International

Business Project

Analyzing the International Business Strategies of

Toyota and Hyundai

By
Mahinder Pratap Singh

PGP/18/144

Rupesh Kamble

PGP/18/141

Nishant Dey Purkayastha PGP/18/153

Praveen Kumar

PGP/18/157

Vikash Bakrewala

PGP/18/174

Parikshit Jhajharia

PGP/18/205

Table of Contents
1. Introduction.........................................................................................................1
1.1

Toyota...........................................................................................................1

1.2

Hyundai.........................................................................................................2

2. Going Global.......................................................................................................4
2.1

Toyota...........................................................................................................4

2.2

Hyundai.........................................................................................................5

3. International Market Entry Strategies.................................................................7

3.1

Toyota...........................................................................................................7

3.2

Hyundai.........................................................................................................8

4. Analysis of Business Strategies.........................................................................11

4.1

Toyota..........................................................................................................11

4.2

Hyundai.......................................................................................................11

5. Organizational Structure...................................................................................13
5.1

Toyota.........................................................................................................13

5.2

Hyundai.......................................................................................................15

1. Introduction
1.1Toyota
Toyota Motor Corporation is a Japanese car maker headquartered in Toyota, Japan, Aichi. In
March 2014 the multinational enterprise comprised of 338,875 workers worldwide and, as of
November 2014, is the eleventh-biggest organization on the planet by income. Toyota was the
biggest car producer in 2012 (by creation) in front of the Volkswagen Group and General Motors.
In July of that year, the organization reported the generation of its 200-millionth vehicle. Toyota is
the world's first car maker to deliver more than 10 million vehicles every year. It did as such in
2012 as per OICA, and in 2013 as per organization data. As of July 2014, Toyota was the biggest
recorded organization in Japan by business sector capitalization (worth more than twice as much
of 2nd positioned SoftBank) and by revenue.
Worldwide presence

The Toyota Camry is amassed in a few offices around the globe including Australia, Taiwan,
Japan, Philippines, China, Malaysia, Pakistan, Thailand, Russia, India, Vietnam and the US
The organization was established by Kiichiro Toyoda in 1937 as a spinoff from Toyota Industries
to make cars. Toyota Motor Corporation produces vehicles under 5 brands, including the Toyota
brand, Hino, Scion, Lexus and Ranz. It likewise holds a 51.2% stake in Daihatsu, and a 16.66%
stake in Fuji Heavy Industries, also it has joint-ventures with two in China, one in India (Toyota
Kirloskar), one in the Czech Republic, alongside a few "nonautomotive" companies.
Toyota has industrial facilities in many parts of the world, assembling or gathering vehicles for
nearby markets in Japan, Australia, Sri Lanka, Canada, India, Indonesia, South Africa, Turkey,
1

Colombia, Poland, UK, US, France, Portugal, Brazil, and all the more as of late, Argentina, Czech
Republic, Malaysia, Thailand, Mexico, Venezuela, Pakistan, Vietnam, Egypt, China, the
Philippines, and Russia.
In 2002, Toyota started the Innovative International Multi-reason Vehicle venture (IIMV) to
advance worldwide assembling and supply frameworks for pickup trucks and multipurpose
vehicles, and to fulfil business request in more than 140 nations around the world. IIMV called for
diesel motors to be made in Thailand, gas motors in Indonesia, and manual transmissions in India
and the Philippines, for supply to the nations accused of vehicle generation. For vehicle get
together, Toyota would utilize plants in Thailand, Indonesia, Argentina, and South Africa. These
four primary IIMV generation and fare bases supply Asia, Oceania, Africa,Latin America, Europe
and the Middle East with three vehicles: The Toyota Hilux, Fortuner, and Innova.
As of the end of Dec. 2014, Toyota conducts its business worldwide with 54 overseas
manufacturing companies in 28 countries and regions. Toyota's vehicles are sold in more than 170
countries and regions.

1.2Hyundai
Built up in 1967, Hyundai Motor Co. has developed into the Hyundai Motor Group, which was
positioned as the world's fifth-biggest automaker since 2007 and incorporates more than two dozen
auto-related auxiliaries and offshoots.
Hyundai Motor, which sent out its first autonomously made vehicle, the Pony, in 1976, now sends
out more than one million top notch vehicles extending from cars, SUVs, trucks and transports.
In 2010, Hyundai Motor sold around 3.6 million cars around the world, up 16.3 percent from
2009.

