HARRIS-STOWE STATE UNIVERSITY,
Anheuser-Busch School of Business,
BSAD0480-02 Business Policy and Strategy,
Spring 2016 Semester,
Section: 02,
Instructor
Dr. Salaria, Aamir Ahmad.
Case Study: Hyundai Corporation
By
Ruth Stark
An in-class article presentation cum assignment project presented to
The Anheuser-Busch School of Business,
Harris-Stowe State University, St. Louis, Missouri – USA
in partial fulfillment for the requirements of the degree
Bachelor of Science Accounting
April 18, 2016
St. Louis, Missouri – USA.
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The Hyundai Motor Group is a Seoul Korea multinational automotive manufacturer
headquartered in Seoul, South Korea. The company was founded by Chung Ju-Yung, who was
born in North Korea in 1915 as the eldest son of a poor peasant family, at the age of 18, he set
o* for Seoul with hopes of finding a be,er life. Success was not immediate. He worked in
various jobs, such as railway construction, bookkeeping and dock work. Mr. Chung’s first
experience as an entrepreneur came in 1938 when he started his own rice store. However, he
was forced to close his business a year later because of the policies of the Japanese occupation
forces. A3er the liberation of Korea in World War II, Mr. Chung formed a chaebol (a chaebol is a
family-type business) with his brother and went into business repairing trucks for U.S. Armed
Forces. He then went into the engineering and construction business, eventually building
multibillion-dollar mega-projects around the world. His venture into the shipbuilding business
is legendary (Hyundai Motors Alabama, 2016). Despite a lack of experience in shipbuilding, he
persuaded a customer to give him an order to build a ship for tens of millions of dollars. Now
the company that he started is the largest shipbuilder in the world. No ma,er how big and
global it becomes, Hyundai will always righ>ully be seen as a Korean company in its business
culture and operating style. The structure of the Hyundai Group is a chaebol or industrial
consortium of family related industries, these business types create global multinationals and
huge international operations. Each chaebol is owned, controlled or managed by the same
family dynasty, generally that of the group’s founder. Samsung, Hyundai, and LG Group are
among the biggest and most prominent chaebols (Investopedia,2016). Mr. Chung built
businesses that helped make Korea the economic powerhouse that it is today. From humble
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beginnings, he rose to great heights. But even at the peak of his success, he remained
disciplined, lived simply and worked hard.
Chung Ju-Yung established the Hyundai Engineering and Construction company in 1947.
Hyundai Motor Company was established in 1967. The company’s first model, the Cortina, was
released in cooperation with Ford Motor Company in 1968. When Hyundai wanted to develop
their own car, they hired +ve top British car engineers, former employees of British Leyland. In
1975, the Pony, was the first Korean car released with styling by ItalDesign and powertrain
technology provided by Japan’s Mitsubishi Motors. In 1984, Hyundai exported the Pony to
Canada, but not the United States; the Pony failed to meet fuel emission standards in the
United States. In 1987, Hyundai began to overhaul its image in order to establish itself as a
world-class auto brand. In the beginning, Hyundai con+ned itself to the Asian market until
1986, when it released its first U.S. model, the Excel a subcompact. In order to convince
customers of the brand’s quality, Hyundai added other capabilities such as design which led to
more diversified product line and more stylish features. The company told customers that
Hyundai means modernity or technology in Korean and rhymed with the English word Sunday,
in order to familiarize customers with the company name.
The Korea-based enterprise, was regarded as a purveyor of cheap, low-quality cars and as a
“me too” follower of Toyota and Honda, it has now become the fastest growing automotive
brand in the United States. Hyundai has been able to step out from behind its larger Japanese
competitors and stake a claim to style leadership in part because of the culture of creativity that
the company fostered, a culture in which U.S. employees and Korean executives innovate
together (Holsten, 2013). “Hyundai doesn’t cede as much to Americans as does Toyota,” says Ed
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Kim, who worked at Hyundai for four years. The Koreans remain very much in control. In 1999,
Chung Ju-Yung transferred leadership of the company to his son, Chung Mong Koo (Mr. Koo
served as CEO until 2006). Hyundai purchased Kia Motors Corporation in 1997 during the Asian
currency crisis in 1998 gave new urgency to the need to shrink expenses. To decrease costs, the
company cut back on quality effort. As a result, sales dropped dramatically and in May 1998
only 4,200 Hyundai cars were sold in the United States. “Many of us were pre,y sure we were
about to go out of business,” recalls Ferrara, vice president for parts. In 1998, Hyundai leaders
set out to develop the kind of skills the company would need to become a global automobile
powerhouse; a company who would able to hold its own in the United States and other +ercely
competitive markets. Early on, that meant offering a comprehensive warranty and taking
specific steps to dramatically improve its quality ratings. A new focus on quality – starting, not
with the manufacturing but with a marketing initiative. In 2004, Hyundai was ranked second in
“initial quality” and twice has tied with Honda in surveys and studies made by J. D. Power and
Associates (Hyundai Motor Company, 2016). Hyundai was one of the top 100 most valuable
