Internal analysis of the Hyundai Motor essay

INTERNAL ANALYSIS OF THE HYUNDAI_MOTOR 15

Internalanalysis of the Hyundai Motor

Abstract

Internalassessment of an organization is in some cases disregarded, but it isa very crucial aspect in the strategic planning of any organization.Strategic planning, on the other hand, is a crucial tool for thegrowth of an organization in adverse aspects such as high salesdrive, market share, excellent services to clients, and profitableoperations. It is, therefore, crucial for an organization to carryout internal assessments for efficient strategic plans. Internalassessment incorporates the activities which aid the process ofidentifying and evaluating the resources, competencies, and thecapabilities of an organization. Through the assessment, anorganization is in a position to determine the growth opportunitiesand gaps in production. The company is, thus, able to identify thefactors contributing to its success and the opportunities and gapsthat need to be addressed for it to have a market share and remaincompetitive in the industry. Through a focus on the above issues, thepurpose of this paper is to present an internal assessment of theHyundai Motor Company.

Contents

Abstract 2

Introduction 3

Internal analysis 3

Resource-based view analysis of the Hyundai Motor Company 4

The tangible resources of Hyundai Motor Company. 4

Physical resources of Hyundai motor company. 4

Human resources of the Hyundai Motor Company 6

Financial resources and analysis 7

Technological resources 8

Intangible resources 9

Human resource intangibles 9

The intangibles 9

Value chain analysis 9

Primary activities 10

The secondary activities 11

Core competency analysis 11

Key success factors 12

Internalanalysis of the Hyundai motor

Introduction

TheHyundai motor started in 1967 and has undergone tremendous growth inthe last four decades to become the Hyundai motor group. The Hyundaimotor is an automotive manufacturer with the headquarter based inSouth Korea. Since 2007, the company ranks as the fourth largestautomaker in the world. Worldwide, the company has sold close tothree million cars in over one hundred and eighty countries throughthe incorporation of the dealers in some of the countries (Rhee andHyondae, 2003).

TheHyundai motor company has over seventy-eight thousand employeesacross the world. The company has also undergone tremendous growth toestablish other overseas plants in the United States, China, CzechRepublic, Turkey, Brazil, and Russia. Currently, there are threeproduction plants owned by Hyundai in Korea. The combined productionof these plants is one million, eight hundred thousand units in ayear.

TheHyundai Motor Company has good relationships, and thus a strongposition in most developed countries such as the United States andEuropean countries. Further, the Hyundai Company has a continuedsuccess in winning tenders for taxis and government vehicles in someof its emerging markets. The company thus, plays a crucial role inthe generation of revenues and boosting the local economy from thesales of its automobiles.

Theoperations of the Hyundai Motor Company are guided by the missions,visions, and the strategic objectives of the company. The mission ofthe company is the exceptional automobiles for their clients byincorporating high quality, efficient, and safe measures. This isachievable basing on the diverse team of highly skilled employeesworking with the organization. The vision of the organization is tooffer value for the future without rivalry.

Internalanalysis

Justlike any other organization, Hyundai Motors needs an in-depthunderstanding of its operations, which is achievable through aninternal analysis. Internal analysis is the process of identifyingand carrying out an evaluation of the crucial internal factorsinfluencing the operations of an organization system (Minkler, 1993).For the internal assessment to be effective and reflect the rightsituation of the organization, there are certain crucial factorswhich should be looked at. These factors are the resources and thecompetencies and the capabilities of the organization.

Theassets and inputs available in an organization to aid the day to dayactivities and processes are the resources of the organization. Theresources that an organization can employ profitably in itsoperations are broadly categorized as tangible and intangible. Thecore competencies and capabilities of an organization need a thoroughcheck when undertaking the internal assessment of an organization.The competencies and capabilities include the specific skills andassets applicable to a particular organization (Minkler, 1993).

