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Hyundai Motors Essay

Hyundai Motor Company (hereafter, HMC) formed in 1967, was a part of the South Korean Chaebol – the Hyundai Group. In the last four decades, HMC managed to establish itself as a most prominent automaker producing reliable, technically sound and stylish automobiles and commercial vehicles.

Headquartered in Seoul, South Korea, HMC opened a new chapter in the history of the Korean automotive industry by exporting its first proprietary model, the Pony, to Ecuador in 1976. In the 1980’s, HMC exported the Excel to the U.S. In 1991, HMC achieved technological independence by developing the first propriety engines and transmissions. Currently HMC has 78,539 employees around the world working in eight manufacturing plants, 12 R&D centers, 5,300 dealerships and sales companies, and CKD plants. As of 2010, HMC established as a global automaker that produces more than three million high-quality passenger and commercial vehicles for sale in 190 countries each year.

By enhancing Brand image through high quality products and unique marketing initiatives, once again, HMC is the first and the only Korean automaker to be listed in the Top 100 Global Brands in 2010 by Business Week and Inter-brand since it first entered the Top 100 Global Brands in 2005.

Revenue and Profit:

In spite of the persistent uncertainties in recent business conditions, HMC achieved some significant milestones in automaker markets in the past few years. In 2009, HMC succeeded in selling 2.4 million vehicles overseas, a meaningful accomplishment considering the global economic crisis. In particular, Elantra, Genesis, Genesis Coupe, Santa Fe, and Veracruz were recognized as the best sales and safest cars in their categories by leading agencies and the media in the US, also, HMC achieved cumulative export sales of 1 million cars in Africa. HMC pledges continuous growth by maximizing brand value in developed markets and expanding its sales capacity in emerging markets.

In 2009, HMC posted 31,859 billion KRW in sales. Operating profits increased by 19% to 2,235 billion KRW. The operating profit margin increased by 1.19% to 7.02%. Net profit surged by 104.5% to 2,962 billion KRW and HMC’s total assets increased by 12% to 22,029 billion KRW. Despite increased sales and profits, tax payments to the central and regional government decreased due to corporate tax cuts and increased tax exemptions associated with increased R&D investments.

(Source: 2010 Sustainability Report, Based HMC operation result only, * EBITDA =EBIDTA : Earnings before interest, taxes, depreciation and amortization)

In 2009, HMC jumped to third on the list of Fortune Korea Top 20 Korean companies and generated 91.46 trillion won in revenue, up 14.7 percent from the year 2008 and 2.97 trillion won in net profit, up 246.7 percent (Source: www. koreatimes.co.kr).

In 2010, HMC announced global sales of 3,612,487 units (domestic plants: 1,730,682, overseas plants: 1,881,805). Sales revenue rose 15.4 percent to 36.8 trillion won from a year earlier as the company sold more cars and improved its product mix, while operating profit also rose 44.4% to 3.2 trillion won. Net profit increased 77.8 percent to 5.3 trillion won. Hyundai aims to increase sales and enhance brand image in 2011 by introducing new models specifically designed for local customers.

In the next decade, HMC will continue in its endeavor to become a leading global automaker company through driving growth the development of world-class eco-friendly vehicles. HMC is striving to develop environmentally friendly vehicles including hybrid electric vehicles; fuel cell electric vehicle and pursuing two-prolonged “Blue Drive” initiatives which focus on fuel efficiency and the development of alternative fuel vehicles as a fundamental solution for climate change & energy security. In the future, HMC focus on vehicles that run on various bio fuels. For the U.S. and Brazil markets, HMC develops flex-fuel vehicles that run on a mixture of ethanol and gasoline. In Europe, where diesel cars are sold in great proportion, the EU has a set of technical standards for diesel fuels with biodiesel content made of palm, rapeseed, soybean and other plant resources, and all HMC’s models are capable of running on diesel fuel mixed with biodiesel.

