I identified a company for global business analyze as Hyundai Mobis Co., Ltd. (https://en.mobis.co.kr/main/index.do). So you should paying attention to the various challenges in international management (competitive, collaborative, organisational, managerial and innovation). The coursework can either focus on three combined challenges (i.e. competitive, collaborative or organisational) in-depth or cover all five challenges separately based on an issue which has occurred in the company. You can analyse for instance innovation, competitive or cultural strategies in multinationals (MNEs), responding to challenges in the global business setting. When deciding on the topic, it is important to consider whether there is sufficient information in the public domain about the initiative and the associated issue.
Each assignment should have the following sections:
Company background. The company information should comprise historical development, evolutionary information, financial, marketing, competitor information and foreign sales data.
Theoretical Underpinning. This section involves an evaluation of the transnational challenges based on the theoretical framework. The theoretical framework should be briefly explained and then evaluated regarding its main strengths and criticisms. It should then be correctly applied to shed light on how the challenges.
Company analysis. This section applies the theoretical underpinning to Hyundai Mobis Co., Ltd. It should analyse the background information provided at the beginning of the assignment. A good work will use company data, information, reports and material from interviews or secondary sources.
Recommendations and conclusions. The section provides conclusions for the company’s strategic, organisational, innovative, managerial and cultural developments, respectively.
Structure of the report: The structure of the report should include an executive summary (covering the main findings/conclusions and recommendations in the report); a table of contents (with page numbers); the company background; the theoretical underpinning; a company analysis; conclusions and recommendations; an alphabetical list of references cited in the main text; and appendices.
Global business face significant management challenges in today’s world. Drawing from Hyundai Mobis company data, information, materials, online content, reports, and reports, this paper illustrates the global challenges the company experienced in its operations. Hyundai Mobis Company was established in 1977 as a parts and services arm of the larger South Korean Automakers. It has facilities in South Korean, United States, Russia, China, and Brazil. Also, it has an annual turnover of approximately 38 billion U.S. dollars and about 32,065 staff worldwide. The report uses internationalization theory and supported by entrepreneurial theory and organization theory to highlight main concerns affecting the company. Businesses, over time, have embraced the strategy of globalization in search of new markets and thereby increase their competitiveness and maximize profits. To do this, the company must create a comprehensive organization and managerial style that would help them achieve maximum productivity
The key factors considered for analysis include competitiveness, collaboration, organizational, administrative, and innovativeness. To complete the investigation, the report uses PESTEL and SWOT analysis to identify critical challenges and opportunities that the company has. The company has established itself over the years as a car part manufacturer and so the company is stable on competitiveness contributed by robust product design, low fuel consumption, and advance research and development plan. Other areas of strength include collaboration, technology, and innovativeness. However, the company lags in terms of organizational and management. The company still uses the traditional vertical style of control, which slows the decision-making process.
The report concludes that Hyundai Mobis faces serious challenges, which requires urgent intervention. The problems identified include stiff competition from strong economies such as the U.S., Europe, and Japan. Also, there are very rigid laws and regulations that continue to increase the cost of production and hence reduced profits. Additionally, the company requires to invest more in research and development to cater to the new trends and the interest of the latest market identified.
On the other hand, the report recommends that the company should use its strength in competitive design, innovation, and collaboration to increase its productivity in new markets. Also, the company should continue to invest in technology and research and development to expand its production. Finally, the report recommends that the company should consider mergers and acquisitions in new markets to increase its financial base and, in return, improve its competitiveness.
Table of Contents
The Global Business Challenges for Companies
One of the primary goals for a company is to maximize profits and thereby increase the shareholders’ welfare. To achieve the objective, companies usually employ different strategies to reduce costs and increase sales. Cutting costs can only work as far, but it has its limitation. Therefore, increasing sales remains the most critical strategy that businesses use to increase profits (Khan, 2017, p. 218). One such approach to increase sales is internationalization. By going global, businesses are opened to new markets hence increased sales. Many companies have embraced this strategy, and this includes the Hyundai Mobis company. However, internationalization is usually faced by different obstacles that a company must endure and strategize to overcome. This research paper, therefore, seeks to evaluate the global business challenges for Hyundai Mobis Company by analysing its competitiveness, collaboration, organizational, managerial, and innovation. Finally, using deductive reasoning, the research offers conclusions and recommendations.
