Operation

Management Assignment

Submitted To: Submitted By:Prof. O. S. Rao Krishna Chaitanya (19004)

M. Ashok Kumar (19010)Sneha Suman (19037)

Devesh Soni (19057)Karan Thawani (19058)

Hyundai Manufacturing Plants

Company Overview

Hyundai Group is a South Korean conglomerate (Jaebeol) founded by Chung Ju-yung. The first company in the group was founded in 1947 as a construction company. With government assistance, Chung and his family members rapidly expanded into various industries, eventually becoming South Korea's biggest chaebol. The company spun off many of its better known businesses after the 1997 Asian financial crisis, including Hyundai Automotive Group, Hyundai Department Store Group, and Hyundai Heavy Industries Group.

The Hyundai Group now focuses on elevators, container services, and tourism to Mount Kumgang. As of March 2007, Hyundai Engineering and Construction is the main shareholder of Hyundai Merchant Marine, which is the de-facto holding company of Hyundai Group.

History

In 1947, Hyundai Togun (Hyundai Engineering and Construction), the initial company of the Hyundai Group, was established by Chung Ju Yung. In 1950, Hyundai Togun was renamed Hyundai Construction. In 1958, Keumkang Company was established to make construction materials. In 1965, Hyundai Construction begins its first overseas venture, a highway project in Thailand.

In 1967, Hyundai Motors was established. In 1975, the group begins construction on an integrated car factory and launches a new Korean vehicle.In 1973, the group's shipyard is incorporated as Hyundai Shipbuilding and Heavy Industries, renamed Hyundai Heavy Industries in 1978.In 1976, Hyundai Corporation is established as a trading arm. The same year, Asia Merchant Marine Co. established, later renamed Hyundai Merchant Marine.

In 1977, Asan Foundation was established.In 1983, Hyundai Elevators and Hyundai Electronics were established.In 1986, Hyundai Research Institute was established.In 1988, Asian Sangsun was established, renamed Hyundai Logistics in 1992.During 1997 Asian financial crisis, Hyundai acquired Kia Motors and LG Semi-Conductor.In 1998, Korea's economic crisis forced the group to begin restructuring efforts, which include selling off subsidiaries and focusing on five core business areas. Nevertheless, Hyundai began South Korean tourism to North Korea's Kumgangsan. In 1999, Hyundai Asan was established to operating Kumgang tourism, the Kaesong Industrial Complex, and other inter-Korean work.[2]

In 2001, the founder Chung Ju-yung died, and the Hyundai Group conglomerate continued to be dismantled.[3]

In 2007, Hyundai Construction Equipment India Pvt. Ltd. established in India.In 2010, Hyundai Group was selected as a preferred bidder by creditors for the acquisition of Hyundai Engineering & Construction.

Restructuring

Before restructuring (beginning circa 2000), Hyundai's major areas of activity included shipbuilding, car manufacture, construction, retailing, finance, and electronics. After founder Chung Ju-yung's death in 2001, the component companies of Hyundai were split off into separate companies.

VISION & MISSION

VisionOur Team provides value for your future.

MissionTo create exceptional automotive value for our customers by harmoniously blending safety, quality and efficiency. With our diverse team, we will provide responsible

stewardship to our community and environment while achieving stability and security now and for future generations.

Goal and Objective Of Company

Customer satisfaction is the number one value of the company. Hyundai Motor Company considers its most important mission to be bringing the enjoyment of elegance and confidence to its customers, rather than just selling products. Hyundai strives to bring its customers luxury and style. Therefore, Hyundai will continue to stabilize its global management by establishing an effective cooperation system among production bases around the world. Hyundai Motor Company's management goal in 2009 is customer–oriented management and continuous execution of global management. Large–scale investments made up to this point will materialize.

Objectives

They are aiming for 5% market share of the Indian market through unit sale volume of 10 0000. Other objectives are aiming for 10% market share of the Indian market. An important objective will be to establish a well-regarded brand name linked to a meaningful positioning. They will have to invest heavily in marketing to create a memorable and distinctive brand image projecting innovation, quality and value. They also must measure awareness and response so they can adjust our marketing efforts if necessary.

