R a tio n a le
Vietnam is poised for further development and globalization after joining the WTO in 2007, which has led to the adoption of open policies for multinational companies with strong global market positions However, local companies face intense competition and pressure from these foreign entities Additionally, rapidly changing consumer interests and increasing industry competition often leave mass production systems misaligned with customer needs To address these challenges, the adoption of mass customization is on the rise as a strategic approach, but businesses must first enhance their functions to successfully implement this model.
Hyundai Vietnam specializes in the automotive industry, navigating significant competition faced by other Vietnamese enterprises As a relatively young player in the automotive sector, Hyundai Vietnam is focusing on strategic initiatives to establish its presence and thrive in this dynamic market.
H y u n d a i V ie tn a m d o e s r r t w o r k w e ll to m e e t c u s to m e r n e e d s T h a t’s w h y I d e c id e d to b u ild u p a b u s in e s s le v e l s tra te g y fo r H y u n d a i V ie tn a m u s in g c o m p a n y ’s c o re c o m p e te n c ie s to g a in c o m p e titiv e a d v a n ta g e s o v e r o th e r c o m p e tito rs
R esearch O b je c tiv e
The objective of this thesis is to identify a suitable business-level strategy for Hyundai Vietnam to navigate through the recession and pursue future development opportunities.
R esearch s c o p e
T h e r e s e a r c h íb c u s e s o n ly o n H y u n d a i V ie tn a m in V ie tn a m m a r k e t
R esearch m e th o d
To develop an effective business strategy for Hyundai Vietnam, it is essential to apply strategic management theories that help identify suitable approaches for strategy formulation This involves recognizing common processes for building business strategies while considering various factors that may impact the business A thorough case analysis will provide insights and recommendations to enhance the overall business strategy.
D ata s o u rc e s
L ite r a tu r e s rev iev v p a r t h a s b e e n ta k e n fro m b o o k s , n e w s p a p e r , in te rn e t s o u rc e s A n d p r im a r y d a te h a s b e e n ta k e n fro m H y u n d a i V ie tn a m lo c a lly
L im ita tio n
The secondary information regarding the import car statistics is outdated, as the customs department has not accurately and comprehensively covered this data for various reasons Additionally, some primary data from Hyundai Vietnam remains confidential and is not permitted for public disclosure.
T o fín d o u t th e r ig h t b u s in e s s - le v e l s tr a te g ie s f o r H y u n d a i V ie tn a m d u r in g th e re c e s s io n tim e a n d it w ill g e t g o o d r e s u lt in a p p ly in g th is s tr a te g y in to H y u n d a i
T h e th e s is is d iv iđ e d in to 3 c h a p te r s :
C h a p te r 1 íò c u s e s o n lite r a tu r e r e v ie w w ith th e ílin d a m e n ta l th e o r y o f s tr a te g ie s b u s in e s s - le v e l s tr a te g ie s a n d th e im p o r ta n c e o f b u s in e s s - le v e l s tr a te g ie s
C h a p te r 2 w ill g iv e y o u th e o v e rv ie v v o f V ie tn a m a u to m o b ile in d u s tr y a n d th e c a s e o f H y u n d a i V ie tn a m w ith b a c k g r o u n d , e x te m a l a n d in te m a l a n a ly s is o f H y u n d a i
V ie tn a m to fín d s o m e k e y f a c to r s o f s tr e n g th s a n d w e a k n e s s e s o f H y u n d a i.
C h a p te r 3 id e n tif íe s th r e a ts a n d o p p o r tu n itie s b a s e o n a n a ly s is in c h a p te r 2 to b u ild u p a p p ro p r ia te s tr a te g y f o r H y u n d a i V ie tn a m
T h e la s t p a rt vvill b e c o n c lu s io n o f th e th e s is
1.1 Strategy and Business-Level Strategies
S tra te g y A c c o rd in g to G e o rg e S te in e r
C A Liíb Mía Management Review is recognized as a pivotal influence in the evolution of strategic planning The author’s book, Strategic Planning, approaches the topic comprehensively, although it lacks a formal definition of strategy, which is only briefly addressed in the notes at the end In these notes, the author explains that strategy emerged in management literature as a means to respond to competitors' actions, whether anticipated or actual Additionally, the author highlights the prevalent disagreement regarding the definition of strategy within the business community.
