Case

Hyundai: A Global Success Story

The automotive industry is among the largest and most global sectors in the world. Any shift in the automotive industry has consequences for firms around the globe. Hyundai Motor Company (HMC) is a rising star in the global automotive industry. South Korea's number one carmaker, HMC produces about a dozen models of cars and minivans, as well as trucks, buses, and other commercial vehicles (www.hyundai-motor.com).

. Popular exported models are the Accent, Elantra, and Sonata. The Korean firm has managed to internationalize successfully seemingly against all odds.

The Car Industry on a Global Arena

With many competitors battling for market share, car makers such as Toyota, Nissan, Honda, Hyundai, General Motors, Ford, DaimlerChrysler, Renault, and Volkswagen operate on relatively thin margins. The automotive industry has been suffering from excess production capacity. Although there is a capacity to produce 80 million cars globally, total global demand runs at only about 60 million a year. Thus, car manufacturers typically employ only 75 percent of their production capacity. However the car industry is extremely capital intensive and, with so much competition, firms should use at least 80 percent of their production capacity in order to remain competitive. It is tough to stay afloat under such competitive conditions and the industry has seen numerous mergers and acquisitions in recent years. Consolidation has occurred between Ford and Land Rover, Jaguar and Volvo, and DaimlerBenz with Chrysler, to name a few.

South Korea and the Auto Industry

Against this background, HMC has faced various mishaps. The South Korean economy endured a recession in the late 1990s as a result of the Asian Monetary Crisis. The economy comprises numerous family-owned conglomerates, or chaebol. The combined sales of the nation’s five major chaebols -- Hyundai, Samsung, Daewoo, LG, and SK – amounted to roughly 40 percent South Korea’s...