Hyundai project free essay sample

The automotive industry is a wide range of companies and organizations involved in the design, development, manufacture, marketing, and selling of motor vehicles. It is one of the worlds most important economic sectors by revenue. The automotive industry does not include industries dedicated to the maintenance of automobiles following delivery to the end-user, such as automobile repair shops and motor fuel filling stations. Automotive industry is the key driver of any growing economy. It plays a pivotal role in countrys rapid economic and industrial development. It caters to the requirement of equipment for basic industries like steel, non-ferrous metals, fertilisers, refineries, petrochemicals, shipping, textiles, plastics, glass, rubber, capital equipments, logistics, paper, cement, sugar, etc. It facilitates the improvement in various infrastructure facilities like power, rail and road transport. Due to its deep forward and backward linkages with almost every segment of the economy, the industry has a strong and positive multiplier effect and thus propels progress of a nation. The automotive industry comprises of the automobile and the auto component sectors. It includes passenger cars; light, medium and heavy commercial vehicles; multi-utility vehicles such as jeeps, scooters, motor-cycles, three wheelers, tractors, etc; and auto components like engine parts, drive and transmission parts, suspension and braking parts , electricals, body and chassis parts; etc. Global Scenario The global automotive car market is growing at a rate of only 2 percent per annum and is not expected to pick up in the near term. Growth has dropped due to the increasing levels of saturation in the larger car markets of the world. Worldwide the trend is towards ensuring that ones products are superior in terms of quality. This will enhance the useful life of cars and, hence, slow down growth in sales. The world car production has increased from 44. 66 mn in 1996 to an estimated 48. 3 mn cars in 1999. Japan, Canada and USA brought about the major increases, which contribute to 53% of the worlds car production. The largest car market the US market expects car sales to decline 8 to 9 per cent to 16 million cars in 2001, as compared to 17. 4 million cars sold in 2000. The USA and Japan are the leaders with around 42% of the total world market. However, since the last two to three years, the international passenger car industry has been witnessing an over capacity of more than 30%. The trend suggests that industry volumes may grow by just 2% or around 10 mn vehicles per year. If this situation continues for the next few years the world car market may witness shakeout in the near future. Already signs towards this are being observed as the phenomenon of mergers catches on. The recent mergers in the international car market are Ford-Volvo, Renault-Nissan, Daimler-Chrysler. A few more players are expected to join the fray in the next few years so as to strengthen their hold in the world market. Among the top car manufacturing companies General Motors and Ford Motors group of USA lead with a contribution of 15. 8% and 11. 6%, of world car production, respectively. Volkswagen and Toyota stand third and fourth with more than 9% contribution each to the world car production. The global domination of the larger automotive manufacturers is slowly on the wane and the trend in sales is shifting towards more regio-centric products. Automakers that have been enjoying a generally prosperous spell would have to rethink on the way vehicles are designed, manufactured, distributed or sold. With global consolidation in the car industry, it is expected that more international players will work closely to bring about operational efficiencies. By nature, the car industry is highly capital-intensive and vast amounts of money are being spent on RD. With the players getting together to produce more technologically superior cars, they can derive greater benefits from their RD efforts. Profits, which are under pressure due to wafer thin margins will be boosted due to greater economies of scale. Moreover, bigger capacities among players means lesser fixed costs per car produced. Even if mergers are not on the cards in the near future (one can see that the Daimler-Chrysler merger has not brought about synergies as expected by automobile experts), technology-sharing and the offering of equity stakes is inevitable. Indian Scenario The automotive industry in India is one of the larger markets in the world. It had previously been one of the fastest growing globally, but is currently experiencing flat or negative growth rates Indias passenger car and commercial vehicle manufacturing industry is the sixth largest in the world, with an annual production of more than 3. 9 million units in 2011. According to recent reports, India overtook Brazil and became the sixth largest passenger vehicle producer in the world (beating such old and new auto makers as Belgium, United Kingdom, Italy, Canada, Mexico, Russia, Spain, France, Brazil), grew 16 to 18 percent to sell around three million units in the course of 2011 and 2012. In 2009, India emerged as Asias fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand. In 2010, India beat Thailand to become Asias third largest exporter of passenger cars. As of 2010, India is home to 40 million passenger vehicles. More than 3. 7 million automotive vehicles were produced in India in 2010 (an increase of 33. 