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Contents 1. Overview 2. Key Innovation 3. Innovation Type 4. Technological Innovation Strategy 6. Suggestion for Strategies - 2 - 5. Analysis of the Present.

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Presentation on theme: "Contents 1. Overview 2. Key Innovation 3. Innovation Type 4. Technological Innovation Strategy 6. Suggestion for Strategies - 2 - 5. Analysis of the Present."— Presentation transcript:

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2 Contents 1. Overview 2. Key Innovation 3. Innovation Type 4. Technological Innovation Strategy 6. Suggestion for Strategies Analysis of the Present Situation

3 Worldwide Industry Description Overview Automotive Industry Designs, Develops, Manufactures, Markets, and Sells the worlds motor vehicles Over than 70 million motor vehicles

4 Worldwide Industry Description Overview Pressures Oil Price External Competition

5 S. Korean Automobile Industry & Hyundai Motors Overview Automotive Industry 5 th largest in the world in terms of production volume 6 th largest in the world in terms of export volume 5 th largest in the world in terms of production volume 6 th largest in the world in terms of export volume 1955: Sinjin Motor Co. founded – 1 st automotive company in Korea 1968: Hyundai Motor Co. founded. Hyundai Cortina, Hyundai Ford 20M, Hyundai Ford D-series, and Hyundai Ford DK-Series launched. 1973: Hyundai New Cortina launched. 1975: Government established "Systematization Promotion Act" for medium and small enterprises in automobile industry; Hyundai Motor Co. established its own research institute, and produced Hyundai Pony, the first Korean-developed car, designed by ItalDesign and based on Mitsubishi technology; 1976: Hyundai Motor made Korean history by exporting the "Pony to the Republic of Ecuador; 1983: Hyundai Motors established Hyundai Auto Canada Inc.;

6 S. Korean Automobile Industry & Hyundai Motors Overview : Number of vehicles registered in S.Korea exceeded 1 million 1986: Hyundai Excel nominated by Fortune magazine for the "Best Product 10" award 1988: Annual domestic automobile production volume exceeded one million units; Hyundai named "Official Car" in Seoul Olympic; 1990: Hyundai's cumulative exports to the U.S. surpassed 1 million 1993: Hyundai Elantra (new model launched), and was selected "Best Car of 1993" in Australia; 1995: Number of vehicles registered in South Korea exceeded eight million; Hyundai's Accent earned "Canadian Best Buy Award", and also won the "Asia-Pacific" Rally; 1998: Hyundai began investing heavily in quality, design, manufacturing, and long-term research, and added a 10-year or 100,000 mile warranty to its vehicles in the United States; 51% of Kia Motors acquired by Hyundai Motor; 2004: Hyundai tied with Honda for initial brand quality, second in the industry behind Toyota, in a survey conducted by J.D. Power and Associates. 2006: Hyundai Motor Company exceeds 100 trillion won in sales 2008: Hyundai Motor receives Global Green Management Excellence Award, Global Reporting Initiative Award 2009: Exceeded an accumulated export sales of 1 million cars in Africa

7 A division of the Hyundai-Kia Automotive - Group Headquartered in Seoul - The worlds fourth largest automaker in terms of units sold. - The worlds largest integrated automobile manufacturing facility in Ulsan - Hyundai vehicles sold in 193 countries through 6,000 dealers hips and showrooms worldwide. Company Overview Overview

8 - 8 - Key Innovation Background Mercedes-Benz, founded Toyota, founded Hyundai Car, founded1968Hyundai Car, founded

9 Quality Productivity Key Innovation

10 Six-Sigma Key Innovation Define Problem Measure Current Situation Analyze Causes Improve Control the Improvement Six Sigma

11 Quality Key Innovation Quality Trained Professionals & developed Q-star system Expanded direct-quality Sections - Manufacturing Section - Research Section - All Partners Expanded indirect-quality Sections Trained 16 Gold Stars (Expert of Improvement) Solved the critical quality problems in the factory Developed Hyundai-Style System Trained 200(+) Gold Stars Expanded direct manufacturing and research sections Expanded to major partners Trained 200(+) Gold Stars Expanded indirect manufacturing sections Expanded to all partners Trained 200(+) Gold Stars Expanded to all parts and companies

