Dahl Ochola Owino
24, 12, 2012
The motor car industry has experienced expansion as result of the government support and the management strategies of the particular firms. This report analyses the motor industry in Korea especially the evolutionary learning of two companies, the firms’ strategies and the industry policy of the country, the report further looks at the various phases that the firms in the industry undergone for them to produce their first car domestic models through the joint venture with other international firms. Korea a developing economy lauded for the performance that enabled it survive the competitive market that many developing economies failed. The president’s directive and the internationalization strategies have also been captured.
Multinational companies have dominated Korea motor car industry. A multinational company is a firm with operations in more than one country or region and is normally characterized by heavy capital investment (Murtha & Lenway, 1994). In Korea Hyundai and Kia controls about 81% of the motor car industry (Kim, 1998). For this to be achieved, these firms formulated and adopted strategies, advanced their technologies and worked closely with the government. In our analysis, Hyundai and Kia were evaluated and their competitive advantages evaluated to determine their strength and weaknesses in such a high competitive industry. A comprehensive analysis of these factors has been systematically captured in this report To begin with, technology is a critical success factor in motor car industry. In Korea, Hyundai and Kia had to accumulate and advance their technology from one phase to another in a bid to improve their products quality. Hyundai motors sourced its technological knowhow from foreign areas with an objective of increasing its knowledge base (Kim, 1998). Whereas it was expected that none of the motor car companies in south Korea if not few would survive the competetive market, Hyundai managed to overcome the upheavals and retain its market share in the 1990s by retaining 100% ownership of their 45 subsidiaries (Kim, 1998). By 1994, Hyundai managed to increase its production by almost ten times. The assimilation of foreign technology in Hyundai motors gave the company a competitive edge against its major competitors (Rhyu & Lee, 2006). The increased production and sales has enabled the company to expand its market to other regions through exports. This success has been realized despite the fact that Hyundai was a latecomer firm. The technological capability has further enable Hyundai to manufacture new models of cars like Accent and Avante in 1994 and 1995 respectively (Kim, 1998). Moreover, the firm has been able to eliminate the royalties paid for use of others permit. The technology transfer process of Hyundai began in 1967 when the company constituted a task force with individuals from different construction departments placed together to develop various car models (Rhyu & Lee, 2006). The taskforce also had foreign engineers who were to bring the immigrant knowledge. The recruiting department ensured that the personnel selected to these task force had pertinent experience and knowledge and that the blend would come up with new models. There after,Hyundai entered into an agreement with Ford for the assembling of the latters products. It was in this agreement that Ford would train Hyundai enginereers , supply them with the training manual together with a blue print (Kim, 1998). This became a milestone in the histrory of technology transfer and accumulation for the company.Hyundai as well developed ambiguous targets that would ensure that the learning takes place within the shortest duration possible (Lowry, 1987). The second face of technology accumulation and transfer in mid 1970s saw Hyundai motor develop a Korean car under license. This phase was meant to ensure that the...