Hyundai Motor Group Strategy Report Assignment Sample

• Subject Name : Strategic Management

Hyundai Motors Australia

Contents

1 Introduction.

2 Hyundai Australia: Introduction.

3 Strategic Business Plans: Importance.

4 Hyundai Australia: The issues faced by the company.

5 Hyundai’s Strategies: Existing plans and ideas.

6 Hyundai Australia: PESTLE Analysis.

Political

Economical

Social

Technological

Legal

Environmental

7 Porter’s Five Forces Analysis.

Industry Rivalry.

Bargaining power of Buyers.

Bargaining power of suppliers.

Threat of Substitutes.

Threat of new entrants.

8 VIRO Analysis: Hyundai Australia.

Value.

Rareness.

9 Hyundai Australia: Things done right and Recommendations.

9.1 Competition: Analysis.

9.2 Hyundai Australia: The Plans that are working.

9.3 Hyundai Australia: Recommendations.

9 Conclusion.

10 References.

1. Introduction

Building a sound business in the world has become increasingly difficult. With a bigger market, stress on production and the image of the organization go through a lot of stress. As the reasons for stress on the businesses are increasing, businesses are moving towards better and sounder process of managing their business activities, which is why strategic management has emerged as one of the crucial areas for any business to focus on (GISMA 2019).

The paper looks into the history of Hyundai, the company profile of Hyundai Australia, its positioning in the Australian markets, considers and analyses the strategic business actions and reports recommendations for Hyundai. Apart from this, the paper also records and reports a PESTEL analysis for Hyundai Australia.

2. Hyundai Australia: Introduction

Hyundai’s name meaning can be translated to the English word “modernity” or to “modern era.” Hyundai’s logo is that of a slanted “H” which stands for a satisfied customer denoting shaking hands with a Hyundai representative.

Hyundai Motor Company had its beginnings in 1967. With Pony, the South Korean company branched out in the world, and the following years proved successful. By 2014, Hyundai had become the fifth largest automobile manufacturer in terms of overall sales. Hyundai’s cars are sold in over 190 countries, and have the world’s largest car manufacturing facility, capable of a production of 1.6 million vehicles a year (GlobalCarsBrands 2015). December 2019 ended with total sales of 396, 569 units of cars (Hyundai 2020).

Hyundai entered in Australia in 1986, and by 2003 Hyundai Motor Company Australia (HMCA) had become a wholly owned subsidiary of its parent company. In Australia, Hyundai has been noted as the fastest growing automotive brand, and is known for its premium design, quality and safety offered. (Hyundai n.d.) In October 2018, Hyundai Australia had sold over 80 thousand cars (Hughes 2020).

3. Strategic Business Plans: Importance

This field of management study and use of approaches majorly is related to the ideas of making use of different topics, research, market study, competitive advantage, success, and understands the underlying factors attributed to the organization’s success and competitive advantage (Guerras-Martín, Madhok & Montoro-Sánchez 2014).

There are some strategic problems that may affect any business plan. Some of the three main problems that can arise are getting everyone on board together, poor communication channels for strategy, and the alignment of goals (Lu 2020).

4. Hyundai Australia: The issues faced by the company

In Australia, Hyundai has been moving in the right direction. However, as problems prop up in South Korea, where the company is facing drastic competition, (Ogura & Sugimoto 2014) In Australia, Hyundai is facing one of the biggest challenges of today’s time. As the automotive industry’s face is changing, it has begun to divide. The market has divided between the choice of making use of the taxpayer dollars to boost the electric vehicle sales or to pay for the national charging network.

There is talk of banning petrol and diesel cars in Australia, due to which many car companies are against off because electric cars are still expensive. Hyundai Australia’s senior manager is of the opinion, as per a news article believes better and efficient fuel cars would be perfect for the scenario. (Dowling 2020) However, as per a 2018 Press Release by Hyundai shows that it was already working on sustainable means of automobile (Hyundai 2018).

Another problem that Hyundai faces in as of February 2020 is shortages in car supplies and other parts as COVID-19 hits the world. As per Hyundai’s predictions, the company is preparing to address the shortages created by the factory stoppages. Although the subsidiary, Kia, has not stopped productions, only China has (Dowling 2020b).

Another issue that is fast becoming a problem, not just for Hyundai Australia but also for other automobile countries, is the growing risk of emissions and greenhouse gases. As per an article published by the Guardian nearly 87% of Australian commuters travel to work by car, and the transport’s emissions make up for 18% of the greenhouse gas pollution in Australia (Henriques-Gomes 2018).

