Gates

James Survoy

GEB 1350 Itn’l Bus

Fletcher

18 Sep 2014

Hyundai: Leading the Way in the global Auto Industry

1. Q. What are the roles of comparative and competitive advantages in Hyundai’s success? Illustrate your answers by providing specific examples of natural and acquired advantages that Hyundai employs to succeed in the global car industry.

Comparative advantage = supieror features of a country that provide unique benefits in global competition, typically derived from either natural endowments or deliberate national polices (ex. Labor, climate, arable land, petroleum reserves)

Competitive advantage = distinctive assets or competencies of a firm that are difficult for competitiors to imitate and are typically derived from specific knowledge, capabilities, skills or superior strategies (ex. Knowledge, capabilities, innovativeness, superior strategies, close relationships with suppliers)

ANS: Demand in South Korea is too low to sustain indigenous automakers like HMC and Kia, thus exporting is a necessity to attain the economies of scale needed to remain competitive in a tough industry. South Korea enjoys various national competitive advantages in the provision of cars such as abundance of production factors in cost-effective labor, knowledge workers, high technology, and capital. The South Korean government devised a partnership system of close government/business ties, including directed credit, import restrictions, and sponsorship of specific industries. In part due to these efforts, Korea is home to a substantial industrial cluster for the production of cars and car parts.

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2. Q. In terms of factor proportions theory, what abundant factors does Hyundai leverage in its worldwide operations? Provide examples and explain how Hyundai exemplifies the theory. In what ways does Hyundai’s success contradict the theory? Justify your answer.

Factor proportions theory – country should export products that...