HYUNDAI STRATEGIC REPORT

Executive Summary

This paper revolves around Hyundai Company, a firm that is recognized for manufacturing quality and environmentally friendly vehicles in Pacific Asia, Europe and some parts of the United States. Indeed, this essay will offer a comprehensive understanding of the strategy used by this company, hence, managing to compete against other firms. In this case, the paper will explain how the PESTEL analysis helps the audience to understand the implication of political, economic, social, technological, environmental and legal aspect impacts the performance of Hyundai. To be specific, there will be detailed information indicating the manner into which environmental, economic and political factors deplete the Hyundai performance. Moreover, this essay also shows that social, technological and legal aspects are helpful in promoting Hyundai’s operations. Furthermore, the porter’s five analysis reveals that this company does not experience threats of new entrants or substitutes, but it is unable to sell its products at higher prices due to consumers and suppliers bargaining powers. In relation to the above points, Hyundai does not experience much pressure from the competitors since it has already dominated the market sector by satisfying their customers’ needs. On the other hand, Hyundai’s SAF, Ansoff Matrix, and SWOT analyses show that this company is very competitive but it should invest much on research and development in order to be able to produce advanced and quality products in a continuous manner. 

Table of Contents

Executive Summary 2

Introduction 4

Analysis of External Environment 4

i. PESTEL Analysis 4

ii. Porter’s Five Analysis 5

Bargaining Power of Suppliers 5

Bargaining Power of Customers 6

Threat of New Entrant 6

Threat of Substitutes 7

Intensity of Competitive Rivalry in the Automobile Industry 7

Analysis of Internal Environment 8

Analysis of Business (Competitive) Strategy and Ansoff Matrix Recommendations 8

Evaluation of Hyundai’s Strategic Options through SAF 9

Conclusion 10

References 12

Appendix: Hyundai’s SWOT Analysis 16

Strengths 16

Weaknesses 16

Opportunities 16

Threats 16

Introduction

Hyundai Motor Company refers to an automobile firm established in 1967, but it was a sub-branch of South Korean Hyundai Group, that was instigated in 1998 via Hyundai Motor Company successfully buying 51% of Kia Motors, the second biggest car manufacturer in South Korea. In the view of the last 40 years, this company is recognized as the most protuberant automobile producer, a thing that is confirmed through making technically sound, reliable, commercial vehicles and stylish automobiles (Pitt and Koufopoulos, 2012). Correspondingly, Hyundai also operates as the global biggest company with manufacturing facility at South Korea in Ulsan, hence, recording a production capacity of 1.6 million cares on yearly basis (Johnson et al., 2008). In connection to the above information, this company sells its vehicles in almost 193 nations through utilizing some 5,000 showrooms and dealers, hence, managing to hire approximate 75,000 individuals in the entire world (Kim and Mouborgne, 2005). As a matter of fact, Hyundai’s strategic report is an effectual tool for assessing the performance of this company while competing with other organizations operating in the automobile sector. 

Analysis of the External Environment

1. PESTEL Analysis

	Factors	Evidence	Impact (High, medium, low)	Type (Positive/Negative)	Importance(Critical/Importance)
Politic	Tax	The increased governmental oversight on business environment subjects Hyundai to great pressure. Based on the above information this company is unable to compete effectively and efficiently with other firms offering similar products and services (Kim and Mouborgne, 2005)	High	Negative	Critical
Economic	Recession	Because of the economic recession, the clients’ purchasing powers has increased in a greater, hence, contributing to the lower demand for vehicles as well as declined sales of vehicles (Combe, 2014)	Medium	Negative	Critical
Social	Demand for SUVs	The changing social trend seems to affect the demand for various goods in the global view. For instance, there is a rise in demand for SUVs in the Asia Pacific region (Hyundai i40: refreshed front design and new safety features. (n.d.)	High	Positive	Importance
Technological	Investment in research and development (R&D)	The technological aspect seems to affect the growth of Hyundai in a greater manner, particularly in the 21st century. In this case, Hyundai seems to focus on using advanced technology, hence, managing to compete with its opponents (Iszatt-White and Saunders, 2017)	Medium	Positive	Importance
Environmental	Laws for controlling pollution	The establishment of laws for reducing the rising air pollution from the vehicles seems to exert more pressure to the automotive businesses on matters relating to environmental impact and vehicle safety. Based on the above rules, Hyundai seems to focus on making electrical and hybrid vehicles that are environmentally friendly (Garriga and Melé, 2004)	High	Negative	Critical
Legal	Compliance rules	Hyundai management have put more emphasis on legal compliance matters, hence, end up coming up with a team that monitors amenability issues, particularly in the local regions and markets (Lynch and Smith, 2006). Owing to the above reason, this company is currently focused on manufacturing products with higher quality through considering factors such as environmental friendliness and passage safety among other competitive capabilities (Bunkley, 2014).	Medium	Positive	Critical