Product Overview

Situational analysis

Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai Motor Company, South Korea and is the second largest and the fastest growing car manufacturer in India. HMIL presently markets 20 variants of passenger cars in six segments. The Santro and Pa in the B

segment, Getz Prime in the B+ segment, the Accent and Verna in the C segment, the Elantra in the D segment, the Sonata Embera in the E segment and the Tucson in the SUV segment.Hyundai Motor India, continuing its tradition of being the fastest growing passenger car manufacturer, registered total sales of 299,513 vehicles in calendar year (CY) 2006, an increase of 18.5 % over CY 2005. In the domestic market it clocked a growth of 19.1 % a compared to 2005, with 186,174 units, while overseas sales grew by 17.4 %, with exports of 113,339 units.HMIL's fully integrated state-of-the-art manufacturing plant near Chennai boasts some of the most advanced production, quality and testing capabilities in the country. In continuation of its investment in providing the Indian customer global technology, HMIL is setting up its second plant, which will produce an additional 300,000 units per annum, raising HMIL's total production capacity to 600,000 units per annum by end of 2007. HMIL is investing to expand capacity in line with its positioning as HMC's global export hub for compact cars. Apart from expansion of production capacity, HMIL plans to expand its dealer network, which will be increased from 183 to 250 this year. And with the company's greater focus on the quality of its after-sales service, HMIL's service network will be expanded to around 1,000 in 2007.

The year 2006 has been a significant year for Hyundai Motor India. It achieved a significant milestone by rolling out the fastest 300,000th export car. Hyundai exports to over 65 countries globally; even as it plans to continue its thrust in existing export markets, it is gearing up to step up its foray into new markets. HMIL has also been awarded the benchmark ISO 14001 certification for its sustainable environment management practices.

Product Range:

Hyundai Elantra

Getz

I10

Santro

I20

Verna

Accent

Tuscon

Opportunities

Leading Growth

As the market leader, company led the growth in the passenger car sector last year. Hyundai sales went up 30% to 4,72,000 units. This, as I said earlier, is the highest annual sale since company began operations 20 years ago. Hyundai also gained market share, mainly on account of its performance in the competitive A2 segment where it increased its share from 40.3% in 2005-06 to 47.7% in 2006-07. The record sales performance was reflected in the financials. Net Sales (excluding excise) grew by 31% to Rs 93,456 million. Operating Profit Margin increased from 0.8 % in 2005-06 to 4.7 % in 2006-07. Profit after Tax jumped 270% to Rs 5421 million.

The World’s Largest Automobile Plant-The Ulsan Plant

As Hyundai Motor’s main production facility, the Ulsan Plant sits on a 5,050,000 m2 site and is equipped with five independent plants that employ over 34,000 personnel to produce an average of 5,400 vehicles a day. Additionally, the plant has its own port where up to three, 50,000-ton ships can anchor simultaneously. The Ulsan Plant, also dubbed the “Forest Plant,” encompasses 580,000 trees as part of its landscape and state-of-the-art facilities.

The Advanced Production Base Focusing On Export Strategy-The Asan Plant

With an annual capacity of 30,000 units, the Asan Plant is an entirely self-contained, independent automobile production complex that mainly produces strategic mid-to large-size passenger cars for export. The Asan Plant offers a bright and pleasant, people-oriented and nature-inspired working space, and has proven that the quality of the working environment determines the quality of products.

World’s Largest Scale Commercial Vehicle Production Plant-The Jeonju Plant

With an annual production capacity of 125,000 units, the Jeonju Plant specializes in producing mid-to large-size buses, trucks, and specialty vehicles that exceed 2.5 tons.

Global Production System

Making The Top 10 In Its First Year Of Operation In North America

Within one year after it began mass production in May 2005, the Alabama Plant achieved the incredible feat of being placed 10th in product quality among 37 plants in North America. It focuses on mid-to full-size vehicles, and continues to live up to its reputation as a comprehensive automobile plant that applies the latest technologies and techniques to its production lines.

600,000 Units Per Year Production Capacity-China Plant

In addition to the existing first plant, a second plant with an annual capacity of 300,000 units was added to the China Plant, increasing its total annual production capacity to 600,000. The plant is a reassuring foothold in securing a sizable share in the automobile market in China, which is rapidly becoming a global economic powerhouse.

