The Hyundai Group

Case Report #2 for

Management 18

Submitted to: Prof. Teresita M. Banayag,MBA

Submitted by: Carla Rosales Nikko Lexis Tejano Jennifer Zonio May Hazel Ann Sanchez Ryan Rommel Rosario

The Hyundai Group

TIME CONTEXT: Year 1987 POINT OF VIEW: Chung Se-Yung, Chairman of the Hyundai Group of Companies.

MAIN PROBLEM: Hyundai Group adopted and had been into practice the authoritarian style of management. Without taking into consideration the fact that during the last two decades of dynamic growth in operations; their management style hindered their evolution . SECONDARY PROBLEM : 1. With the rising competition and swelling demands from Koreas more independent youth generation, Hyundais strategies of low wages and hard work were no longer effective. 2. The reported labor rebellion at Ulsan that were participated by 2000 Hyundai workers since December 1988. 3. Hyundai started to move away from Koreas slumping construction and shipbuilding industries and faced a troubled transition to a high-tech , high-waged future.

COMPANY OBJECTIVES : To gradually transform leadership strategies to meet the demands of the times and the demands of an increasingly complex socio-economic structure that was under going tremendous flux, and a high return on investments as an added incentive.

SWOT ANALYSIS : STRENGTHS : 1. As according to Ibrahim , Hyundai construction crews at work are like disciplined , para-military , single-minded , self-sufficient machine. 2. Working fourteen-hour shifts and seven-day weeks , the construction crews do their faster than anyone else. 3. Hyundai Chairmans audacity, determination , and imagination remained to be a trademark of the man as the financial stakes multiplied. WEAKNESSES : 1. The stagnation of the ratio of profits to revenue in recent years and the marginal possibility that overseas construction and shipbuilding be ever regain their former glory. 2. The continued bout of labor strife has hurt production and created an image of a company unwilling to change with the times. 3. Hyundai as one of the largest construction companies in the Middle East , bid on a projects first and learned how to build it later. 4. Hyundai had invested heavily in Hyundai Electronics , its semiconductor subsidiary which had been a disappointment. OPPORTUNITIES : 1. Hyundai consistently landed major civil contracts and Chung became one of the privileged business leaders.

2.

Hyundai became one of the largest construction companies in the Middle East.

3. Hyundai has become the largest automobile manufacturer in Korea.

THREATS : 1. The collapse of oil prices and the Iran-Iraq war , however choked off much that business and the prolonged slump in the world shipping severely hurt the companys shipbuilding subsidiary. 2. U.S. pressure for the won to appreciate may reduce Koreas competitive advantage before Hyundai could respond. 3. The nationwide uprising for democracy in 1986 brought a radical change to the relationship between employers and workers. 4. The political force of labor in South Korea is so strong that it had managed to push ways up rapidly in the midst of an unprecedented surplus of highly educated labor which, normally should depress wages.

ALTERNATIVE COURSES OF ACTIONS: 1. The company should retain its current style of management but they should also give in to the demands of its workers for salary increase. Pros : Cons : It would entail higher cost, which means higher prices for its products and The strike would stop and the company would continue its operations.

services. Workers might be used to it and the company will be abused.

2. The company should retain its current management style and fire all the workers who participated on the strike. Pros : Discontinued incurring of losses due to strike. Firing of these workers would mean hiring new ones, and these new ones could be easily managed. Cons: There could be a hassle upon hiring new applicants or workers. Costly training of these new workers and since the company has a goal of having bigger profits, they might do this through cost cutting and could result to low quality of products and services. A lot of organizations would disagree and could result to a bad reputation that might affect companys operations in the future. 3. Management should be reorganized and change to a more appropriate and efficient management style. Pros: The current strike of their workers would stop. This would lessen the possibility of repeated occurrence with this kind of problem or a more serious one.

This would result to a better relationship with its workers and would help the company in achieving their goals.

Cons: The company (their staffs and workers) might have a hard time adjusting to the newly organized style of management. RECOMMENDATION: Among these three alternatives, alternative three is the more appropriate action to be adopted. The associated costs and possible arising problems are way much lesser than the other alternatives. Hyundai would definitely vanquish all its problems, not only the current one but also the other upcoming problems that the company would encounter.