12 Quality Key Innovation Unit field quality improved Achieved 6 Sigma First Pass Yield increased 90% 99% of claim cost reduced 50%

13 Relationship Between Quality and Sales IQS ( Complaint per 100 cars ) Number of Sales ( Unit : 1000 cars ) Quality Key Innovation Initial Quality Study (IQS) : measure of problems experienced within the first 90 days of ownership In 2009, Hyundais IQS : 102 Toyotas IQS :

14 Productivity Key Innovation Has short assembling lines Uses buffer to reduce error Manufactures automatically Has information networks Over all manufacturing steps Manufacturing Efficiency Asan Plant

15 Operating ratio Productivity Key Innovation Ulsan Plant Asan Plant 87.7% 97.5% 89.5% 107.6%

16 Types of Innovation Types of Innovation Innovation Type Product Radical Competence - enhancing Architectural Process Incremental Competence - destroying Component

17 Quality Types of Innovation Innovation Type Types of Innovation Product / Process Q star: Process Radical / Incremental Core Machinery Components: Radical Six Sigma: Incremental Competence-enhancing / Competence destroying Quality rather than Technology: Competence-enhancing Architectural / Component Core Machinery Components: Component

18 Productivity Types of Innovation Innovation Type Types of Innovation Product / Process Manufacturing Process: Process Radical / Incremental Hyundai Asan Plant: Radical Lean-type Manufacturing Process: Incremental Competence-enhancing / Competence destroying Productivity than Technology: Competence-enhancing Architectural / Component Manufacturing Process: component

19 Choosing Innovation Project Technological Innovation Strategies Car Infotainment Vehicles of the future will offer diverse information and entertainment fo r drivers and greater safety features than ever before. This car would be c alled Smart car. Smart cars with infotainment systems will also offer the l atest electronic technologies and equipment so that driving will be more comfortable and enjoyable as well as safer

20 Choosing Innovation Project Technological Innovation Strategies New Automotive Electronics Technology For Customers Driver Information System(DIS) DIS is a comprehensive information system that provides easy control of multimedia, navigation and telematics func tions Smart Cruise Control (SCC) radar to help maintain a safe distance from other vehicles. Thus, the device helps prevents collisions Hologram HUD This futuristic technology places various useful informatio n in front of the driver on the windshield using a 3D hologr am Auto-pilot Driving Ultimately, the goal is to create a car that can assess the t raffic situation and operate without any manipulation from the driver

21 Choosing Innovation Project Technological Innovation Strategies Hybrid Car Hyundai introduced a new standard of green vehicles in 2009 when they begins commercial mass production of the Elantra (Avante) LPI hybrid, which runs on LPG. Hyundai started worlds first mass production of LPI hybrid electric vehicles in July Hyundai is trying to develop fuel cell electric vehicle to accomplish zero- emission to reality. Fuel cell electric vehicles are powered by the electricity. Except water, the vehicles produce no- emissions and moreover the amount of energy is unlimited. Fuel Cell Car

22 Collaboration Strategies Technological Innovation Strategies In March 1999, Hyundai Motors absorbed Kia Motors. By union with two rival companies, Hyundai took advantages from Kia Motors and consolidate its first position in domestic market. - First, Hyundai established a constituency for their overseas expansion - Second, Hyundai got Kias high technologies - Third, Hyundai could restrain foreign companies from holding domestic market.

23 Collaboration Strategies Technological Innovation Strategies In May2008, Hyundai collaborated with Microsoft to develop infotainment for next generations car together. Microsoft will focus on developing software platform for car and Hyundai will adopt those technologies. They will also promote car IT venture companies to advance global market In Dec 2005, Hyundai collaborated with LG telecom to start navigation service, telematics, based on cellular phone

24 SW OT High brand awareness High quality High market share Diverse vehicle types Customer Value Program High technology in Green Car SWOT Analysis Analysis of the Present Situation

25 World Best Brand Rank 69 S

26 SWOT Analysis Analysis of the Present Situation SW OT High brand awareness High quality High market share Diverse vehicle types Customer Value Program High technology in Green Car Frequent recalls Bankruptcy of middle/small sized companies supplying components

