Hyundai

Hyundai is the South Korean automaker for excellence, whose name translated into English means "modernity”. The Hyundai cars are simple, resilient and known for their low cost. Created in the middle of the country’s recovery after the Korean War, Hyundai received help from Ford, which through its subsidiaries in the UK, helped to set up its manufacturing plant.

The brand was born in 1947 by Chung Ju-yung, Son of North Korean peasant farmers; dominant figure in the Korean economy from 1960 until his death in
2001. Hyundai built its first car in 1968, the “Cortina”, a compact sedan under Ford license. In 1975, Hyundai made its first own model, the Pony, in collaboration with Mitsubishi and the firm “Italdesign” of Turin. Currently, Hyundai has one of the most respected research and development centers of the industry. In 1997, South Korea suffered of a serious financial crisis which also affected the automotive industry involving the Daewoo’s bankrupt (now part of General Motors). Hyundai overcame the crisis, but it was forced to divide its many operations (construction, banking, petrochemicals, logistics, shipbuilding, etc...) into 5 separate companies. One of these, the most internationally known, is the Hyundai Motor Group which now includes the brand Kia.

The company has been one of the most influential industrial conglomerates in South Korea's economy. And currently, it’s the second-largest chaebol behind Samsung.

The 6 major group companies are:
• Group Hyundai: Hyundai's original company, founded in 1947 as a company infrastructure construction. It is dedicated to infrastructure, lifts and tourism.
•Hyundai Kia Automobile Group: the company best known at Hyundai worldwide, is responsible for the manufacture of cars, with Hyundai Motor Company and
Kia Motors as its two most popular brands. It is the fourth largest manufacturer of vehicles worldwide.
• Hyundai Department Store: malls chain with presence in Korea South. Hyundai Heavy Industries: dedicated to the manufacture and development of ships, is the first in the world in the sector.
• Hyundai Development: the conglomerate real estate firm.
• Hyundai Rotem: manufacturer of railway equipment, defense and machinery factories

Hyundai companies continue to compete successfully in the market thanking the overall vision of a peasant farmer. The Hyundai logo is an "H" stylized symbolizing two people: the company and customers, while its motto is "New thinking, new possibilities".
Between their top company values are: customer service, challenge to achieve their goals, collaboration between them and their partners, people and comprehensiveness in diversity of cultures and customs of the world.

SWOT analysis.

Internal Strengths | Internal Weaknesses | -Strong domestic market.-Loyal costumers-Cost advantage-A growing brand reputation -Operations in Europe -Successful marketing campaigns -Strong focus on R&D (Research and Development) | -No luxury cars-Design-Negative publicity in certain countries- Hyundai has no presence in Japan’s car passenger market -Small pool of previous buyers-Product recalls | External Opportunities | External Threats | -Cheaper cars-Diversification-European and African market-Changing customer needs-Product Life Cycle Not Reaching Maturity | -Strong competition from other countries-Exchange rate fluctuations-External changes -The rising of raw material prices-Decreasing fuel prices |

Internal Strengths Hyundai’s fist strength is a strong domestic market; the name for Korea's economic market for Korean-brand goods, chiefly automobiles and parts is “Korean Domestic Market” (KDM). Korea's exportation market resides mainly in the United States and Canada. While the United States often uses an original equipment manufacturer for assembly, the KDM makes all their products with their own brand. Because of this Korean people are more likely to buy products made in Korea, causing Hyundai to be the favorite Korean brand in the Automobile industry.
The second strength is Loyal Customers; Hyundai’s cars are known for high quality, reliability, durability and the safety in the cars, besides the accessible cost of the cars; Because all of this, once a customer use a Hyundai car, it’s more likely that that customer will continue buying and using Hyundai cars for the rest of his life. The third strength is Cost advantage. Hyundai cars are very cheap comparing with the price of other brands, making them the first option for cars, when it comes to low cost and safety.
The forth strength is a growing brand reputation; In 2012, Hyundai’s brand value grew from 24% to $ 7.43 billion dollars and became the 53rd most valuable brand in the world; Making Hyundai’s brand the second fastest growing brand in automotive sector.
Hyundai’s fifth strength is their Operations in Europe. Currently, Hyundai is experiencing significant growth in the Europe region. Hyundai’s market share in Europe went from 2.9% in 2011 to 3.5% in 2012. This growth led to a competitive advantage over his biggest competitors, Toyota and Volkswagen. The sixth strength is Successful marketing campaigns; Hyundai has launched many successful marketing campaigns through their CSR programs, sponsorship of many important sport events and using celebrities to promote their products, which has helped them to increase the brand popularity. And finally, their seventh strength is a Strong focus on R&D (Research and Development). Hyundai has established R&D centers in 6 different locations and has small R&D offices around the world. As a result from these firms, the company had positive results and the company has become one of the automotive leaders in producing high quality, reliability, durability and safety cars.