Hyundai Mobis Company is a public company founded in 1977, specializing in sales of car parts both locally and internationally (Forbes, 2020). However, the company is part of the South Korean automakers, which consists of companies such as Hyundai Motor Company, Kia Motors, and Genesis Motors. Therefore, Hyundai Mobis is a significant supplier of parts and services of the broader South Korean motor industry. Hyundai Mobis has, over the years, experienced substantial growth when the sector introduced the country’s first vertical integration. The company has established factories in India, United States, Turkey, Russia, the Czech Republic, and Brazil.
Additionally, as a growth strategy, Hyundai Mobis experienced restructuring, mergers, and acquisitions, which allowed the company to increase its financial base and hence increased productivity. Resultantly, the company managed to build its vertical division of labour. This strategy allowed the company to have a competitive edge in the global market, as well as improved care quality.
According to Forbes (2020), Hyundai Mobis has a market capitalization of 13.2 billion dollars and a sales turnover of 31.9 billion dollars. This places the company at number 6 worldwide in terms of an automotive supplier, also, according to Hyundai Mobis website (2020) the company has approximately over 32,065 employees worldwide and have continuously spent more than 850 billion dollars in research and development. Additionally, the company has an operating income of roughly 2.3 billion dollars. As of 2020, the company has PER of 1.056, Return of Investment of 7.27%, operating income of 6.20%, and Profit Margin of 6.02%. The company also commands the largest market share in the parent country of South Korean. It is the only car part supplier company own and developed by the country’s citizens.
The companies’ shareholders include KIA Motors Corp with a capital share of 17.2% of the company. The National Pension Services of Korean also owns 11.5%. Hyundai steel Co. owns 5.7%, Fidelity Management and Research Company own 2.5%, while both Hyundai Mobis Co. and The Vanguard Group each own 1.9%. BlackRock Fund Advisors and Mathews International are the small-scale shareholders holding 1.5% and 1.4%, respectively. Hyundai has several related companies and partners, which include but not limited to Hyundai Iwi Co. Lamp assets, Beijing Mobis Auto Parts, and Components Co. Ltd, Chongqing Hyundai Mobis Automotive Parts Co. among other. In total, the company has over twenty-nine partners and related companies that are spread around the world, covering different continents and regions of interest.
Hyundai Mobis’ business operations comprise three modules chassis modules, cockpit modules, and front-end modules. These modules are designed and developed through intensive research, development, and testing, which facilitate the production of high quality products for both the local and international markets. The research and development facilities target specific markets, including China, the US, India, and Europe. Hence, the production has allowed the Hyundai company to increase local production and, in turn, strengthened its competitiveness in the emerging international market.
Although Hyundai Mobis has established itself in the international market, it faces stiff competition from manufacturers such as Delphi Automotive Systems, Johnson Controls, Bosch Limited, Continental Corporation, and Honeywell international Inc. In comparison, Johnson Controls Inc has a market valued at 37 billion dollars, Valeo S.A. approximately 17 billion dollars, and Continental Corporation and Honeywell International Inc have 44 billion and 39 billion dollars, respectively. While Hyundai Mobis has nearly 32,302 staff worldwide, companies such as Bosch have over 407,538 employees, and Johnson Controls has over 122,000. This presents stiff competition for Hyundai Mobis from all continents
Internationalization provides businesses with more business opportunities as well as increased funding for research and development. Wadeson (2020, p. 11) posits that although companies use internationalization as a marketing strategy, they usually face new competitors. Consequently, because it necessitates the need to improve its competitiveness, collaboration, organizational, managerial, and innovativeness, however, these objectives pose a challenge to a company, and Hyundai Mobis is no exemption. Internationalization theory is used to explain the firm growth by entering new markets, which continues until the cost of running the firms exceeds the benefits. This principle, together with the theories of innovation and commerce, is used to elaborate on the location of the business and its success. Also, the approach is used along with the theory of growth and organizational development of international enterprises.
To analyze the performance of the Hyundai Mobis PESTEL and SWOT analysis would significantly help identify the company’s health concerning competitiveness, collaboration, organization, managerial, and innovation. Marketers usually use the framework of PESTEL analysis as a tool to evaluate, analyze, and track direct and indirect impact macro-environment factors have on their businesses; this includes the external marketing environment. Fundamentally, the element considered contains Political, Economic, Social, Technological, Environmental, and Legal aspects. Commercial operations and performance usually deal with these factors daily, and the Hyundai Company is not exceptional. Organization restructuring has not only disrupted internal management and contributed to management employee disagreement on decision making. Also, external factors such as international laws and regulations and geopolitical interests of different countries continue to play a significant role in how the company operates.
