...operate, ensure a consistent pool of resources that are required for the business to perform its functions, and to generate profits. The Acquisition of Kia Motors by Hyundai Motors Fikre Y. Wondimu CalUniversity Author Note Fikre Y. Wondimu is a student at California Intercontinental University. Special thanks to Dr. Troy Roland and Dr. Fathiah Inserto for providing suggestions to improve this document format and content. Correspondence concerning this thesis should be addressed to Fikre Y. Wondimu, CalUniversity, 1470 Valley Vista Drive #150, Diamond Bar, CA 91765. Contact: fikre_y@yahoo.com Abstract The last decade demonstrated decreased revenue and higher value of development costs, which led the automobile industry to engage in domestic and international mergers and acquisition (M&A). This case analyis examines one of the largest M&As in the Korean automobile industry in recent years, the acquisition of Kia Motors (Kia) by Hyundai Motors (Hyundai). The case study briefly analyses the conditions of the acquisition, the integration and stabilization processes undertaken by both companies. By acquiring Kia, Hyundai enhanced its competitive position in both domestic and global markets, achieving economies of scale, scope and strengthened its local and global market. The M&A process of Hyundai/Kia did not come easy. The Post-acquisition and restructuring process faced several challenges of synergy effects prompting for strategy change in order to align...
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...Both Hyundai and Kia rely on exports for much of their sales. Consequently, the companies are highly vulnerable to changes in exchange rates. When the South Korean currency, the won, rises relative to the U.S. dollar, the cars sold in the United States are recorded at a lower price when translated back into won. This of course hurts Hyundai and Kia's profits, and forces the two companies to sell more units just to stay even. Both Hyundai and Kia Announced plan to expand production in the United States. Hyundai already has a plant in Alabama, and Kia will soon be opening a plant in Georgia. Both companies hope that having a U.S. manufacturing site will help protect them against adverse currency movements. Most students will probably recognize that having the U.S. production locations allows the firms to shift production during times of sustained currency movements. Some students may also note that since both companies rely on the U.S. market for a substantial share of their profits, having a U.S. presence may be beneficial simply Because they are closer to an important market, and Because U.S. consumers might be more inclined to purchase cars made by Americans. At the same time though, students will probably point out that manufacturing in the United States where wages are higher could make it more difficult for the companies to implement their low cost strategies. If Hyundai expects the won to appreciate, Hyundai should consider expansion in the United States. A Stronger won...
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...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...
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...Hyundai Motor Company Question 1 Hyundai is a Korean Motor company which is a part of Hyundai Group. It has been established 29th December 1967. It has achieved a high success domestically and internally. In this question we will highlight the difficulties faced Hyundai including its competitors, how they overcome these problems domestically and internally and the strategies adapted to compete effectively . HMC has faced some of the difficulties & problems that affect its market position & brand image. Their problems is going around three main problems which are "Sales, rate & quality". HMC rates was so cheap which made the product is undervalued by the customers. In fact, the cheap price of their cars reflect its quality as some customers are needed for expensive cars. Therefore, Hyundai goal in US only to maintain its share not to gain more profits & sales in one had. On the other hand, segmenting low level –moderate level people and focus on cost saving cars rather than high quality oriented cars affected it's brand image & identity. Moreover, Hyundai is caring only to save money by having cheap labor which also affect its quality of working and having lots of workers strikes. In addition, we can't forget that inherited Chairmanships that gave the priority to the family to run the business rather than the qualified professional from management. These family chairmens' never listen to the experts inside organization and never take their advice. As well as they had a problem...
