Hyundai Case Study: Synergy, Strategy, and Market Analysis

This case study examines Hyundai's strategic use of synergy, a concept where combining resources and values leads to increased benefits. The analysis covers how Hyundai leveraged synergy with suppliers and partners, particularly in the South Korean market, to reduce costs, boost employee morale, expand market share, and gain a competitive edge. The study discusses how Hyundai's strategic approach incorporated consolidation, customization, combination, and connection to maximize value. It also explores the key drivers behind Hyundai's corporate strategies, including socio-cultural, economic, and political factors. Furthermore, the study highlights the effectiveness of a portfolio organization perspective over an integrated one for decision-making, risk reduction, and resource optimization. The company employed a focal relationship between its customer business unit and supplier business unit to manage its cash flow effectively. The conclusion emphasizes synergy's role in driving revenue and customer base growth, particularly through mergers with raw material firms, ultimately contributing to Hyundai's success.

Hyundai Case Study

Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Conclusion..................................................................................................................................4
References..................................................................................................................................4

Introduction
The case study of Hyundai showcases the concept of ‘Synergy’ which is used by a large
number of businesses today. This concept includes combining the performances and the
values of two companies and can be better explained as “1 + 1 = 3”. In case of Hyundai, as
discussed in the case study, the synergy was based a corporate strategy or a strategic
partnership to gain benefits for both the parties involved in it. Synergy has provided Hyundai
a number of advantages including reduced costs, improved productivity, boosted morale of
the employees, increased revenue, empowerment of employees and customers, expanded
share in the market, improved competitive advantage and increased satisfaction of the
customers in the Korean market.
Discussion
Synergy has been used since many years by the corporate strategists of thecompanies as a
corporate growth strategy and Hyundai has utilized this concept in its full potential over the
years. For instance, Hyundai synergised with the steel and auto part companies of South
Korea and found a sudden expansion in their revenues. Adopting synergy as a corporate
strategy by Hyundai included consolidation (creating value among the similar resources and
eliminating redundancies); customization (use of intangible assets of one in a customized
manner to generate value for other companies); combination (combining two or more
companies increases the strength in numbers) and connection (linking of the value chains of
one company with the other to generate better value). As indicated by the case study, these
four C’s acted as tools of corporate strategy for decision- making and analysis. For instance,
the analysis of all these factors made Hyundai to function as an assembler of motor parts for
many years to earn maximum profit rather than developing their own manufacturing firms.

In case of Hyundai, the major drivers for the corporate synergy are socio-cultural factors
(environmental awareness, changing lifestyle needs); suppliers (foreign entrants,
development of innovative products); new entrants in market; complementors and substitutes
(changed range of products, new standards of technology); political drivers (new government,
new regulations, privatization); and economic drivers (economic growth, productivity of
labour), as indicated by the case study.
In case of Hyundai, portfolio organization perspective has proved to be more effective than
integrated one as it allowed better decision making by providing multiple instances, reduced
the risk exposure and maximized the portfolio perspective of resources which further helped
in reduction of duplicate efforts and project costs. The portfolio competitive strategy allowed
Hyundai to launch new products (such as Hyundai Pony in Korea), improve product mix and
diversify its customer base which further reduced the risks for the company. The company
adopted focal relationship between its customer business unit and supplier business unit to
manage its cash flow operations in an effective manner.
Conclusion
All the corporate strategies are aimed at increasing the revenue and customer base of the
company and concept of synergy proved to be the key strategic concept for Hyundai for
ensuring growth in external market. Merger with the raw material firms in South Korea
increased the revenue for the company and helped it in becoming chaebol all over again.