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Comparative Case Study of VW Group and Hyundai Group

Executive Summary

My primary area of concern is the transport industry sector as it is an industry with steady changes, filled with firms constantly fighting for being the first with the latest on the market. Two primary transport retailers that stand out are Volkswagen and Hyundai Groups that will be compared in this report.

The Group of Volkswagen is made up of twelve brands from seven European states. The members of the group are Volkswagen Passenger vehicles, Bugatti, SEAT, Volkswagen Commercial Vehicles, Audi, Bentley, Scania, SKODA, and MAN. One of the amusing aspects about the group is that each brand has its own traits and each operates independently on the market. The brands excite millions of clients globally throughout the year, which is an indication that the group is on the market to meet the needs of clients. Volkswagen was founded in 1937 with the intention of producing the first affordable cars.

Hyundai began as a construction firm back in 1947 under the leadership of Chung Ju Yung. It is a primary diversified company in South Korea, where it supplies products that range from ships to stereo equipment. Later in 1967, the firm formed the Hyundai Motor Company that has apparently grown to be the largest producer of automobiles in Korea. One of the major achievements made by the company is that after developing their first engine independently in 1991, the firm became a world-leading automobile brand. Cristobal (2011) entails that the achievement made by Hyundai has led the firm to be valued at $9 billion as of 2013, and it is all because of their globalization approach.

Within us, we can find a personality and a requirement to wear what we want and feel as good as promising with ourselves, which can be associated to the Iceberg metaphor. It is not sufficient anymore to only categorize what can be seen over the surface. Leaders have to go deeper and classify what is under the surface. Not only do they sell vehicles but they also sell self-importance.

The two firms see themselves in the future as the world’s leader in the transport business, hence, the rationale for the continued improvement, creation of significance, and they are always open to do the necessary changes. Both VW and Hyundai Group Companies have unique business models that have created superior importance for their clients. When it comes to corporate social accountability, both companies go further than what is expected from them. In Volkswagen Group and Hyundai Group, we see two companies that have been in the business for a long time. On the top of the companies, we can see leaders with crucial entrepreneurial skills who have obtained their knowledge over many years. These leaders are able to take a step back and observe what people actually look for.

Introduction

The transport business is an industry that did catch my attention at an early stage in life because of its constant changes and because it is filled with businesses continuously fighting for being the first with the latest on the market. I find it motivating how businesses are able to initiate the significant work in advance of the period their products will be sold. The process is made to comprehend what developments will take over a year in advance and how to endure in an atmosphere where new organizations entering the market (Robson, 2011). The rationale for my perception of the transport industry is that everything modernizes as time goes by. As a result, the transport industry also changes to meet up with the current generation in terms of speed, design, and cost.

The primary query in this case is what are the directors in this business undertaking that differentiates them from the rest? Apparently, the question has led me to two major vehicles companies in the world - the Volkswagen Group and the Hyundai Group. The above-mentioned firms have industrialized vital competitive benefits and fashioned exclusive commerce models that are separate from their opponents. Even if we see many similarities between these two companies, there are also many interesting differences (Berger, 2014). Fundamentally, the purpose of the report is to enumerate differences and similarities to the reader based on a comparison perspective between the Volkswagen Group and the Hyundai Group and an inclusion of a conclusion that will sum up their differences.

VW Company

Company Background

Volkswagen was founded in 1937 by Ferdinand Porsche, where the first Volkswagen was built to provide an inexpensive means of transportation. Therefore, the implication here is that the Volkswagen Group is a German manufacturing company with headquarters in Wolfsburg, Lower Saxony. The Group deals with both commercial and passenger vehicles under the brand names of Volkswagen Passenger vehicles, Bugatti, SEAT, Volkswagen Commercial Vehicles, Audi, Bentley, Scania, SKODA, and MAN. The primary reason for the company was to come up with the Volkswagen car that is currently known as the Beetle. Additionally, there was also the objective of producing inexpensive vehicles that would meet the needs of all working individuals (Robson, 2011). According to Berger (2014), today, Volkswagen produces its vehicles in over 15 states and it has been named one of the biggest of the 25 companies globally. Therefore, this organization possesses numerous challenges for the modern market as a whole.