Whenthe necessary resources and the right capabilities are available inan organization, they work jointly to result in the competitiveadvantage for an organization. However, the organization has theresponsibility of investing in the resources for the competitiveadvantage to be realized. The organization can invest in theproduction of the core competencies through measures such asempowering the employees with training and development to acquireskills in the production processes and incorporating the appropriateand up to date technological advancements (Patel, 2000).

Withthe information above on the measures to incorporate when undertakingan internal analysis of an organization, this paper will perform aninternal assessment of the Hyundai Motors Company. The analysis willcarry out a resource based view analysis, value chain analysis, andcore competency analysis. The assessment seeks to establish theunderlying reasons that have enabled the Hyundai Motors Company toachieve the growth and success in the last four decades to be amongthe leaders in the automotive industry.

Resource-basedview analysis of the Hyundai Motor Company.

Resource-basedview analysis incorporates the processes which look at the resourcesused by an organization. The analysis identifies the resources thatplay a critical role in ranking the organization high among similarindustries in the market. The core of the resource-based analysis isto ensure competitive advantage of the resources in use by anorganization.

Thetangible resources of Hyundai Motor Company.

Thesuccess of Hyundai Motor Company in the automotive industry is as aresult of investments in the tangible resources crucial in theoperations of the company which includes physical, financial, andtechnological resources.

Physicalresources of Hyundai motor company.

Theproduction equipment and the machinery in use by an organization formthe physical resources of the organization. These resources are veryimportant to the operations of an organization because they ensurethat the activities run smoothly. The core of the Hyundai MotorCompany is the production of automobiles and requires a framework ofintegrated infrastructure in combination with the productionprocesses for the operations to run smoothly.

Theinfrastructure of an organization includes the physical facilitiesand the organizational structures which promote the smooth running ofthe organization’s operations. Hyundai has the largest integratedfacility for the production of automobiles in the entire world inUlsan with a production capacity of one million and six hundredthousand units yearly (Lansbury Et al., 2007). This large complexfacility is found on a one thousand and two hundred acre land and isthe main production plant for the company with five independentplants. It enrolls over thirty thousand employees who are capable ofproducing over five thousand vehicles on a particular day. There is aport owned by the plant with an anchoring capacity of three shipswith a capacity of forty-two thousand tons at the same time.

Thereare equally other subsidiaries and facilities working with the Ulsanproduction plant which are the Asan and the Jeonju plants. The Asanplant mainly specializes in the production of passenger vehicleswhich are exported for revenue generation. The plant is found on afour hundred and forty acre land with a building measuring fourmillion square feet. The production plant has production lines forpaint, assembly, auto frames, materials plants, and an engine.Similarly to the Ulsan plant, the Asan plant is an independentproduction plant with the capability of producing over two hundredand fifty thousand medium and large-sized passenger vehicles in agiven year. The Jeonju plant, on the other hand, rests on a more thanthree hundred acre land with a four million and three hundred squarefoot building. The main mandate of the plant is the production ofmedium and large-sized buses with capacities exceeding 2.5 tons andtrucks. The plant has a production capability of seventy thousandunits in a given year and rates as the largest commercial vehicleproducer in the world.

Besidesthese production plants, Hyundai Motors has overseas productionplants in the United States, Brazil, India, Russia, Turkey, China,and Czech Republic (Hyun, 1999). These plants work in collaborationwith the main production plants in South Korea contributing to anincrease in the number of units produced in a given year.

Fromthe fact that Hyundai has the largest integrated facility in vehicleproduction, it is given that it has the highest capacity ofproduction of high-tech and new models in the market. The manysubsidiary facilities also help boost the number of productionsyearly, ensuring that the demand for automobiles is met. There hasbeen continuous growth and expansion of the infrastructure of HyundaiMotors in the global arena, for instance, the establishment of theplant in India (Park and Rhee, 2015). The result of this continuousconstruction and expansion of production facilities is an integratedand strategic production network, which has boosted the productionand the sales of the automobiles of the organization. Besides, theestablishment of plants in other states has enabled Hyundai tocapture the domestic market of the states, in addition to theincreased exports from the increased production. Again, from theelaboration, it is evident that the Hyundai Motors Company has a goodnetwork of infrastructural facilities. These factors have helpedHyundai Motor Company become a leader in the automobile industry,hence its continued success.