S o m e o f th e d e íĩn itio n s in u s e to w h ic h S te in e r p o in te d in c lu d e th e fo llo w in g :
• S tra te g y is th a t w h ic h to p m a n a g e m e n t d o e s th a t is o f g r e a t im p o r ta n c e to th e o rg a n iz a tio n
• S tra te g y r e f e r s to b a s ic d ir e c tio n a l d e c is io n s , th a t is, to p u r p o s e s a n d m is s io n s
• S tr a te g y c o n s is ts o f th e im p o r ta n t a c tio n s n e c e s s a r y to r e a liz e th e s e d ir e c tio n s
• S tr a te g y a n s w e r s th e q u e s tio n : W h a t s h o u ld th e o r g a n iz a tio n b e d o in g ?
• S tra te g y a n s w e r s th e q u e s tio n : W h a t a re th e e n d s w e s e e k a n d h o w s h o u ld w e a c h ie v e th e m ?
1.1.2 B u sin ess-lev el s tra te g ie s
T h e b u s in e s s - le v e l s tr a te g y r e f e r s to th e p la n o f a c tio n th a t s tr a te g ic m a n a g e rs a d o p t to u s e a c o m p a n y ’s r e s o u r c e s a n d d is tin c tiv e c o m p e te n c ie s to g a in a c o m p e titiv e a d v a n ta g e o v e r its r iv a ls in a m a r k e t o r in d u s tr y
The process of business definition involves critical decisions regarding customer needs, the target customer group, and distinctive competencies Specifically, it entails identifying what needs to be satisfied, determining who will be satisfied, and understanding how those needs will be met These three decisions form the foundation of a business-level strategy, as they dictate how a company will compete within its industry.
C ustom ers’ needs and p ro d u ct diíĩerentiation:
C u s t o m e r s ' n e e d s a re d e s ir e s , w a n ts , o r c ra v in g s th a t c a n b e s a tis íĩe d b y m eans o f the ch aracteristics o f a product or Service.
Product differentiation is the strategy of creating a competitive advantage by designing goods or services that meet customer needs Companies must differentiate their products to attract customers and satisfy essential demands However, some companies achieve a higher level of differentiation than others, which can provide them with a significant competitive edge.
C ustom er groups and M a rk et segm entation:
M a r k e t s e g m e n ta tio n is th e w a y a c o m p a n y d e c id e s to g ro u p c u s to m e r s , b a s e d o n im p o r ta n t d i í ĩ e r e n c e s in th e ir n e e d s o r p re f e r e n c e s , in o r d e r to g a in a c o m p e titiv e a d v a n ta g e
T h e th ir d is s u e in b u s in e s s - le v e l s tra te g y is to d e c id e w h ic h d is tin c tiv e c o m p e te n c ie s to p u r s u e to s a tis íy c u s to m e r s ’ n e e d s a n d c u s to m e r g ro u p s
1.1.3 T h e im p o rta n c e o f B usin ess-lev el stra te g ie s
Business-level strategies analyze how a company can effectively compete within its industry, focusing on various approaches to maximize competitive advantage and profitability By pursuing these strategies, companies can achieve advantages that enable them to outperform rivals and secure above-average returns There are three fundamental generic competitive approaches to consider: cost leadership, differentiation, and focus.
1.2 Business-Level Strategies Form uIation
F ig u re 1.1 B u sin ess level stra te g ie s
1 P ro d u ct d iíĩe re n tia tio n
3 D istin ctiv e co m p eten cies
S trateg y Im p lem en tatio n
(source: S tr a te g ic m a n a g e m e n t a n in te g r a te d a p p ro a c h b y C h a r le s W L H ill a n d G arethr Jo n e s)
T h e m is s io n s e ts o u t w h y th e o rg a n iz a tio n e x is ts a n d w h a t it s h o u ld b e d o in g
A vision defines and describes the desired future state that a company aims to achieve Its primary purpose is to guide, control, and motivate the organization as a whole towards reaching this ideal outcome.
External analysis is crucial for identifying strategic opportunities and threats within an organization's operating environment This process involves examining three interconnected environments: the immediate industry environment where the organization operates, the national environment, and the broader macro-environment By analyzing these factors, organizations can gain valuable insights that inform their strategic planning and decision-making.