Hyundai Motor, South Korea's biggest automaker, sold 659,565 cars in the Korean household
market in 2010, coming to a piece of the overall industry of around 45 percent. Outside Korea, the
organization sold around 2.9 million cars in 2010 in more than 186 nations through in the range of
5,300 merchants.
Worldwide Operations

Utilizing more than 78,000 individuals around the world, Hyundai Motor is actualizing another
worldwide arrangement went for limitation. This incorporates item advancement, outline, deals,
promoting, and shopper administrations to fulfill neighbourhood clients tastes and that of the
worldwide business sector.
As of now Hyundai Motor has six abroad plants in the U.S., India, China, Turkey, the Czech
Republic and Russia. The organization will included seventh plant by 2012, in Brazil. Hyundai
Motor today has a consolidated worldwide generation limit of around 3.91 million units a year
(Korea Domestic: 1.86 million/Overseas: 2.05 million).

2. Going Global
2.1Toyota
From humble beginnings in 1933, as a sub-division of Toyota Automatic Loom Works in Japan to
one of the worlds leading automaker today, Toyotas strategy to go global comes from one of its
visionary policies- "Producing vehicles where the demand exists". During the World War II,
Toyota was involved in making military trucks for the Imperial Japanese Army while Japan was at
war with China. The economic and resource shortages in Japan required these army trucks to be
simplistic yet sturdy in design, an attribute Toyota Trucks had developed an expertise in. While
Toyota was struggling due to tight finances, its war-ally the United States helped revive the
company with an order of 5000 trucks. This order can be considered as one of the entry points for
Toyota in the global markets as United States used these military vehicles in Korea. At the same
time, Toyota also started exporting to South America, starting with Brazil. The post war era made
United States a very attractive platform for the automotive industry. Toyota identified this
opportunity early and entered the US market with the first Japanese export, The Toyota Crown.
Another major milestone which Toyota achieved by stepping into the US market was learning the
art of localization. Toyota setup its own wing for operations in the United States in 1958 which
helped it in bringing low cost offerings in the international markets. Toyota pioneered the
philosophy of Think Global Act Local very early in its expansion. This helped them survive in
foreign markets even during economic slowdowns. Toyota tasted success in the US Market with its
long standing Land Cruiser and Corolla. Toyota entered Europe with its offerings as early as the
1960s identifying the potential in the market. Its performance in the American market helped it
further strengthen its global presence expanding to South America and Europe.

2.2Hyundai
Being a spin-off from the Hyundai Engineering and Construction Company, Hyundai Motor
Company was established in 1967. The cars developed at Hyundai laid the foundation for it to go
global. Hyundais developed its first motor car The Cortina in 1968, in collaboration with the
Ford Motor Company, an established Automotive Company from the United States of America.
The collaboration naturally lent an America touch to the Korean car. Few years later in 1975, when
Hyundai decided to develop its own car, it established an international team for the same.
Engagement with George Turnbull of British Leyland Motor Corporation as the vice-president, a
design developed in collaboration with ITALDESIGN, transmission system and engine from the
Japanese Motor giant Mitsubishi, car-body technologies adopted from Perkinson and Ogihara
Mold Company, heavy-machinery from France and funding from the Barclays, Hyundai proved its
international collaborative abilities. The Korean government had already set the ball rolling for the
automotive giants in its home base by offering preferential allocation of foreign exchange linking
it directly to the degree of localization which could be achieved. In 1973, the Korean government
formulated the Automobile Industry Long Term Promotion Plan where it specifically emphasized
on the development of localized Korean Car. Following the governments announcement, Hyundai
started building its new plant with a capacity of 80,000 vehicles in contrast to its existing 5426
cars per year plant. Hyundai utilized its foreign technology transfers and its local sourcing
capabilities to come up with The Pony, the first Korean Car to be exported, year being 1976.
Having developed a successful low cost passenger car with tacit knowledge acquired from global
markets helped Hyundai put its foot forward in the global industry. Following the oil crisis,
Korean government helped pushed exports out of Korea to help its economy, a major factor which
drove Hyundai towards going global via the export route. With a robust capacity plant, Hyundai
5

quickly grew its local market share in Korea from 19.2% to 79.3%. Hyundai entered the global
markets through South American countries which at that point were untapped markets with limited
local potential in the automotive sector. Hyundais ability to quickly rev-up its abilities with costeffective measures helped it in making Pony an affordable car even for the South American
markets of Colombia, Venezuela and Ecuador. Hyundais ability to turn crisis into opportunities
became its strength during the Second Oil Crisis where it further expanded its global presence by
entering North America in the early 1980s itself. The table below shows Hyundais performance
as compared to one of the other Korean automaker Daewoo. Today, Hyundai is worlds fourth
largest automaker with a global presence in 193 countries.