Remarkable success since 2007:

In 2007, HMC received National Environmental Management Awards President’s Prize and sales in US exceed 5 million units; its products i30 selected as Car of the Year in Australia; Accent (Verna) selected as Best Car of the Year by the Indian automobile magazine Overdrive; Azera (Grandeur) ranks first in J.D. Power and Associates’ consumer satisfaction survey.

In 2008, HMC received Global Green Management Excellence Award, Global Reporting Initiative Award; it ranked first in National Customer Service Index (NCSI) for eighth year in a row, Avante (Elantra) exceeds 5 million units in accumulated sales;

In 2009, HMC was selected as Best Company in terms of customer satisfaction in the automaker category by a consumer research group in China; it ranked Top 60 in Global Brand Value by Business Week and selected as Best Marketer of the Year in the US; Its product i30 and Grand Starex awarded as Best Cars in Australia for the second consecutive year; TAU engine selected as winner of US Ward’s AutoWorld 2009 10 Best Engines for the second consecutive year; received Presidential Prize at the 2009 Korea New Technologies Award.

In 2010, HMC placed in the Top 100 Global Brands in 2010 based on a joint study conducted by Business Week and Interbrand and was named Carmaker of the Year by AM, UK’s leading auto trade magazine, in the AM Awards 2010. The TAU 4.6 engine was selected as a winner of the 2010 10 Best Engines of the US automotive media Ward’s AutoWorld for the second consecutive year.

Corporate Responsibility

Corporate Social Responsibility (CSR) was the key issue in company society relations. CSR has taken a core position of Hyundai Motor included three areas: trust-based management, environmental management, and social contribution. For trust-based management, HMC focused on labor relations enhancement, mutually beneficial cooperation with suppliers, ethics management and transparent management. As for environmental management, HMC proactively responded to global trends and environment regulations.

For social contribution, HMC enlarged its capacity and obtained expertise to effectively carry out global social contribution projects and participated in volunteering programs, contributed to development of local communities. In 2007, HMC established the ‘Hyundai Motor Global CSR Network’ with primary production and sales subsidiaries around the world and also laid foundations by promoting global CSR activities and by developing and opening the ‘Global CSR Web site’ for information exchange.

Challenge of sustainability:

“Sustainable development satisfies the needs of the present generation without compromising the chance for future generations to satisfy theirs” Brudtland Report (1987).

Enhancement of stakeholder value through achieving economic profits, environmental soundness, and the fulfillment of social responsibilities in corporate activities with a long-term perspective is the goal of sustainable management. To social and political sustainability, HMC has increase value to stakeholders through engagement and collaboration. To economic sustainability, HMC has responded to fast-changing demands of global customers by fully utilizing strategically placed production and R&D facilities and fulfilled fundamental responsibility as a corporation by sharing economic value with various stakeholders including shareholders, investors, employees and suppliers.

To environmental sustainability, HMC has tackled the twin challenges of climate change and energy security by developing green technology. HMC develops environmentally-friendly vehicles and the establishment of low carbon value chains to achieving reductions in greenhouse gas emissions. In addition, HMC has established a comprehensive hazardous materials management system and making effort to minimize impact on air quality.

Climate change:

Climate change is the most important issue to be tackled among five core Environmental Management Areas including Recycling and reuse, Air pollution, Hazardous materials, Environment Management System, Climate change. Since increased consumers’ preferences for low carbon products, therefore, HMC has invested a large amount of resources into the vehicle energy efficiency improvement technologies. HMC has established and implemented a comprehensive environmental strategy throughout the entire lifecycle of products.

Its ‘Blue Drive’ is a strategy that focuses on fuel efficiency improvement of vehicles power by internal combustion engine and the supply of zero emission vehicles in the future. Facing to multiplied challenges of climate change, HMC has striving to develop vehicle that run on various bio-fuels and hybrid electric vehicles, fuel cell electric vehicle, environmentally –friendly vehicles and the establishment of low carbon value chains to achieve reduction in green house gas emission. As a first achievement, HMC is the world’s first LPG – Hybrid vehicle using proprietary technologies in July 2009 and release in the North American market and the domestic market in 2010.