Performance

Wolfsburg (2015) entails that the Volkswagen Group records successful business performance during the first half of the year 2015. The perception is based on the fact that there is a considerable growth in sales revenue and earnings in the first six months of the year in a challenging atmosphere. Robson (2011) shows that the sales revenue for the firm rose by 10.1% to EUR108.8 billion due to exchange rate effects and developed product mix. Despite Volkswagen being placed in an increasingly difficult market atmosphere, it remains well positioned with compelling product range. Depending on economic challenges, 2015 sales revenue for the company is expected to increase by up to 4% above the prior year (Berger, 2014). Significantly, the implication here is that Volkswagen forecasts an operating profit at the prior-year level for the Financial Services Division.

Business Model

The Company’s business model is called strategy 2018 aimed at positioning the Volkswagen Group as an international economic and environmental leader among automobile manufacturers. The strategy aims at ensuring that Volkswagen deploys intelligent innovations and technologies to become a global leader in customer satisfaction. Moreover, Volkswagen aims to be the most attractive employer in the automotive industry by 2018 and to generate unit sales of more than 10 million vehicles annually on the market through the incorporation of strategy 2018 (Robson, 2011).

The Use of Technology

The information technology department (IT) at Volkswagen is responsible for safeguarding production processes and production of technologies globally. The department also supports sales processes by offering innovation solutions because there is a uniformed standard of IT infrastructure of brands and regions within the group. Furthermore, their IT system ensures that salaries for their employees are transferred to them on time all over their branches. Consequently, the IT department offers, maintains, and develops the Group-wide information technology infrastructure, which shows that they have a modernized technology system that generates significant results (Berger, 2014).

Corporate Governance

Being an international firm, Volkswagen perceives the notion of good business supremacy as an essential tool to meet their long-term targets. Its objective can be made through the administration, acting decently and transparently while being subject to domestic and exterior checks and controls all the time. Volkswagen fosters trust within their clients and investors through transparent and responsible corporate governance. The Group works under the German Corporate Governance Code that contains recommendations for good corporate governance. The code also permits the Company to meet the gradually increasing stipulation for the information from national and worldwide stakeholders (Wilson, 1987)Through the code of the organization, they are able to offer employees a guidepost that unites the significant fundamental concepts of their activities and assists employees in mastering the officially permitted and moral issues in their daily tasks. The initiation is that the corporate governance of the Volkswagen Group has a clear set of rules and regulation that are required to be followed by the entire firm through the code to attain their set objectives.

Hyundai Group

Company Background

The initial founder of the Hyundai Group is Chung Ju-Yung who was born in 1915. Chung Ju-Yung founded the Hyundai Company in 1947 as the Hyundai Engineering and Construction Company. In 1967, Hyundai formed the Hyundai Motor Company that grew to be known as the largest producers of automobiles. The Group takes part in business internationally as the largest integrated automobile manufacturing facility in Ulsan. Currently, Hyundai initiates its business in eight research centers in Korea along with four other international centers. It offers a full line-up of products, ranging from small to large passenger vehicles (Steers, 2013). Additionally, in 2007, it was ranked as the fifth largest automaker. According to Cristobal (2011), it is believed that the firm employees over 78,000 individuals globally.

The Hyundai Group puts into consideration a new international policy that is meant to be localized. The processes in question entail design, sales, consumer service, and product development that satisfy the needs of clients. As a global firm, Hyundai has seven overseas plants in India, China, Brazil, the USA, Turkey, the Czech Republic, and Russia. The group exports vehicles throughout the Far East, and it consists of divisions that build and export diesel and electric locomotives. Furthermore, the Company also deals with passenger coaches for the railroad industry, extraction equipment for the oil business and freight cars (Lansbury, Suh, & Kwon, 2007). Apparently, the firm is represented on all continents, which entails that Hyundai is a firm that has its class and objective set.

Performance

Plunkett (2008) enumerates that the Company brings a diverse lineup of commodities with world-class competitiveness to its clients in over 200 states via more than 6,000 dealers, operating on the market. The organization pursues local markets by coming up with production sites in key international markets. The Group’s trade name image has revolutionized from trustworthy eminence to the most rewarding brand on the market. An example of its performance is its trademark rate that has grown by 16% in 2014 to USD10 billion against 2013 where it surged three marks to number 40 in inter-brand Best Global Brands 100 and joined the top 40 for the first time (Jargosch & Jurich, 2014). The efforts made by the Hyundai Group are an indication of the significance of the company’s contribution to the international transport sector.

The company is also committed to continue developing an ultimate dream engine that will take the global market by surprise since the company has been able to win the distinction of 10 Best Engines in 2009, 2010, 2011, and 2012 consecutively. Furthermore, they were able to win the SUV of the year in 2013, 2014 because of their development of the Santa Fe and Tucson models (Lansbury et al., 2007). Significantly, the increase in the number of Awards being won by the Hyundai Group is an indication that their performance is worth their presence on the market. Additionally, it shows that they offer what their clients desire; hence, they need to be applauded for their major efforts.