Furthermore, Hyundai’s problems in Australia also include the issue of consumer guarantee, an issue that the company faced in 2018. In 2018, the company began to improve its customer satisfaction guarantees approach thereby complying under the guarantee obligations under the Australian Consumer Law (ACL). (Australian Competition and Consumer Comission 2018)

Apart from this, the Australian automobile industry is facing certain issues in general, and there are some that are affect Hyundai’s functionality as well. In Australia, the macroeconomically issues have an impact on the functionality of the automobile industry. With that in mind, Hyundai needs to rethink its strategies.

Another problem is that the Australian car market is wide, big and has a lot of competition. The Australian market for automobiles has more than sixty separate brands for cars alone. There is a clear demarcation in the markets. Nissan, Holden, etc. are trying to gain the upper market by providing luxury cars, while Hyundai is making efforts in the lower markets by offering its durability and reliability; brand power is decreasing with time. Also, categories are shifting in the country. Additionally, the consumers in Australia are going through behavioral changes, which is a big deal (MMC.com 2012).

Furthermore, studies show that sales growth is slowing worldwide, and is not just an issue in a specific country alone (IHS 2015) .

5. Hyundai’s Strategies: Existing plans and ideas

Hyundai has been struggling, as mentioned above. To ensure that the company does not struggle further in its corporate life, the company unveiled its roadmap Strategy 2025” to transition into a smarter solution provider for mobility.

Furthermore, Hyundai plans on investing KRW 61.1 trillion into R&D and for better technologies. The company intends to create many smart solutions for seamless mobility for its customers and consumers, and this includes the development of Personal Air Vehicle (PAV), robotics and many other types of enhanced mobility models. Additionally, the company intends to create a platform and mobility solution which allows the company to cater to its customers with personalized services and contents. (Hyundai 2019).

The company’s strategy plan for 2025 has also lain out the idea of manufacturing more electric vehicles. Organizations and management is set to be reformed, and the company states that it will adopt new systems to make data-backed informed decisions (Hyundai Motor Company 2019).

6. Hyundai Australia: PESTLE Analysis

Hyundai Australia has become one of the fastest growing companies in the country. PESTLE analysis of Hyundai Australia will help in shedding a light on understanding what the company can do better, which will be covered in the Recommendations section.

Source @smartinsights

This section of this paper looks into the PESTLE analysis of Hyundai Australia, and the analysis is done on the above cited and mentioned information.

Political

The political scenario of the Australian government is not much different from before. However, the new look on the world’s and the country’s pollution control system is putting a stress on Hyundai. New laws and new standards have been put in place for the companies functioning.

Economical

Considering the above literature, it is clear that the economical condition of the world was very different in 2018 and 2019. The 2019 sales for Hyundai were lower, a tab lower, than the year before (Hyundai, 2020)

Along with this, the problem with the Chinese factories not being able to send spare parts due to COVID-19 condition is yet another problem that the company is facing, which will have serious downsides in the coming months. Lastly, COVID-19 in 2020 will affect the sales and the performance of the company drastically.

Social

As cited above, there are problems with understanding the behavioral tendencies of the Australian customers. The market is becoming more segmented. Hyundai is taking its position for the lower segment, and has been providing the durable quality of services for its segment.

Other than this, there is the involvement of social responsibility and various other types of social requirements that Hyundai will have to fill. Furthermore, the enhanced customer requirements and different as well as changing perspectives are a point to be considered.

Technological

Technological development has become a very important part of the automobile industry. Hyundai is one of those companies that believes in bring better mobility solutions to its consumers and customers. With that being said, the press release released by Hyundai in 2018, cited above, shows that the company intends to make many changes in its cars and will be bring electric cars to the market.

Additionally, statements published on the company website also show that Hyundai is committed to ensuring that it makes use of energy sources well and finds technological means to harness the same. The company has been experimenting with electric and hydrogen models in order to provide green solutions for the world. One example of such endeavor is Kona Electric, which is Australia’s first 100 per cent electric car (Hyundai Motors Australia n.d.)

Furthermore, as per a news article listed on Hyundai’s website, the company is developing a better breed of eco-friendly cars and motoring. The company is working on IONIQ Electric Vehicle (EV), which it states will be the future of motoring. The concept, which is yet to be launched, is a model that will make use of low carbon green technology strategy, which is called as Blue Drive. (Hyundai Motors Australia 2018)

Legal

The market in Australia for cars and automobiles is becoming stricter. As the government is stressing on greener forms of transport, Hyundai is faced with legal issues such as complying with newer and better emission restrictions and regulations. Hyundai also faced an issue with complying with Australian Consumer Law (ACL) in 2018.