Engages with external stakeholders:

HMC conducts business in an open & transparent manner to earn and maintain the trust of all relevant stakeholders including shareholders and investors, customers, suppliers, government and communities. HMC have been sharing relevant information with all stakeholders via its sustainability report since 2003. HMC also tries to promote fair trade, mutually beneficial transaction with business its partners.

With customers, HMC has been operating a customer service center that handles customer complaints and inquiries for improving customer satisfaction, reflect customer opinions about product and service by means of including regularly scheduled customer satisfaction surveys, customer services hotlines. The success of a surprisingly bold campaign with a new assurance program, which guaranteed customers to be able to return newly bought cars with no credit damage in the case they lose their income amid the still prevailing financial crisis.

For suppliers, HMC created the Mutually Beneficial Cooperation Fund and a number of win-win supplier support programs designed to ensure shared growth with suppliers. In 2008, HMC signed a fair trade agreement with approximately 2,400 suppliers to further increase fairness and transparency collaboration with parts suppliers its essential in achieving high product quality in automobiles.

HMC has made a sustainable effort to maximize shareholders and investors value through the increasing value of HMC by cash dividends – most important means of sharing company profits. In 2009, HMC declared cash dividends of 1,150 billion KRW per each common share.

HMC also paid taxes to central & regional government, local community and social distribution expense and launched tailored social contribution activities, organized an active employee volunteer service program which serves as the driving force for ‘Moving the world together’ social contribution campaign. In 2009, 25,851domestic employees participated in volunteer community service.

In conclusion, HMC is more likely to achieve success in the long term by taking responsibility for the economic, social, ethical and environmental impact of its activities.

Crisis Management

In 2007, the antitrust agency of Korea fined HMC an amount of $ 25 million for violations in businesses. At the same time, Hyundai chairman Chung Mong-koo came before the court for corrupting from funds $ 96 million and damage more than $ 224 million from 2000 to 2006 to bribe officials for Hyundai facilitate urban expansion in southern of Seoul. This incident influenced a lot to the company, especially in long-term strategy, reputation and revenue.

The global automotive markets which expanded rapidly over the past five years from 2002 to 2007 had sharply declines from the fall of 2008 in consequence of the financial crisis. Under extremely severe conditions, automakers run a race for survival in the global market. To respond to the crisis, HMC and other automotive manufacturers must solve liquidity problems urgently and reduction in production cost. And they also have implemented creative marketing strategies to entice reluctant consumers.

The global financial downturn in 2008–9 affected European and Asian automotive manufacturers. The automotive industry was weakened by a substantial increase in the prices of automotive fuels linked to the 2003-2008 energy crisis which discouraged purchases of sport utility vehicles (SUVs) and pickup trucks which have low fuel economy. With fewer fuel-efficient models to offer to consumers, sales began to slide. By 2008, the situation had turned critical as the credit crunch placed pressure on the prices of raw materials.

The result of the 2008-9 international financial crisis impact almost economic sectors and left a number of banks and other financial institution in severe difficulties, forcing some to collapse. As a result, inter-bank, corporate and personal lending was drastically reduces, share price fell, and all the companies found themselves in financial difficulty. The world economic downturn led to falling sale and profit, exchange rate and share prices and a shortage of credit finance for business and consumers, unemployment and social hardship.

As a result, automotive industry is one of the first industries to suffer from the 2008-9 world recession. Clearly, consumers incomes were falling, business were cutting down on their purchases, credit was in short supply, thus consumers exercised caution and either bought a used car instead a new one. It is not therefore surprising that there was a significant fall in the demand for new cars. In some country, Government responded to the situation by offering financial incentives to persuade consumers to buy new cars. So HMC focused on making effort to make economizing fuel vehicles with minimize cost to respect customers need and have implemented creative marketing strategies to entice reluctant consumers as most experienced double-digit percentage declines in sales.

Although the world’s automotive market remains sluggish, and some of the world’s largest carmakers have been sorely tested on how to survive, HMC has weathered the global crisis relatively well. In the midst of the global crisis, Hyundai planned a standalone strategy, because their product line up is not expected to synergistic effects through M&A. Despite difficult market conditions, in 2010, HMC succeeded in increasing its sales and strengthening its internal capacity.

