Hyundai's US Market Entry: Analysis of Challenges and Recommendations

This report provides a comprehensive analysis of Hyundai's entry into the US automobile market, examining the challenges and opportunities faced by the company. The report begins with an overview of the purpose and recommendations, followed by an analysis of Hyundai's present situation, highlighting its initial struggles to establish itself as a leading brand due to its perceived low-cost image and product differentiation issues. The report then offers future recommendations, including acquiring an American car brand, marketing strategies to position Hyundai as a premium brand, and fostering innovation to maintain a competitive edge. The analysis also addresses the challenges of changing customer preferences and strong competition. The report concludes with a financial ratio analysis, including current, debt, and acid-test ratios, to assess Hyundai's financial health and provide insights for future strategic decisions. The report emphasizes the importance of adapting to market dynamics, leveraging financial resources, and continuous innovation for Hyundai's success in the US market.

Running head: HYUNDAI ENTERS US
Hyundai Enters Us
Name of the Student:
Name of the University:
Author Note:

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Table of Contents
Part 1: Purpose of the summary and recommendations:.................................................................2
Part 2: Analysis of the present situation of Hyundai:......................................................................2
Part 3: Future recommendations for Hyundai: Most important challenges and opportunities in the
American automobile industry:.......................................................................................................3
Acquiring an American car brand:..............................................................................................3
Marketing its brands in the American market:............................................................................3
Innovation:...................................................................................................................................4
Part 4: Challenges and Opportunities:.............................................................................................4
Part 5: Financial ratio analysis:........................................................................................................5
Current ratio:................................................................................................................................5
Debt ratio:....................................................................................................................................6
Acid test ratio:..............................................................................................................................6
References:......................................................................................................................................8

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Part 1: Purpose of the summary and recommendations:
The mentioned case study points out several facing Hyundai which requires
recommendations for the company. The recommendations would follow an analysis of the
situation of Hyundai after the car manufacturer entered the market of the United States of
America (Dunning, 2015).
Part 2: Analysis of the present situation of Hyundai:
An analysis of the situation shows that Hyundai entered the American automobile market
to establish itself as a leading brand in the American automobile market during late 1980s.
However, the company failed to establish itself as a leading automobile manufacturer due to its
market image of that of a low cost automobile maker (Kim, Hoskisson & Lee, 2015).
The second issue which Hyundai faced in the American market was the difference
between the actual and the perceived quality of the then Hyundai model cars. The company
emphasized more on producing low priced car instead of producing high priced cars. The
economic conditions of the USA was stronger than the Asian markets and the American
customers preferred premium expensive cars compared to the low priced cars. Hence, the market
image of Hyundai ta that was not compatible with the tastes of the American customers.
Moreover, the American market already had presence of companies like Mitsubishi and Honda
whose models were of better quality than Hyundai. This analysis also pointed out that Hyundai
lacked product differentiation of its brands (Grant, 2016).
The fourth issue which Hyundai faced in the American market even after recovering its
sales volume in the early 2000s was lack of differentiation. Car manufacturers like Chrysler and
Mazda started imitating its warranty catch line of 100000 miles. This issue made it clear to the

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automobile manufacturer that it required to obtain a 360 change to augment its brand image and
market position in the highly competitive American market (Hardman, Shiu & Steinberger-
Wilckens, 2015).
Part 3: Future recommendations for Hyundai: Most important challenges and
opportunities in the American automobile industry:
The following are the recommendations that one can make to the apex management of
Hyundai keeping the above discussion in view:
Acquiring an American car brand:
Hyundai can take over an American car brand to establish itself in the American
automobile market. One can point out that IN 1980s, the American automobile market already
had powerful brands like Honda and Ford. As per Porter’s model, the Hyundai was under
continuous threats from these substitute brands which were more powerful compared to it
at that time. Acquiring an American automobile brand would have given Hyundai access to its
resources like manpower and knowledge. IT can be pointed out that the American subsidiary
would have been in a stronger position compared to Hyundai as far as knowledge about the
preferences of the American customers are concerned (Malysheva et al., 2016). The company
would have used the market knowledge of the American subsidiary to make models of cars
which would have added value to the American customers (VRIO model).
Marketing its brands in the American market:
Hyundai must market models of cars as premium Korean cars suited to the American
tastes which would lend it rarity. The case study clearly mentions that the apex management of
the Hyundai feared losing customers if it increased prices of its models in the USD owing to its