Second Place Market Share In Just Two Years- India Plant

A comprehensive, self-sufficient automobile plant that focuses on the R&D, testing, manufacturing, and sales of new products that are adapted to the Indian market, the India Plant added a second plant in 2008 to achieve an annual production capacity of 600,000 units. It serves as an overseas manufacturing plant for compact cars, such as the first overseas-specific model i10 and the strategic European model i20. It has accomplished much in India’s automobile industry, including setting a production record of 2,500,000 units and sales of 1,000,000 units in the shortest time, and is responsible for 20% of the market share and 66% of the automobile export in India.

Critical Foothold In The European Market-Turkey & Czech Republic Plants

Turkey: The expansion of the Turkey Plant in March 2007 resulted in an increase in the annual production capacity from 60,000 units to 100,000 units. A strategic foothold that connects Europe, Africa, and the Middle East, the Turkey Plant plays a key role in the increase of exports from the region

through the localization of the Accent and i20 models.

Czech Republic: Nineteen months after its historic groundbreaking, the Czech Republic Plant commenced mass production in November 2008. The Czech Republic Plant focuses on a strategy of full localization to develop models geared to the tastes of European consumers. Taking full advantage of its strategic location in the center of Europe, the Czech Republic Plant

Russia PlantsScheduled to commence mass production in January 2011, the Russia Plant is the only auto plant in Russia that can handle the entire manufacturing process of complete units. The plant will start off with an annual production of 100,000 units, which will eventually increase to 150,000 units. Comprised of expert employees trained in Korea and in the Czech Republic, the Russia Plant will focus on production of the C-Class models with reinforced designs adapted to the local needs in Russia.

Brazil PlantsThe Brazil Plant will secure a manufacturing foothold in the biggest market in Central and Latin America and play an important role in increasing sales in the region. The Brazil Plant will be producing stylish and fuel efficient compact cars suited for the Brazilian market, and contribute to increasing the market share in the region.

Inventory Management

In an ongoing effort to enhance customer service, Hyundai will roll out a new inventory management system to dealers, which is expected to increase same-day service repairs and enhance inventory efficiency. The Supply Modeling and Retail Tracking collaborative dealer inventory management program, known as Smart Stock, has increased parts sales by 19 percent and inventory turns by 25 percent in a pilot program. Hyundai's goal is to increase same-day service repairs, a key component of overall customer service.

Between 30 and 40 dealerships will be upgraded to the Smart Stock system in November, with all Hyundai dealers having access by the end of 2010. While individual dealers understand local market trends and seasonal demands, Smart Stock takes a collaborative approach to inventory management. Smart Stock leverages the inventory supply system used by Hyundai and the data generated by Hyundai's network of almost 600 dealers to optimize stocking at the individual market level.

"The bottom line is that we provide the information and tools that the dealer needs to make informed stocking decisions," said George Kurth, Director of Supply Chain and Logistics. "Guesswork is virtually eliminated because the dealer knows the importance of each part and the system will automatically recommend whether that part should be stocked or not."

The key differentiator is that Hyundai is forecasting demand up to six months into the future rather than relying on historical average demand, enabling dealers to get ahead of trends and seasonality. Once a dealer is operational, Hyundai guarantees that it will buy back all inventory that does not sell on a quarterly basis provided the dealer ordered the parts in accordance with program guidelines.

The Smart Stock system is compatible with ADP, Reynolds or UCS computer systems and Hyundai dealers with parts managers trained on these systems will be first to upgrade to Smart Stock. Hyundai is targeting upgrades to one market per region per month through 2003.

Hyundai’s Competitive Advantage

In this sternly aggressive business world, the goal of most firms is to establish distinctive or unique capabilities to gain a competitive advantage in the marketplace through utilising the most of their core competencies. Competencies refer to the fundamental knowledge owned by the firm (knowledge, know-how, experience, innovation and unique information), and to be distinctive they are not confined to functional domains but cut across the firm and its organisational boundaries.

