Impact Of Globalization Strategies On Financial Performance Of Korean Motor Vehicle Industry

Problem statement

The term globalization strategy refers to consideration of three major areas such as multinational and international strategies that can help the organizations to expand the market share and customer base at international level and support the management to achieve the goals and objectives (Cartwright, 2017).  The design and development of global strategy are essential for the organization for gaining the competitive advantages and craft improvement in the sales and profitability by using the market opportunities (Christensen & Kowalczyk, 2017). The development of global strategies requires the analysis of internal and external resources, capabilities and current international position of the organization. The proper analysis and planning of the global market conditions is helpful for organizations to manage and arrange the resources that could help in the implantation of strategy and craft improvement in the financial performance as per the determined goals and objectives (Gereffi, 2018).

The Korean motor vehicle organizations are performing well in domestic marketing as well as the European market. The proper consideration of customer needs and expectations is helping organizations to maintain the sales and profitability according to the required standards (Castaño Méndez, & Galindo, 2016). The problem for organizations is to expand the market share and sales in the Asian market which has the high demand for personal and commercial vehicles. The study will focus on factors and global marketing and sales strategies that could help the organization like Hyundai to expand the market and increase the financial performance to meet the goals and objectives more professional manner (Golikova & Kuznetsov, 2016). However, the local automobile organizations from this region are having the strong impact on the customers and offering quality products and services to retain them and maintain the success in the market. The study will analyze various strategies that used by the company to grab the opportunities and increase the sales in the market. Moreover, the consideration of factors those are essential for framing the strategies to gain the competitive advantages as well as improve the brand effectiveness in the market. The implementation of strategies also has a significant impact on the success of organizations to perform well in the international market (Srikanth, 2016). The study will focus on growth and profitability through global strategies.                   

Aim:

The aim of study is to identify the impact of globalization strategies used by Korean motor vehicle industry on the financial performance of Hyundai.

Objectives:

• To identify the globalization strategies used by Hyundai for increasing financial performance in Asia.
• To analyze the factors that contributed in globalization of motor vehicle sales in Asian countries for Hyundai
• To analyze the improvement in market share and profitability in global market through global stagey of Hyundai

1. What are the major globalization strategies used by Hyundai for increasing presence in global market?
2. What are the key factors considered for faming the globalization strategies for encouraging financial performance of company?

Review of literature is the essential step for developing the strong theoretical background for the study that helps to understand the key point of the study. This part of the research will help the researcher to gather the information about the various aspects of the globalization strategies that could help in the achievement of goals and objectives at the international market. The information for relevant literature will be collected from the past studies, books, research articles and libraries that help to understand the issues and factors for the chosen topic of study.

Global strategy refers to the planning that helps organizations to increase the presence in the global market and support in the growth in the business for sales and profitability in the international market. As per the views of Filatotchev & et al., (2016), the decision making approaches that used by the organization to encourage the branding and expand the business at the international level are considered as global strategies. The automobile organizations are highly concern about the expansion of business at the international market and encouraging their sales and profitability. Along with this, Bauman, McFadden & Jablonski, (2018), has also found that the considerations of globalization strategies that involve marketing, manufacturing, and distribution in the proper manner have the positive impact on their financial performance. The globalization strategies that majorly used by the organization involve market penetration and global strategy. Cavusgil & Knight, (2015) have stated that some minor modifications in the products and services according to the target market are having the positive impact on the presence and marketing of the products that help the organizations to gain the attention of the customers. For that consideration of customer needs is essential.  

Aim and objectives

Apart from that, the Sarin, (2018) has discussed the transnational strategy that used for entering into the international market. According to this strategy, the organization needs to develop the balance between international standards and local preference of the products and services that support them to design and market the products. MuyiwaAdeleke, Uchenna, & Sunday, (2018) has stated that understanding of approaches that customer used for buying the products can help leading organization to make changes in the products and marketing aspects. This will help in the development of brand value in the international market (Mun, 2016).

There are various factors that have the direct and indirect impact on the market performance and development of international strategies to improve the sales and profitability. Lee, & Lee, (2015) have identified factors like commitment level of organization, investment level, the approach for market penetration, identification of target market and quality of products and services. These factors play the critical role in the marketing and branding of the organization at international level (Vargas, 2015). For automobile organization like Hyundai, it is essential to understand the economic condition, buying behavior of customers and the performance of existing organizations from the automobile industry (Wang & Yeo, 2016). The technical advancement in products and services is also the important factor that influences the efficiency and effectiveness of the vehicle performance. In spite of that Hemmert & Jackson, (2016) have critically argument that the export duties and taxes that an international organization pays increase the cost of the products that affect the sales of the organization in the overseas market. In addition to this, the political conditions and business environment of a nation also have both positive and negative impact on the sales and profitability of the automobile organizations (Park & Shintaku, 2016).

