Hyundai Group

Topics: South Korea, Chaebol, Hyundai Pages: 4 (1147 words) Published: January 30, 2013
Case Study: The Hyundai Group
Time Context:
Like many Korean chaebols, Hyundai was established only recently, in 1947 as a construction company. But by the end of the 1950s, Hyundai Construction grew to become one of the major construction companies in Korea. Then, Hyundai expanded businesses primarily in the construction, heavy industry and automobile manufacturing sectors during the next two decades to become the largest business group in Korea. During this period, Hyundai was a major business partner for the government, by gearing its corporate growth strategies to the government’s policies for economic development. During the development era (1961-1988), the Korean government insured or underwrote big business’ risky projects through its control over financial resources as well as myriads of discretionary licensing and approval powers, and big business actively capitalized on this insurance provided by the government. The government and big business needed each other, albeit for different reasons, and exchanged different resources to achieve common goals.

In the 1960s, Hyundai’s expansion mainly took place within the construction industry by winning highway construction projects and investing in large-scale cement plants. The Group also pioneered overseas construction markets during this period, which gave Hyundai a leading edge when it decided to enter the construction markets in the Middle East in the 1970s. The successful experience of Hyundai in the construction sector also turned out to be extremely helpful when the Hyundai Group entered the shipbuilding and related heavy industries in the 1970s. These two sectors were similar in production technology, employment, or marketing. Thus, the Hyundai’s entry into the heavy industry sectors could be viewed as diversifying into related businesses, an unusual experience in the early expansion history of Korean big businesses4

. Hyundai also diversified into unrelated...
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