Hounded Car development a synonym for a cheap car, which Is used only by the lower class or a cheapskate. Its content, performance and reputation has been through rosy and rough times. In 1986, Hounded Motor America was launched in California, and sold its first car which is called subcompact Excel. In 1987, Hounded expanded and opened a central state office beside Chicago. After a year, HAM started in Ontario, California, a $21 million distribution center. Afterwards, it opened a distribution center in Illinois. Handmaid’s sales increased In the U. S by 315 percent rise over 1998-2002.
This company was first lead Juju-Young Chunk, which Is the founding chairman on this company. He was had an authoritarian style of leadership, top-down management, with a centralized and unified management structure. The initial ownership structure was dominated only by Mr.. Chunk, and his heirs. Additionally, there was a centralized decision-making process, and the strategic goals were only controlled by the Chunk’s family. This centralized and patriarchal management structure and ownership facilitated Hounded to pursue more autonomy over the external legislations.
For Instance, when HEM made a strategic alliance with Ford, Juju-Young Chunk refused to move his managerial authority to Ford. However, the patriarchal and dominant style of leadership did now allow the employees to express their opinions or object if they saw anything wrong. Afterwards, Se-Young Chugging-Young Chunk younger brother lead HEM. The new leader tried a new management style which can be summarized by harmonious opportunity. He delegated responsibility and authority to executives and managers, and tried to implement a more focused strategy.
Se-Young Chunk improved reduction efficiency by reorganizing or merging the Job functions division. He converted the functional organization to a divisional one. The aim was to efficiently control, evaluate, and develop management ability and motivation. He also intended to improve the competence order to cope with a diversified market and to reduce the costs. Horizontal leadership was being applied. The new style took a long time to adapt to, customers lost confidence in Hounded, while employers were comfortable the way they were before. Equal opportunity allowed more creativity and helped in the development of the company.
Also, the horizontal and autonomous management one increased cooperation, communication, and an easier reporting process. Later, Se-Young Chunk gave the title of Chairmanship to his son, Mongo-Key Chunk. His son used the same leadership style which allowed a smooth transition with little organizational chaos. Moreover, the effort to make Hounded a reliable company with a stable and constructive labor-management relationship continued. A new vision was established and worked upon, which was, making Hounded “top-10 automaker ranking in the 21st century by occupying four percent of the world auto market”.
The strategy adopted was one of product quality movement, value management and the globalization to different markets. Thus, improving the brand image and customer satisfaction is steps towards achieving the new vision. In 1997-1998, HEM faced liquidity problems. The Hounded group was pressured to restructure its business; however, the restructuring was only based on the distribution of hierarchies within the Chunk family. The restructuring was not based on realization of management, thus, the concepts that Se-Young Chunk claimed were not being implied completely.
Chunk continued to improve the product quality, rand value, and management transparency. From 1986 to 1988, the U. S customers loved Handmaid’s first car, and it had a big amount of sales (168,882 sales in 1986, which was an industry record for an import car distributor). Moreover, in 1987, 263,610 units were sold and Hounded had a 2. 58 market share. It was a great business strategy, to use low prices as a way to enter the American market since at that time, most automakers produced high-end, high priced cars.
There were no competition in the entry-level market, which made Hounded use that, and produce a low budget, Excel car. Furthermore, limited public ND private agencies tested this car in reliable ways and no public test results were issued. However, Excel had a huge quality problem. Cars rusted fast, cars stopped in the middle of the road, air conditioners did not work, and those were few problems that happened to this car. Consequently, a huge drop in sales happened. This model was in the bottom 10 car models and it was rated the worst cars for overall injury claims.
The image of Hounded became one of a cheap car with no quality. The vice president of Hounded tried to change the bas image into one were “quality is affordable”, wrought advertisements, lineups, maintenance and financing, but it was hard, and he left the company. It also tried to diversify the product mix, but that did not work either. Accent and Eleanor models, but that received low quality ratings. More managers and key employees were leaving the company. Thus employees did not have a good connection with the company they were working in.
The culture of Hounded was one of no freedom and not a friendly and cooperative environment, because if it was not like that managers and presidents would have considered it their organization and irked to improve it especially in crisis. Therefore, Hounded did not have a clear section to compete with. Even though is clear that HAM is an automobile production company, but in the motor market, different group of customers prefer cars for different reasons. Aiming for the right pool of buyers maximizes the chance of success of Hounded.