9%), making the country the second (after China) fastest growing automobile market in the world in that year. According to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 4 million by 2015, no longer 5 million as previously projected. The majority of Indias car manufacturing industry is based around three clusters in the south, west and north. The southern cluster consisting of Chennai is the biggest with 35% of the revenue share. The western hub near Mumbai and Pune contributes to 33% of the market and the northern cluster around the National Capital Region contributes 32%. In 2011, there were 3,695 factories producing automotive parts in all of India The average firm made US$6 million in annual revenue with profits close to US$400 thousand. Key players in the industry Tata Motors Is an Indian multinational automotive manufacturing company headquartered in Mumbai, Maharashtra, India and a subsidiary of the Tata Group. Its products include passenger cars, trucks, vans, coaches, buses, construction equipment and military vehicles. It is the worlds sixteenth-largest motor vehicle manufacturing company, fourth-largest truck manufacturer and second-largest bus manufacturer by volume. Tata Motors is listed on the Bombay Stock Exchange, where it is a constituent of the BSE SENSEX index, the National Stock Exchange of India and the New York Stock Exchange. Tata Motors is ranked 314th in the 2012 Fortune Global 500 ranking of the worlds biggest corporations. Maruti Suzuki Maruti Suzuki India, popularly recognized as Maruti, is an auxiliary company of Japanese auto company Suzuki Motor Corporation. A complete range of car movels are manufactured by Maruti starting from initial level Maruti 800, Maruti Esteem and Alto, to hatchback Ritz, A-Star, Maruti Omni, Multi Purpose vehicle Ertiga and Sports Utility vehicle Grand Vitara and many more. By 2012 market share reports, Maruti holds 37 percent of the Indian passenger car market. The Brand Trust Report published by Trust Research Advisory has ranked Maruti Suzuki in the seventh position in 2011 and the sixth position in 2012 among the most searched brands in India. Mahindra Mahindra Headquartered in Mumbai, Maharashtra Mahindra Mahindra is among the top automobile manufacturers in India. According to ‘Republic of India’, production wise, MM is one of the largest vehicle manufacturers in India. It is a subsidiary of Indian conglomerate Mahindra Group. Mahindra Mahindra was ranked 68th in 2011 and 66th in 2012 among Most Trusted Brands among 17000 brands as per the Brand Trust Report. Blue bytes News rated Mahindra Mahindra as Indias second Most Reputed Car Company conducted for the Auto (Cars) Sector launched in April 2012. Chevrolet India After Maruti Suzuki, Hyundai, Tata and Mahindra Chevrolet India is the fifth largest auto manufacturer in India. It is a joint venture of General Motors based at U. S. The popular models of Chevrolet in India are Chevrolet Spark, Chevrolet Tavera, Chevrolet Cruze, Chevrolet Captiva etc. Chevrolet India currently has 205 dealerships and more than 200 service centres in 178 cities across India. Hyundai Motor India Limited Wholly owned by Hyundai Motor Company, Hyundai Motor India is the second largest automobile manufacturer in India. After Maruti Suzuki it is the largest auto exporter in India. It deals in producing small cars on a large scale, making India the global manufacturing base for small cars. The popular Hyundai models in India are Santro Xing, i10 and the i20, Getz Prime, Accent, second generation Verna, Tucson, and the Sonata Transform. Ford India Headquartered in Chengalpattu, Chennai, Tamil Nadu, Ford India is the sixth largest auto manufacturer in India. It is a fully owned subsidiary of Ford Motor Company. Since 1995 to 2012 Ford Motor Company invested around $2 billion in the automobile sector. Few popular Ford India models are Ford Figo, Ford Classic, Ford Fiesta, Ford Endeavour. The least priced model of Ford is Ford Figo is priced at 3, 84,999 and the highest priced model of Ford is Ford Endeavour priced at 21, 19,745. Honda Cars India Honda Cars India is a subsidiary of the Honda Motor Company of Japan which concentrates in the production, marketing and export of passenger cars in India. The production operations in India are mainly carried in Greater Noida in Uttar Pradesh and at Bhiwadi in Rajasthan. In the year 2010 the total investment in its production facilities was over $16. 2 billion. Few of the highest priced models of Honda are Honda CR-V, Honda Accord, and Honda Civic etc. Toyota Kirloskar Motors Toyota Kirloskar Motors is a joint venture between Toyota Motor Corporation and the Kirloskar Group and is the manufacturer and merchandiser of Toyota cars in India. In 2011, it publicized that it was escalating production to 210,000 vehicles per yearly due to increase in demand for its models particularly the Etios and Fortuner. Toyota is all equipped for giving its production a big boost up. Toyota Kirloskar Motor plans to trek the production capacity of its Etios series models by 75 percent by 2013. Toyota owns few of the finest luxury car models like Toyota Land Cruiser, Toyota Land Cruiser Prado, and Toyota Prius etc. PEST Analysis PEST refers to all political, economic, social and technological factors affecting any industry. The objective of PEST analysis is to objectively study the environmental factors facing a firm, company or an industry. The external environment affects the company in many different manner and unlike internal environment it cannot be influenced much. Political Factors Indian government has changed its role from controller to facilitator with prime focus onproviding better infrastructure, growth ori-ented economic policies and right environment to attract investments. This has made giant auto