Drivers of Internationalization for Hyundai Motor Company

Exports are the engine of the contemporary Korean motor vehicle industry's success. Hyundai exported a total of 560,169 units, up 13% from the 1995 figure of 494,479. In the 1980s, Hyundai began to explore strategies to increase access to the overseas market. The strategy of internationalization in the first stage was to develop joint  ventures  with  advanced  foreign  car makers that would allow them to develop a world market sales car.

Cost Drivers :
Scale Economies and Favourable Logistics

Hyundai began to face increasing global competition both at home and abroad from the 1990s onwards. Since the late 1980s, Hyundai has adopted a comparative production system, namely lean production system, in order to improve quality and productivity. In this point of view, Hyundai started to rationalize their reorganized logistics through the use of modern information and communication technologies like "value added network". They set up rationalization of logistics in 1994 that belonged to 329 firms of their suppliers. With the development of this system Hyundai can completely control the logistics chain, so they will increase the flexibility of the logistic plan. As a result of the revitalization of JIT delivery 2 the time-unit of delivery scheduling was radically reduced from months to days and then to hours. By 1993 approximately 76.4% of the total parts bought (in volumes) were delivered daily, 17.1% of it weekly, and 6.5% of it monthly.3 Hyundai has an average inventory of 0.6 days of production. 

Market Drivers:
Presence of similar customer needs

The implementation of multi-regional strategy involved the decision to integrate Southeast Asia operations in terms of products and manufacturing. Ultimately, Hyundai created a single vehicle, launched in India in 1998 and the following year in Indonesia and Thailand. An organizational structure is emerging which is based on three world regions: Asia, North & South America and Europe. Hyundai has made significant regional advances as far as it Asia-Pacific operations are concerned, as it has attempted to co-ordinate the activities of its various subsidiaries spread out among the ASEAN countries, creating a regional division of labor, and linking the factories in India and Indonesia into a network of global sourcing of components and parts. Hyundai continues to expand in markets it has already entered and influences through its exports, with the internationalization of its sales, based on existence of sales and after-service network as a basis upon which to make investments in production. In Southeast Asia, the company was to start production and sale of a specific vehicle destined for these markets (Asian Car), on the basis of a platform shared with Korean products (Accent Model). This led Hyundai to utilize its components and platforms to the maximum. On the other hand, this platform strategy permits the accelerated pace of product replacement in the home market. Since the late 1996, Hyundai has begun the construction of its largest manufacturing plant excepting Korea in Chennai, India. Hyundai will be investing approximately US$ 1.1 billion in the Hyundai Motor India Chennai Plant by the year 2001.

Nowadays, Hyundai's Trajectory is characterized by transition from a world-wide export strategy to multi-domestic strategy based on manufacturing sites in the differential regions, because they can't continue to depend on the domestic market for sustained growth and loss to the vast potential market. In this transition process, Hyundai has adopted three ways that become clear as follows: Continuously, Hyundai has extended production sites with knock-down manufacturing base in periphery areas. Through niche-market strategy, the company has been able to increase its periphery market penetrations despite increased import barriers or raised dumping charges. For the core markets, they will hold the direct export strategy. To increased quality, they are to complete a new modern factory with the respective company's latest technology and new work organization. In transition the multi-domestic company, Hyundai will develop the "Asian Car" based on the new transplant in India. Competitive foundation of the company is the only reason behind the success of Hyundai's trajectory and enhanced position in the world car market.