2. Porter’s Five Analysis

Bargaining Power of Suppliers

The Porter’s five analysis have played a vital role in bringing about the comprehensive understanding of Hyundai’s competency. To be specific, the bargaining power of Hyundai’s distributors as well as for the entire automobile industry is low since the suppliers has flocked the market at a higher rate (Statista.com. (n.d.)). In relation to the above information, Hyundai have a tendency of choosing its promoters with regard to the quality ethics and standards rather than considering factors such geographical location and racial aspects (Lynch and Smith, 2006). Still, Hyundai works collaboratively with the qualified, experienced and value-driven distributors, hence, managing to attract more clients to consume their products and services (Jung-a, 2018). Irrespective of the general bargaining power for the company’s suppliers being low, Hyundai distributors are supposed to follow the quality as well as the sustainability policies agreed by the organizational management. 

Bargaining Power of Customers

In the view of the 21^st century, Hyundai’s bargaining authority for its clients has risen at a greater rate because of various reasons. First, the number of automobiles in the market is very high, hence, contributing to intense competition. Still, various brands in the vehicle manufacturing industry always compete for the identical customer base (Lynch and Smith, 2006). In relation to the above information, the vehicle producers are more concerned with the clients than before, thus, laying emphasis on user safety and quality of the product (Jung-a, 2015). Second, in the view of the 21^st century the consumer seems to be aware of the needed information during the purchase and as a result, the sellers end up experiencing hardships in setting the prices that will be acceptable in the marketplace (Pratap, 2018). On the other hand, most brands appear to focus on offering high-quality products and services with an aim of sustaining their clients, thereby, offering the customers with the authority of influencing prices of different products and services (Endeavor Automotive Limited. (n.d.)). Otherwise, the elements that limit the Hyundai’s client bargaining power include financial strength, brand image as well as the strategy and innovation used during the process of manufacturing vehicles. 

Threat of New Entrant

In the view of the automobile industry, the threat of new entrant is an insignificant factor since there are many barriers hindering the new firms to venture into the market. To illustrate, the above hindrances tend to grow due to many reasons including the required initial investment, marketing, and human resources as well as existence of different types of legal regulations (Cars News., 2017). Owing to the above information, for any company to enter into the vehicle manufacturing industry it is supposed to set aside a huge sum of money to cater for extensive costs and expenses (Statistica.com. (n.d.), 2018). As a matter of fact, the above factors denotes that Hyundai does not experience a higher threat of new automobile companies intending to join the market in the near future. 

Threat of Substitutes

Irrespective of vehicles made by the competitors weakening Hyundai’s sales, this company seem to experience the moderate threat of substitution. To be specific, there are several automobile brands meant for the different market segment and they range from luxurious, stylish, and modern cars (St. Wall., 2009). Based on the above information, Hyundai is capable of selling many vehicles, hence, dominating a large segment in the market (Financial Times (n.d.)). In this case, Hyundai’s competency in the automobile market emanates from several factors including brand image, technological innovation, and brand image among others. 

Intensity of Competitive Rivalry in the Automobile Industry

The force of the competitive rivalry in the automobile keeps on increasing in a continuous manner. Indeed, there are multiple brands competing for the few vehicle consumers, where each of them tends to invest quite largely in marketing as well as on research and development, a thing that in turn contribute to rising in the competitive rivalry (Jin and Reuters, 2015). To be specific, in the 21^st century most vehicle manufacturers seem to focus on using more innovative and advanced technologies. For instance, these producers involve higher technologies and sustainable materials to make their cars, hence, subjecting their rivals to higher costs and expenses while trying to manufacture cars with higher demand (Pitt and Koufopoulos, 2017). In a like manner, the brand image is still an essential factor that affects customers’ attitudes towards certain products and services (Bhasin, 2018). Based on the above information, Hyundai seems to put more emphasis on marketing and branding in order to sustain a good brand image, a thing that is attained by offering quality products and services. 

Analysis of Internal Environment

Analysis of Business (Competitive) Strategy and Ansoff Matrix Recommendations

There are numerous factors that demonstrate the competitive strategy utilized by the Hyundai Motor Company. First, this company is using breathtaking style by introducing different types of cars including Tucson, Elantra, and Sonata. As a matter of fact, the above classic vehicles appears to fit the personality of the drivers and they are also suitable for contemporary roads (Hyundai, (n.d.), 2017). Moreover, Hyundai have a dynamic performance, hence, managing to manufactures various types of engines, a thin that enable the consumers to select the vehicles that perfectly suit their preferences. At the same point, this company have several types of wheel-drive cars that help the users to handle tough weather in England (Hyundai Overview (n.d.)). Furthermore, this company is more concerned with the client’s need, hence, it have subscribed to various services such as 24/7 Roadside Assistance and America’s Best Warranty among other security and safety features. 

