industry.

-Japan is similarly ahead of the pack with a 6.7% forecast growth as consumers and businesses are expected to take advantage of lower vehicle prices ahead of the impending sales tax increase from 8% to 10% on October
2019.

-China’s new vehicle market is expected to slow down as prices on small engine vehicles will rise next year as the government announced that sales tax on small engine cars will revert to 10% in January 2018.

For political, with the Korean President announcing that from 2008, government will use ‘green
growth’ plan which is designed to use 22 new engine technologies (Kim, 2008), which includes
Fuel Cell. Considering the high levels of automobile pollution, the government aims to combat
this by introducing more green technology and especially by incentivising the building up of
more hydrogen-refuelling stations. With Hyundai also being a member of California Fuel Cell
Partnership programme, it gets even more incentive and technology to go the fuel-cell way.
(StrategyPaper.com, 2013)
 PESTLE Analysis
ECONOMIC
-Light vehicle sales in the region (asia )are expected to be 5.9 percent in 2017.India is expected to feel a negative demonetization impact and limit 2017 growth to just 7.7 percent. Association of Southeast Asian Nations
(ASEAN) car markets are forecast to accelerate by 4.6 percent as recoveries continue in key markets. Japan and South Korea remain similarly depressed by tax-related hangovers and economic and political concerns.

-Of the 1.2 million vehicles made in Turkey in 2015, about 70% were exported to Europe and elsewhere. So, industrial infrastructure including suppliers is developing.The Turkish side is interested in absorbing technology
from Japanese companies.

-IHS Markit expects China to continue to be the world’s largest car market for the foreseeable future, and has upgraded its 2017 China forecast to 28 million units and expected payback effects will now be in play for 2018.

-Asia's auto market accelerates as vehicle sales forecasted to grow 4.7% in 2018 Sales of commercial vehicles will continue to race ahead of the passenger cars. Vehicle sales in the region are expected to grow 4.7% in 2018.

Asia’s auto market continues its rapid acceleration as it is projected to be the third fastest growing region for vehicle sales by 2018, according to BMI Research.

Economic factor Korean economy is 97% dependent of foreign imports for energy and per capita energy consumption has already crossed that of Japan and Germany
(Lee, 2008). With prices of conventional fuels rocketing, the government is looking for ‘green plan’ to reduce the traditional technologies with new ones, thereby also
increasing jobs of about 150,000 by about 2018 and reducing 8% of petroleum consumption by then. It is common knowledge that eco-friendly transportation would
be the driving force of the economy and thus Hyundai’s plans to go that way. It started in 1991 with producing Sonata electric cars, started hybrid production in 1995
and plans to mass produce hybrids by 2009, increasing production eventually to 3,000,000 by 2015 (Hyundai Company, 2013).
 PESTLE Analysis
SOCIAL
-Due to the fact that the GDP of most Asean countries increases, people's preferences gradually shift to luxury cars. However, in some countries
where GDP decreases, people prefer low cost automobiles. In addition, there is increase in demand for low fuel-consumption cars.
-Although the largest market is the Asia-Pacific region (including Australia, China, Hong Kong, Japan, Malaysia, New Zealand, Singapore,
South Korea, and Taiwan), with 2.3 million users and 33,000 vehicles, Europe (including Turkey and Russia) boasts the largest service per
capita, with 2.1 million users and 31,000 vehicles.

The Korean society has a traditional patriarch way of performing business expressed by obedience and personal loyalty (Biggary and Guillen,
1999). Hyundai is owned by this family system and in a need to survive, it must change and bring in elements of meritocracy and this change is
being reflected in its strive for greener cars. (StrategyPaper.com, 2013)
 PESTLE Analysis
TECHNOLOGICAL
-India
has declared its intention to make all new vehicles electric by 2030.Volvo, Jaguar and Land Rover, Volkswagen,
Mercedes, Audi and BMW have all promised to roll out electric models over the next decade.

-SINGAPORE/KUALA LUMPUR (Reuters) - Demand for gasoline in Asia may peak much earlier than expected as millions
of people in China and India buy electric vehicles over the next decade, threatening wrenching change for the oil industry, oil
and auto company executives warned.

The Ministry of Education, Science, and Technology (MEST) and the Ministry of Knowledge Economy (MKE) are the key
players involving in Korea’s fuel cell Research and Development (R&D) project since 2004 (Lee, 2008). After two years, they
launched two aggressive monitoring projects for fuel cell vehicles so that they can promote the hydrogen infrastructure by
validating and demonstrating for fuel cell cars and hydrogen refuelling stations at the same time. Accordingly, due to the
technology supports by government, Hyundai will have fuel cell cars road tests in 2009 which is earlier than many car
companies, like Ford and Toyota. (StrategyPaper.com, 2013)
 PESTLE Analysis
LEGAL

-Under the ASEAN Trade in Goods Agreement (ATIGA), ASEAN countries will
eliminate intra-ASEAN car import duties from 2018. The company can sell cars
manufactured in Indonesia free of duty to neighboring countries, including Vietnam.

-With constant innovation and the introduction of new technologies, patent

protection remains one of the most important forms of intellectual property for many
automotive companies. Patent owners acquire the exclusive rights for a limited
period of time (usually 20 years) to prevent others from making, using,
commercializing or importing the patented inventions during the term of the patent
 PESTLE Analysis
ENVIRONMENTAL

-Many governments announced tax subsidies for vehicles which are low
on emissions and fuel consumption, thus, creating an incentive for

-Carbon dioxide regulation is likely to continue to tighten, and not just

in China, but also and Japan have also enacted laws to reduce
emissions.(US and Europe also)
5 Forces Analysis
 strengthening of control over suppliers

FIVE FORCE ANALYSIS

Buyer power=Moderate

-Buyer power is weakened=Manufacturers invested in brand building Oligopoly

-Increasing adoption of cars=motorization rates are still low.