3. International Market Entry Strategies

3.1Toyota
Toyotas first step to explore a market outside Japan came in 1952. They adopted a Direct
Exporting strategy as Toyota Motor Sales setup an export department and started exporting to
Brazil.
Toyota primarily used the Direct Exporting model to enter its target almost all the countries in
Asia, Americas and Africa. But, in most cases especially in Africa and Asia, it shifted to Indirect
Exporting by signing agreements with local distributors within a few years.
The Direct Exporting model was adopted early on as it gave Toyota more control over the
operations and would have enabled them to get closer to the customers and understand them better.
However, this model increased costs for the company and it became difficult to manage operation
in Africa and Americas due to the geographical distance and time difference in the age where
communication was not as easy as it is today. Also, lack of knowledge about the local market hurt
their progress.
Hence, within a few years of entry, in some cases months, distribution agreements were signed
with local distributors. These distributors had local market knowledge and their inputs enabled
Toyota to increase the scale of their overseas operations. Toyotas cost and risk came down as a
result of this.
The Asian markets were easier for Toyota to control from the headquarters in Japan and hence
Direct Exporting was followed until manufacturing facilities were setup once the brand had been
established.

The challenges experienced by Direct Exporting to Americas led to Toyota adopting the Indirect
Exporting strategy right from the start with distributors in countries across the continent except
Eastern Europe where it established subsidiaries (Poland, Czech) or acquired equity stakes
(Hungary). Denmark was they first European country in which Toyota entered.
In the early 1980s, Toyota started facing barriers from government policies or conditions of each
country due to trade conflicts and increasing claims of import substitution with localized
production. This led to Toyota setting up manufacturing facilities in most countries. It was at this
time they entered Eastern European nations and went ahead with subsidiaries or acquisition of
equity stakes. Though the method was high risk due to the large capital investment required,
Toyotas success in the rest of the continent had given them the confidence that they would be able
to succeed in Eastern Europe as well.
The setting up of manufacturing facilities across Europe brought Toyota closer to the customers.
This proved to be useful as Europe already had a number of established local players and
establishing presence put them in a better position to take on the competition.

3.2Hyundai
Hyundais internationalization started with a Direct Export strategy. They began exporting the
Hyundai Pony variant to Chile, Argentina, Colombia, Ecuador and Egypt from 1976. European
exports began in 1978 with Belgium and the Netherlands, with Greece added shortly thereafter.
Korea at that point of time was still a developing economy. This enabled Hyundai to produce the
vehicles at a lower cost that in the developed economies. These vehicles were more competitive
that the entry level variants of the other manufacturers due to the lower cost. Thus, this entry
strategy enabled Hyundai to increase sales at a rapid rate.

A similar strategy was adopted by the firm during its entry into the largest market in the world, the
US market in 1986. The entry strategy was to import its subcompact model called Hyundai Excel
and take it to the market through its wholly owned subsidiary called Hyundai Motor America.
Most other players had moved to the high end high price market, leaving behind a void in the entry
level market which Hyundai tried to fill it with Excel. As with the Pony, the lower production cost
enabled Hyundai to price the Excel at around $5,000 USD, around $1,000 USD cheaper than the
vehicles of other manufacturers in this segment. The car set a record for first-year import and
helped establish Hyundai brand name for further expansion in the US. Hyundai Auto Canada was
opened in 1989 with an assembly plant at Quebec to serve the entire North American market.
Similarly, Hyundai served the European markets too through the Direct Export strategy. This
enabled them to compete better as the production in Korea enabled them to keep prices low and
take on the more established players.
As Korea started moving from a developing to a developed economy in the late 1980s, production
became difficult as wages increased. Therefore in 1995, Hyundai started to internationalize its
manufacturing operations in South Asia, especially Indonesia, Malaysia and Philippines. A plant
was also opened in Egypt. A couple of years later in 1997, a plant was opened in Chennai in India.
The shift in manufacturing to the specific countries enabled Hyundai to maintain their value
proposition of providing competitive prices. The low cost of production continued and the Direct
Export model reaped rewards for the firm.
A separate strategy had to be adopted to enter the Chinese market. In May 2002, a joint venture
was setup with Beijing Automotive Industry Holding Corp. The reason for a deviation from the
usual model was that in China, the existing manufacturers also had access to cheap labour and
hence for Hyundai had to look for more avenues to reduce costs. Setting up a plant in China
9

