Thesis: Development of Intercultural Issues of the Hyundai Motor Company

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Intercultural Issues at Hyundai

Inter-Cultural Issues at Hyundai

Hyundai faces issues with intercultural concerns for two major reasons. First, they operate a carmaker that operates on a global scale and second because they actually have many of their cars manufactured in countries other than their country of origin including the United States. Indeed, Hyundai operates both Hyundai itself and Kia within the United States. This can be a challenge on a number of levels. Issues like nationalism, inter-cultural interactions, inter-cultural turf wars, prior wars between the home country of the company with that of one or more countries they operate in and other related concerns can all be issues for companies like Hyundai that originate from one country or part of the world and operate extensively, especially as a manufacturer, in another. Put another way, there are a lot of dependent and independent variables that Hyundai must address and deal with to operate efficiently and with the proper amount of public relations and other corporate skills. Indeed, the cultural norms of South Koreans and Americans, let alone those of any other countries that Hyundai operates and sells in, are quite different and the meshing and melding of those two cultures as they interact can be quite tepid and even uncomfortable at times.

Table of Contents

Terms & Acronyms 4

Introduction 6

Methodology 14

Hypothesis 18

Literature Review 19

Discussion & #8230;.22

Conclusion & #8230;24

References 26

Terms & Acronyms

Asian Auto Crisis -- the time period during which Kia acquired bankruptcy and thus allowed them to be acquired by Hyundai

HMA -- Hyundai Motor Company. Founded in 1967 and is traded publicly in South Korea.

HMMA -- Hyundai Motor Manufacturing Alabama

Hyundai America Technical Center -- the "proving ground" for Hyundai cars in the United States. The area is located in California City, California in the western United States.

Kia -- Another South Korean car company, in addition to Hyundai, that has operated corporately since 1944. Roughly one third of Kia's corporate assets are owned by Hyundai Corporation.

Kia Motors America -- the United States division of Kia Motors. Founded in 1992, they filed for bankruptcy just a few years later in 1997 and when was acquired via a majority stake buyout (51%) in 1998. They outbid Ford Motor Company, which had had a stake since 1986, predating their entry into the American market. They have since drawn back their stake to roughly a third.

Kia Motors Europe -- the European counterpart to Kia Motors America

Lean Production System -- a Japanese automaker creation, it is a stressing of flexible and easily-changeable production operations in auto plants

Montgomery Plant

NUMMI -- New United Motor Manufacturing Incorporated -- a joint venture of Toyota and General Motors that was shuttered in 2010

SIA -- the common acronym used to identify Subaru/Isuzu Automotive.

West Point Plant -- the American manufacturing point for Kia vehicles. The plant is located in the state of Georgia in the southeastern corner of the United States. The plan is fairly close to the Montgomery Hyundai plant

Inter-Cultural Issues & Hyundai

Chapter I - Introduction

Background

Hyundai has been able to take major advantage of the fact that two of the major domestic United States automakers, General Motors and Chrysler, were on the verge of obsolescence and extinction to the extent that they had to be bailed out by the United States federal government. The third major United States automaker, that being Ford, did not take any federal bailouts but they themselves struggled both before and during the recession in their own ways. All three of them are doing much better now but Hyundai was able to make some major inroads even though some inter-cultural issues continue to haunt and challenge them in many ways.

Hyundai starting operating in the United States when it opened up its first United States plant in Montgomery, Alabama in 2005. This followed its operations in South Korea at its Ulsan and Asan plants. The Ulsan plant was the first but then it shifted to the Asan plant which was located in a remote area of South Korea so as to avoid violent and otherwise disrupted labor activities. However, these efforts did not end up succeeding and the labor strife that they strived to avoid happened anyway.

The company then tried to succeed by operating a plant in Canada but due to shoddy human resource policy conformance and other issues, Hyundai soon discovered that they were unable to manufacture cars in Canada make the needed profit. As such, after less than roughly five years in Canada, operations in that country were shuttered in favor of going back to the Asan model. In both cases, South Korean investors were shaken by the fact that the plants did not operate with stability and profitability and this shook their confidence in the plant and in their investments with the Korean automaker.

South Korea's Hyundai eventually found success by moving to Alabama but even that was not without its challenges and obstacles to overcome and a lot of the problems were cultural. On top of that, many of the union activities that helped trouble the Ulsan and Asan plans in South Korea also influenced the progression of the Montgomery plant in many ways. As far as cultural concerns and challenges, there are always going to be challenges when taking an Asian automaker like South Korea's Hyundai and acclimating ownership from South Korea into a more Western country like the United States, which of course Hyundai had already discovered during their ventures in Canada.

Even so, Hyundai stood to benefit greatly if the Montgomery plant succeeded, so they pressed on with the project to offshore operations from South Korea to Montgomery. However, even in an age where the marketplace becomes more globalized by the day and international boundaries between the different operation points within certain industries or even within single businesses, some challenges can still come up during such a transition from operating a plant in South Korea and then shifting it to an entirely different marketplace and country like the United States. Even with the more vague boundaries caused by globalization, firms like Hyundai have had to deal with cultural issues that pertain to and/or otherwise affect employee relations, human resources practices, general business practices, sales tactics, whether or how to focus on catering and pandering to nationalism in customers and so forth.

Another major concern in such a shift are the commonly accepted cultural practices of the two very different cultures that are the United States and South Korea as well as the obvious language barrier issues that exist as well. Just as prior work has focused on management practices, that is far from being the only cultural issues that Hyundai must face and this report shall focus on the other major cultural issues that have or could arise in the future based on the review and theories of the best minds on the subject including from those in the industry as well as those that have reviewed the similar efforts of other foreign countries bringing operations to Western nations in the past.

One major cultural issue that any foreign automaker must endure is the penchant for many politicians, domestic companies of any sort and people in general is the whole "Buy American" chorus. Indeed, many of the foreign cars in the United States are made in one of three major foreign countries, those being South Korea, Japan and Germany. Just within the last century (and mostly in the last half century and change), the United States has been at war in all three of those regions. With Germany, it was World War II and World War I before that. German automakers that now sell pervasively in the United States include BMW and Mercedes, both of which are luxury cars with a hefty price tag. For Japan, there is Toyota (which sells Toyota, Scion and Lexus) and Honda (which sells Honda and Acura cars in the United States). Finally, one has South Korea which sells Hyundai and Kia cars, both of which are owned by Hyundai at this time. It should be noted that the United States was not at war with the South Koreans, but rather the North Koreans, but the United States was at war in that region nonetheless and many people are not educated enough to make that distinction or that distinction is not important and/or relevant to their viewpoint.

Many people are not hung up on the fact that the United States is importing a lot of German, Japanese and South Korean cars but the nationalism that was largely fed (at least in the past) but the fact that the United States was at war with those nations is still very well alive in the modern context. However, there are plenty of other people that are just focused on the price of goods and not on where they are made, so this is why many Americans buy a lot of goods from Japan,… [END OF PREVIEW]

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