manufacturers enter into India and a? ect the competitive environment. The liberalization steps, such as, relaxation of the foreign exchange and equity regulations, reduction of tari? s on imports, and re? ning the banking policies, have played an equally important role in bringing the Indian Auto-motive industry to great heights. Institutionalization of automobile ? nance has further paved the way to sustain a long-term high growth for the industry. Economic Factors Rising GDP consecutively for the last 5 years has led to increased purchasing power and hence the automobiles. Per capita Income is rising , which is a? ecting the segments of automobiles being ventured into. There is cut Throat competition among many players in market. Increasing urbanization of rural India also has given rise to increase in sales. The concept of service in auto industry has changed into customer care now , thus en-compassing the greater value into it. Social Factors Indian families are becoming increasingly nu-clear Increasing Propensity to spend Increasing distances between work-place and residence Increase in percentage of working women has increased number of earning members in a family Technical Factors Alternate Fuel: increasing use Use of CNG and LPG instead of conventional fuel has made the entry of new kinds of vehicle in the market. Advent of Internet: The customer can now use the Internet to place the order and expect the manufacturer to ful? ll his customized demand in the minimum time. Electric Car: With technological advancements electrical car may emerge as a preferred option. Porter’s 5 forces analysis. Five Forces Analysis was developed by Michael Porter to better identify competitive opportunities and attractiveness within an industry or market. Porter’s model supports analysis of driving forces in an industry. The management can make better decision by using the information that evaluated from detailed Five Forces Analysis. Porter’s model supports analysis of driving forces in an industry. Automobile is one of the most convenient transportation tools in our modern society today. The management can make better decision by using the information that evaluated from detailed Five Forces Analysis. The five forces that Michael Porter has identified are: Threat of New Entrants: MEDIUM It is not that easy for an entrant to enter into a car industry because of the brand loyalty of customers. However, some of the well known foreign companies entered into US car industry easily, for instance, when Honda Motor, Co. opened its first office in Ohio, the major competitions began. The expansion of the foreign entrants decreases the market of American companies. Bargaining Power of Suppliers: LOW Suppliers have a little power in an automobile industry. That’s because numerous suppliers rely on some particular auto manufacturers to buy their products. Each manufacturer has many suppliers. For example,Toyota has more than 10 different suppliers in US. The main qualifications of the suppliers are the quality, cost, and delivery of the products. If suppliers can’t meet those basic considerations, it is hard for them to survive. Bargaining Power of Customers: HIGH There are various brands and models of the cars to choose from nowadays. The factors that affect consumer to make a buying decision are: the appearance, quality, price, and environmental effect. People always want a new and nice looking car. For those rich people who love cars, they always purchase the new released and attractive model. Besides that, the quality of the car is an important issue. The car has to efficient, which means saving gas, protecting our safety, and running fast. In addition, since there are many competitors, consumer have more choices to select a cheaper, but good quality car. Moreover, because of the global warming and other environmental effects, a lot of the manufacturers make their cars unique in order to protect the environment. Based on a variety of the lifestyles, people choose to purchase a car in a different way. Threats of Substitutes: LOW It is true that there are many of transportations substituting automobiles. They are bicycles, subways, buses, and trains. These substitutions really make our life easier if we live in the cities. On the other hand, for those people who live in Utah, upstate NY or suburb area, car is the only transportation tool other than walking. Competitive Rivalry between Existing Players: LOW Competition between existing automobile companies is high because there are too many choices for the customers. That may cause the industry earning lower profits when the cost of the competition is high. CHAPTER 2 COMPANY PROFILE HISTORY Hyundai Motor India Limited is a wholly owned subsidiary of the Hyundai Motor Company in India. It is the 2nd largest automobile manufacturer in India. Hyundai Accent car used by the Greater Chennai Police. Hyundai Santro Xing/Atos Prime is made only by Hyundai Motor India Limited. Hyundai Motor India Limited was formed in 6 May 1996 by the Hyundai Motor Company of South Korea. When Hyundai Motor Company entered the Indian Automobile Market in 1996 the Hyundai brand was almost unknown throughout India. During the entry of Hyundai in 1996, there were only five major automobile manufacturersinIndia,i. e. Maruti, Hindustan, Premier, Tata and Mahindra. Daewoo had entered the Indian automobile market with Cielo just three years back while Ford, Opel and Honda had entered less than a year back. For more than a decade till Hyundai arrived, Maruti Suzuki had a near monopoly over the passenger cars segment because TELCO and MM were solely utility and commercial vehicle manufacturers, while Hindustan and Premier both built outdated and uncompetitive products. HMILs first car, the Hyundai Santro was launched in 23 September 1998 and was a runaway success. Within a few months of its inception HMIL became the second largest automobile manufacturer and the largest automobile exporter in India. Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai Motor Company (HMC), South Korea and is the largest passenger car exporter and the second largest car manufacturer in India. HMIL presently markets 6 models of passenger cars across segments. The A2 segment includes the Santro, i10,eon and the i20, the A3 segment includes the Accent and the fluidic Verna and the fluidic elantra, the A5 segment includes the Sonata Transform and the SUV segment includes the Santa Fe. HMIL’s manufacturing plant near Chennai claims to have the most advanced production, quality and testing capabilities in the country To cater to rising demand, HMIL commissioned its second plant in February 2008, which produces an additional 300,000 units per annum, raising HMIL’s total production capacity to 600,000 units per annum. HMC has set up a research and development facility (Hyundai Motor India Engineering HMIE) in the cyber city of Hyderabad. As HMC’s global export hub for compact cars, HMIL is the first automotive company in India to achieve the export of 10 lakh cars in just over a decade. HMIL currently exports cars to more than 120 countries across EU, Africa, Middle East, Latin America, Asia and Australia. It has been the number one exporter of passenger cars of the country for the sixth year in a row. To support its growth and expansion plans, HMIL currently has a 307 strong dealer network and 627 strong service points across India, which will see further expansion in 2010. In July 2012, Arvind Saxena, the Director of Marketing and Sales stepped down from the position after serving the company for 7 long years. VISION/MISSION To create exceptional automotive value for our customers by harmoniously blending safety, quality and efficiency. With our diverse team, we will provide responsible stewardship to our community and environment while achieving stability and security now and for future generations. SWOT ANALYSIS A SWOT analysis (alternatively SWOT Matrix) is a structured planning method used to evaluate the strengths, weaknesses, opportunities, and threats involved in a project or in a business venture. Strengths Hyundai India has such a brand equity that it is almost assumed to be an Indian brand, with lot of good accolades for being India’s second most selling brand next to MUL in market share Hyundai Motor India limited is the largest car exporter from Asian Market which showed a 10% growth compared to last FY The domestic sales is increasing at an average rate of 19.1% HMIL is known for its quality products which has better performance and it has constantly been ahead in the race with Maruti Udyog limited in many parameters. The product length includes around 8 cars, starting from new Eon in small car segment to SUV segment Santa Fe Among the automobile players only HMIL is known for its CSR activities Hyundai products never fail to win laurels in each segment from various automobile ratings ever since its operations in India Hyundai , has the largest network of showrooms and service station next to Maruti in India An article in Economic times quoted that â€Å"Hyundai Eon launched, treads on Alto territory† indicated that Eon will act as a threat to reduction in Alto’s market share. Weaknesses HMIL took a long time to gain the market share as its not the first mover in India In terms of most reliable and trusted brand; Maruti is more strong in Indian subcontinent Spare parts of Hyundai vehicles are comparatively priced higher and spare parts do not have PAN India presence In SUV segment both Tucson and its next model Santa Fe didnt make a major impact Increase in commodity prices such as steel, aluminium and ancillary parts has affected margins Since HMIL concentrates on both domestic and International sales there are higher risks of exchange rate fluctuations As Hyundai majorly concentrates on quality, most of its product are in premium category in each segment. Hyundai is still struggling to make a better impact in small car segment in terms of cost efficiency like other manufactures Hyundai doesn’t have any product match to compete in Corporate orders like Tata Indica V2, Tata Sumo, Tata Indigo, Chevy Tavera, Ford Fiesta etc. These vehicles are most preferred in both cab segment and government booking for bulk orders Opportunities SIAM – Society of Indian automobile Manufacturers, have stated that there is steady increase in Car sales both Domestic and Indian contributing a valuable share in India’s Gdp The export markets growth rate is 22.  