Did Hyundai make a strategically correct choice when it acquired Kia? Why? (Hint: How was the automobile industry globally and in Korea in the late 1990s? What benefits did Hyundai expect from acquiring Kia?)
Yes Hyundai made a strategically made a correct choice
The automobile industry in the late 1990’s was was oversupplied and production capacity was in excess of demand information technologies Many companies were facing mergers and acquisitions
Competing was difficult because diversifying customer preferences Korea’s automobile was always oversupplied because new intro to companies and expanding facilities 1997 Asian financial crisis
Kia would improve Hyundai’s competitiveness- Economies of scale, scope, and construction of global network
What administrative tasks did Hyundai need to complete after acquiring Kia?
Kia and Hyundai were maintained as two separate companies- Hyundai Motors and Kia Motors Hyundai switched Kia from direct management to horizontal management Hyundai integrated its R&D with Kia to develop new models
Materials divisions- parts were integrated
Hyundai’s chairman of the board, CEO, and COO would hold concurrent positions The Automobile Planning Coordination Committee
How did Hyundai do in terms of achieving synergy effects by acquiring Kia?
Much better than Gillette acquiring Duracell!
Hyundai used coordination strategy- production, sales, R&D, parts supply, workforce operations- horizontal strategy- reduces their inter-unit competition Shared tangible resources- Integrated R&D and began developing new models, materials division as well and parts supply networks were rearranged- combining and rearranging their parts supply networks gave them bargaining power- reduce costs and improve quality- Hyundai clearly put thought and effort behind this acquisition, in-depth analysis prior to the
acquisition was to their advantage
What do you learn from this case?
Importance of the six different types of synergy- each individually can be very impactful to a company BUT the company you’re acquiring should/has to share similar attributes Is it possible that the synergy of company not only worked because they were able to easily integrate to similar car companies but Hyundai is also a korean company- One domestic company purchasing another they have similar corporate culture- If it was an american company or a german company that has different business philosophies it might not transfer for a company based in korea.
Cite this Hyundia
Hyundia. (2016, Nov 14). Retrieved from https://graduateway.com/hyundia/