According to Billington (2018,p. 1), Hyundai Mobis has strategically invested in stable political countries, especially the United States, China, Europe, and Brazil. The political factors that may pose a risk such as a sudden change of political regime, civil unrest, or drastic measures taken by a different government. However, the countries the company has invested in and continue to target for marketing and diversification enjoys a very stable political climate. Also, due to the uniqueness of the products, Hyundai Mobis continues to experience new markets that are readily available without the need to cause drastic market disruption in new territories. In fact, due to its unique product design, it has become more comfortable for the company to establish itself at a reduced cost of marketing and advertising in oversea territories. Hyundai airs its views and policies through lobbyists and other companies as part of their organization. Also, Hyundai formulates its strategy through direct advocacy and trade association.
Incidentally, there are vital political factors that have a direct impact on Hyundai Mobis. Acts and government regulations in different territories continue to form a significant obstacle to the company. The Hyundai Mobis had to sign different contract laws that dictate what it can or can not do in all overseas regions. In-country like China where Intellectual Property (I.P.) Rules are loosely followed poses a direct threat to the development and innovation of the company. Also, a high level of taxation in the host country continues to be a significant bottleneck in the company’s endeavours to its operations in different regions around the world.
Additionally, to decrease the cost of operations, low wages would ensure increased profit. However, the areas that can offer low wages have a risk of military invasion and hence discouraging the investment. In return, Hyundai targeted regions, and countries such as the USA, Europe, and the Asia Pacific have a history of high wage rates, which reduces the profits of the company.
Hyundai Mobis Company has been around since 1977, and over the years, the company has experienced restructuring and reorganization to take advantage of available opportunities. For quite sometimes now, the company has developed a robust market in regions that enjoy high purchasing power, such as in Europe and North America. Besides, the company continues to enjoy a strong local market where it has the best competitive edge. Hyundai dominates the local market in South Korea, which is characterized by a highly trained, skilful, and talented workforce. Also, South Korea has a highly stable economy, and it is bordered by other economic powerhouses such as Japan and China. Further, South Korea is a member of different trade blocks, such as G20, APEC, WTO, and OECD.
China, Latin America, Russia, Africa, and India are promising emerging markets that are continuing to provide a broad market for the Hyundai Company. These countries are emerging as an economic powerhouse. These regions have steady nominal GDP growth Russia has $1.8 Trillion, China has $14.01 trillion, while Africa has a combined GDP of $1.3 trillion, and Latin America has a combined GDP of $5.6 Trillion. Also, Countries such as Russia, China, and Latin America have a stable political environment that provides a favourable business environment for investors.
On the other hand, as the company expands its operation, so does the other competitors. This limited the level of diversification the Hyundai company can provide. The key selling factor of the Hyundai company is and continues to remain the unique design of its products. Additionally, in the last decade, the automotive industry has seen the entry of electric cars. Consumers are highly interested in Electric Driven Vehicles (EDV), and hence provide stiff competition in the available market. Also, the cost of investment in establishing EDV companies is very high, which reduces the return on investment and thereby discouraging the investors. However, Hyundai has invested heavily in electric cars, and over time, the company has managed to introduce high quality power converters for electric vehicles.
One of the considerations when designing and placing cars is social factors such as need, lifestyle, social, and economic factors of the consumers. Hyundai continues to provide a wide range of vehicles, including cars, SUVs, trucks, and buses. The ever-changing social trends have necessitated the Hyundai Mobis to invest more in research and development to cater to the new needs. Internationally, there is increased demand for SUVs, such as in the Asia Pacific region. This is attributed to a change in social trends where more and more people are seeking a large car that can accommodate their families as well as provide room for other necessities such as animals or hiking equipment.
Hyundai Mobis is also designing its marketing strategy to fit the local societies and cultures in the market. What people shop and the product of their interest keep on evolving as the world population keeps on changing its demographic composition. The younger generation is more interested in technologically advanced and stylish cars while the older generation needs a car that would fulfil their needs, such as the SUVs. Therefore, Hyundai Mobis has been forced to keep on investing in research and development that is geared toward understanding consumers’ needs and preferences. This has allowed the company to evaluate its business model and develop a more comprehensive product design and development.