In addition, Hyundai is always recognized as a Korean company because of its operating style and business culture. To be specific, Hyundai’s founding brothers, Chung Se-Yung and Chung Ju-Yung have survived the devastation of the Korean War subsequent to escaping from North Korea (Sanderson, 2017). Based on the above information, both Chung and Yung appears to have enough skills for promoting growth and development in the automobile industry. Since the instigation of Hyundai, this company have experienced tremendous improvements (Mintzberg, 2006). As a result, Hyundai is recognized as being among famous automobile companies, a competence that was first noted during its first year in a business where they managed to make a sale of 186,000 vehicles (Hyundai Logo, HD Png, Meaning, Information (n.d)). In confirmatory, a huge number of clients appear being royal to Hyundai since this company is capable of constantly producing quality cars that outshine those manufactured by the competitors. 

According to the Ansoff matrix, there are numerous actions that Hyundai should take in order to remain competitive in the market. First, this company should diversify its operations in order to dominate the automobile sector in the entire world. In this case, Hyundai should have a clear idea concerning the goals and objectives of the new strategy as well as assessing the risks associated with the new approach (Reuters, 2017). Moreover, this company should also come up with a method of rewarding its return customers, hence, motivating them to continue carrying out various transactions with Hyundai. On the other hand, this firm should focus on product development through coming up with innovative ways of production, hence, managing to manufacture more advanced vehicles compared to those of its competitors (Jin, 2017). As a matter of fact, the above techniques will enable this company to attract higher revenues. 

Evaluation of Hyundai’s Strategic Options through SAF

With regard to SAF analysis, there are numerous strategic options that Hyundai have been using in order to successfully outweigh its competitors. First, this company is using a sustainable strategy through coming up with the strong brand image since they are aware that customers are concerned with purchasing the products from the renowned companies that are able to manufacture quality and durable vehicles (Mintzberg, 2006). In relation to the above information, this company still have a large product portfolio, hence, managing to maintain customers with different income segments (The Guardian., 2014). On matters relating to acceptability, Hyundai is dominating the automobile industry from Europe to Asia as well as some parts of America. Indeed, the above aspect seems to help this company to cut manufacturing costs as well as making it easy for Hyundai to sell its vehicles at relatively low prices. Additionally, Hyundai is feasible since it has a huge and varied product portfolio that handles the requirements of the different customer base (Best Global Brands 2016 Rankings (n.d)). Conversely, the above aspect provides this company with the power of attracting higher profits, a thing that in turn enhances Hyundai’s growth and development. 

Conclusion

Hyundai is a renowned vehicle manufacturing company that dominates the automobile sector in Pacific Asia, Europe and some parts of the United States. Indeed, there are numerous factors that help in the determination of Hyundai’s performance. To be specific, the PESTEL analysis indicates that the social, technological and legal factors have a positive impact on Hyundai, whereas the economic, political and environmental aspects appear to influence the performance of this company in a negative manner. Moreover, the porter’s five assessment reveals various information about Hyundai, that is, the assessment shows that this company is competent and does not experience much pressure from the threat of new entrants and substitutes. On the other hand, the application of SAF and Ansoff Matrix tools indicate that Hyundai is doing well compared to its opponents in the Asian markets. Otherwise, this company should invest much in technology as well as on research and development in order to maintain its competency in the automobile sector. 

References

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Appendix: Hyundai’s SWOT Analysis

Strengths

• Hyundai have a strong brand image and equity and for this reason, it has many loyal customers in different income segments
• Hyundai have dominated the automobile market in Europe, the Asia Pacific and some parts of America, hence, being able to attract huge and consistent revenues.
• Hyundai’s sales have increased at a higher rate in Asian markets, a thing that is noted through selling above 1.88 million cars in 2017 (Hyundai, 2016).
• This company have a strong distribution network and manufacturing capabilities as well as having skilled workers (Hyundai (2016). Ix35 Fuel Cell. (n.d.))

Weaknesses

• Hyundai’s vehicle recalls are affecting the reputation of its brand in a negative manner
• This company is utilizing a huge sum of money on marketing, a thing that in turn contribute to extra costs and expenses (Hyundai, 2016).

Opportunities

• The digital technology is creating Hyundai’s opportunities to enhance its supply chain as well as boosting the efficiency of its distribution network
• The demand for vehicles is increasing at a higher rate in the Asian markets, hence, indicating that this company have a ready market for the manufactured vehicles (Litterick, 2006).

Threats

• There is higher competition from other automobile makers
• The national governments have come up with strict laws and regulations for monitoring business activities, but Hyundai is unable to comply with all the provided rules (Reuters, 2007).
• Fluctuation of currencies will also affect the performance of Hyundai