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image of a car manufacturer which catered to the middle class customers. The company in future
should use differentiation business level strategy to deal with similar situation in future business
operations. The company must market its two types of variants, the premium variants for the
upper class customers and the low priced variant for the middle class customers. Hyundai must
maintain its superior automobile engineering in all its variants irrespective of their market prices.
The company should provide unique features in all its models which would help it to
differentiate it from its competitors and render its models rarity (Love & Roper, 2015).
Innovation:
Hyundai should keep on introducing innovative models of cars in all its market which its
competitors would find difficult to imitate. This would have two advantages to the company.
First, the unique product features would protect them from threats of newly entering competitors
and secondly, it would protect the company from the fear of substitutes by established brands
(Porter’s model). The company would bring about continuous innovation in its models, both
premium and low priced to maintain uniqueness of its brands and prevent the competitors from
imitating them (VRIO) (Keeble & Wilkinson, 2017).
Part 4: Challenges and Opportunities:
The most important industry challenges which Hyundai faces in the market are
changing customer preferences and strong competition from other global leaders in the
automobile sector like Honda. The company also receives competition from manufacturers
which are introducing innovative models of cars like the one’s running on electricity.
Hyundai must use the market opportunities like growing need of cars running on
environment friendly fuel like electricity to introduce new cars and enter new markets to

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counteract these challenges. Hyundai should use its immense financial resources to carry out
disruptive innovations to introduce cars running on new concept like interchangeable fuel
sources. For example, the car can run on battery but if the battery runs low on charge, the car can
switch over to the alternative fuel like CNG. The company in order to bring about such
innovations has to train its human resources and acquire new value chains.
Hyundai has to bring about improvements in its existing value chain as well right up to
the business level strategy. The automobile manufacturer must acquire firms which would
supply it with raw materials exclusively and not to its competitors. The company can also use
the corporate level strategy of acquisition and mergers to diversify its product line and
enter new markets. For example, Hyundai can acquire a tyre manufacturing company. It can
then supply tyre to other automobile companies, thus controlling their supply chain and
production to a certain extent.
Part 5: Financial ratio analysis:
Current ratio:
2016 2015 2014
Korean
Won
Korean
Won
Korean
Won
Current assets 72,449,60
0
67,529,21
0
65,025,68
4
Current liabilities 43,609,79
3
41,213,52
0
35,179,67
3
Current Ratio(Current Assets/Current
liabilities)
1.7 1.6 1.8

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The current ratio analysis of Hyundai shows that the multinational automobile
manufacturing company do not maintain sufficient current assets to pay the liabilities. Thus it
can be inferred from the analysis that the company must maintain more current assets.
Debt ratio:
2016 2015 2014
Korean
Won
Korean
Won
Korean
Won
Total assets
178,835,92
8
165,367,94
6
147,225,11
7
Total liabilities
106,491,35
0 98,486,545 84,604,552
Current Ratio(Current Assets/Current
liabilities) 1.7 1.7 1.7
The debt ratio is uniform but low compared to the ideal ratio of 2 assets for each
liabilities. The Hyundai must increase acquire more assets to maintain its market position. The
company should acquire assets like acquiring more companies to strengthen its market position.
Acid test ratio:
2016 2015 2014

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Korean
Won
Korean
Won
Korean
Won
Korean
Won
Korean
Won
Korean
Won
Current assets
72,449,60
0
67,529,21
0
65,025,68
4
Less: Inventory
10,523,81
2 9,198,999 7,417,239
Current assets -
Inventory
61,925,78
8
58,330,21
1
57,608,44
5
Current liabilities
43,609,79
3
41,213,52
0
35,179,67
3
Current ratio 1.4 1.4 1.6
The acid test ratio of Hyundai shows that the company should maintain more bank
balance and less inventory to maintain high acid test ratio (hyundai.com, 2018).

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References:
Dunning, J. H. (2015). Reappraising the eclectic paradigm in an age of alliance capitalism.
In The Eclectic Paradigm (pp. 111-142). Palgrave Macmillan, London.
Financial Statements | IR | About Hyundai - Hyundai Worldwide. (2018). HYUNDAI MOTORS.
Retrieved 21 March 2018, from
https://www.hyundai.com/worldwide/en/about-hyundai/ir/financial-information/
financial-statements
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Hardman, S., Shiu, E., & Steinberger-Wilckens, R. (2015). Changing the fate of Fuel Cell
Vehicles: Can lessons be learnt from Tesla Motors?. international journal of hydrogen
energy, 40(4), 1625-1638.
Keeble, D., & Wilkinson, F. (Eds.). (2017). High-technology clusters, networking and collective
learning in Europe. Routledge.
Kim, H., Hoskisson, R. E., & Lee, S. H. (2015). Why strategic factor markets matter:“New”
multinationals' geographic diversification and firm profitability. Strategic Management
Journal, 36(4), 518-536.3.
Love, J. H., & Roper, S. (2015). SME innovation, exporting and growth: A review of existing
evidence. International small business journal, 33(1), 28-48.
Malysheva, T. V., Shinkevich, A. I., Kharisova, G. M., Nuretdinova, Y. V., Khasyanov, O. R.,
Nuretdinov, I. G., ... & Kudryavtseva, S. S. (2016). The sustainable development of

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competitive enterprises through the implementation of innovative development
strategy. International Journal of Economics and Financial Issues, 6(1).