Application of Theories
Application of Theories
Description of Issue:
Hyundai Motor Company was managed by the authoritarian and charismatic leader Ju-Young Chung. There were many professional and talented managers in the company who were afraid to object his direction because of a threat to be fired. However, due to his “bulldozer” type of leadership the company succeeded to enter the US automaker market. Democratization process and emergence of labor unions in Korea made a significant impact on the HMC human resources management (Stanford Graduate School of Business, 2003).
HMC top management chose the right strategy for entering the US market. US automakers tended to manufacture expensive high-end cars. Actually, there was a vacuum in the low budget cars segment. HMC offered Excel for young couples and college students. The company quickly gained empty market segment and developed strong brand awareness among the US customers experiencing no rivalry (Stanford Graduate School of Business, 2003).
Evaluation and Suggestions:
Hyundai employees were not ready to accept the changes in the leadership style. The lack of leadership qualities made them nagging and lazy. Democratization after strict regime-like human resource policy led to significant sales losses. Shifting to the horizontal leadership model and employee empowerment was painful and costly. After some time Se-Young Chung succeeded to create autonomous and responsible management, equal opportunity for every employee and harmonious relationships in the team. He also established authority of professional managers and executives. The changes in leadership style lead to the changes in the company overall strategy.
Employee empowerment theory is widely practices by successful companies. Thus, it is used by Toyota since 1950s when the company first set up Kanban system. Toyota’s example showed that empowerment of employees starts from making decisions regarding quality control. Toyota implemented Kanban in order to enable employees to operate effectively in a timely manner. Another example of implementing employee empowerment is Continental AG Company which CEO realized the importance of employees’ involvement into decision making process. He selected the most talented managers displaying entrepreneurial skills from the company management and appointed them to the key positions. Also, he provided regular training for the personnel. The results were awesome: Continental AG expanded into forty six countries and its sales made up approximately 26 billion euro in 2010.
If I have to address this situation I would use mixed human resource strategy based on leadership continuum model. This model has certain advantages as follows: it gives managers many choices for involvement, emphasize development of employees and presents criteria for delegation. This model also has certain disadvantages, namely: it assumes neutral business environment and tend to oversimplify complex decisions. I would entrust the majority of decisions to my team leaving the most significant at me disposal (Heller, 2008).
Penetration strategy is very popular among food retailers. For example, Wal-Mart offers its goods at a lower, if not predatory, prices when expands new geographic markets taking advantage of perfectly organized supply chain. Wal-Mart success does not need to be additionally advertised. Penetration strategy is often used by the companies operating in price sensitive markets to capture competitors’ market share. For example, lightening manufacturer may offer its goods to hardware stores to gain an access to the customer base. DVD market also offers the opportunity to exercise penetration strategy because of high volume of goods selling at a reasonable (or low) price.
HMC was able to exercise penetration strategy because it had the possibility of economies of scale, product was perfect for a mass market, the demand for product had high elasticity and price skimming strategy did not work at that time.
Penetration pricing strategy implemented in the US market was very successful resulting in sales boom, 1,431 units sold by one dealer, despite dealers were located only in 31 states. In addition, HMC succeeded in having position in the top-10 of the world among automakers in this century. At the present HMC occupies 4% of the world auto market (Kotler & Keller, 2008).
If I had to enter the US market I would better implement differential pricing strategy because it allows occupy several market segments. After experiencing success in the US market HMC suffered a decline because its cars were perceived as of bad quality due to low prices. There were other customers willing to pay more for quality cars. HMC failed to occupy this segment. If the company exercise differential strategy (discount price plus full price), it would succeed in another market segment (Kotler & Keller, 2008).
Stakeholders of the case:
1. Huyndai Motor Company (HMC) management
2. US customers of HMC cars
3. Employees of HMC
Effect on Stakeholders:
1. The changes in human resource policy that occurred changed the quality of the company management and managers. This made positive impact on the team work and managers empowerment.
2. US customers were satisfied with cheaper cars.
3. Employees obtained the opportunity to make own decisions and take on the responsibility for them.
Heller, R. (2008). Employee Empowerment: Management giving power to the people
Retrieved from http://www.thinkingmanagers.com/management/employee-empowerment.php
Kotler, Ph., & Keller, K. (2008). Marketing management. (13th ed.). New Jersey: Prentice Hall.
Stanford Graduate School of Business. (2003). Hyundai case study. Retrieved from
http://sbapps.stanford.edu/cases/documents/SM122.pdfg