The globalization of business is becoming important for leading organizations to increase the brand effectiveness that has the significant impact on the sales and profitability. Similarly, Kim, Jean & Sinkovics, (2018) has asserted that the proper consideration of global strategy and knowledge about the target customers from the international market influences the sales of the organization. As per the views of Jun, & Park, (2016), the global marketing and customer services of an organization have the direct impact on the branding substance and approach to manage the customers. The offering and delivery of goods and services play the critical role in making changes in the preference of the target customers (Turner, 2017). The automobile organizations are using the global and different marketing strategy that involves the use of particular language, providing information about the benefits of buying the products as well as after sales services. This kind of approaches and initiative of organizations are supporting them to increase the sales and profitability in the global market (Morkovkin & et al., 2016). Moreover, the starting the manufacturing services in the potential market can also support to improve the global presence and overcome the cost of production and transportation that directly influence the margin of sales and profitability of the company at international level (Noailly, & Ryfisch, 2015).

Research questions

After carrying the extensive review of the literature, it has been found that global strategies are having the positive impact on sales and profitability of organizations. Apart from that, there are some elements that need discussions such as the use of the global strategy for automobile organization and impact on their sales and profitability (Aharoni, 2014). The proper consideration of issues and factors will require more research to understand the impact of implementing globalization strategies.       

Research methodology is an important aspect of undertaking the study. The proper framework of research methodology is helpful for developing the systematic approach to solving the problem. The research methodology also helps the readers to understand the manner in which the study was conducted (Panneerselvam, 2014). The key aspects of research methodology are philosophy, design, approach, data collection, and analysis as well as ethical considerations.

To manage the research, there are majorly three types of philosophies are used such as interpretive, positivism and realism. The positivist philosophy is considered to be the focus on the objective nature whereas interpretive is used for managing the subjective nature of research (Mackey & Gass, 2015). Realism is the mix of both interpretive and positivism philosophy. For the current research, the investigator has chosen the realism philosophy to consider both objective and subjective variables to increase the validity of the study.

For meeting the objectives of research, the proper consideration of the research approach is important. There two types of research approaches are used such as deductive and inductive. For the current research about analyzing the impact of globalization strategies on sales and performance of automobile organization like Hyundai, the researcher has chosen the deductive approach that will help in drawing a valid conclusion (Taylor & et al., 2015).

The type of research is based on segmentation, barriers, and drivers of the study. Majorly two types of research are considered such as quantitative and qualitative. For the current research on the analysis of the impact of global strategies on the financial performance of the Korean motor industry and organization like Hyundai, the researcher has chosen quantitative method. This type will help to overcome the gaps in the research that has been supported by the numerical data to support the findings (Lewis, 2015).

For conducting the research, the researcher could use descriptive, exploratory or casual design. The design of the research is based on the type of the research. For the current study, the researcher has selected the descriptive design to prove the impact of globalization strategies on the financial performance of the Korean motor industry (Flick, 2015).

As per the current research objective researcher needs to collect appropriate data about the globalization strategies of Hyundai and financial performance. Author has used secondary data collection method for obtaining facts and figures of the company. And regarding this author has used different sources such as annual report and website of the Hyundai. As per the secondary data author has collected the sales and profitability of the firm that has helped in analyzing the financial performance of the organization and that has helped in attaining aim and objective of the study (Flick, 2015).   

Literature review

After collecting data author has used the quantitative methodology for analyzing facts and figures such as statistical analysis method. Quantitative data analysis has helped in analyzing the numerical analysis of the financial performance of the firm. Regarding this, author has used statistical methods such as descriptive analysis, graphical methods, etc. On the other hand, researcher has focused on globalization marketing strategy of the firm. Study has focused on attaining aim and objective of the research by applying appropriate data analysis methods (Wang and Yeo, 2016). Therefore, these data analysis methods have helped in resolving the research problem in effective manner.

The consideration of ethical issues is beneficial for increasing the reliability and validity of the research. The researcher has followed ethical policies to keep the research on the right track. The data has been collected from the authentic and reliable sources and not been used for further activities (Ledford & Gast, 2018). Moreover, the research is free from biasness and data is not copied from the sources.

As per the above discussion author has used the statistical analysis for examining collected facts and figures. Analysis of the obtained data is as follows: 

It is an important method for determining mean, mode, median and other statistical analysis of the numerical facts and figures of the financial performance of Hyundai.