Business Model

Through the niche strategy, Hyundai has been able to increase its periphery market penetration despite the increased import charges. The organization also incorporates the direct export strategy for the purpose of their core market. The Group’s strategic products for specific markets make a significant contribution to the overseas sales. Thus, it shows that their strategic model on the global market apparently generates significant results for their clients (Jargosch & Jurich, 2014). Furthermore, their prowess in design, product launches, and consumer know-how is part of a distinctive model of product management that has generated $66 billion due to the company’s efforts.

The approach of ensuring that the U.S. and Korean employees innovate together has enabled the company to step out from behind its larger Japanese competitors’ shade and stake claim to style leadership because of the culture of creativity fostered in the company (Cristobal, 2011). Furthermore, the strategies initiated by Hyundai have enabled the company to encourage local teams to go out on limb and compete in search of ambitious and unconventional resolutions. The other approach that has contributed towards Hyundai’s success is that it routinely moves technological features from high-end luxury automobiles into much less expensive vehicles (Plunkett, 2008). Significantly, the firm has done well for its clients by practicing several business models to reach the objective of the firm as a whole.

Corporate Governance

The firm is entitled to enhance corporate transparency as a way of maximizing corporate value and to fulfill corporate social accountability by sharing economic values with its stakeholders. The corporate investment pattern is arranged in such a manner that they focus on shareholder rights and accountability by building long-term connections with stakeholders. The approach is meant to maximize future corporate value. The board of directors consists of four internal directors and five external directors (Jargosch & Jurich, 2014). The directors are tasked with the responsibility of setting guidelines for the company’s management and they make significant decisions associated with execution of projects.

Furthermore, the board is supposed to represent shareholders’ and stakeholders’ rights and supervise the tasks of executives and management. From the information presented above, it is apparent that the Hyundai Group has a well-organized corporate governance pattern that generates significant results on the global market (Cristobal, 2011). The rationale is based on the fact that Hyundai has an established independent committee that improves their interaction channels and measures to serve their clients and investors in significant ways (Plunkett, 2008). Therefore, the Hyundai Group has improved governance that meets the global standard of the transport industry.

Transport Industry and the Iceberg Theory

Not only to the Volkswagen Group and the Hyundai Group sell the best vehicles, but they also satisfy people’s desire to feel well while driving in terms of speed, cost, and design. Most companies think too narrowly about who they are and whom they serve. Rarely do they consider searching out and meeting the unrecognized needs of their customers (Plunkett, 2008). Moreover, the two firms satisfy individuals’ need to look good while driving as well as their fantasy of self-fulfillment. Inside all of us, we can find a character and a need to drive what we want and feel as good as possible with ourselves. To illustrate and create a better understanding of the transport industry, I will have a closer look at the iceberg conjecture (Berger, 2014).

Freud came up with an indicative allegory of the consciousness like an iceberg. The tip of the iceberg that is above the surface is the cognizant mind and it can be felt and observed. The cataleptic mind, which is hidden below the surface, is the most influential and the largest part. All our feelings, outlook, and reminiscences that are not a part of our cognizant know-how will be found under the surface (The Unconscious Mind and the Iceberg Metaphor 2010). The iceberg signifies that that individual’s traits are measured by the cataleptic mind where our desires and wishes are kept. This makes this region of huge significance for organizations like the Volkswagen Group and the Hyundai Group that want to attain and comprehend their clients at a much deeper level that is not observed by other participants of the market.

The best approach is for the leaders to go deeper and spot out what is under the surface to satisfy the needs of the market effectively. Clients and their traits are inspired by the longing to feel pleasure while driving vehicles of their choice. Therefore, the Iceberg theory signifies that in an industry such as the transport one where competitors join it all the time, it will be significant to have that little extra to counter challenges in the market. Employees take care of all the labor needed while the executives ensure that the business expands in the right atmosphere. The chart below shows how the Iceberg Theory is structured:

Comparison of VW and Hyundai Group

Top-Down

Both Volkswagen and Hyundai are the primary leaders in the transport sector and they have established strong brand names over the years. Their objective is apparently be the best in the industry by manufacturing the latest car brands that are affordable for their clients (Robson, 2011). Volkswagen is the third largest carmaker in the world, and its objective is to offer attractive, safe, and environmentally sound vehicles that can compete in an increasingly tough market and set world standards in their respective class. On the other hand, Hyundai aims at offering clients with new possibilities (Jargosch & Jurich, 2014). Hyundai also focuses on creating and leveraging synergies among affiliates and accordingly emphasizes cross-unit cooperation and coordination.

