The Acquisition and Restructuring of Kia Motors by Hyundai Motors SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Acquisition and Restructuring of Kia Motors by Hyundai Motors
In recent years, greater competition and diminished profits, due to domestic and global oversupplies as well as higher development costs, have led the automobile industry to engage in domestic and international mergers and strategic collaboration. This case examines one of the largest mergers and acquisitions (M&As) in the Korean automobile market in recent years: the acquisition of Kia Motors (Kia) by Hyundai Motors (Hyundai). The case describes the background conditions of the acquisition, the integration processes after the acquisition, and the requisites for Kia Motors to normalize management within a short time. Hyundai, in acquiring Kia, enhanced its competitive power in both domestic and global markets, achieving economies of scale and scope and strengthening its global market basis. That said, Hyundai/Kia faced several pressing challenges, among them the cooperation of Renault and Samsung Motors, the unclear domestic treatment of Daewoo Motors, and M&As taking place among top motor companies worldwide. This case study asks students to analyze the process of post-acquisition restructuring and the resulting synergy effects, inviting them to think through the strategies by which Hyundai/Kia may thrive in the global automobile market. Further, it illustrates both the current state of the domestic Korean automobile industry and recent trends in the global automobile market.
Swot Analysis of "The Acquisition and Restructuring of Kia Motors by Hyundai Motors" written by Seungwha (Andy) Chung, Sunju Park includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kia Hyundai facing as an external strategic factors. Some of the topics covered in The Acquisition and Restructuring of Kia Motors by Hyundai Motors case study are - Strategic Management Strategies, Mergers & acquisitions, Reorganization and Global Business.
Some of the macro environment factors that can be used to understand the The Acquisition and Restructuring of Kia Motors by Hyundai Motors casestudy better are - – geopolitical disruptions, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic ,
increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of The Acquisition and Restructuring of Kia Motors by Hyundai Motors
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Acquisition and Restructuring of Kia Motors by Hyundai Motors case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kia Hyundai, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kia Hyundai operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of The Acquisition and Restructuring of Kia Motors by Hyundai Motors can be done for the following purposes –
1. Strategic planning using facts provided in The Acquisition and Restructuring of Kia Motors by Hyundai Motors case study
2. Improving business portfolio management of Kia Hyundai
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kia Hyundai
Strengths The Acquisition and Restructuring of Kia Motors by Hyundai Motors | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kia Hyundai in The Acquisition and Restructuring of Kia Motors by Hyundai Motors Harvard Business Review case study are -
High switching costs
– The high switching costs that Kia Hyundai has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Sustainable margins compare to other players in Global Business industry
– The Acquisition and Restructuring of Kia Motors by Hyundai Motors firm has clearly differentiated products in the market place. This has enabled Kia Hyundai to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Kia Hyundai to invest into research and development (R&D) and innovation.
Ability to lead change in Global Business field
– Kia Hyundai is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Kia Hyundai in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Kia Hyundai is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Kia Hyundai is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Acquisition and Restructuring of Kia Motors by Hyundai Motors Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Kia Hyundai are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Diverse revenue streams
– Kia Hyundai is present in almost all the verticals within the industry. This has provided firm in The Acquisition and Restructuring of Kia Motors by Hyundai Motors case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to recruit top talent
– Kia Hyundai is one of the leading recruiters in the industry. Managers in the The Acquisition and Restructuring of Kia Motors by Hyundai Motors are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Kia Hyundai in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Kia Hyundai is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Seungwha (Andy) Chung, Sunju Park can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Training and development
– Kia Hyundai has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Acquisition and Restructuring of Kia Motors by Hyundai Motors Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High brand equity
– Kia Hyundai has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kia Hyundai to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Kia Hyundai is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses The Acquisition and Restructuring of Kia Motors by Hyundai Motors | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Acquisition and Restructuring of Kia Motors by Hyundai Motors are -
High operating costs
– Compare to the competitors, firm in the HBR case study The Acquisition and Restructuring of Kia Motors by Hyundai Motors has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Kia Hyundai 's lucrative customers.
Lack of clear differentiation of Kia Hyundai products
– To increase the profitability and margins on the products, Kia Hyundai needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Acquisition and Restructuring of Kia Motors by Hyundai Motors, in the dynamic environment Kia Hyundai has struggled to respond to the nimble upstart competition. Kia Hyundai has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Kia Hyundai is dominated by functional specialists. It is not different from other players in the Global Business segment. Kia Hyundai needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kia Hyundai to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Kia Hyundai has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The Acquisition and Restructuring of Kia Motors by Hyundai Motors HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Kia Hyundai has relatively successful track record of launching new products.
Products dominated business model
– Even though Kia Hyundai has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - The Acquisition and Restructuring of Kia Motors by Hyundai Motors should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Kia Hyundai has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Aligning sales with marketing
– It come across in the case study The Acquisition and Restructuring of Kia Motors by Hyundai Motors that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case The Acquisition and Restructuring of Kia Motors by Hyundai Motors can leverage the sales team experience to cultivate customer relationships as Kia Hyundai is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Acquisition and Restructuring of Kia Motors by Hyundai Motors, is just above the industry average. Kia Hyundai needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Kia Hyundai is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The Acquisition and Restructuring of Kia Motors by Hyundai Motors can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities The Acquisition and Restructuring of Kia Motors by Hyundai Motors | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study The Acquisition and Restructuring of Kia Motors by Hyundai Motors are -
Loyalty marketing
– Kia Hyundai has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Leveraging digital technologies
– Kia Hyundai can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Kia Hyundai can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Kia Hyundai in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Kia Hyundai to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Kia Hyundai can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Kia Hyundai to increase its market reach. Kia Hyundai will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Building a culture of innovation
– managers at Kia Hyundai can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Global Business segment.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Kia Hyundai to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Kia Hyundai is facing challenges because of the dominance of functional experts in the organization. The Acquisition and Restructuring of Kia Motors by Hyundai Motors case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kia Hyundai can use these opportunities to build new business models that can help the communities that Kia Hyundai operates in. Secondly it can use opportunities from government spending in Global Business sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Kia Hyundai to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Kia Hyundai to hire the very best people irrespective of their geographical location.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Kia Hyundai can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats The Acquisition and Restructuring of Kia Motors by Hyundai Motors External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Acquisition and Restructuring of Kia Motors by Hyundai Motors are -
Increasing wage structure of Kia Hyundai
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Kia Hyundai.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Kia Hyundai business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kia Hyundai can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study The Acquisition and Restructuring of Kia Motors by Hyundai Motors .
Stagnating economy with rate increase
– Kia Hyundai can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Kia Hyundai.
Shortening product life cycle
– it is one of the major threat that Kia Hyundai is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Kia Hyundai with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Acquisition and Restructuring of Kia Motors by Hyundai Motors, Kia Hyundai may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
Consumer confidence and its impact on Kia Hyundai demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Regulatory challenges
– Kia Hyundai needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Global Business industry regulations.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Kia Hyundai can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of The Acquisition and Restructuring of Kia Motors by Hyundai Motors Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study The Acquisition and Restructuring of Kia Motors by Hyundai Motors needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study The Acquisition and Restructuring of Kia Motors by Hyundai Motors is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study The Acquisition and Restructuring of Kia Motors by Hyundai Motors is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of The Acquisition and Restructuring of Kia Motors by Hyundai Motors is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Kia Hyundai needs to make to build a sustainable competitive advantage.