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...Using sports marketing to engage with consumers: A Kia Motors case study Introduction Today’s consumers have higher expectations than ever before. Dramatic improvements in media, communication and transport have made the world’s economy more connected. Products developed in one country have become increasingly attractive in other parts of the world. However, entering markets in other parts of the world is not an easy task. Entrants face many different challenges as they try to develop their brand profile. This is especially evident in mature markets like the UK car market. This market has a number of long established brands. The awareness and brand loyalty that exists for established brands form a barrier to entry for new organisations. This case study illustrates how Kia , a South Korean motor company, has used sports marketing to develop its brand identity in the European motor market. The Kia Motors Corporation, based in South Korea, has 12 manufacturing and assembly plants and subsidiaries in 165 countries around the world. Globally the Hyundai Kia Group is now the fourth largest car company in the world. Kia Motors UK has more than 166 dealerships. It also has plans to grow the network to support the increasing demand. Kia is a relatively new entrant to the UK car market. However, it has become more well known in recent years. Kia does not have the same level of brand heritage in the UK as it does elsewhere in the world. Kia aims to overcome this through its massive ambition...
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...The Acquisition and Restructuring of Kia Motors by Hyundai Motors 1. Since the mid-1990s, the global automobile industry was characterized by oversupply and a production capacity well in excess of demand. There were, and still are, many competitors in the industry. Advances in technology have allowed for rapid growth within the industry. Research and development costs increased due to consumer environmental and safety concerns. With this social consciousness, automobile producers were forced to develop new types of automobiles to meet demand. This allowed bargaining power in the buyer’s hands. This caused automobile companies to increase their production efficiency, restructure, and enter strategic alliances (mergers and acquisitions) to realize the economies of scale and scope. The Korean automobile industry was characterized by weak domestic demand, which resulted in continuous oversupply. The market was also completely dependent on Japanese technology to produce automobiles. Korean automobiles were cheap but subpar in quality. Many manufacturers did not run their facilities to full capacity, increasing unit costs. Through the acquisition of Kia, Hyundai hoped to influence the economies of scale, influence the economies of scope, and develop a superior global network. The merger with Kia could potentially improve competitiveness by allowing the use of common parts, integrated quality control and shared functional improvements, as well as reduce costs through the purchase...
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...management are Kia and Chrysler. Both car companies have been around for well over 60 years, both are major car dealers and have established a huge name for themselves in the United States. These two companies have one major difference though; Kia competes within the global market, and Chrysler competes in the domestic market. Even though Kia and Chrysler compete in different markets, they both have the same similarities concerning their systems of prevention of problems, and quality products. Kia was established first in Korea in 1944, and launched into America in 1996. The name Kia translates into Rising out from Asia (NA, 2010). Kia has had difficulties through the years; however, they always have had the same problem prevention and quality of products. Kia starts with reviewing the parts that come from overseas. After reviewing the parts several times over, Kia then has the personnel tests the parts before making the car. These steps are taken to test each part that goes into making the cars. For Kia’s car safety, there is training for local and overseas personnel on new testing and procedures. This training consists of three parts. The first stage will be done by the manufacturer of the parts. The second stage will be for the research and development team and the purchasing department. When parts have successfully passed the first and second stages of testing, those parts will then be sent to the personnel that assemble the modules of the Kia...
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...Hyundai Motor Company Business History The Hyundai Motor Company is a multinational automotive manufacturer based in South Korea. The company is the world’s fifth largest motor group. (Hyundai.co.uk). the motor group has its headquarters in Seoul in South Korea. Hyundai was started by Chung Ju-Yung in 1967. Its parent company is the Hyundai motor group. It owns Kia motors by 32.8%. The company has its main operations in Ulsan, South Korea. This unit has an annual production capacity of 1.6million units. Ulsan is the world’s largest automobile manufacturing plant. The company had its first model, the Cortina released in 1968. This was in corporation with Ford Motor Company. The company has since grown and is now one of the top 100 most valuable brands worldwide. In Canada, Hyundai Auto Canada Inc. was opened in 1989. It is a subsidiary of the Hyundai Motor Company. It was located in Bromont Quebec. The Bromont plant only operated for four years before failure. Hyundai Auto Canada Inc. operates without a plant. There are however plans to revive it since there was a boosts in sales in the year 2009. Hyundai Motor Company is currently run by Chung Mon-koo who is both the chairman and CEO of the motor company. The company says that its goal is not to become the biggest car company; rather it is to provide value for the future. This also doubles as the company’s vision statement. (worldwide.hyundai.com) Production The main products for Hyundai Motors Company are cars. The company...