Bottom-Up

Hyundai appears to be utilizing several business models to counter its competitors; hence, it is likely to survive in changing market. On the other hand, Volkswagen utilizes the approach of using strategy 2018 to ensure that they deploy smart innovations and technologies in order to become a global leader in customer satisfaction (Robson, 2011). Thus, Volkswagen will not be in the position to take advantage of the changing trends on the market.

Vision

The two firms seem to have a thriving future where they target to satisfy the needs of the clients on the international market. They aim at offering clients quality vehicles that are worthy their capital in terms of speed and affordability.

Learning and Growth

The Volkswagen Group and the Hyundai Group continue to develop and create relevant vehicles, and they open to initiate changes that are meant to satisfy the needs of their clients. Furthermore, they have always used the same culture of identifying with the contents of a new market before they invest in it, which is an indication that their experience has enabled them reach where they are (Berger, 2014).

Sustainable Competitive Advantage

The Hyundai Group business model ensures that they incorporate the skills of both individuals from the United States and Korea to design vehicles that meet the needs of clients globally (Berger, 2014). Moreover, routinely moving technological features from high-end luxury automobiles into much less expensive ones has ensured that they stay on top of the market globally (Jargosch & Jurich, 2014). On the other hand, the Volkswagen Group business model of strategy 2018 has ensured that they deploy intellectual advancement and technologies to become a global leader in customer satisfaction.

Location

The two firms are authorized by executives who find it truly significant to be seen in the market by constantly looking for the right spot in the cities. Furthermore, they perceive that their clients are meant to get them in the best and posh areas in the cities.

Corporate Social Responsibility

When it comes to the issue of corporate social responsibility, the two companies state that the surroundings and individuals are of significant interest for them all the way through the organizations, even if they are persuaded directly or indirectly by the accomplishment of their business strategies. The achievement of their business public accountability becomes more significant, and it is stressed that there is no dissimilarity between countries when it comes to the issue of doing business (Berger, 2014).

Environmental, Governance, Strategy, Organization, and Political Analysis

Volkswagen makes environmentally significant and enhanced technologies accessible globally and applies them across the entire life cycle of their commodities. On the other hand, Hyundai respects human values and executes its executive social accountability through protection of the atmosphere on behalf of the harmony of humans, the environment, and society as a whole (Jargosch & Jurich, 2014). On the issue of governance, Hyundai’s executive channels are under the obligation to exercise transparency as a way of increasing corporate significance and to accomplish corporate social accountability by allocating economic values with stakeholders (Robson, 2011). Volkswagen’s governance is aimed at ensuring that the administration acts courteously and blatantly while being a subject to domestic and exterior checks and controls.

The strategy practiced by Volkswagen is the strategy 2018 aimed at making certain that the company employs intellectual innovations and know-how to become an international manager in client fulfillment. Hyundai’s strategy of correlating with the employees of the United States and Koreans has led to better invention of vehicles in terms of design, speed, and cost. The organizational structure of Hyundai is often undertaken as a directive leadership type of structure that consists of the individual firms and larger networks utilized to unite individual corporate entities (Jargosch & Jurich, 2014). The political connections significance for top leaders at Hyundai is based on family and clan basis, which often leads to the top-down decision-making process. The organizational structure of Volkswagen is managed by the Volkswagen AG Board of Management as per the rules of the Volkswagen Articles of the group Board of management (Robson, 2011). Companies of the group are managed separately by respective management in order to ensure that politics is played at different levels.

Conclusion

The paper signifies that both Hyundai and Volkswagen are companies that need to be reckoned as their business approach lies in ensuring that their clients have the best quality in terms of innovation, design, cost, and preference. The comparison has been made of the initiates that both leaders have in their way of working with their clients, but all of them recognize that the needs of the clients are the number one objective. Despite the difference, it is apparent that both companies aim at being the best on the market by manufacturing vehicles that meet the needs of their clients.

Both Volkswagen and Hyundai are firms that succeed on the market because of their business approach since they create what the clients desire and what they can afford. The Iceberg theory has been used with the perspective of enumerating that in an industry like the transport sector, where competitors emerge all the time, it will be significant to have that little extra that will allow companies to counter challenges on the market. The implication here is that the Iceberg Theory is often utilized by both firms with the objective of evaluating what suites them in terms of type of vehicle.