Internal Weaknesses Hyundai has 5 principal internal weaknesses; the fist of these weaknesses is that they have no luxury cars. Hyundai cars are manly based in the creation of comfortable, save and low cost cars, SUV’s and CV’s; but they don’t make luxury cars. 2. Design. The design of Hyundai cars is good, but it’s nothing out of their comfort zone. As we mention before, these cars are made for reliability, safety and durability, but not for luxury or visuals; situation that causes a problem when it comes on competing with other companies that innovate in designs. 3. Negative publicity. In 2012, Hyundai has been accused over inflated fuel economy numbers. Now the company will face federal lawsuit and will have to reimburse all the damage done to the customers; besides the bad image that Hyundai already has in different countries like in Japan, where people believe Hyundai is equivalent to cheap, bad quality and bad customer service, compared to Japanese brands. 4. Hyundai has no presence in Japan’s car passenger market. Hyundai has pulled their passenger car division from Japan in 2009 due to low sales and the weak brand perception that we mentioned before. Japan represents a large automotive market and performing poorly in this market leaves Hyundai at competitive disadvantage. 5. Small pool of previous buyers. Most consumers do a lot of research prior to buying an automobile, and feedbacks from prior buyers can be a determining factor for many consumers. However, Hyundai does not have a huge pool of previous buyers to provide feedback, because of this many careful consumers hesitate more to buy Hyundai. 6. Product recalls. Over 2012, Hyundai recalled more than 300,000 cars in different regions to fix manufacturing and design defects. This product recalls impact negatively in Hyundai’s reputation and could affect their competitive advantage. External Opportunities 1. Cheaper cars. As we mention before, Hyundai has the advantage when it comes of low prices and high quality in their automobiles, in comparison with their competition. 2. Diversification. Hyundai is not only focusing in small cars, they are also focused in the creation of automobiles for all types of necessities, like the SUV’s and CV’s. 3. European and African market. As we mention before. Hyundai is experiencing a significant growth the Europe market, but also in the African market. Placing Hyundai in an advantage position against their biggest competitors (Toyota and Volkswagen), who did not had any significant changes in this markets. 4. Changing customer needs. They do this by introducing new car models, Hyundai could satisfy a variety of consumer’s tastes and needs for more fuel-efficient, ecological cars and this way accessing wider customer group. 5. “Green” automobiles. Cars that emit large quantities of CO2 pollute air and affect the environment. Consumers are aware of this problem and they are more likely to choose fuel-efficient hybrid, electrical or hydrogen fueled cars that Hyundai is currently offering, and other brands do not. External Threats 1. Strong competition from other countries. Hyundai faces strong competition from other automotive companies and competes more than ever on price rather than differentiation lowering firm’s profits. Also Chinese automakers are presenting the greatest threats for Hyundai, since they plan to arrive at the American market, threatening many present competing firms in America and their exports. Chinese automakers are capable of making huge amount of vehicles at very low cost, and with this having the capability of taking a huge market share away from Hyundai’s target consumers all over the world. 2. Exchange rates fluctuation. Hyundai earns more than half of its revenue outside South Korea. Exchange rate fluctuations threaten Hyundai’s profits if the KRW would appreciate against other currencies. Situation that might happen as a consequence of the political and economic issues that Korea is experiencing on this days. 3. External changes. In this last month’s Korea has experienced a series of political events related to the conflict in the Korean peninsula, even thought this might not end in a war, the investors around the world will hesitate in the moment of investing, and this threats the economic stability of Hyundai in the future; at the same time, the new president of South Korea has been in the presidency for only 2 months, and the government is still trying to adjust to this new administration. 4. The rising of raw material prices. Raw metal prices (main raw material for car manufacturers) are rising due to increasing global demand, affecting automotive firm’s profits in Korea and Hyundai. 5. Decreasing fuel prices. Some analysts say that due to shale gases future the fuel prices should drop and as a consequence this will make hybrid and alternative fuel cars be less attractive to consumers; and with this, Hyundai will have big losses since creating this kind of cars is their competitive advantage in this moment.

Sources: 1. Interbrand (2013). Best Global Brands 2012. Available at: http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands-2012.aspx 2. Madslien, J. at BBC Business News (2013). Hyundai and Kia gain from European crisis . Available at: http://www.bbc.co.uk/news/business-21686822 3. Ingram, A. at Green Car Reports (2013). Hyundai, Kia Face Federal Lawsuits For Overstated Gas Mileage. Available at: http://www.greencarreports.com/news/1080295_hyundai-kia-face-federal-lawsuits-for-overstated-gas-mileage 4. Hyundai Corporate Information (2013).Company overview. Available at: http://worldwide.hyundai.com/WW/Corporate/InvestorRelations/CorporateInformation/CompanyOverview/index.html