ANS: Demand in South Korea is too low to sustain indigenous automakers like HMC and Kia, thus exporting is a necessity to attain the economies of scale needed to remain competitive in a tough industry. South Korea enjoys various national competitive advantages in the provision of cars such as abundance of production factors in cost-effective labor, knowledge workers, high technology, and capital. The South Korean government devised a partnership system of close government/business ties, including directed credit, import restrictions, and sponsorship of specific industries. In part due to these efforts, Korea is home to a substantial industrial cluster for the production of cars and car parts.
2) In terms of factor proportions theory, what abundant factors does Hyundai leverage in its worldwide operations? Provide examples and explain how Hyundai exemplifies the theory. In What ways does Hyundai's success contradict the theory? Justify your answer.
ANS: It is a fact that Hyundai enjoys various advantages such as knowledge labor, inexpensive wage, low cost of input-goods (steel, tires…) which are profitably exported, but due to the government restrictions on imported goods, the factor proportions theory is misused.
3) Discuss Hyundai and its position in the global car industry in terms of porter's diamond model. What are the role of firm strategy, structure, and rivalry; factor conditions; demand conditions and related and supporting industries to Hyundai's international success?
ANS: With many competitors battling for market share, carmakers such as Toyota, Nissan, Honda, Hyundai, General Motors, Ford, DaimlerChrysler, Renault, and Volkswagen operate on relatively thin margins. The automotive industry has been...