Monday, September 26, 2016

Hyundai Workers on Strike!

                                                                                                            Zachary Perret         
                                                                                                            MBA 5355                                                                 
Wall Street Journal Summary of:

“Hyundai Workers on Strike for First      
                     Time in 12 Years”
by In-Soo Nam September 26, 2016 8:06 a.m. ET



No changes made


             Hyundai’s plants in South Korea went ceased operations and went on strike on Monday, affecting the supply of cars by thousands, which could reduce Hyundai’s revenue by up to $1.3 billion (Nam). These cars were planned to be distributed globally to the U.S., Asia, and the Middle East, and includes over 50,000 workers the strike was due to a disagreement between Hyundai and the labor union because compensation increases have declined due to lacking profits (Nam). According to Nam, this year’s strikes at Hyundai could be especially damaging because the company’s profits have declined for the last 10 quarters, and the U.S. might face shortages of some of the more popular models because we are Hyundai’s second-largest market behind China.

From a global marketing perspective, this depicts how economic struggle in an international company affects other major markets. Labor strikes seem to be more common in South Korea than the U.S. Hyundai is an extremely large company that is facing a gradual loss in revenue, and that will certainly affect both foreign and domestic consumers and producers. It will be interesting to see how Hyundai’s marketing efforts change; either reducing them to lower their budget or increasing them to increase lagging sales. Conventional wisdom tells us that they need to step up their game and focus on their market strengths (economies of scale, quality, and price) and get this message out to consumers. Their business model has changed over the years as they now offer several models over $30,000. They have followed a similar path of Honda, which entered the U.S. market at a low price point and emphasized quality, but has become much more expensive of a brand. Hyundai is not yet as reputable as Honda for quality, but the prices are very close; I believe they need to target their market more precisely and decide exactly where and how they want to compete. Maybe then they can pay their workers an acceptable wage and avoid strikes.

3 comments:

  1. This is a very interesting topic Zachary. It is shocking that Hyundai's company profits have declined for the last 10 quarters! It would really be a tragedy that the United States would face shortages because of that. You are right about South Korea having more labor strikes than the United States that is very interesting.

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  2. This is a very interesting article. I do agree that Hyundai need to determine a better target market and where they actually want to compete, because since their reputation is not up to the standards of Honda, are they ready to compete at their level of pricing. Also, ensuring proper wages for their employees would help to prevent future labor strikes.

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  3. This strike is just a reflection of mistakes in strategies or business model. First of all, Hyundai must analyze its business and find the root of the continuous declining in profit, maybe it has to do with the value for money that customers give to the cars; the perceived quality is lower than the prices, therefore, potential customers look for another options that fulfill the quality requirements for the same price, specially in the US, where consumers have plenty of options to choose.

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