Strategy over the past few years

HMC developed five mid–and long–term strategies: global management, higher brand values, business innovation, environmental management, and strengthening product competitiveness. Especially, HMC selected environmental management as to meet the needs of markets and to fulfill stakeholder expectations and the society. HMC also intends to promote sustainability development and preservation of the environment.

Blue Drive is HMC’s low carbon green technology strategy designed to reduce CO2 emissions by boosting fuel efficiency. Blue Drive also stands for HMC’s technology development strategy focus on improving fuel efficiency of internal combustion engine-based cars, and with an ultimate goal of developing vehicles with zero CO2 emissions. HMC has focus on three technology areas for improving energy efficiency of the power-train energy efficiency improvement, minimizing energy loss, and creating renewable energy in order to lower CO2 emissions from vehicles.

In Europe, HMC succeeded in low CO2 emissions products including the Blue Drive variant of the i30 diesel model, Blue Drive variants, the i10, the i20, the i30, and the Tucson ix blue. In the US, HMC is the most fuel efficient brand with an average combined (passenger vehicle-light truck) fuel efficiency. In the domestic market, a great number of vehicle models including the Click(Getz), the Verna(Accent), the i30, the Avante (Elantra), the Tucson(Diesel model), and the Santa Fe(diesel model) earned a first class energy efficiency.

HMC has expanded its vehicle lineup by including more luxury sedans and eco-friendly cars in order to keep up its strong performance in the U.S. market. HMC sold more than 500,000 vehicles in the USA in 2010 and it is the highest number of cars it has ever sold in a single year since tapping into the U.S. market in 1986. HMC have been aggressively pushing into China as the country has become the world’s largest automobile market. As its first achievement, HMC launched the world’s first LPG-Hybrid vehicles, the Elantra LPi Hybrid, which is developed using proprietary technologies in 2009 and released the Sonata Hybrid in the North American market in 2010 and in the domestic market in 2011.

HMC’s high product quality innovation was proven in engine technology—the heart of an automobile. Its technical capabilities and the development of high fuel efficiency-related technologies become a true global environmental leader. Under the philosophy of putting quality first, over 5% of its revenues are invested into R&D to secure world-leading quality, marketability and technology.

HMC has already taken environmentally-friendly investments and research that have resulted in a range of innovative breakthroughs from fuel-saving technology to new materials and responsible treatment of end-of-life vehicles. By adding blast furnaces to its operations, HMC was able to complete what it calls “resource circulating business structure” that goes from molten iron to automobiles, and from scrap back to unprocessed steel.

Since its first concept model “Blue Will” in 2009 with light-weight bodies made of carbon-fiber, a panoramic sunroof with solar cells minimizing power loss, HMC will launch plug-in hybrid (PHEV) and electric vehicle (NEV) are optimized for in-city use, especially well-fitted for commutes and short trips.

Innovative vehicles that pioneer changed in the auto industry through continuous investment in R&D and advanced dealer network programs and highly recognized for its sharp sales increase, first-rate dealership programs, and growth in brand awareness. HMC beat other candidates including Ford, Jaguar, and Landrover to be selected as the winner of the coveted title.

Vision, Mission, Goals

Hyundai Motor Company has grown rapidly to become one of the largest automobile companies with global top five production capability and superior quality, reaching a tipping point the qualitative approach, bringing bigger ideas and relevant solutions to its customers. At this opportunity to move ahead, HMC have developed a new brand slogan that encapsulates the willingness to take the next big step up. Led by new slogan and the thinking behind, HMC will become a company that keep challenging ourselves to open up new possibilities for people and the planet.

HMC established a long-term vision of “Innovation Humanity” and selected five core strategies directions including a global orientation, respect for human values, customer satisfaction, technology innovation and cultural creation. HMC desires to create an automobile culture of putting customer first via developing human–centered and environment–friendly technological innovation.

