Kia in South Korea Porter's Diamond

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KIA in South Korea, A Porter’s Diamond Perspective Timothy J. Rausch Mount Vernon Nazarene University MSM002MV MAN6093 Global Business October 11, 2008 Introduction KIA, which means “arise from Asia” in Korean, started out making bicycles prior to World War II (Kia Motors Corporation, 2008). The company developed the manufacturing of steel bicycle tubing into a multi-national corporation producing cars and trucks. Prior to merging with Hyundai in 1998, Kia was the second largest producer of vehicles in South Korea (Kia Motors Corporation – Company Profile, Information, Business Description, History, Background Information on Kia Motors Corporation, 2008). Examining Kia’s transformation in a country lifting itself out of the…show more content…
Using these criteria, South Korea and Kia have a distinct disadvantage on the world market. Demand Conditions The demand conditions in South Korea have been unparalleled in other countries in recent history. In 1963, the per capita Gross National Product (GNP) was $100. This has grown to $20,000 per capita and South Korea is now the seventh largest trading partner with the United States (Background Note: South Korea, 2008). This growth in GNP is staggering considering that it took the United States 130 years to grow its Gross Domestic Product ten fold (1870-200) (Barro, 2003). Barro (2003) notes that this growth is “fairly” evenly distributed. This distribution of income has remained relatively unchanged from 1960 to today (Barro, 2003). Life expectancy and infant mortality indicators have also significantly changed. Life expectancy has increased from 54 years to 73 years and infant mortality has dropped from 8% to 0.8% since 1960 (Barro, 2003). This rapid growth and increase in personal income has led to a significant growth in internal demand for automobiles. According to a study conducted by AC Nielson, who developed an Aspiration Index (AI) to measure current ownership levels and future intentions to buy, over 60% of those surveyed indicated an intention to buy. This is compared to the same index in the United States of less than 30% (Consumers in Asia Pacific – Car Ownership and Our Purchase

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