Targeting a specific client type with a small line-up of cars plays an advantage for Hounded. Hounded, compared to other main automakers, has a smaller size in terms of total production and employers. This helps Hounded to be more flexible in terms of ricers and decisions related to cutbacks and expansion. Therefore, Hounded faced problems and adopted several strategies in order to solve them which is normal to any company. Question 2 Discuss and analyze the approach that Hounded has adopted for its global strategy (20 marks – 750 words). The strategy of internationalization is what Hounded adopted.
In in the first stage, Hindi acquired Joint ventures with a developmental car maker so that they can to create a world market sales vehicle. The growth in exports and productionnecessitatescarefully linking both, the developed product design and recess technology. Thus, Hounded cooperated with Mediumistic to start this venture. They acquired chassis modules and other parts that were hard to manufacture, for instance they acquired engines and gears from Mediumistic, but fabricated the blocks, cylinder heads, and transmission case in house.
In the early sass, Hounded built a plant for the first front wheel drive vehicle in Korea and invented the “Excel Phenomena” in 1985 which successfully broke through the marketplace in the United States in 1986. Next, Hounded saw a need to diversify to the overseas market. Its efforts threatened after the situation in the U. S market and the domestic market’s saturation. Thus, Hounded sold 24% of overall exported vehicles; 178,328 units in Europe with 32%; and the rest of the regions conquering 44% with 248,832 units (Chunk, 2000).
As the local vehicle market progressively matured, Hounded tried to discover more overseas markets through the development of cars production centers in foreign countries. Particularly, developing countries became more significant markets for Korean auto makers since they acquire cheap labor costs and they found out it is ore effective. Thus, Hounded developed overseas markets for sustained growth since they are positive that the domestic market is not as dependable as it used to be (Freestones and Lung, 1996).
Afterwards, the plan was to increasing global competition domestically and production system, which is a lean production system, to advance productivity and quality. Hounded began to rationalize their reorganized logistics by the use of communication technologies such as “value added network”, and modern information. Because of the development of this system, Hounded was in complete intro of the logistics chain, desegregating the flexibility of the logistic plan. The advantages were a reduced delivery schedule from few months, to few days, to some hours. In 1993 around 76. Percent of the total parts purchased were delivered daily, 17. 1 percent weekly, and 6. 5 preponderantly. This made Hounded have an inventory average of 0. 6 days of production. Later, Hounded realized that it can begin a Joint venture of their suppliers. Accordingly, coordination and development must happen. Hounded worked on this plan and was recognized as one of the main innovators in the use of supplier elation’s. In the end, the cost and quality was controlled through this organization. Subsequently, Hounded established a hierarchical structure of committees where information was regularly exchanged.
Therefore, Hounded gave technical guidance, management guidance, machines, and money to subcontracting companies via the supplier’s association. Hounded now has laboratory facilities to provide bilateral design and development for new machineries between Hounded and their subcontractors. To Join the overseas top level of automobile manufacturers, Hounded created an international network of sales. Where two agencies are located in North America, 40 in Latin America, 37 in Europe, 44 in Middle East/Africa, and 29 in Asia/Pacific (Chunk, 2000).
Nowadays, Handmaid’s is characterized by the transition from a world-wide export strategy to a multi-domestic strategy based on developmental sites in the differential regions. Hounded has increased the production locations with a great manufacturing base which are located inbred areas. Through niche-market strategy, Handsaw’s capable of increasing its periphery market penetrations regardless of the rise in import barriers or increased dumping charges. As for the growth of the Asian market, the company should be prepared with modern technology and run under modern management concepts in overseas plants in Asia.
Therefore, Hounded passed through several risks to go global such as macroeconomics, policy, competitive, resource, currency and strategic risks. The macroeconomics risks were the ones that are uncontrollable such as exchange rates, interest rates and wars. This problem was faced by Hounded when it opened up to the American market. Moreover, Hounded faced some policy risks, which are the political and governmental risks. This can be seen when the Asian market was unstable and this is a reason why the company moved overseas. Furthermore, the competitors of Hounded took its ideas at one point in the market, which is a competitor risk.
Additionally, strategic and resource risks were a key factor that cause Hounded to do research and market analysis before entering the market. Question 3 Reference to the material presented in book Strategy for Business, which theory/ concept that the strategies of Hounded were based on. You need to critically]justify investment in the research and development and advertising which helps to advance he position of Hounded in the market, and it helps increase its profits. Thus, Hounded operates five research institutions in Korea and outside.
