In US, the automotive industry holds a greater position as it is contributing about 3.5% GDP and US is amongst the largest car exporter too. (Uzwyshyn, 2012) Hyundai is a United States Motor Company. The company was founded in 1946 in Korea. In 1968, Hyundai had partnered with Ford to produce Cortina which is a compact car. The firm has always prioritized on producing quality economy cars while in 1986 Hyundai had begun to export “Excel” to United States. However, now Hyundai is amongst the best importers in USA and Europe. (Woong. Et al, 2009) It is also sixth most highly regarded brand in the Automobile industry. (Jurevicius, 2016) In USA Hyundai is a foreign competitor. (Uzwyshyn, 2012)
Analyzing porter’s model will tell more about the strengths and weaknesses of the company. The model is helpful in seeing the attractiveness of the market. (Lima, 2006) The study will further analyze Hyundai motor company using Porter’s model of five forces.
Competition Among the Competitors
Hyundai faces huge rivalry as there is a lot of price competition. For this, the company needs to focus on the product differentiation strategy and put in more resources for its marketing activities. Competition is technology based while strategies may be copied amongst the competitors. Market share is important to be snatched. Once the business has well settled it is able to expand. Hyundai being flexible holds a competitive advantage for other competitors to enter into the industry. (Woong. Et al, 2009) General Motors, Ford and Chrysler already are the market leaders while competition gets tougher as foreign competitors including Toyota, Nisan and Honda exist. (Uzwyshyn, 2012)
Bargaining Power of Buyers
Buyers hold greater power in an automobile industry. They would choose complementary products. The product information is taken before purchase. The competitive market in terms of specifications and prices gives customers more options. (Woong. Et al, 2009). Companies are putting marketing efforts for advertising and branding their product to create a differentiated identity. Hyundai needs to consider all aspects in mind including appearance, specs, quality, pricing, branding and also the effect of the environment while manufacturing the final product and introducing it into the market. On aiming for the right pool of customers could enhance chances of success for the firm. (Lima, 2006) With the changes in economic conditions globally, buyers are reducing. The firm should prioritize the fuel effectiveness and opt for cost reduction strategies. (Uzwyshyn, 2012)
The Bargaining Power of Suppliers
Suppliers do not hold a stronger bargaining power. For an automobile industry suppliers are competing in terms of pricing. A few parts are supplied by other firms but negotiation is lesser as the buyer may easily shift to the other supplier. Therefore, it is important for the suppliers to compete and get the contract. The business is fragmented and suppliers depend on one or two firms only (Woong. Et al, 2009).
Substitute of Existing Products
The threat towards choosing a substitute product is only when the product price is increased or the substitute product provides the product in a lower price. (Lima, 2006) The company could face threat from different means of public transportation. However, Hyundai faces low threat towards choosing the substitute product as consumers prefer having their own cars for ease. Yet they may buy products from other manufacturers. Innovation in the automobile industry is required while considering cost. (Woong. et al, 2009). The scope of supply lies in hybrid cars so that fuel and gasoline is charged at lower prices. (Uzwyshyn, 2012)
Threat of New Entrants
In case of a automobile industry, it is not very easy to enter into the market as brand loyalty is needed to be generated first. For an automobile industry, cost of resources is very high that is huge cost of capital and huge investment on labor too. An automobile industry like Hyundai needs a strong supply chain system from transportation to the delivery of end product. For this a competitive technology is also required to meet the safety standards and increase in technology. In an automobile industry, government too puts pressure on companies to enter into such an industry. (Woong. Et al, 2009) This is done by putting taxes, trading rights and also limits imports and exports which make it inconvenient for other entrants to enter into the market. Hyundai also needs to focus on the product differentiation and come up with a unique design to create a brand image. A customer would only purchase from a reputable company as it is a high priced product. (Jurevicius, 2016)
References
Jurevicius. Ovidijus, (2016). SWOT Analysis of Hyundai. Available at: https://www.strategicmanagementinsight.com/swot-analyses/hyundai-swot-analysis.html
Lima. Tony, (2006). Michael Porter’s “Five Forces” Model. Available at: http://arfuso.weebly.com/uploads/9/9/6/1/996130/porters_5_forces_model.pdf
Uzwyshyn. Ray, (2012). The US Auto Industry in 2013: Five Forces to Consider. Automotive Industries. Available at: http://www.ai-online.com/Adv/Previous/show_issue.php?id=5129#sthash.KGOqKPwr.dpuf.
Woong. Et al, (2009). Hyundai Motor Company. An analysis of the U.S Automobile Market. Available at: http://www.mcafee.cc/Classes/BEM106/Papers/2009/Hyundai.pdf