Environmental

As per the cited literature, there is reason to understand that Hyundai is facing issues with its operations as the world is moving towards greener vehicles. The Australian market is a wide and big market for more vehicles and automobiles. However, with the changing times, the government has been pushing for electric vehicles to be used as pollution levels are increasing in the country. With that being said, compliances, as discussed above are becoming stricter as well. (SWOT and PESTLE 2017)

7. Porter’s Five Forces Analysis

Image – Porters Five forces

Porter’s Five Forces model includes supplier power, threat of new entry, buyer power and threat of substitution. Here is the Porter’s Five Forces Model for Hyundai Australia:

Industry Rivalry

Hyundai in Australia is facing tough competition in Australia. Australia’s market for automobiles is segmented, and even though Hyundai is doing well in its segment where it is in competition with Toyota Motor Corporation Australia, Ford, Holden, Honda and Mazda. (Autocar 2016)

Bargaining power of Buyers

Hyundai is known for offering the longest warranty in the automobile industry. However, other brands, companies offer other features in their cars. Toyota offers reliability and comfort in automobile, Honda offers better engines and technology, and Kia offers a great technology. All of these add up to offering more features and more options to the buyers, thereby increasing their bargaining power as the market ideally offers more choices. In the end, it boils down to the consumer preferences.

Bargaining power of suppliers

The bargaining power of suppliers includes the fact that suppliers either come together or come up with a product which negates the use of Hyundai cars. As mentioned in PESTLE, the Australian market is wide and there is more competition along with the absence of brand loyalty, which gives more power to the competition.

Threat of Substitutes

In the context of substitution in the market for Hyundai, the threat would be when a product is offered in a lower price than Hyundai. At present, as per information stated above, Hyundai is doing well and is placed first in its segment. But in the future, there is always a threat of better quality of products being offered in the market, which is priced lower than Hyundai.

As per the numbers Toyota’s stocks are going up, along with Kia, Subaru and Holden. (Dowling 2020c).

Threat of new entrants

As the world is becoming more competitive, it is important for a company like Hyundai Australia to maintain its supply chain to keep a hold on the market. Supply chain management will help Hyundai to manage its transportation and delivery of the manufactured cars to its customers. Additionally, focus on product differentiation and to ensure that it can create a brand image in the market, which will help Hyundai to protect itself from new entrants. (adamkasi 2017)

8. VIRO Analysis: Hyundai Australia

VIRO analysis looks into value, rareness, imitability and organisation of the organisation.

Value

Hyundai’s core value comes from its technologically advanced methods of tackling business and car models. Along with that, Hyundai has been making efforts to satisfy its customers more. Additionally, the company has been making efforts to enhance their cars in terms of greener technology and eco-technology. Hyundai also makes fuel-efficient cars for better future (Hyundai Australia, n.d).

Rareness

Hyundai has been named as the number one automotive brand as per Sales Satisfaction Index (SSI) in Australia in 2017. The company even has a beautiful luxury car, which has taken this car from mid-rangers and budget car manufacturer to a higher level. Furthermore, Hyundai’s Genesis SUV is rated better than Porsche, which makes it rare amongst the other budget car manufacturers like Toyota. (A. Eisenstein 2017)

Imitability

Imitability factor of Hyundai is tough as Hyundai makes use of a unique blend of customer satisfaction processes along with advanced technology. R&D department of the company and its think tank of the company is hard to imitate. All of the sources Hyundai has, cannot be imitated easily. (Streetsville Hyundai 2020)

Organisation

As per the statements of Hyundai Australia, the company intends to create a better and fair-value of hierarchy of management. It follows the traditional form of organisation, with board of directors and committees as well (Hyundai Australia, n.d).

9. Hyundai Australia: SWOT Analysis

Strengths

Hyundai’s primary strength is the product range. All of its cars come with high-tech features, and with ease of comfort. Additionally, the product line also has the better and the newer electric models as well. (Hyundai Australia, n.d)

Weakness

Hyundai’s brand image is weakening. With many product recalls in Australia for Elantra, the small sedan, the company’s image is shaking. (Murphy, 2020) Furthermore, Hyundai Australia has been in the news for overstating mileages for the new Sonata, which has damaged the image of the company. (SBS News 2014)

Opportunities

Hyundai is pioneering in technology and technologically advanced cars. It has already brought out some good electric cars in Australia. (Hyundai Australia, n.d) One of the fastest cars, Veloster N, was launched in Detroit but had no news regarding its release in Australia. Good powered cars, such as this one, could lift and boost Hyundai’s reputation. The market is bubbling, and Hyundai can enter it with its fast and technologically advanced cars.

