The Acquisition of Kia Motors by Hyundai Motors

1041 WordsNov 3, 20135 Pages
Every company has a purpose, and part of that purpose is to create wealth and value. However, there are other responsibilities that have been entrusted with companies. The environmental and social responsibilities of a company have an important role in its ability to maintain a social license to operate, ensure a consistent pool of resources that are required for the business to perform its functions, and to generate profits. The Acquisition of Kia Motors by Hyundai Motors Fikre Y. Wondimu CalUniversity Author Note Fikre Y. Wondimu is a student at California Intercontinental University. Special thanks to Dr. Troy Roland and Dr. Fathiah Inserto for providing suggestions to improve this document format and content. Correspondence…show more content…
Econmies of scale Even though Hyundai was a leading manufacturer of automobiles in Korea, acquiring Kia was an opportunity to move to the next tier by expanding its production capacity to 2.6 million cars annually. Hyundai would then displace Honda (at 2.4 million cars per year) as the world’s 10th largest automobile producer (Seungwha Chung and Sunju Park, 2009). In doing so, through economy of scale, product development costs would be reduced, improving international competitiveness as a result of the acquisition of Kia. Economies of Scope As the domestic overproduction was considered a drawback of oversupply, exporting excess automobiles to global market was conceived to offset the imbalance. Furthermore, significant focus was given to maximize the synergy effects by identifying overlapping area of operations in the area of research and development (R&D) capabilities, parts and utilization of human resources to improve performance and international competitiveness. Construction of a global network Hyundai was able to build on Kia’s strength in its approach towards international competitiveness through which, the delivery of quality product, reduced cost and attractive price was fundamental and then, developing marketing strategy to impact global system for each country and region were critical for sustainable growth. Restructuring Kia Motors Operational restructuring may entail changes in the composition of a firm’s asset

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