Hyundai and Honda: Performance in the International Market Review

Introduction

Honda and Hyundai are globally recognized brands in the motor engineering industry. The two companies have worked hard over the years to achieve this recognition. They continue to compete with each other to ensure that each remains at the top of the automobile industry. In addition, they make efforts to make sure that their customers are fully satisfied with the products. Honda and Hyundai have both maintained a high level of innovation and creativity in a bid to remain competitive in the market (Lansbury, Suh & Kwon 2007).

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The current paper is a case study of the two companies, Hyundai and Honda. The author of the paper will compare and contrast the two entities in terms of their strategies, competitiveness, innovation, and ambition. The impacts of the recent economic downturn on the two will also be reviewed. The status of Honda and Hyundai on the global market will also be analyzed.

Honda and Hyundai: Key International Success Factors

Success Factors for Honda

Reputation

The company has been in operations for over fifty years. Its major goal is to achieve success in the automobile industry. Within this duration, the firm has established a global presence such that many consumers from different parts of the world are aware of the brand and the products it offers (Honda worldwide 2014, par. 3).

The slogan of this organisation, The Power of Dreams, captures its spirit to succeed in the global arena despite the various changes taking place. It has developed different types of cars in an attempt to satisfy clients from different countries. A strong brand has helped the entity remain relevant in the changing business environment (Lee & Jo 2007).

Diversity and innovation

Honda continues to capture the imagination of the consumers with its wide range of products. The company produces, among others, cars, sports motorbikes, and boat engines. Recently, the management launched a line of private jets. The development is enough proof that the company is sensitive to the diverse needs of its clients.

The firm has always pushed its limits to ensure that its products are of high quality, effectively engineered, and in line with the interests of the consumer (Choi & Hong 2002). As a result, the team of engineers makes efforts to come up with new models of engines and improved vehicle designs. They also make efforts to come up with environmentally friendly hybrids and other innovative additions. The consumers are aware of the fact that the company is capable, driven, innovative, and exciting in its approach to satisfying their needs. The reality is another key success factor in the changing global business environment (Honda worldwide 2014, par. 5).

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MotoGP

As mentioned earlier, Honda has made significant steps towards the development of sports motorbikes. The company has developed bikes that have competed severally in the MotoGP. The management has sponsored drivers and machines taking part in the competition. Sponsorship is a way of growing and awarding talent in the industry. It is also used as a strategy to convince consumers that the firm believes in its brand and stands by it. In turn, this has created an aura of trust among clients, a factor that has enhanced the success of the firm in the changing times (Choi & Hong 2002).

Success Factors for Hyundai

Brand power

Hyundai offers new possibilities in the world of automobile manufacturing. It is this kind of drive that has helped it build a global presence with a strong brand. The company has maintained this brand over time, which is a significant indicator of its exemplary performance in the changing global market (Kim 1998).

Luxury and environmental friendliness

Hyundai has made efforts to provide luxurious cars that are affordable to consumers. In response to the recent calls to reduce carbon emissions, the company has come up with new models to achieve this goal (Worldwide Hyundai 2014, par. 3). As a result, Hyundai continues to produce environmentally friendly cars, which is one of the factors behind its success today (Lee & Jo 2007).

Innovation

The company has developed technologically sound and innovative cars, which have captured the attention of global consumers. As a result, Hyundai has retained its leadership position despite shifts in the global market (Lansbury et al. 2007).

Hyundai MotoSport

The organisation is the sponsor of the popular Hyundai MotoSport. The move creates customer loyalty and trust in the brand, helping the company overcome the challenges associated with changes in the global market (Lansbury et al. 2007).

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A Comparative Analysis of Competition and Global Reach between Honda and Hyundai

It is a fact that both Honda and Hyundai have made major steps to develop and sustain their global presence. However, a critical analysis of the two entities reveals that Honda is more competitive than Hyundai. Its competitiveness has earned this company a large share of the global market. For example, Honda offers a wide range of products compared to Hyundai. As earlier indicated in this paper, its portfolio includes cars, motorbikes, boat engines, and private jets (Honda worldwide 2014, par. 4). As a result, the company can appeal to clients on a wider scale than Hyundai. The appeal gives Honda the ability to expand, increasing its global reach in the process. The organisation has expanded its technological capabilities, making it possible to expand the range of products and global outreach (Honda worldwide 2014, par. 6).