Threats

Kia overtook Hyundai in April in terms of monthly sales. Even though Hyundai holds a better position in the context of quarterly sales, there is a chance Kia would perform better. (Chesterton 2020). Furthermore, the sales for 2019 already down (Hyundai, n.d) Hyundai could soon be losing its position as one of the best car brands in Australia. Toyota, Holden, and Mazda are the prime threats for the company.

9. Hyundai Australia: Things done right and Recommendations

9.1. Competition: Analysis

Primarily, the competition that Hyundai faces in Australia is from Toyota, Mazda, Kia and Mitsubishi. In April 2020, Kia managed to sell more cars than Kia, for the first time in 24 years, despite things being slow in COVID-19. Kia’s success lies in the fact that it offers seven-year warranty with its cars along with the fact that it does not change the prices as per the time of the year (Chesterton 2020).

As per the sustainability report published by Hyundai Motors, shows that the company enjoyed its position as number one in the world in terms of quality. The JD Powers Index affirmed its position and put Hyundai as a leading global brand. Furthermore, there were no accidents in the company either. In other areas, HMG (Hyundai Motors Group)’s position is well.

9.2. Hyundai Australia: The Plans that are working

Hyundai is one of those companies that take technology in its considerations and plans. This part of the section sheds a light on the plans and actions that Hyundai is taking and doing things right, which is based on the literature as cited above.

Hyundai’s plans and strategies in Australia are based out what the environment and circumstances demands of it. Although there are some discrepancies, there are many things that the company is doing right. Hyundai Australia has already launched its Kona electric, which is Australia’s first electric car, and more are being developed so that the company can deal with the changing automobile trends. (Hyundai, n.d)

Along with this, the company has also changed its variety of processes which are to comply with the new legal requirements. Furthermore, the company has been complying with the customer requirements as well.

9.3. Hyundai Australia: Recommendations

As per the various types of literature cited above, it is clear that Hyundai is doing well in the Australian automotive market, despite the market being a wider than that of the U.S. Although the press releases of Hyundai are suggestive of the fact that it is working on making new and better modifications to its models and is making progress in the technological aspect of automobile as well, there are still certain areas where the company can improve as well.

Primarily, the first thing that Hyundai needs to do is take care of its customers. As per the Porter’s model, VIRO analysis and PESTLE analysis, the customers and their requirements are growing drastically. With that being how it is, it is imperative that Hyundai as a company makes an effort into changing matters as per the customers’ needs.

Apart from that there is yet another recommendation that the Hyundai Australia should begin its operations in a better digital manner. As the company is moving towards better and greener modes of automotive development, a change in its functionality should be in order as well.

Furthermore, the customer service of the company and the process purchasing a car from Hyundai should become seamless and should leave a lasting impression on the said customer. For this to be done, the company would have to come with new ways of marketing and management of the departments.

Apart from that, another good recommendation is that the company should begin gauging its performance in the electric sector, which would also help the customers gain knowledge of what Hyundai is doing in the aspect of green automobiles, and the company would be able to speak about its achievements better.

Lastly, the PESTLE, VIRO and Porter’s model analysis suggests that the company is struggling with customer guarantee laws in the country, which leads to the point that it might also struggle in the future with new regulations and standards, as matters are becoming stricter. So, it is wise to recommend that Hyundai Australia should hire consultants or set up a team that will handle these matters and keep a close eye on the changing standards in order to avoid mix-ups with the government.

Also, the company should empower its cars with better powertrains to ensure better stability. Additionally, this will add to the fuel efficiency of the cars as well.

9. Conclusion

Careful study of the literature cited in the paper shows that there are various aspects of the market that Hyundai Australia needs to tap into, and be careful of. Issues such as climate change being attributed to pollution, cars contributing to major pollution and much more, will lead to massive changes in the standards, laws and regulations.

After careful study of Hyundai Motors Australia, it is clear that the company has been doing things right in Australia. Considering some changes, which Hyundai already has been implementing, as seen by the Press Releases, the company shall retain its position.

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