reduced tariff and shipping costs. But, since a wholly owned subsidiary could not have been
established under the laws that existed at that point of time, a JV with a local player was the only
available option.

10

4. Analysis of Business Strategies

4.1Toyota
In order to take advantage of the opportunities provided by the global market Toyota has adopted a
Global Business Strategy and named the concept as think global, act local meaning that they
would cater to the markets worldwide but adapt their products aligning them to the local
consumers demands. This thinking is backed by a strife to achieve high quality, to perfect and
innovate with automotive technologies and showing concern for the environmental surroundings
meanwhile focusing on the consumer needs. Toyota especially leveraged upon the opportunities
provided by emerging markets and economies with lower wages and hence launched low-cost cars
in markets like India and China. The company has always stuck to its principles of honesty and
loyalty towards the customer by publically apologizing and withdrawing such faulty cars from the
market. This global strategy is mainly based on research and constant quality enhancement along
with technological innovation in order to keep the customers satisfied with its products.

4.2Hyundai
Hyundai has seen a transition from a global export strategy to multi-domestic strategy which is
based on the local manufacturing sites in the differential regions since they cannot sustain their
growth by depending on the domestic market, i.e., Korea. Hyundai has increased production sites
periphery areas. Following a niche-market strategy, it has increased its market penetration
globally. The core markets oversee direct exports. They have concentrated on modernizing their
factories with latest technologies to stay abreast with the competition. Like in the case of India
various cheap variants of hatchbacks were launched to challenge Maruti-Suzukis business head
on. In order to survive the fierce sales competitions in Asian markets, which are predominantly
11

filled with Japanese players it has extensively started working on its management concepts along
with technological advances and exhaustive R&D.

12

5. Organizational Structure
5.1Toyota
From April 2013, Toyota has come up with new organizational structure as shown in below image.
This new structure is brought in to place to achieve the sustainable growth of organization.
Toyota new global architecture (TNGA) has given the responsibility to derive the strategy for
medium to long term technology base products. Product and Business Planning Division has given
the responsibility of developing products and strategy based on the needs of the different markets.
These two divisions dont belong to any of four groups.
Chairman/Presid
ent

Lexus
International
IT & ITS
External Affairs & Public Affairs
Administration & HR

TNGA
Planning
Division

Product &
Business

Toyota No.1

Toyota No.2

North
America,
Europe,
Japan

Accounting
Purchasing

Customer First Promotion

(Planning to
Production /
sales)

China; Asia
& the Middle
East; East
Asia &
Oceania;
Africa; Latin
America &
the
Caribbean

Unit Center
Developmen
t, planning,
and
production
of engines &
other unit
components

(Planning to
Production /
sales)

Technical Administration
Production Control
Vehicle Production Engineering
& Manufacturing

There are basically four units which consist of Lexus International, Toyota No. 1, Toyota No. 2
and unit center as shown in the diagram. These business units can apply the appropriate business
13