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...This is especially evident in mature markets like the UK car market. This market has a number of long established brands. The awareness and brand loyalty that exists for established brands form a barrier to entry for new organisations. This case study illustrates how Kia, a South Korean motor company, has used sports marketing to develop its brand identity in the European motor market. The Kia Motors Corporation, based in South Korea, has 12 manufacturing and assembly plants and subsidiaries in 165 countries around the world. Globally the Hyundai Kia Group is now the fourth largest car company in the world. Kia Motors UK has more than 166 dealerships. It also has plans to grow the network to support the increasing demand. Kia is a relatively new entrant to the UK car market. However, it has become well known in recent years. Kia does not have the same level of brand heritage in the UK as it does elsewhere in the world. Kia aims to overcome this through its massive ambition and plans for growth in the European market. Developing brand identity To support this growth plan, Kia has to develop its brand identity. In the past Kia has competed mainly on price, using a competitive pricing strategy. The challenge for Kia has been to increase awareness of its brand within European markets. Alongside this it has created positive perceptions of its products through high profile sponsorship deals. It wants consumers to view the brand as a...
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...Hyundai Motors Globalization strategy 1967-2013 06/06/2013 Research project: Hyundai globalisation strategy Executive summary The following report maps out Hyundai Motor Corporation’s (HMC) internationalisation strategy from its creation in 1967 to the current period. This strategy can be chronologically divided into four phases according to HMC’s objectives and rationale for expansion at different stages of its existence. From the research carried out, it appears that HMC’s choices of specific internationalisation patterns at different stages essentially stemmed from: The dynamics of the relationship between HMC, the Hyundai business group and the South Korean economic and political environment; Political, social and nationalistic incentives deriving from the specificities of Chaebol management and later the influence of the Asian crisis on this management and decision taking processes; Korea’s initial factor dotation, i.e. the prevalence of certain factors over others which pushed the company to seek knowledge and resources abroad at a very early stage; The replication of Japanese strategies (Nissan, Mitsubishi, Toyota). - Due to the complexity of HMC’s environment, strategy over time cannot be illustrated using a single internationalisation framework. The report therefore discusses two different frameworks – namely Porter’s diamond and Dunning’s eclectic paradigm – to analyse the company’s strategy at different stages of its international development. 2 ...
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...Chris Maxwell MKT 682 Case Study October 29, 2014 Circle Corporation Circle Corporation is a small company that was started in 2001. The founder of the company is Yong Soo Kang, and he started this company with his own savings of $350,000. Before doing this he worked in Hyundai Motor Group where he started as a machinist but eventually managed the sheet metal forming processes. Circle Corporation is located in the southeastern part of Korea, in a city by the name of Busan. The company manufacturers various machine parts but specializes in mufflers and ferrules for automobile air conditioning, which helps to reduce the noise and increase the system reliability. Busan is the fifth largest seaport in the world, which helps this company out by being able to sell and trade these materials easily through ship transportation. The company is fairly small but does a lot of business with automotive companies. Its largest customer is Hyundai. Circle sold roughly 3.5 million ferrules and about 120,000 A/C’s every month by the end of 2010. In 2010 the company had revenue of about $6.2 million and buy the end of 2011 it was at $6.6 million. Their biggest jump was from 2007 to 2010. The company is now stuck and needs to bring in more revenue and is looking outside of Korea. With Circle wanting to branch out into further regions so that it can bring it more revenue it will have to deal with some competition. Right now there are a number of companies that they would have to go...