Change in Technology significantly affects today’s world economic structure, and it directly affects companies such as Hyundai Mobis on how it designs products, organize production, and invest capital. Also, communication among the extensive global enterprise operations is made instantaneous due to the introduction of sophisticated information sharing technologies. Hyundai Mobis usually uses these technologies around the globe to reach territorial, regional partners, and customers. In a recent report, Mobis Chief Executive Officer (CEO) stated that the company had dedicated a substantial amount of resources to build capacity that would allow the company to develop a variety of cutting edge technologies. The CEO continued to point out that the focus on technology is the one that would help develop eco-friendly core parts as well as help improve the safety and happiness of the customers.
Hyundai Mobi’s raw material acquisition, production, research and development, packaging, and distribution heavily rely on technology. There are several online techniques that the Mobis should endure to exploit in marketing and research, such as online advertising. A recent study shows that the majority of people, primarily consumers, heavily rely on social media platforms when deciding what type of products they want to buy. Therefore, this would make it efficient for the firm to reach its consumers conveniently. Efficiency in technology ensures timely production and effective supply chain, which are critical factors when strategizing on increasing revenue and increasing customer satisfaction.
Mobis operates in regions with different levels of technological advancement; this poses a challenge for the company as it tries to harmonize its operations. The technical standards in the U.S. are different from those in India or Brazil, hence limiting the speed of entry into the market in different regions. Also, the difference technologies hinder improved collaborations with other manufacturers in a separate area. Furthermore, different techniques provide different interfaces and, therefore, limit the level of systems integration across the world with various partners. This calls for additional investment in technologies for different regions and thereby reducing profits.
One of the major concerns in the automotive industry is the growing pressure of the environmental impact the fuel-guzzling vehicles has on air pollution. This has necessitated the Hyundai Mobis to commit more resources to research and development for energy-efficient cars. Recently Volkswagen Company had to pay billions of dollars for failing to comply with emission-related laws and regulations in the United States. This has consequently put a lot of pressure on other manufacturers, including Hyundai. They have, in turn, focused on developing electric vehicles besides the environment-friendly cars that have low carbon emission.
Although electric cars are seen as the best alternative to replace the carbon-emitting ones, the industry is still young, and the majority of other competitors are also engaged in the same business. This has created different scenarios for the Hyundai company. One on hand, the company can collaborate with other manufacturers and develop various products. Mores allows the company to concentrate on the product to aid optimal growth. On the other hand, since the market has many players, there is stiff competition in the quest to being the market leader. This has consequently put a lot of pressure on the Mobis company, which results in committing more funds to research and development and thus reducing profits.
Political and legal environment advancements significantly affect marketing decisions. Laws government agencies and pressure groups regulate and influence how individuals and organizations conduct their businesses. As such, Hyundai Mobis has a list of rules and regulations that it must comply with in different regions where it operates. This includes but not limited to; anti-corruption, fair trade, customs, personal data protection, employment, environment, intellectual property, and product safety. To comply with all these laws, a large portion of the fund is required. Hence, reducing the money that could otherwise be used in car manufacturing. The hefty penalty that was placed to the Volkswagen Company proved that non-compliance could be costly to businesses and brands.
Labour and environmental laws continue to grow stiffer, resulting in higher oversight. The minimum wage continues to escalate as politicians continue to promise citizens of improved salaries and other benefits. This results in an additional budget to the Hyundai Mobis Company, which necessitates the company to look for cheap labour. Consequently, when a company uses cheap labour, and the information becomes available to the public domain, it tarnishes the brand image. However, over the years, the Hyundai Company has managed to comply with the majority of the labour laws. The company has also led to comply with environmental acts, especially pollution and waste disposal regulations. Hyundai Mobis works closely with recovering businesses aimed at recycling wastes, defects, and scrap metals.
SWOT, as a collective business management tool, is expounded as strengths, weaknesses, opportunities, and threats. As a business management strategy, companies usually use SWOT Analysis to identify both external and internal factors that directly or indirectly affect the company’s going concerned. The companies typically determine the overall operational and financial goals for the immediate future by carrying a thorough SWOT analysis. Appropriate steps are then taken to ensure these goals are realized. According to Dyson (2004,p. 635), businesses must ensure that they have managed to identify their opportunities and threat if they wish to remain competitive and expand in their industry. After the PESTEL analysis, the SWOT analysis is used to analyze Hyundai Mobis performance about competitiveness, collaboration, organizational, managerial, and innovation (Dyson, 2004, p. 635).