model to suit the market requirement. Lexus brand comes under Lexus international. Toyota 1 is
responsible for the operations of Japan, North America and Europe. Toyota 2 is responsible for the
operations in China, Africa, Asia & the Middle East, Latin America, East Asia & Oceania and the
Caribbean. Unit center is responsible to develop all required automotive components.
Responsibility includes planning to the development of production technology and related
functions.
Under the new business model freedom is given to each business unit to develop their own
business model based on the market requirement. There is separate vice president to look after the
operations and earning of the two basic markets that is emerging market and emerged market. This
is created to respond different dynamics of these two markets. Emerged market growth is depend
upon how organization captures the replacement demand as the market is considered to be
stagnant due to high penetration. For this market, main driving factor for the growth is the quality
of the product and advance technology which is being implemented in the new product.
Environment and safety are also two significant factors needs to be considered for launcing new
products. On the other hand emerging markets are experiencing rapid growth and high penetration
rate. In this market launch of the product which meets the market need plays the significant role
for success.
Under both units of Toyota 1 and Toyota 2, there is horizontal structure. There are separate
regional headquarters to look after the business operations of the respective units. All the
operations of automotive component developments come under Unit Center. A separate vice
president takes care of all the global unit operations.
Toyota follows divisional organization system. Business operation committee enables president to
follow-up different ongoing executive activities and other related information from all the heads of
14

divisions. It also monitors execution of the different projects in different units. In a meeting of
management council, managing officers, directors and supervisory board members report about
the status of the business operations. Functional meetings are conducted to discuss different issues
such as quality, HR, production, technology etc.

5.2Hyundai
The Hyundai motors adopted multi-domestic strategy for Business. Earlier it was a global export
strategy. As they wanted to take advantage of Local markets, Hyundai feels multi-domestic can be
implemented as follows
Hyundai has tried to increase production facilities throughout the world. Through Niche market
category, the company made penetration despite of many trade barriers in many countries. For core
markets they use direct export strategy. To increase on quality Hyundai will open new plants with
using parent companies expertise and knowledge. To leverage the multi domestic strategy,
Hyundai will focus on "Asian Car" based on new plant in India.

Hyundai Global

America
Continents
North America
USA
Mexico
Panama &
Dominican
republic
Canada

Europe

AsiaPacific

China
India
Japan
Philippin
es
Turkey

German
y
Czech
Republic
Russia

South
America
Brazil
15

Australia

Africa

South
Africa
Libya
Egypt

Australia
New
Zealand

Within a country Hyundai follows following structure. The structure given here is of Hyundai
structure in India
Organization Structure of Hyundai (India)

Managing Director
G.M(Finance Operation)
A.G.M(Sales & Marketing)

Senior

&&&Marketing

Service Manager

Accountant

Accountant
Sales
Manager

Duty
Manager
Hyundai
Advantage

Asst
Sales
Manager

Team
Leader

Sourcing
Officers

HR
Executive

IT

Customer
Relation
Manager

Parts in
charge

Customer
Relation
Officers

Customer
Relation
Executive

Body
shop in
charge

C.R.M

Asst.
works
Manager

CRO
Parts in
Executives

Sales
Consultant

Body
shop
Advisor

Body Shop
Supervisor

CRE

Service
Advisor

Floor in
charge

Supervisor
Denter

Painter
Mechanics

16

Parent Subsidiary Relationship at Hyundai

Hyundai as following multi domestic strategy now and is focused at high localization for these
new markets. It employs about 78000 people worldwide. Its global policy leverages upon
localization and this includes product development, design, sales, marketing, and consumer
services to satisfy local customers tastes as well as that of the global market. They make their
products according to World standard while keeping local factor in mind.
Hyundai gives autonomy to their local subsidiaries, partners to have autonomy. They have global
standards in manufacturing and design that need to be maintained. They Have R&D facilities in
India now, and they are exporting Cars to many countries from there. Freedom to Local managers
is given in Decision making. However looking at Head positions ( CEO) in few countries, one can
say it is managed by Korean leaders. In top management many local leaders are present. The
subsidiaries, partners have full freedom to choose the distribution network. The Parent company is
motivated to expand globally through building sales, distribution and R&D.
The Design Centre at Namyang is leading other design facilities in India, China, Europe and
Japan. It provides them superior design and local players gain local insights to customize those
designs into local products.
They have different sort of relationships with subsidiaries when we analyses Hyundai operations
in different countries. In 2002, Hyundai entered China and made a joint venture with Beijing
automotive holding corp (BAHC). Here the slow management of BAHC actually delayed entry of
Hyundai in Chinese market. In India they have a fully owned subsidiary and operating with lot of
freedom. Hyundai has 2plants near Sriperumbudur in Tamil Nadu in India and an R&D facility in
Hyderabad. It has grown to be the second biggest manufacturer in India. However the in plant

17

manufacturing the work culture and the atmosphere has been implemented as Korean
methodology.

18