HyundaiMotor Company makes use of high technology processes to design andcome up with high quality products. Since the inception of itsoperations, the Hyundai Motor Company has always incorporated themost appropriate and effective processes in the manufacture of itsautomobiles. As a result, the sales from their productioncontinuously rose despite the fact that at the time, the organizationrelied on the services of dealers in thirty out of the fifty statesthey made the remarkable sales (Lansbury, Et al., 2007). The HyundaiMotor Company made efforts in its activities to incorporate theservices of more dealers in its processes. Currently, Hyundai Motorshas close to six hundred dealers of the Hyundai Motors Companythroughout the world. This has resulted in the growth of the sales ofthe automobiles from the Hyundai Motor Company in America thus thesuccess of the organization. The result of these processes is asignificant rise in the sales of the Hyundai Motor Companyautomobiles, thus remaining successful in its operations.

Humanresources of the Hyundai Motor Company

Humanresources are the personnel mandated with the responsibility ofmonitoring the process and operations of an organization (Minkler,1993). Without such individuals, an organization loses its focus andability to meet its objectives. The role played by the humanresources is thus very crucial for the successful operations of anorganization. The Hyundai Motor Company incorporates the services ofover seventy-eight thousand employees. This is an overwhelminglylarge number of personnel who can undertake the activities of theorganization efficiently. The staffs are redistributed in thedifferent productions plants and departments appropriately byensuring each employee fits well in their line of operations.Besides, the processes of designing and constructing an automobile isnot an easy task. The staffs are picked from highly trainedindividuals who can be efficient in the production process to come upwith a safe and quality automotive meeting the needs of the clients.This fact has over time ensured that the Hyundai Motor Companyremains productive through the services of the personnel since theyare sufficient and capable of producing a significant number of unitsto satisfy the needs of the clients.

Theprocess of designing and joining different parts to come up with anautomobile is a complex one. As a result, the personnel attached atthe Hyundai Motors are mainly qualified engineers with vast knowledgeon the mechanical processes and operations of automobiles. Hyundaitaps in such personnel for its production processes. The personnelhave never been a disappointment for the Hyundai Motor Company hasbeen a leader in the automotive industry since its inception morethan forty decades ago (Hyun, 1999). The personnel have constantlyproduced quality, safe, and diverse automobiles to suit the needs ofdifferent clients. From the qualified and skilled staff, the HyundaiMotor Company has been in a position to remain a leader in theautomotive industry, hence its unending success.

Constanttraining and education to the human resource personnel are verycrucial for an organization that seeks to remain competitive in itsoperations. The training and education widen the skills and knowledgeof the personnel such that they are in a position to undertake theiractivities in a more efficient manner (Hahn, Et al., 2000). TheHyundai Motor Company has invested in training and education forumsfor its employees. These trainings and education ensure that thestaffs are equipped with knowledge and expertise in the production ofautomobiles, which has ensured that the personnel is in a position tocome up with quality products. Besides, during the training, theinteraction between the new and experienced staff help the new staffto improve their skills. This has resulted in efficient andexceptional production of automobiles by the Hyundai Motor Company,which in turn promotes client satisfaction hence the demand for theirautomobiles. Consequently, this has led to high sales of theirproducts, hence the generation of high returns making theorganization to operate profitably.

TheHyundai Motor Company has over seventy-eight personnel attached toits production plants in the different parts of the world (Rhee andHyondae, 2003). From this figure, it is evident that the organizationhas a low employee turnover. As a result of the low employee turnoverrate, the Hyundai Motor Company has the capability to producesufficient units of automobiles to meet the demand for their clients.Again, the lowest employee turnover rates save the organization theresources which would have been used in the acquisition and trainingof new staff. The combination of these factors has enabled theHyundai Motor Company to operate profitably, hence successful in itsoperations.