It is also apparent that Honda’s global network is wider than that of Hyundai. To this effect, Honda has more outlets and distributors in different continents. Compared to Hyundai, this company enjoys an obvious advantage concerning its distribution networks and outlets. The situation reveals Honda’s aggressive approach to marketing. Competition theories, such as Porter’s Five Forces, support this assertion. A wide distribution network and a functional marketing strategy allow a company to succeed in the market. If one takes into consideration the distribution network possessed by Honda, then it becomes obvious that the company is a force to reckon with in the automobile industry (Honda worldwide 2014).

Thirdly, in comparison to MotoGP, of which Honda is the official sponsor, Hyundai’s Motosport attracts a smaller crowd. MotoGP is watched by millions of people around the world. Although the Hyundai Motosport is a fairly large event, when compared to the MotoGP, it does not attract as many fans (Lee 2011). The fact that Honda has chosen to sponsor and market its product through the MotoGP is a rather clever strategy that highlights the aggressive and smart nature of the marketing strategy applied by Honda is just an indication of its competitive nature.

Fourth, many people and governments around the world have raised issues with the nature of pollution caused by motor vehicles and other oil consuming engines. Environmental activists have called upon all vehicle manufacturers to ensure that they take responsibility. Companies are required to ensure that they produce engines that reduce carbon emissions to the atmosphere. Honda has made major improvements to its engines. The company has manufactured several hybrid vehicles to help its customers save huge amounts of money on gas while reducing the rate of carbon emissions.

It is quite clear that Honda has done more to protect the environment from carbon emissions when compared to Hyundai. Honda has a wider variety of environmentally friendly cars compared to its competitor. The company is also doing more in terms of technology to ensure that they offer the best in terms of fuel efficient and environmentally friendly cars. Hyundai, on the other hand, seems more inclined towards luxury and performance of their vehicles (Kim 1998). Although recently the company has developed a few environmentally friendly cars, this is a drop in the ocean when compared to the number produced by Honda (Honda worldwide 2014, par. 5).

Future Internalisation Prospects for Honda and Hyundai in Response to the Recent Economic Downturns

The global business environment is not a static phenomenon. On the contrary, the world market changes with time as a result of several factors. Some of these issues include technological innovations, the political environment, and shifts in the needs of consumers (Choi & Hong 2002). For an organisation to remain relevant in these changing situations, the management has to come up with strategies to address the emerging market needs. Several factors are behind the success of Honda and Hyundai in these changing times.

The global recession that hit the world had adverse effects on the vehicle manufacturing industry. Sales plummeted and companies declared bankruptcy. For companies to survive, they had to rethink their strategies in terms of marketing and the products they put on the market for potential clients. They also had to rethink their target population since the markets that they had relied on for years had failed miserably. As a result, companies are forced to look into the new target market and emerging economies were their best bet.

China and India are some of the fastest growing economies in the world. The demand for automobiles in such growing economies is quite high. However, most people living in these countries do not have the amount of money required to purchase most of the models many companies sell in developed economies. For Honda and Hyundai, this was not different. The two companies had to expand their operations to cater for growing economies. China and India also have an existing pollution problem and the countries are doing all that they can to better the situation (Honda worldwide 2014, par. 5).

In the opinion of this author, Honda has done more than Hyundai concerning internationalisation. The company has designed and created fairly priced cars that are environmentally friendly in a bid to appeal to the diverse market it looks to tap into. In addition, the company has continuously supported environmental campaigns, something that is evident in its website (Honda worldwide 2014, par. 5). Apart from this, Honda has taken the initiative to inform prospective customers in a large number of countries of their outlets in the specific countries. The gesture is not only an indication of how widespread the company’s tentacles are but also the plans of the company with regards to internationalisation (Honda worldwide 2014, par. 7).

On the company’s website, Honda showcases a large variety of dealerships and their contact for both India and China. It is noted that China has more dealerships when compared to India. However, the nature in which the dealerships in China are spread out throughout the nation is just an indication of how dedicated Honda is towards its expansion and internationalisation. Further, Honda has achieved an all-time automobile production monthly record for its production of automobiles in Asia. Honda has also achieved an all time accumulated production record for overseas and worldwide markets (Honda worldwide 2014, par. 2). The situation reveals the fact that the company is better placed to deal with the vagaries of the global market compared to Hyundai.

