Turning Crisis into Opportunity: Is Hyundai’s Trajectory A Miracle or A Mirage?
Publication Type:Conference Paper
Source:Gerpisa colloquium, Berlin (2010)
The global automotive markets which expanded rapidly over the past five years from 2002 to 2007 have sharply declines from the fall of 2008 in consequence of the financial crisis. Under extremely severe conditions, automobile makers run a race for survival in the global market. To respond to the crisis, automobile manufacturers must solve liquidity problems urgently and reduction in production cost. They also have implemented creative marketing strategies to entice reluctant consumers, even though it has not helped the catastrophic drop in sales.
There is no doubt that the automobile industry is going through a fundamental shift. A recession of worldwide automobile demands has been affected by financial crisis is prompting automobile manufactures to form alliances and shift on concentrating on the emerging market, which has withstood the slump amid economic growth and government subsidies. In this context, world carmakers have strategy alliances among the automobile manufacturers are the top of the agenda during global turmoil and they are indispensable for competition. The global crisis has sped up this reshuffle.
VW agreed to buy a 19.9 per cent stake in Suzuki and jointly developed vehicles for emerging markets such as India. Suzuki control Maruti Suzuki India Ltd., the maker of half of all cars sold in India and VW is the second-biggest overseas automaker in China, which is set to surpass the U.S. as the world’s largest car market this year. PSA Peugeot Citroen, Europe’s second-biggest carmaker, and Japan’s Mitsubishi Motors Corp. are in talks to deepen a strategic partnership that may involve an equity investment, the companies. Fiat SpA, Italy’s top automaker, acquired a 20 percent stake in Chrysler Group LLC in June 2009.
Although the world’s automotive market remains sluggish, and some of the world’s largest carmakers have been sorely tested on how to survive, Hyundai motor, a Korean company which is one of the countries biggest vehicle assemblers and one of its main suppliers and yet it is not without trouble that they have weathered the global crisis relatively well. In the midst of the global crisis, Hyundai has no plan to M&A as an exit strategy which has been adapted by European carmakers like VW, Fiat, and Chinese companies. In contrast, Hyundai planned a stand alone strategy, because their product line up is not expected to synergistic effects through M&A.
This paper aims to provide preliminary understanding regarding the management strategy of Hyundai in order to survival in the current global financial crisis. This paper also is an examination of the new trajectory of Hyundai whether this is a new pattern setter for emerging carmakers. The paper is organized as follows. Section 1 analyses of the business performance and the management strategies of Hyundai in the periods of global crisis. Section 2 focuses on the stand alone strategy of Hyundai in the global turmoil, which are required for sustainable growth in next decade. Finding that the reminder of the paper asks how firmly in global recession can Hyundai pursue the competitive strategies. To this end, Section 3 shows that Hyundai actually faces this challenge and this task to pursue this strategy, while Section 4 concludes with a summary interpretation.
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