From PESTEL analysis, it is clear that the Hyundai Company has a critical competitive edge due to its excellent and unique vehicle safety and design. The company has been considered and won many different awards. The uniqueness of the model has afforded the company to increase its market size and share. Additionally, the company has been ranked 6th highest worldwide in brand reputation. This provides the company with the right exposure to the targeted consumers and thereby increasing brand loyalty. Hyundai has robust and effective research and development spending, which allows the company to develop high quality and innovative cars. Innovativeness is one of the critical attributes the Hyundai Company provides that helps the company cutting edge technological products and thereby increasing its market size.
Additionally, due to its fuel-efficient designs, the company has managed to develop and produce low-cost cars, making them affordable to many consumers. More so, the cars are durable, and parts and after-sales services are excellent. Also, due to the diversity of its product line, the company continues to enjoy a significant level of collaboration with other car manufacturers, especially the partnership in the electric car field. Finally, the company has managed to penetrate and establish a strong presence in the China market. China has a vast market and therefore ensures increased profits.
The company continues to operate a sophisticated vertical style of management, which has resulted in reduced decision making. Consequently, this has led to a weak brand portfolio, which is reflected in decreasing sales as compared to its immediate competitors. Also, the company has yet to establish itself in strong markets such as the United States entirely and has no presence in the Japanese market. This has allowed other brands to develop in those regions and therefore posing stiff competition and hence reduced sales and profits. Additionally, the company has, in the past, experienced product recalls, which further damage its brand reputation.
There is an improvement in the U.S., Russia, China, and Brazil economies, and the company has already established itself there. Therefore, creating a growth opportunity for the company. Furthermore, the business should continue to invest in emerging economies through practices such as acquisitions, mergers, and collaboration. Meglio and Risberg (2010,p.90) assert that mergers and acquisitions help firms establish more dominance in the industry. Also, the company should use research and development to improve the timing and frequency of releasing new models that address the latest trends in the market. Additionally, due to the low cost of fuel, this creates new demand for Hyundai. The company should use its innovativeness to venture into new product categories, especially in the electric car field (Meglio& Risberg, 2010, p.90).
Even with the excellent brand name and high expertise following many years of operations, the company stills faces serious risks, which mainly include increased competition for large economies such a Japan, U.S., and Europe. This limits the speed at which the company establishes itself in the region. Also, the ever-changing Korean exchange rates the value to of the Won which simultaneously depreciates reduces the value of wealth. Finally, due to entry and investment in the new market increasing government regulations indifferent region increases the cost of operations of the Hyundai Mobis Company.
In conclusion, the Hyundai Company has dominated and continues to lead in competitiveness, collaboration, and innovation. The company can produce different products and offer excellent after-sales service. The company is also able to fund and run successful research and development, which has allowed for the steady growth of the business portfolio. The company is very innovative and has enabled it to venture into electric car parts development. Also, the company has managed to acquire new markets in emerging economies that have ensured business continuity. The decisive competitive edge for the Hyundai Mobis is a unique car design, low-cost cars, high quality vehicles, and increased innovation. The company is also able to collaborate with other car manufacturers, especially in the electric field. However, on the other hand, the company has room for improvement concerning organization and management. Vertical style of control continues to cause poor decision that has resulted in product recalls and destroyed brand image.
To sustain its competitiveness, Hyundai Mobis should continue investing in research and development. The company should leverage market profits it’s attain to acquire new markets. Additionally, the company should consider acquisition, mergers, and collaboration in the emerging market to create a strong financial foundation. The company should also consider restructuring the management style to allow quick vertical and horizontal information sharing and decision making. Technology continues to be essential tools in businesses use to enhance their performance. Therefore, Hyundai Mobis should continue investing heavily in technologies, especially the ones that help improve decision making and product quality and thereby eliminating poor brand image. Finally, the company should continuously use social media platforms to boost its brand image and create more awareness of its brand. Also, the company should conduct critical market research in countries where it does not have a presence like Japan and establish areas of mutual interest that can necessitate collaboration.
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