Financialresources and analysis

Thepossible sources of finances in an organization include the existingand potential finances explainable with the ratios below.

Theabove data was obtained from Morningstar (2016)

Analysis

Currentratio: This shows the organization’s ability to settle liabilitiesusing the current assets expected to be realized from the production.From the table, the average current ratio is 1.77 which implies thatthe Hyundai Motor Company has sufficient assets to repay theliabilities. This indicates that the Hyundai Motor Company ismanaging the current assets efficiently, hence profitable operations.

Quickratio: This compares the amount of cash and other liquid resources tothe current liabilities in an organization. It presents theorganization capability of settling short-term liabilities using theshort-term assets. From the table, the Hyundai Motor is able tosettle its liabilities and remain with some cash. The company thusoperates profitably from the quick ratio that can sufficientlyleverage during a liquidity crisis.

Grossmargin: This ratio presents a comparison between the gross margin andthe net sales of an organization. It shows the profitability of anorganization in selling its inventory. The gross margin of theHyundai Motor Company is not very high, but it is sufficient tofinance the operating expenses. After an internal assessment, theorganization is able to identify the factors to apply in raising thegross margin such as cheap inventory.

Operatingprofit margin: This shows the percentage of the operating profit incomparison to the revenue earnings during a certain period. Itmeasures the efficiency of an organization to generate profits. Fromthe table, the Hyundai is capable of producing close to ten cents forthe organization from the sale of one South Korean Won. This showsthe organization is operating profitably, but can incorporate moremeasures such as increasing the volume of sales.

Fixedasset turnover: This presents a measure of the efficiency of anorganization in the utilization of fixed assets in revenuegeneration. On Average, the Hyundai Motor Company generates 4.14South Korean Won for every one South Korean Won of investing assets(Morningstar, 2016). This shows the operations are profitable.

Totalasset turnover: This presents a measure of the ability of anorganization of the generation of income from the sale of its assets.From the table, the Hyundai Motor is able to generate sixty-eightcents South Korean Won from an investment of one South Korean Won.This amount is not very profitable, but from the assessment, theorganization is able to take necessary measures to improve it.

Technologicalresources

Thecritical role played by technological resources is the facilitationof the production process resulting in quality products and servicesfor the clients. The Hyundai Motor Company is a leader in theautomotive industry with a high-tech and the largest integratedfacility in the production of automobiles (Lansbury, Et al., 2007).The facility consists of high technological production equipmentwhich ensures that the end product is safe and of high quality tomeet the needs of the clients. The result of investing in the hightechnological machinery is the production of quality automobiles,which, in turn, attract higher sales in the market enabling theHyundai Motor Company to operate profitably.

TheHyundai Motor Company makes use of the latest technologicaladvancements in the marketing and sale of its products. Theincorporation of social media in sales and promotional activities hasenabled many clients view and purchase the products from theorganization. This use of latest technology in communication hasenabled the Hyundai Motor Company to make more sales thus operatingprofitably.

Intangibleresources

Inas much as these resources are not physical in nature, they form acrucial part of the resources that enable an organization to operateprofitably for investing in the resources in the production process.The intangible resources include human resource intangible andintangibles.

Humanresource intangibles

Thehuman resource intangibles that an organization can employ profitablyin its production include morale, the culture of the organization,and motivation (Patel, 2000). The Hyundai Motor Company ensures thatthe work environment is safe for its employees. The Hyundai MotorCompany has invested in building a sewage and waste disposaltreatment plant. This culture of environmental conservation isbeneficial to the organization through the employees and clients. Theemployees can work efficiently in a safe and friendly environment,ensuring good end result products and thus high sales.

