Kia in South Korea Porter's Diamond
KIA in South Korea, A Porter’s Diamond Perspective
Timothy J. Rausch
Mount Vernon Nazarene University
MSM002MV
MAN6093 Global Business
October 11, 2008
Introduction
KIA, which means “arise from Asia” in Korean, started out making bicycles prior to World War II (Kia Motors Corporation, 2008). The company developed the manufacturing of steel bicycle tubing into a multi-national corporation producing cars and trucks. Prior to merging with Hyundai in 1998, Kia was the second largest producer of vehicles in South Korea (Kia Motors Corporation – Company Profile, Information, Business Description, History, Background Information on Kia Motors Corporation, 2008). Examining Kia’s transformation in a country lifting itself out of the wreckage of the Korean Conflict, is the focus of this study.
Factor Endowments South Korea’s recent history has included conflicts between Russia and Japan, annexation by Japan, division in a post World War II world, and invasion from North Korea (Central Intelligence Agency: The World Factbook: South Korea, 2008). Yet, when examining the country based on Porter’s Diamond concept of Factor endowments, the author questions why, besides the political implications, this country was such a critical part of world history (Hill, 2007). South Korea’s natural resources are limited. According to a study by the United States Central Intelligence Agency (CIA), South Korea has almost no natural resources suitable for the production of energy. Oil production is not viable. The only natural resources listed are coal, tungsten, graphite, molybdenum, and lead (Central Intelligence Agency: The World Factbook, 2008). Korea imports roughly 2.3 million bbl/day of crude oil, making it the ninth largest consumer of oil in the world (Country Analysis Briefs: South Korea, 2007). Its consumption of Liquefied Natural Gas (LNG) was 22.1 million Metric Tons of LNG in 2005 (Country Analysis Briefs: South Korea, 2007). The third factor in the carbon
Timothy J. Rausch
Mount Vernon Nazarene University
MSM002MV
MAN6093 Global Business
October 11, 2008
Introduction
KIA, which means “arise from Asia” in Korean, started out making bicycles prior to World War II (Kia Motors Corporation, 2008). The company developed the manufacturing of steel bicycle tubing into a multi-national corporation producing cars and trucks. Prior to merging with Hyundai in 1998, Kia was the second largest producer of vehicles in South Korea (Kia Motors Corporation – Company Profile, Information, Business Description, History, Background Information on Kia Motors Corporation, 2008). Examining Kia’s transformation in a country lifting itself out of the wreckage of the Korean Conflict, is the focus of this study.
Factor Endowments South Korea’s recent history has included conflicts between Russia and Japan, annexation by Japan, division in a post World War II world, and invasion from North Korea (Central Intelligence Agency: The World Factbook: South Korea, 2008). Yet, when examining the country based on Porter’s Diamond concept of Factor endowments, the author questions why, besides the political implications, this country was such a critical part of world history (Hill, 2007). South Korea’s natural resources are limited. According to a study by the United States Central Intelligence Agency (CIA), South Korea has almost no natural resources suitable for the production of energy. Oil production is not viable. The only natural resources listed are coal, tungsten, graphite, molybdenum, and lead (Central Intelligence Agency: The World Factbook, 2008). Korea imports roughly 2.3 million bbl/day of crude oil, making it the ninth largest consumer of oil in the world (Country Analysis Briefs: South Korea, 2007). Its consumption of Liquefied Natural Gas (LNG) was 22.1 million Metric Tons of LNG in 2005 (Country Analysis Briefs: South Korea, 2007). The third factor in the carbon