Introduction

A. Company Background

Hyundai Motor Company was incorporated in 1967, under

the laws of the Republic of Korea, to manufacture and distribute
motor vehicles and parts.

The company owns and operates three principal automobile

production bases in Korea: the Ulsan factory, the Asan factory
and the Jeonju factory. In addition, the Company has invested in
seven overseas manufacturing plants including Hyundai Motor
Manufacturing Alabama, LLC (HMMA) as well as seventeen
overseas sales and R&D subsidiaries including Hyundai Motor
America (HMA).

The shares of the Company have been listed on the Korea

Exchange since 1974 and the Global Depositary Receipts issued
by the Company have been listed on the London Stock Exchange
and Luxemburg Stock Exchange.

It has 45 affiliated domestic companies and 254 overseas

companies in nearly 200 countries. This group is active in
sectors such as shipbuilding, steel, petrochemicals, heavy
machinery, aerospace, electronics and financial services.

As of December 31, 2009, the major shareholders of the

Company are Hyundai MOBIS (20.78%) and Chung, Mong Koo
(5.17%).

B. Paper Design and Methodology

This paper was prepared primarily to formulate and

recommend general strategies for the Hyundai Motor to consider
as it competes in a highly competitive automotive industry. To
be able to do this, certain data or parameters have to be
analyzed and evaluated.

In all, therefore, the paper made use of the following research

methodology:

1. Documentary analysis – pursuant to this method of

research, documents and materials related to the
subject matter were examined. This approach is useful
 in the conduct of any research undertaking as it
enhances or confirms the substance and basis of
information, whether quantitative or qualitative, which
were used as primary and basic reference materials to
support the study.

2. Descriptive method – under this approach, both

primary and secondary information pertaining to the
subject matter which were gathered from various
sources were recorded, analyzed and interpreted in a
manner that generates the basis upon which
prospective conclusions and recommendations relative
to the subject matter of the study were made.

II. External Analysis

This chapter represents and discusses the external factors

that affect the Hyundai’s Industry. External trends and events
significantly affect the overall performance of an organization,
such performances on their products, services, markets, and to
other organizations in the world. External forces such as
economic, social-cultural, demographic, environmental,
technological, political, and competitive forces are presented for
these provides intelligence that could have a direct impact and
support on the effectiveness and performance of the Hyundai’s
Industry.

The objective of the external analysis is to provide

information and guidance for identifying and evaluating trends
and events beyond the control of the firm. Further more
developed a predetermined list of opportunities that could
benefit the firm and threats that should be avoided in the near
future.

A. Economic Forces

The major economic force that affects the automotive

industry was the recent global financial crisis. The crisis affected
European and Asian automobile manufacturers, but it was
primarily felt in the American automobile manufacturing
industry. The crisis also affected Canada by virtue of
the Automotive Products Trade Agreement.
 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. The popularity and relatively high profit margins of
these vehicles had encouraged the American "Big Three"
automakers, General Motors, Ford, and Chrysler to make them
their primary focus. 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.
Car companies from Asia, Europe, North America, and
elsewhere have implemented creative marketing strategies to
entice reluctant consumers as most experienced double-digit
percentage declines in sales. Major manufacturers, including the
Big Three and Toyota offered substantial discounts across their
lineups. The Big Three faced criticism for their lineups, which
were seen to be irresponsible in light of rising fuel prices. North
American consumers turned to higher-quality and more fuel-
efficient product of Japanese and European automakers.
However, many of the vehicles perceived to be foreign were
actually "transplants," foreign cars manufactured or assembled
in the United States, at lower cost than true imports.

B. Social

High population growth constrains growth of per capital

income. This situation impedes the economic growth of the
country. Densely populated cities and communities pose more
problems to development. Unless there is development, the
prospects of the automotive industry are not likely to be
realized.

The buying decisions of millions of individuals are related

to vehicle size, fuel efficiency and vehicle type. For the past 20
years, people bought bigger and more powerful vehicles. The
average weight of a vehicle over that 20-year period is up 900
pounds. But due to increase in gas prices, people now focus on
fuel efficiency and tend buy small and compact cars.
C. Cultural
 The automotive culture is the combination of Eastern and
Western cultures. People’s love affair with the automobile is on
the rise. As the economic growth rises, interest in cars rose and
during the 1990s up to present, automobile exhibits are
rampant, from mainstream to custom-built vehicles are
displayed. People also tried to patronize by buying their own
products especially in Japan and Korea.

D. Demographic

The increase in population will give an increase market

share for automotive. Asia accounts for over 60% of the world
population with more than 4 billion
people. China and India together have about 40 percent of the
world's population. Africa follows with 1 billion people, 15% of
the world's population. Europe's 733 million people make up
11% of the world's population. North America is home to 352
million (5%), Latin America and the Caribbean region to 589
million (9%), and Oceania/Australasia to 35 million (less than
1%).

E. Technological Forces

Technology adds to the pleasures of owning a car.

Technologies in today’s automobiles help to create a more
intimate driving experience. Vehicles today have become
extensions of our identities, personalities and preferences. The
amount of technology reflects the lifestyles and driving habits
and even concern for comfort and safety.

F. Political, Legal and Governmental Forces

Potential foreign investors, as well as tourists, remain

concerned about law and order, inadequate infrastructure,
policy and regulatory instability, and governance issues. While
trade liberalization presents significant opportunities,
intensifying competition and the emergence of powerful regional
economies also pose challenges. Competition from other
economies for investment underlines the need for sustained
progress on structural reforms to remove bottlenecks to growth,
to lower costs of doing business, and to promote good public
and private sector governance. When anti-corruption efforts are
ineffective, it further requires strong political will.

G. Environmental Forces
 The world faced hurdles of unstable fuel prices, depleting
fuel supply and excessive exhaust emissions. Environmental
politics and related concerns regarding carbon emissions have
heightened sensitivity to gas mileage standards and
environmental protection worldwide.