Theintangibles

Theintangibles in use by an organization seeking to operate profitablyinclude reputation, innovation, and intellectual property. Since theHyundai Motor Company began operations, they have been constantlyintroducing innovative automobiles to meet the needs of the clients.The development of the various models with high-tech capacities is aresult of the innovative processes of the Hyundai Motor Company(Hyun, 1999). This has in turn promoted the sales of the products bythe Hyundai Motor Company hence its profitable operations.

TheHyundai Motor Company has worked hard to ensure a good reputation inthe market. This has been mainly through the production of high-techand high-quality products ensuring that the organization has a goodreputation. The employees also contribute to the reputation of anorganization. By providing a good and safe work environment hasenabled the Hyundai Motor Company to have a good reputation for theirproducts. These factors have helped propel the sales of theirproducts high hence profitable operations.

TheHyundai Motors has the necessary licenses in all the areas theyoperate and sell their products. This has given them the opportunityto work efficiently since they deal with genuine operations. Theyalso sell their products in countries and states where they haveestablished agreements with the governments of the regions. Thisensures that the organization can work efficiently because they havethe rights to operate in the areas.

TheHyundai Motor Company produces unique automotive brands and models.The brands are as well fascinating to the client and produced withthe latest technology in use in the automotive industry. The brandsare also available in diverse colors to meet the diverse needs of theclients. Again, Hyundai has been undertaking vigorous advertisementson their products and is a well-known brand in the manufacture of theautomobiles. As a result, the Hyundai Motor Company has been able tomake enormous sales through the production of the unique products,hence operating profitably.

Valuechain analysis

Theactivities and the processes that an organization undertakes in thedesigning and production process to define the nature of itsoperations (Minkler, 1993). The undertaking of these activities andprocesses result in the value chain for that particular organization.The value chain is composed of the primary and secondary activities.The primary activities are crucial in the matters of ensuring thecustomers get the best value and, on the other hand, secondaryactivities act as facilitators of the primary activities.

Primaryactivities

Theprimary activities are those which an organization incorporates toensure that the firm’s product and services create value for theclients (Hahn, Et al., 2000). The primary goal of these activities isto ensure that the customers are consistent in buying the productsand services by the organization for its operations to be profitable.The primary activities include inbound logistics, outbound logistics,sales, marketing, services, and operations. The core of the inboundlogistics is to receive, store, and distribute the inputs for thesmooth running of the operations. The core of the Hyundai MotorCompany is to manufacture and distribute automobiles and spare parts.The Hyundai Motor Company owns large production plants withsufficient space for the proper storage of the inputs used in theproduction process. The inputs are as well distributed across thedifferent production plants which ensure the smooth running of theoperations of the organization.

TheHyundai Motor Company has large and integrated production plants withproper plant layout and design, appropriate automation in themanufacture of automotive, and systems which ensure qualityproduction. These activities result in quality products for theclients resulting in high demand for their products.

TheHyundai Motor Company employs efficient shipping processes throughthe assistance of the dealers in the particular area they areshipping the products to. Besides that, the production plants of theHyundai Motor Company are large enough to hold many units of rawmaterials and finished products. The company also has the capabilityof shipping large amounts of the final products, for instance, theHyundai Motor Company owns a port with anchoring capacity of threeships with a forty-two thousand ton capacity at a go. From the A/Rturnover of Hyundai, it is evident that it has a high ability incredit issuance and collection from the debtors ensuring that theyoperate profitably (Morningstar, 2016).

TheHyundai Motor makes use of innovative approaches in the advertisementand promotional sales. The organization makes use of the social mediato advertise its products. The organization also undertakescontinuous advertisement of the goods and services to increaseawareness among potential clients. Despite the production ofhigh-quality products, the Hyundai Motor Company sells its productsat competitive prices driving the sales high.

TheHyundai Motor Company, through the social media platform, givesclients the opportunity to provide feedback on the different productsmanufactured by the company (Hyun, 1999). Through the platform, thecompany ensures that the needs and concerns of the clients areaddressed appropriately in the shortest time possible. The companyoffers guarantee and warranty on its products, increasing theclients’ confidence in making the purchases.