The set-up was accelerated to faster transfer advanced technologies in future car maker’s countries. Hounded opened a research center in Yashmak, Japan in 1997. This new research place operated as the Japanese center for mutual exchanges of R with the present institutes, the advancement of new cars and electronics systems and analysis and testing of advanced cars. In Los Angels, they set up a design center and also started technical base in Ann Arbor, Michigan in 1986 to supply the mother company with the newest technology and to make cars that please the different needs of local customers.
Its domestic research institutes are as follows: Ambrosia Central Research Center, Misrepresentation Institute #2, LULAS Passenger Car Institute #1, Chunk Commercial Vehicle Institute, and Naming Design Center. They spent, 350 billion on R in 1997 or 10% of its total turnover (Chunk, 2000). Thus, the information gains are helping the company rise and excel over its competitors. Moreover, the low price strategy plays a cost advantage over other competitor companies. Hounded is considered to be for the low income population, newly married couples, and college students, thus causing its price to be an acceptable, affordable one.
Game theories also played a role in determining the leader in the auto-maker industry. In 1998, Hounded launched national advertisements for “the industry best warranty,” which provided a 10-year, 100,000-mile perpetration protection to the owners. The U. S. Auto-maker industry was puzzled positively with this tactic. This caused the sales to increase tremendously. However, the game theory suggests a resource based perspective which is one where firms should develop hard-to-imitate products to build long term advantages.
Thus, Hounded developed a unique product in the United States and utilized the assets gained from this strategy. However, the competitors such as Chrysler and Mazda began to imitate this idea causing Hounded an unsecured position in the market. Hounded configured its world- wide value chain from global integration to national differentiation. The internal flow of people, technology, information, and value were all concepts that the company kook them into consideration and worked on them. For instance, Hounded did not depend on direct labor but depended on improving the production facilities.
This can be viewed when the level of information technology and automation expanded in the production process while the factory workers on maintained the operation of production. Moreover, product development and improved quality level were planned adequately in Hounded. Thus, the research centers worked to meet the necessities of production lines in advance. The parts were outsourced and were mostly sub-assembled into modules before entering the final assembly line. Hounded, therefore relied on product development and marketing and decreased the burden of parts production.
Thus, efficiency was enhanced through the use of company resources, achieving output economies of scale and by finding more efficient production processes Question 4 Identify and analyze (I) the technology policy that was adopted and implemented by Handmaid’s performance (1 5 marks – 500 words). According to the Logic of managerial capitalism, Chandler’s thesis suggests that the business enterprise should have both technology and governmental policies which are the keys to industrial success. However, if there are no prolonged investments, technological findings do not translate to the market place.
Moreover, the firms need to be renew the organizational levels. Additionally, the business enterprise and their managers determine whether the opportunities will be converted into advantages. Because Hounded built several research centers in Korea and overseas. The R facilities enhanced and facilitated the transfer of innovated technologies in advanced car creators’ countries. This surely facilitated the mutual exchange of research and development with existing institutes. Also, it developed electronic system, new cars, and allows the analysis and assessment of future cars.
Hounded has a design and technical center in order to develop vehicles that please different needs of customers. The technological “nationalism” of the engineers at Hounded furthered the emergence of the company’s own production model. In the early stages of development, the company included many foreign technologies. Moreover, the engineers at Hounded developed and produced original products which played a big role in the progress of Handmaid’s production model. The autonomy given to the engineers from the senior management gave them the freedom to develop new, innovative ideas and compensated or promoted them within the company.
As a result, Handmaid’s development from 1991 till present made them depend on its own state-of-the-art technology to produce unique products on a big scale. The industrial policy in South Korea contributed to Ham’s success. At the beginning of the sass, the Korean government declared a “long-term promotion plan” to help unconstitutionally produce original goods with local parts production. This policy helped Hounded achieve its original model which is called the Pony. Also, the overspent in Korea offered domestic automakers financing and protection from imports.
When the domestic auto-sector experienced over-investment, the government stopped and regulated the number of automakers Owe Jung, 2010). The instable labor relations for companies in South Korea influenced the development of Handmaid’s production model. The government in Korea did not allow regular employees to handle the company, in the early stage of industrialization, thinking that this would keep the salaries low. However, with the rise of democracy in 1987, labor unions started to have a voice. This incommodiousness at Hounded, whose onion contributed directly in the Korean labor movement throughout the sass.