HMC vision is to secure world-best innovations and raise its profile as a premium automaker. Its quest also includes making this world a better place for all by popularizing next generation eco-friendly technologies and creating a new auto-culture through people-centered technologies that move customers’ hearts.

HMC goal is to become a respected global company that contributed the creation of an automobile consumer culture that respects customers need and innovation in environmental technology that minimize the environmental impact of automobile.

HMC’s success, watched closely worldwide, is a result of continuous and aggressive innovations that have been implemented on behalf of our customers. HMC considers its most important mission to bring the enjoyment of elegance and confidence to its customers, rather than just selling products. Hyundai strives to bring its customers luxury and style. Therefore, Hyundai will continue to stabilize its global management by establishing an effective cooperation system among production bases around the world. HMC’s management goal is customer–oriented management and continuous execution of global management.

Motivation employees

HMC has human resource management policy with fairness and reasonableness as the guiding principle, ensuring protection of human right and maximizing employees’ satisfaction at the work place. HMC does not discriminate against its employees or job applicant on the basis of race, age, religion, sea, nationality, physical characteristic or any other facture for all personal decisions including recruitment, placement, evaluation, compensation, training, rank or promotion.

HMC respect the Universal Declaration of Human Rights and fully comply with related laws and international labor practice norm including the UN Global Compact principles and ILO guidelines. HMC provide fair compensation for all work at our business sites according to the work guidelines, compensation policy and relevant laws. Also, HMC have created an ethics charter that calls for respect of the right of all workers.

HMC focus in increasing health service for workers in the older age group, implementation of policies to recruit and support female employees and provision of more employment opportunity to non-Korean nationals and people with disability improve working conditions for female workers, HMC offer benefits including monthly days off and 90 day maternity leave. Some operation sites offer childcare centers for working mother as well. HMC ensures employees safety pre-assessment, accident prevention activities, increased investment in safety-related facilities and safety training. Therefore, HMC pursue a long-term relationship that is mutually beneficial to both employees and management.

Desirability as an employee

I would like to work for HMC because HMC is a leading global automaker with competitive edge in product quality, innovation, appealing to the ever-growing emerging markets, as well as the rapidly changing global market. Moreover, it contributes to society, as part of our global corporate responsibility, as well as to secure leadership for future growth through environmental management, forging the way for green growth and the development of world-class eco-friendly vehicles. Actually HMC is an ideal work place, safe and healthy working environment because of its human resource management policy with fairness and reasonableness to ensure human right protection and maximizing employees’ satisfaction.

HMC regards employees as important assets for corporate growth so it has established the HMC ethics charter, the employee code of conduct, and the Guideline on Ethical Business Practices to help employees make the correct decision in the business conduct. It endeavors to provide all employees with environment training program. HMC is stepping up efforts to ensure fairness in HR decisions, to introduce a rational compensation system, to collaborate with the UN Global Compact for human rights protection, talent development, welfare improvement, and health and safety enhancement.

References:

Main sources: Hyundai Motor Company. Available from < http://worldwide.hyundai.com> [Accessed 4th March 2011]

The road to Sustainability-Hyundai. Available from

< www.worldwide.hyundai.com/Web/C_Sustainability_down/2010_reports.pdf> [Accessed 8th March 2011]

The road to sustainability – Hyundai. Available from

< worldwide.hyundai.com/Web/C_Sustainability_down/2010_reports.pdf> [Accessed 8th March 2011]

Global Crisis Enables Hyundai to Grow Bigger, 04-21-2010 19:37, Available from < http://www.koreatimes.co.kr/www/news/biz/2010/11/294_64620.html> [Accessed 9th March 2011]

Hyundai Motor joins top 3, in Fortune Korea 500; 10-24-2010 18:54. Available from < http://www.koreatimes.co.kr/www/news/biz/2011/02/123_75131.html> [Accessed 9th March 2011]

PART 2: Critically discuss the contention that “Leaders are born not made”

“Leadership is the process of influencing people towards achievement of organization goals” (Naylor J. (2004) 2nd ed. Management, Harlow. Prentice-Hall)


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