Organisational and Strategic Changes that Need to be Made to Increase Profitability and the Competitiveness of Hyundai

Hyundai needs to make several changes to increase its profitability and chances of continued success in the global market. Some of these changes include organisational and strategic restructuring, as well as diversification of production processes.

Production

It is important to note that automobile manufacturing is a very expensive process. However, several factors can mitigate the expense of the production process. Given the opportunity to manage Hyundai, I would source cheaper raw materials to be transported in the cheapest of ways. In this way, the company can reduce its cost of production by a significant percentage. Consequently, the company will be able to price its cars lower, making them favourable. Further, I would try to establish more production plants in Asia where labour is a lot cheaper. The move would be part of a large picture one to move all production to Asia, where the future market could be located and where there is a fairly cheap and readily available workforce. The move would also lower the cost of production quite significantly (Sako 2004).

Marketing strategies

Hyundai needs a more aggressive marketing strategy. The company needs to increase its global reach and focus its effort on future internationalisation. The company also needs to align itself with major sports factions related to its brand. In this way, the company will be in a better place to build its brand recognition and identity. The company will also be in a better position to build its global presence (Worldwide Hyundai 2014, par. 9).

Product diversification

While today Hyundai concentrates more on building luxurious models for sale to their customers, as a manager I would want to revise this strategy. Although luxurious models can be sold at a larger price, this does not factor well into the bigger picture. Instead of this approach, I would divide the product range into two with fewer luxurious models and the majority of products made for lower middle-class customers. In this fashion, the company will be able to target a larger pool of prospective clients and focus on their needs in a bid to come up with a comprehensive range of products, and at bearable prices (Worldwide Hyundai 2014, par. 4).

Focusing on the target market

With the current ongoing recovery from the global recession, as manager of Hyundai, I would work towards increasing the target market. The target market is quite important to the automobile manufacturing industry because it dictates the product, the range of products, marketing strategies and managerial strategies. In this case, Hyundai needs to embrace a rather inclusive target market. It can be possible by ensuring that during market research, the company focuses on wider sample size.

If the management adopts the changes suggested above, it will have a wealth of information on prospective customers, their likes and dislikes. With this information, the company will be in a better position to develop its production and expansion strategies. In the end, the company will be able to target diverse customers of different ages and economic capabilities, while offering the best product to suit most if not all of their needs (Sako 2004).

Conclusion

In this paper, the author analysed the various elements associated with Honda and Hyundai, two of the most popular brands in the motor industry. It was revealed that the two companies have remained successful in the changing global market as a result of several factors. The factors include their sponsorships in the motorsports industry and a wide range of products. However, it was revealed that Honda is more competitive compared to Hyundai.

The competitiveness is brought about by the extensive range of products offered by this firm to the consumers. In addition, the motorsport event sponsored by Honda attracts a large audience compared to the competition supported by Hyundai. The two companies should come up with strategies to help them deal with changes in the international market. Such changes include the current economic downturn in Europe and North America and the uncertain demands in India and China, some of the emerging markets.

References

Choi, T & Hong, Y 2002, ‘Unveiling the structure of supply networks: case studies in Honda, Acura, and DaimlerChrysler’, Journal of Operations Management, vol. 20 no. 5, pp. 469-493.

Honda worldwide 2014. Web.

Kim, L 1998, ‘Crisis construction and organisational learning: capability building in catching-up at Hyundai Motor’, Organisation Science, vol. 9 no. 4, pp. 506-521.

Lansbury, R, Suh, C & Kwon, S 2007, The global Korean motor industry, Routledge, London.

Lee, B & Jo, H 2007, ‘The mutation of the Toyota production system: adapting the TPS at Hyundai Motor Company’, International Journal of Production Research, vol. 45 no. 16, pp. 3665-3679.

Lee, K 2011, ‘Integrating carbon footprint into supply chain management: the case of Hyundai Motor Company (HMC) in the automobile industry’, Journal of Cleaner Production, vol. 19 no. 11, pp. 1216-1223.

Sako, M 2004, ‘Supplier development at Honda, Nissan, and Toyota: comparative case studies of organisational capability enhancement’, Industrial and Corporate Change, vol. 13 no. 2, pp. 281-308.

Worldwide Hyundai 2014. Web.

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