Figure 1: Graphical analysis of Operating profit

Data collection has reflected that Hyundai has used the globalization marketing strategy towards Indian in last five years. So, company has invested the huge amount of money in global marketing. Descriptive statistical of the sales and profitability has shown the impact of these strategy on sales and profitability of the firm. As per the sales means average sales of the company is $4.47 Million and average operating profit is 7.166 trillion won. On the other hand, graphical analysis has reflected that sales of the Hyundai have increased in last five years and it has shown that globalization marketing strategy helped in increasing the financial performance of the firm. But, on the other hand, investment on global marketing also affect the operating cost of the company that has negative impact on operating profit of the firm. Therefore, the current research study has found that globalization marketing strategy has helped in increasing the sales of Hyundai but on the other hand, investment increases the cost of the firm that can decline the operating profit also.

Now, the regression analysis is performed in excel to find the insight of the relation between the yearly sales and the operating profit (in WON). It is expected that the operating profit depends on the sales in that particular year.  

Hence, from the above table the predictor model for operating profit (in trillion WON) will be

O = 19.09 -2.4998*S.

Where, O = Operating profit in trillions (WON)

S = Sales in billions ($)

Now, the R^2 of the model is 0.3765 or 37.65% of variation in the Operating profit is explained by the change in sales in a year. Hence, the model is not an complete predictor model to express the operating profit and there exist some other external variables that effects the operating profit.

Factors that consider in global strategies

The bivariate correlation coefficient between the operating profit and the sales is 0.6136 or it can be said that both are moderately positive correlated or with the increase in sales the operating profit is also expected to increase moderately.

Hence, for globalization of the financial market of Hyundai the factor that is responsible is the increment of the operating profit of company which is dependent on sales in the running year. Hence, the globalization strategies that may be employed must be focused on increasing the operating profit or increasing the sales from current business as this will help the company to extend the business globally or to provision for the unforeseen losses.

The international market capturing strategies that used by the Korean Motor company Hyundai involve the planning and implementation of manufacturing plant in the selected country to overcome the cost and meet the economic expectations of the target customer groups. According to study, the organization has used the global strategy for expansion of business and managing the supply of the products and services in the particular region of the nation.

The outcome of the research provides information about the key factors that considered by the Hyundai for expanding the business and sales of the organization. The key factors that the organization has involved in globalization strategy for expanding the business in the Asian region involve the manufacturing in the local market, marketing, and availability of products. The organization has used marketing terms more effective manner to create a place and improve the market share. The Hyundai management has used customer needs through research and development, considered the local languages and marketing trends for creating the awareness in the market to get the attention of the customer. Moreover, the easy processing and economical services provisions have also helped the organization to increase the sales and profitability in the global market.

Determining the impact of globalization marketing strategy on financial performance of Hyundai is the major aim of the current research. Findings of the literature has concluded that Korean motor companies are focusing on customer needs and offering the customized products and services that expected by the target customers. The study revealed that globalization strategies of Hyundai have the positive impact on the expansion of the market at the international level and gain the competitive advantage. Moreover, the marketing aspects that used by the organization has the positive impact on the branding and influencing the decisions of the potential customers. But on the other hand, findings of the statistical analysis have reflected that the sales of the organization have been increased in the last five years in the international market as current sales of the organization are more than 7 trillion but operating profit has decreased due to the huge investment in the marketing strategies. In contrast, the substantial utilization of resources and proper development of manufacturing plant in identified nations has supported the organization to meet the determined goals and objectives to gain the competitive advantage.

Conclusion, recommendation and limitations 

Impact of globalization on sales and profitability

From the current study, it has been carried out that globalization strategies that used by the Korean Motor industries have the positive impact on their sales and profitability. The research has analyzed that factors like proper market research, use of marketing tactics and utilization of resources has helped the automobile company like Hyundai to create the place in the Asian region.

The aim of study was to analyze the impact of globalization strategies on the financial performance of Korean automobile companies. The outcome of the study has supported that globalization strategies like marketing, use of on-site manufacturing units and customer originated approach has helped organization to meet the finical objectives.      

The current market share of the organization is around 8% in the Indian market. Moreover, the research has identified that sales of the organization are increasing as quality and range of personal and commercial vehicles has been increased. In the globalization strategy of Hyundai, the management has focused on the manufacturing, economical scale and relationship with the national government to support their planning of expanding business in the particular market. This kind of strategies for globalization has increased the market share of the company in the Asian region and helped to improve the profitability in overall business.

The limitations of research that have affected the flow involve the proper management of time and collection of data to meet the requirements. I have spent a lot of time for collecting the data by reading the books, journals and analyzing the company website. Moreover, I have lacked in consideration of methodologies to meet the required framework of the study. However, I have tried to complete the research on time and maintaining the validity.                                                                

To improve the brand image and maintain the substantial growth in the international market, it is been recommended to Hyundai management to address the different customer needs and demand by making changes in the products quality and range. The marketing strategy that used by the organization has the positive impact on business but the use of discounting offer, festival discount and after sales services need improvement. The proper availability of post-sale services and parts of vehicles can boost the sales and profitability of Hyundai.                      

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