Case Study Of Hyundai's Position In The Global Car Industry

3. Discuss Hyundai 's position in the global car industry

Hyundai today is miles away from its initial position. The remarkable development, however, is not sorely to blame on Hyundai 's intelligent minds, but on the competitive environment of Korea itself. Thus Porter 's Diamond Model proves adequate to gain a profound insight on a variety of factors that have contributed to Hyundai 's current strength. y 3.1 Factor Conditions

Since the Korean conflict ceased in 1953, the Republic of Korea witnessed a rapid transformation, from an society almost entirely employed the first sector into an industrial based society. GPD per capita in 1960 was USD 60, likewise the income was rather low. Back in the 60 's a Korean worker only received 1/10 of

More than 90% of the parts were produced locally, thus Hyundai pursued a low cost strategy for the Pony. In 1986, Hyundai entered the US market with the Excel, a competitively low priced car at $4.999. (The time were the US set an import quota on Japanese cars.)In other words, Hyundai started and pursued business while barely competing on the price. In recent years, Hyundai increased in quality and innovation, but this put Hyundai as many other Korean companies trapped in the middle regarding market positioning. If quality falls short, customers are likely to purchase Japanese or European cars . Likewise if they cannot compete on the price, customers move to Chinese or Indian alternatives.

In order to differentiate from the other market segments, Hyundai pro-actively attempts to define the brand image. Kim Yeung-tae, a Hyundai vice president states: "We 'll redouble efforts to enhance Hyundai 's image as a provider of high-end and environmentally friendly automobiles" . Thus attempting to abandon the common perception of Hyundai being a mass-market producer that barely offers value for money.

Nonetheless, Korean literature reckons that high international competition is to blame for the success of Hyundai. The pressure from international competitors forced Hyundai to M&A activities , i.e. merging with Kia, in order to profit from economies of scale . Thus the overall competitiveness

The popular frontiers Volkswagen, BMW and Daimler produced more than 14mio cars worldwide. The automobile industry accounts for 20 % of German GDP and almost 1 out 7 is employed in the industry . Volkswagen aims to become the biggest car manufacturer worldwide by 2018. Thus the mass-production brand VW is under heavy pressure, in 2013 the EBIT margin was only at 2,9 % or €616. In other words , VW which accounts for half of the (14mio) sales currently earns almost no money, with negative outlook. Hyundai currently operates at 9.5% EBIT, the main competitor Toyota at 8.8% ( BMW and Daimler are roughly at 10% ). To crown it all, the domestic German market is highly saturated and in terms of total sales (2.95mio) , 2013 was the worst since the