-Cut in fuel prices(2014&2015)=increased buyer power.Stable macroeconomic performance
of most countries led to lower interest rates, enhancing credit as an option of financing.
-Car manufacturers supply their products through car dealership businesses=associate
dealers increase their buyer power due to their importance.
-Increased price-sensitivity=motorization rate lower

Buyer power in the new cars market is assessed as moderate

5 Forces Analysis
Supplier
power=Moderate direct distribution of a company's products.

-High standard requirements=diminish Supplier power. But if supplier is able to meet

requirements=can enter into long lasting relationships with international players, thus increasing
supplier power.
-Raw materials offering low differentiation=reduces supplier power somewhat.
-The industry is trying to achieve shorter delivery times, faced with increasingly stringent
quality requirements.
Supplier power is moderate

5 Forces Analysis
New
entrants=Weak

-Difficult for new players to enter the market=Asia-Pacific region has ownership restrictions=that
only allow foreign manufacturers to operate through joint ventures with local automakers.
-Trade barriers on car imports can be distortive, increasing the cost for buyers. Import tariffs are
strongly present!

Threat posed by new entrants is weak.

5 Forces Analysis
Threat of
substitutes=Strong

-Endusers may find them less convenient.Motorcycles could theoretically be considered as

a substitute.(not important)
-Used cars are still an important substitute=especially in countries where price-
sensitivity is increased.
-In countries with low motorization rates=threat is not significant as the stock of old
cars is limited

Threat of substitutes is assessed as strong

5 Forces Analysis
Degree of
rivalry=Strong

-A relatively small number of large companies dominate the new cars market forming an
oligopolistic market structure that relieves price competition.
- Price cannot be manipulated by manufacturers by withholding inventory, which increases
competition.
-Diversification guards against market downwards trends.
-Foreign automakers have no other choice than engaging in local production in these markets of
great interest.

Rivalry in the Asia-Pacific new cars market is strong. 5 Forces Analysis

Resources and
Capabilities
 Resources and
Capabilities
Physical Resources
Resource Capability

th
1. World’s 4 largest •It has the world's largest integrated
automaker (2009) automobile manufacturing facility,
which is capable of producing 1.6
million units annually. This capacity
gives a competitive advantage by
increasing the profits of the company
 Resources and
Capabilities
Technological assets
Resource Capability

• the most efficient EPA-certified vehicle

2. Hyundai IONIQ car of 2016 (1.6L/100km) and the cheap
price compared to others beats the
competitors like Tesla Model 3
• it was recently named as the “Best
Green Technology” – zero emission of
CO2 (2017) which will lead to higher
market share in near future
 Resources and
Capabilities
Technological assets
Resource Capability

3. Highest safety ratings •Hyundai Tucson and Sonata have earned a

2015 top ranked safety pick + rating in testing
conducted by the Insurance Institute for
Highway Safety (IIHS), and it increased the
value of the Hyundai’s products
competitiveness
 Resources and
Capabilities
Company image
Resource Capability

4. Brand
•Got a high recognition among
customers because of quality, safety,
style, and price
•Uses its brand value to increase the
profit margin

Relationships
Resource
5. A long-term contract with
Praxair, Inc., a Fortune 300
company
Resources and
Capabilities
Capability
•Praxair will build, own and operate four
vacuum pressure swing adsorption
(VPSA) plants that will supply a
combined 750 tons per day (TPD) of
oxygen to Hyundai. Thus, the company
beats the power of suppliers by
increasing the control of supplies, and it
greatly affects competitors.
 Strength and
opportunity
Analysis
 Strength and
opportunity Analysis

Strength&Opportunity:

Opportunity Strength
Impending sales tax increase-are Res: World’s 4th largest
expected to take advantage of
lower vehicle prices. automaker (2009)

Cap: high capacity gives a

competitive advantage by
increasing the profits of the
company
 Strength and
opportunity Analysis

Strength&Opportunity:

Opportunity Strength
Increase in demand for low Res: Hyundai IONIQ
fuel-consumption cars car
Cap: “Best Green
Technology” – zero
emission of CO2 (2017)
which will lead to higher
market share in near future
 Strength and
opportunity Analysis

Strength&Opportunity:

Opportunity Strength
Res: Brand
Sales of commercial Cap: due to the ranked safety
vehicles will continue pick + rating in testing, it
competition level with
increased the value of the
passenger cars.
Hyundai’s products
competitiveness

Strength&Opportunity:
Opportunity
Elimination car import duties-
can sell cars free of duty to
neighboring countries
Strength and
opportunity Analysis
Strength
Res: a long-term contract
with Praxair, Inc., a Fortune
300 company
Cap: due to the high
recognition among
customers its brand value
increases the profit margins
 Strength and
opportunity Analysis

Strength&Opportunity:
Opportunity Strength
Environment friendly Res: Highest safety ratings
cars- brings new
customers and profit Cap: ranked safety pick + rating in
will rise testing increases the value of the
Hyundai’s products competitiveness
Generic Stratagy – Low cost provider

• 1. Price competition is strong

• 2. Rivals impact is strong
• 3. Buyers are large and have significant bargain
power
• 4. Most buyers use product on same ways
Value Chain
Supply Chain Management
Operations
Distrubition
Sales and Marketing
Service
Profit Margin