1. MOT in Hyundai Motors

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

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

4. External Competition Oil Price Pressures Overview
Worldwide Industry Description
Pressures
External
Competition
Oil Price

5. Overview
S. Korean Automobile Industry & Hyundai Motors
Automotive Industry
5th largest in the world in terms of production volume
6th largest in the world in terms of export volume
1955: Sinjin Motor Co. founded – 1st 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. 1985: Number of vehicles registered in S.Korea exceeded 1 million
Overview
S. Korean Automobile Industry & Hyundai Motors
1985: 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 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. Overview
Company Overview
- A division of the Hyundai-Kia Automotive
- Group Headquartered in Seoul
- The world’s fourth largest automaker in terms of units sold.
The world’s largest integrated automobile manufacturing facility in Ulsan
Hyundai vehicles sold in 193 countries through 6,000 dealerships and showrooms worldwide.

8. Mercedes-Benz, founded
Key Innovation
Background
1886
Mercedes-Benz, founded
1937
Toyota, founded
1968
1968
Hyundai Car, founded
Hyundai Car, founded

9. Key Innovation
Quality
Productivity

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

11. Quality Key Innovation Quality Trained 16 Gold Stars
(Expert of Improvement)
Solved the critical quality problems
in the factory
Developed Hyundai-Style System
Trained Professionals & developed Q-star system
1999
Trained 200(+) Gold Stars
Expanded direct manufacturing
and research sections
Expanded to major partners
Expanded
direct-quality Sections
- Manufacturing Section
Research Section
All Partners
2000
Trained 200(+) Gold Stars
Expanded indirect manufacturing
sections
Expanded to all partners
2001
Expanded
indirect-quality Sections
Trained 200(+) Gold Stars
Expanded to all parts and companies

12. 99% 50% Achieved 6 Sigma 90% 2003 Unit field quality improved
Key Innovation
Quality
2003
Achieved
6 Sigma
Unit field quality improved
99%
First Pass Yield increased
90%
1998, Hyundai’s IQS 257
2000, Hyundai’s IQS 189 Average car company’s IQS 157
2003, Hyundai’s IQS 143 Average car company’s IQS 133
2009, Hyundai’s IQS 102 Toyota’s IQS 101
50%
of claim cost reduced

13. Relationship Between Quality and Sales
Key Innovation
Quality
Relationship Between Quality and Sales
IQS ( Complaint per 100 cars )
Number of Sales ( Unit : 1000 cars )
257
224
189
175
145
143 97
163
244
346
375
420
Initial Quality Study (IQS) : measure of problems experienced within the first 90 days of ownership
102
1998, Hyundai’s IQS 257
2000, Hyundai’s IQS 189 <-> average car company’s IQS 157
2003, Hyundai’s IQS 143 <-> average car company’s IQS 133
2009, Hyundai’s IQS 102 <-> Toyota’s IQS 101
표로 어떻게 못만들까…??
660
1998
1999
2000
2001
2002
2003
2009
In 2009, Hyundai’s IQS : Toyota’s IQS : 101

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

15. Operating ratio Key Innovation Productivity Ulsan Plant Asan Plant
87.7%
97.5%
89.5%
107.6%
2004
2006

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

17. Quality Q star: Process Core Machinery Components: Radical
Innovation Type
Types of Innovation
Quality
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 Manufacturing Process: Process
Innovation Type
Types of Innovation
Productivity
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
Productivity
Product / Process
Manufacturing Process: Process Innovation
Radical / Incremental
Hyundai Asan Plant: Radical Innovation
린 방식 Manufacturing Process: Incremental Innovation
Competence-enhancing / Competence destroying
Productivity than Technology: Competence-enhancing Innovation
Architectural / Component
Manufacturing Process: Architectural Innovation
Sources of Innovation
Quality
Benchmarking
Consulting Firms

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

20. Technological Innovation Strategies Choosing Innovation Project
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 functions
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 information in front of the driver on the windshield using a 3D hologram
Auto-pilot Driving
Ultimately, the goal is to create a car that can assess the traffic situation and operate without any manipulation from the driver

21. Hybrid Car Fuel Cell Car
Technological Innovation Strategies
Choosing Innovation Project
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 world’s first mass production of LPI hybrid electric vehicles in July 2009.
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. Motors and consolidate its first position in domestic market.
Technological Innovation Strategies
Collaboration 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 Kia’s high technologies
- Third, Hyundai could restrain foreign companies from
holding domestic market.

23. Technological Innovation Strategies
Collaboration Strategies
In May2008, Hyundai collaborated
with Microsoft to develop infotainment
for next generation’s 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. S W O T Analysis of the Present Situation SWOT Analysis
High brand awareness
High quality
High market share
Diverse vehicle types
Customer Value Program
High technology in Green Car O T

25. S
World Best Brand Rank 69
<Interbrand>

26. S W O T Analysis of the Present Situation SWOT Analysis
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 O T

27. W
HYUNDAI IS RECALLING 531,894 MY ACCENT, ENTOURAGE, SONATA, MY 2007 AZERA, ELANTRA AND SANTA FE, MY TUCSON AND MY VERACRUZ VEHICLES. THE STOP LAMP SWITCH IN THE AFFECTED VEHICLES MAY MALFUNCTION. A MALFUNCTIONING STOP LAMP SWITCH MAY CAUSE THE BRAKE LIGHTS TO NOT ILLUMINATE WHEN THE BRAKE PEDAL IS DEPRESSED OR MAY CAUSE THE BRAKE LIGHTS TO REMAIN ILLUMINATED 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 POSITION. IT MAY ALSO CAUSE THE ELECTRONIC STABILITY CONTROL (ESC) MALFUNCTION LIGHT TO ILLUMINATE, AND IT MAY NOT DEACTIVATE THE CRUISE CONTROL WHEN THE BRAKE PEDAL IS DEPRESSED.

28. S W O T Analysis of the Present Situation SWOT Analysis
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 O T

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. S W O T Analysis of the Present Situation SWOT Analysis
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 O T

31. Decreasing World
Automotive
Brand
Value
<Interbrand> T

32. Very difficult to found a new car company
Threat of Potential Entrants
5 – Force Model
Lot of component companies → Low Bargaining
power
Developing new tech → High
Bargaining power
Bargaining
Power of supplier
Price of
foreign cars ↓
→ Gradual increase in bargaining power of buyer
Bargaining
Power of buyer `
There’s 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

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

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

35. O T S W Suggestion for Strategies
Hyundai Motor Co. should occupy US middle-classed consumers by releasing various small cars
Using increasing brand awareness, Hyundai Motor Co. could apply premium price on their hybrid or fuel cell vehicles
Hyundai should have stable growth focused on domestic sales
Hyundai should establish policy to widen chance to select car models, developing new products W
Hyundai should supplement their weakness in supply network by adding additional supplying companies
Hyundai should decrease strikes and labor conflicts building stable relationship
Hyundai should quit producing unprofitable models
Hyundai should minimize their export to unprofitable foreign markets