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...the damage and my personal outrage.” He also personally apologized to former and present NBA players, the Clippers organization, and the fans. Silver addressed in the press conference that he urges all NBA owners to stand by him in forcing Donald Sterling to sale the Clippers franchise. In order for Silver’s wishes to happen he would have to cast a vote amongst NBA owners and 75 percent of the owners have to agree with forcing the sale. Silver stated he was optimistic that he’ll get the support he needs to move forward. Unfortunately as a result of Sterling’s racist rant sponsors have quickly dis associated themselves from Clippers organization. In rapid succession, the mass exodus included used car seller CarMax, State Farm Insurance, Kia Motors America, airline Virgin America, P. Diddy's water brand, AQUA Hydrate, Red Bull, Yokohama tires and Mercedes-Benz. It doesn’t stop there some NBA corporate sponsors Amtrak and Corona beer have also threatened to pull...
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...Organizational change as defined in our text “Managing Organizational Change” is when an organization seeks to make a transition from its current state to some desired future state. Managing this change is a process that requires proper planning, and execution, as to mitigate employee resistance, and to minimize financial loss to the organization. Today's organizational climate often mandates that companies undergo changes if they are to remain a competitive business force. Globalization and technology that is forever growing, force these organizations to respond in order to survive. Such changes may be from within the organization, at the executive level, or from the consumer perspective, as in the case of McDonald’s incorporation, and Hyundai Motors. In this paper I would like to focus on these two companies, both dealing with change within and outside the organization. Both companies embracing inevitable change, and both companies implementing “Images of Change” which will be discussed later. I will also compare and contrast the methods of change that each organization implemented, and how these changes has either helped or hurt their respective business. Evidence of Change Not even McDonald's Corp. has an iron stomach when it comes to the global economic downturn. The world's largest hamburger chain has thrived in boom and bust times by selling cheap eats and constantly updating its menu with popular items such as fruit smoothies and snack wraps. But the company is...
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...HYUNDAI MOTOR INDIA LTD Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai Motor Company (HMC). HMIL is the largest passenger car exporter and the second largest car manufacturer in India. It currently markets eight passenger car models across segments -- in the A2 segment it has the Eon, Santro, i10 and the i20, in the A3 segment the Accent and the Verna, in the A5 segment Sonata and in the SUV segment the Santa Fe. HMIL's fully integrated state-of-the-art manufacturing plant near Chennai boasts of advanced production, quality and testing capabilities. HMIL forms a critical part of HMC's global export hub, it touched 1.5 million in exports in March 2012. It currently exports to more than 120 countries across EU, Africa, Middle East, Latin America and the Asia Pacific. HMIL has been India's number one exporter for seven years in a row. To cater to rising demand the company commissioned its second plant in February 2008 having an installed capacity of 330,000 units per annum. To support its growth and expansion plans HMIL currently has 346 dealers and around 800 service points across India. In its commitment to provide customers with cutting-edge global technology, HMIL set up a modern multi-million dollar R&D facility in Hyderabad. The R&D centre endeavors to be a center of excellence in automobile engineering. Mission To create exceptional automotive value for our customers by harmoniously blending safety, quality and efficiency...
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...What are the greatest ethical challenges for Hyundai? Over the years Hyundai has had its share of ethical challenges to overcome. Probably the most notable of these challenges was the prosecution and subsequent conviction of the Chairman, Chung Mong Koo in 2006 for embezzling funds. Chung was essentially responsible for turning Hyundai into the global success that it was and is today so this had an enormous impact on the future of the company. He was accused of making questionable deals that benefitted him and his son and he was sentenced to three years in prison; however in September of 2007 he was granted a suspension of the three year prison sentence due to the fact that his imprisonment and the impact on Hyundai would negatively affect the Korean economy. Chung promised to donate $1 billion if he was freed and in February 2008 he was re-elected as the Chairman of Hyundai Motors. According to the text, this behavior is that of an immoral manager. Chung was obviously not interested in what was “the right thing to do” but was more interested in his own best interests and that of his family. He put the reputation and image of Hyundai at risk. However, given the economy in Korea and the political issues that exist there he basically got a slap on the hand and was allowed to be reinstated. This ethical challenge of immoral behavior did have some impact on their reputation; however given the fact that they are still one of the leading auto makers in the world, obviously...
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