Analyzing the industry environment involves evaluating the competitive structure of an organization’s industry, including the competitive position of the focal organization and its major rivals, as well as the stage of industry development In today's global markets, this analysis also requires assessing the impact of globalization on competition within the industry Additionally, examining the national environment necessitates an evaluation of whether the national context in which a company operates supports the achievement of a competitive advantage in the global marketplace.
PEST analysis, which stands for Political, Economic, Socio-cultural, and Technological analysis, is a framework used to evaluate macro-environmental factors in strategic management This analytical tool is essential for conducting environmental scanning and market research, providing a comprehensive overview of the various external factors that a company must consider By utilizing PEST analysis, organizations can gain valuable insights into the dynamics of their operating environment, aiding in informed decision-making and strategic planning.
7 fo r u n d e rs ta n d in g m a rk e t g ro v v th o r d e c lin e , b u s in e s s p o s itio n p o te n tia l and d ir e c tio n f o r o p e ra tio n s
The first element of a PEST analysis focuses on political factors, which significantly influence organizations in various ways These political factors can create advantages and opportunities for organizations, while also imposing obligations and duties Key types of political instruments include regulations, government policies, and political stability, all of which play a crucial role in shaping organizational strategies.
3 L e g is la tio n s u c h as th e m in im u m w a g e o r a n ti d is c r im in a tio n la w s
6 T ra d e a g re e m e n ts , t a r if f s o r r e s tric tio n s
8 T y p e o f g o v e m m e n t re g im e ( e x a m p le : c o m m u n is t, d e m o c r a tic , d ic ta to r s h ip )
T h e s e c o n d e le m e n t o f a P E S T a n a ly s is in v o lv e s a s tu d y o f e c o n o m ic ía c to rs
All businesses are influenced by both national and global economic factors National interest rates and fiscal policies are shaped by prevailing economic conditions The state of the economy determines the behavior of consumers, suppliers, and other stakeholders, including creditors, within society.
A n e c o n o m y u n d e r g o in g re c e s s io n v v ill h a v e h ig h u n e m p lo y m e n t, lo w s p e n d in g p o w e r a n d lo w s ta k e h o ld e r c o n íĩd e n c e C o n v e rs e ly a “ b o o m in g '’ o r g r o w in g e c o n o m y w i l l h a v e lo w u n e m p lo y m e n t, h ig h s p e n d in g p o w e r a n d h ig h s ta k e h o ld e r c o n íìd e n c e
A s u c c e s s íu l o rg a n iz a tio n w i l l re s p o n d to e c o n o m ic c o n d itio n s a nd s ta k e h o ld e r b e h a v io r F u r th e im o r e o r g a n iz a tio n s w i l l n e e d to r e v ie w th e im p a c t e c o n o m ic c o n d itio n s a re h a v in g o n t h e ir c o m p e tito r s a n d re s p o n d a c c o r d in g ly
In th is g lo b a l b u s in e s s w o r ld o r g a n iz a tio n s a re a ffe c te d b y e c o n o m ie s th r o u g h o u t th e w o r ld a n d n o t ju s t th e c o u n tr ie s in w h ic h th e y a re b a s e d o r o p e ra te from.
C h e a p e r la b o r in d e v e lo p in g c o u n tr ie s a ffe c ts th e c o m p e titiv e n e s s o f
A truly global player must be aware of economic conditions across all borders and implement strategies that protect and promote its business in varying economic climates worldwide.
The third aspect of PEST analysis highlights the influence of social forces within society, including family, friends, colleagues, neighbors, and the media These social influences shape our attitudes, interests, and opinions, ultimately impacting our behaviors and purchasing decisions For instance, in the UK, there is a noticeable shift in people's attitudes towards diet and health, leading to a significant rise in fitness club memberships and an increasing demand for organic food.
Population changes significantly impact organizations by influencing the supply and demand of goods and services within an economy Declining birth rates can lead to reduced consumer demand and increased competition as the number of consumers decreases Conversely, a rising global population, coupled with predictions of food shortages, is driving urgent calls for action to address these challenges.
9 f o r g re a te r in v e s tm e n t in ío o d p r o d u c tio n D u e to fo o d s h o rta g e s A í r ic a n c o u n trie s such as U g a n d a a re n o w re c o n s id e rin g t h e ir re je c tio n o f g e n e tic a lly m o d ifie d fo o d s
Organizations must adapt their products and services to complement and enhance people's lifestyles and behaviors Failure to respond to societal changes can result in a loss of market share and decreased demand for their offerings.