27 W HYUNDAI IS RECALLING 531,894 MY ACCENT, ENTOURAGE, SONATA, MY 2007 A ZERA, ELANTRA AND SANTA FE, MY TUCSON AND MY VERACRUZ VEH ICLES. THE STOP LAMP SWITCH IN THE AFFECTED VEHICLES MAY MALFUNCTION. A MALF UNCTIONING STOP LAMP SWITCH MAY CAUSE THE BRAKE LIGHTS TO NOT ILLUMINATE W HEN THE BRAKE PEDAL IS DEPRESSED OR MAY CAUSE THE BRAKE LIGHTS TO REMAIN IL LUMINATED WHEN THE BRAKE PEDAL IS RELEASED. A STOP LAMP SWITCH MALFUNCTION MAY AFFECT THE OPERATION OF THE BRAKE-TRANSMISSION SHIFT INTERLOCK FEATURE SO THE TRANSMISSION SHIFTER WOULD NOT BE ABLE TO BE SHIFTED OUT OF PARK POS ITION. IT MAY ALSO CAUSE THE ELECTRONIC STABILITY CONTROL (ESC) MALFUNCTION LI GHT TO ILLUMINATE, AND IT MAY NOT DEACTIVATE THE CRUISE CONTROL WHEN THE BRA KE PEDAL IS DEPRESSED.

28 SWOT Analysis Analysis of the Present Situation SW OT High brand awareness High quality High market share Diverse vehicle types Customer Value Program High technology in Green Car Frequent recalls Bankruptcy of middle/small sized companies supplying components Solved Labor & Mngt problems Removed customs (KOR-US FTA) Increased brand awareness in foreign countries Risen demand of small cars

29 O While Korea exports about 700,000 cars it only imports 7,000 U.S. cars. Korean car companies have about 5 percent of the U.S. auto market share.

30 SWOT Analysis Analysis of the Present Situation SW OT High brand awareness High quality High market share Diverse vehicle types Customer Value Program High technology in Green Car Frequent recalls Bankruptcy of middle/small sized companies supplying components Solved Labor & Mngt problems Removed customs (KOR-US FTA) Increased brand awareness in foreign countries Risen demand of small cars Decreasing world automotive brand value Low rate of R&D in Korea Foreign cars imported in cheap prices

31 T Decreasing World Automotive Brand Value

32 Very difficult to found a new car company Threat of Potential Entrants – Force Model ` Theres no competitor for Hyundai Motors in domestic car market. Hyundai Motors established their position in market quite well. Intensity of competitive rivalry Short Distance - Bicycle, Subway Long Distance – KTX, Airplane Threat of Substitute Product Price of foreign cars Gradual increase in barg aining power of buyer Bargaining Power of buyer Lot of componen t companies L ow Bargaining power Developing new tech High Bargaining power Bargaining Power of supplier

33 Balanced Scorecard Vision of Hyundai Motors Global orientation Respect for human values Customer satisfaction Technology innovation Cultural creation Increasing sales amounts Financial Reducing the recall rate Customer Familiar Business Environment Internal Business Green car Strategy Innovation Learning If Hyundai vision succeeds, how will Hyundai differ?

34 Development of new technology Financial Continuous Customer management Customer Employees Management Internal Business Producing the hybrid car Innovation Learning What are the critical success factors? What are the critical measurements? Sales amounts of cars Financial Recall rate & Customer Satisfaction Customer Rate of strike in a year Internal Business Amounts of Sold hybrid car Innovation Learning

35 Suggestion for Strategies 1.Hyundai Motor Co. should occupy US middle-classed consumers by releasing various small cars 2.Using increasing brand aware ness, Hyundai Motor Co. coul d apply premium price on thei r hybrid or fuel cell vehicles 1. Hyundai should have stable growth focused on domestic sales 2.Hyundai should establish poli cy to widen chance to select car models, developing new products 1.Hyundai should supplement t heir weakness in supply netw ork by adding additional supp lying companies 2.Hyundai should decrease stri kes and labor conflicts buildin g stable relationship 1.Hyundai should quit producin g unprofitable models 2.Hyundai should minimize thei r export to unprofitable foreig n markets OT S W


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