30% compared to last fiscal year The saving consumption pattern of India is an added advantage for any segment doing business in India. This was one of the major reason for Indian market to survive amidst global recession There is more scope of HMIL to enter into small car segment as its has dedicated RD plant in Hyderabad, India. Hyundai is one of the very few companies that has widest RD network across the world located in Korea, Europe, India, US, Japan Hyundai has very good opportunity in entering into commercial vehicles and Recreational vehicles as they are already doing well outside India. Currently HMIL has its focus only on Passenger car segment Threats Though Hyundai claims itself to have no direct competitors other than MUL, there are Indian players like Tata, Mahindra imposing a strong threat for Hyundai Motors India to expand its product category Foreign Direct Investments flowing in Indian automobile space are not good signs for already existing Giants like MUL and Hyundai. Almost all major automobile players have started invading India to open up their market and their manufacturing plant in India. †Chennai† is referred to as the Detroit of Asia! Hyundai faced a slight decline in market share due to tough competition from Ford’s Figo and Volkswagen- Polo Many manufacturers have started to concentrate on small car segment as an alternative to Nano. These will slowdown the expected sales of Eon. CHAPTER 3 BUSINESS LEVEL FUNCTIONS ORGANIZATIONAL STRUCTURE Organizational structure refers to the way that an organization arranges people and jobs so that its work can be performed and its goals can be met. When a work group is very small and face-to-face communication is frequent, formal structure may be unnecessary, but in a larger organization decisions have to be made about the delegation of various tasks. Thus, procedures are established that assign responsibilities for various functions. It is these decisions that determine the organizational structure. DEPARTMENTS IN HYUNDAI 1. Sales / Marketing The many roles of a marketing department include; making sure that the companys products focus on the target customer, keeping an eye on the competition, creating and promoting a good, strong brand, and looking for new markets. This department also has the duty of analysing the companys ability and developing strategies that are within those abilities. Marketing department functions of Hyundai Research function: the research function of marketing is that function of marketing that enables you to generate adequate information regarding your particular market of target. You must carry out adequate research to identify the size, behavior, culture, believe, genders etc. of your target market segment, their needs and want, and then develop effective product that can meet and satisfy these market needs and want. Promotion function: promotion is one of the core functions of marketing since your finish product must not remain in the place of production, hence, you as a marketer must design effective communication strategies to informing the availability of your product to your target market. After sales-service: in a more complex and technical product, you as a marketer should make provision in order to assist your customers after they have purchased your product. In terms of machines or heavy equipment product that requires installation or maintenance, most marketing organization renders such services like installing the machine or maintaining it for stipulated periods on time for free or by a little service charge. After sales services is an effective marketing strategy to building a long lasting customer relationship, staying ahead of your competitors while making profit for your organization. Risk bearing function: the process of moving a finished product from the point of production to the point of consumptions is characterized with lots of risks, such risks as in product damaging, pilferage and defaults etc. 2. Human resource department The HR department provides comprehensive human resource management services for the company. Its main functions include recruitment and selection processes; classification and pay systems; policy development and management; employee training and development programs; equal employment opportunity and affirmative action programming. Human resource department functions of Hyundai The automotive industry is broad, and has different businesses within it, so human resources for the automotive industry will vary. For example, human resources are needed to manufacture automobiles and need specific skills in order to do their jobs. To sell automobiles requires people who have a different set of skills. To fix automobiles requires human resources who have yet another skill set. Whether in the manufacturing, selling, leasing, or fixing automobile business, supervisors, managers, and leaders are required, and they, too, have skills that can include those mentioned above as well as demonstrate the ability to direct others. Even the automotive racing business requires human resources with skills that support the success of the racing business. Hiring Promotions Position classification and grading Salary determination Performance appraisal review and processing Personnel data entry and records maintenance Policy development 3. Finance department The part of an organization that manages its money. The business functions of a finance department typically include planning, organizing, auditing, accounting for and controlling its companys finances. The finance department also usually produces the companys financial statements. Finance department function of Hyundai The activities from a finance department cover a wide range from basic book keeping to providing information to assisting managers in making strategic decisions. At the base level, your finance department will be responsible for all the day to day transactional accounting for the business. This will include the tracking of all transactions and the management of any government reporting. An outside accounting firm is usually used for annual financial statements and returns. The finance department is also responsible for management of the organization’s cash flow and ensuring there are enough funds available to meet the day to day payments. Working capital management Cash management Risk management Portfolio management Preparing budget for marketing and HR department Analyzing financial health of the organization