Theseprocesses promote the crucial primary activities of the Hyundai MotorCompany by putting the needs of clients first, hence increasing thelevel of sales and thus profitability of the organization.

Thesecondary activities

Theseact as aids into the proper undertaking of the primary activities.They include general administration, the management of the humanresources, technology development, and procurement processes.

Themanagement of the Hyundai Motor Company has a good relationship withdifferent stakeholders. The company has the ability to coordinate andintegrate activities evident in the division of the plants to dealwith a particular brand of vehicles.

TheHyundai Motor Company offers a good work environment which is safefor its employees. There is also continuous training to ensure thatthe staffs are equipped with the knowledge and skills to come up withmore advanced automotive models compete in the market. Theorganization rewards employees, which acts as a motivator for them todeliver better results in the next production.

Thefacilities and equipment in use at the Hyundai Motor Company areintegrated and high-tech. This ensures that the personnel have thecapability to work efficiently to produce quality automotive. Thereis a continuous development of the automotive production at theHyundai Motor Company, which gives the personnel the opportunity tobe innovative and creative in their operations. The personnel arehighly trained with special skills to ensure they have the ability tocome up with high quality automotive.

Thecombination of these activities results in the production ofhigh-quality automotive meeting the needs of the clients. Theautomobiles are also exceptional and unique, thus competitive in themarket. These factors enable the Hyundai Motors to operate profitablyhence the success in its operations.

Corecompetency analysis

Thecompetitive advantage of an organization stems from the capabilitiesof the organization and are identifiable through core competencyanalysis (Hahn, Et al., 2000). The capabilities of an organizationwhich yield competitive advantage include abilities, competence andskills, and the combination of assets.

Theassembling of the different parts to come up with a completeautomotive require a unique set of abilities, which the Hyundai MotorCompany employs in its processes. These abilities are valuable to theHyundai Motors since their application in the production processresults in quality products competing fairly with other industries inthe sector. The abilities of the personnel in the Hyundai MotorCompany are rare since they are highly trained automotive engineersand are rare. The processes of the Hyundai Motor Company are hard toimitate by the competitors since they incorporate unique and complexintegrated framework in their operations. This is possible to theHyundai Motor Company since their personnel have unique abilities.The abilities are organized in the production processes resulting inthe competitive advantage for the organization.

TheHyundai Motor Company employs various inputs in its productionprocesses to come up with a complete automotive. The process requiresskills and expertise to result in a high-quality end product whichsatisfies the needs of the clients in an effective manner. Theresources in use by the Hyundai Motor Company are valuable followingthe fact that they incorporate high skills and expertise resulting inhigh-tech products hence competitive advantage for the organization.The skills are hard to imitate basing on the fact that the HyundaiMotor Company ensures constant training and development as well aschanges in production process making it hard for competitors toimitate. The skills are rare following the fact that the organizationincorporates unique technical operations, which are specific to theproduction of automotive by the Hyundai Motor Company.

TheHyundai Motor Company makes the proper combination of assets to comeup with a complete automotive. These assets are valuable, since,without their incorporation, the organization would not be in aposition to undertake their production activities. The assets arerare and hard to imitate since they are specific to the processes andactivities of the Hyundai Motor Company. The assets in use by theorganization are organized since they ensure that they result invaluable, rare, and hard to imitate processes.

Keysuccess factors

Thekey success factors for the Hyundai Motor Company is the productionof high-quality automobiles at competitive prices. This factorresults in a high volume of sales of their products, hence thesuccess of its operations. Proper marketing of their products,especially through the online media has enabled the Hyundai MotorCompany to make high sales hence operate profitably. The process ofcoming up with high quality automotive is the result of investing inemployees with high skills and expertise in the field. The HyundaiMotor Company has invested in highly skilled employees, which hasbeen a key success factor in enabling the Hyundai Motor Company tomake high sales.

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