Having a competitive advantage is having a difference, the choice of certain activities to deliver a unique value-mix to a selected market, thus the ability to perform particular activities and manage the linkages between activities is the key source of competitive advantage. The strategic task, then, is to create a distinctive way ahead, using whatever core competencies and resources at its disposal, against the background and influence of the environment. Through these distinctive capabilities the organisation seeks sustainable competitive advantage. Competition in many domestic and international markets appears to be entering a new phase, in which product quality and performance are becoming more important to customers than price. In such markets, the effective management of the new product development process is the essence of competitive advantage.

           

Hyundai Motor Company is regarded as the largest auto-manufacturing industry in South Korea and known as the fifth largest industry in the world. The company has the capacity to produce or manufacture 1.6 million units in a year. The company has been able to give emphasis on each level of the industry which enables them to gain the trajectory and momentum required to attain competitive position of being a world-class automotive brand and to attain competitive advantage (Worldwide Hyundai,2010). The company has been able to operate in different parts of the world including US, Europe and other parts of Asia.

The management of the company are accountable for having a sustainable competitive advantage in a business. If the management would not be able to do their tasks efficiently, the company might lose their competitive advantage. Competitive advantage is the status of the company in the market

environment against their rival companies. Like any other industry, Hyundai has also their competitive advantage against their rival auto-manufacturing industries in the world. In addition, the company may also erode or lose their competitive advantage and position if the management will not be able to adapt to the changing market and customer need, specifically in car industries.

For instance auto manufacturing industries nowadays must be able to provide car products which are affordable and cost-effective in terms of diesel engine aspects.  In this regard, Hyundai must be able to produce cars that adhere to these needs. In order to sustain their competitive advantage, Hyundai has manufactured Hyundai’s i30 (Hyundai i30 SX CRDi, 2008).  Compared to its diesel rivals, the diesel i30 emerge to have gazumped them all on either price or size before it has turned a wheel. Products like these enables Hyundai to sustain their competitive advantage in the growing crisis of diesel and energy. Aside from that, there are many ways in which Hyundai will be able to sustain their competitive advantage. First of, the company should be able to continue to maintain the superiority of their cars that they offer to the market.

Furthermore in order to sustain their competitive advantage by presenting two new production models and a program than enhances the general environmental compatibility of their products. For example, the Sonata brand has been the standard bearer of the company all over the world in the D segment, and the other is the 2008 matrix. The company ensures that they also consider corporate social responsibility to ensure their competitive advantage by providing products which are environmental friendly as their way of dealing with the greenhouse gases global issues. The are able to create an eco-concept package demonstrating how the emerging technologies can make a relative reduction in CO2 emissions without punitive penalties in terms of price, driving enjoyment and performance.  This context is a near production approach for reducing CO2 emission and fuel consumption (Hyundai Motor, 2008)       .

As a global leader, the company must also strive harder to fulfil their obligations to provide the needs of the society. The company can also

consider their pricing strategy by providing affordable yet quality cars and vehicles to the market.  Industrial models which are to be consistent with part of a strategy of 'flexibility and innovation' must therefore give the firm the resources to counter the risks of erosion and losing of their competitive advantage.  In order to cope with the various influences and effects of market environment changes, and to sustain their competitive advantage, the management of Hyundai, must be able to improve and expand its organisation so as to conduct environmental activities on a global scale which include the expansion of Hyundai through the manufacturing presence of the brand in China, India, U.S., and Europe; and plans for new plants in Czech Republic and Russia as well as establishing transplants which is an overseas production plant; refers to vehicles produced in US or somewhere else at a Hyundai-owned plant.

Aside from this, the management of Hyundai must also be able to focus on tier research and development department and to initiate innovative strategies, accordingly, the higher echelon of management in organisations is now driven towards innovative strategies designed to provide a competitive advantage and edge in the marketplace. As business gravitates towards a global scale, entrepreneurs find themselves faced with the challenge of producing new and better products at reduced cost and market price. Daft (2003) pointed out that in managing a global environment, managers of Hyundai must be characterised by the ability to bring about change through innovation and creativity.

As discussed, the knowledge of the underlying sources of competitive advantage highlights the abilities and core competencies of Hyundai as a world leader in auto manufacturing industries. In this regard, the company must be able to determine strategies and ways to ensure that their competitive position and advantage are being sustained in all levels of the organization.

Total Quality Index (TQI)Hyundai produced the most segment leaders of any automotive manufacturer, according to Strategic Vision‘s Total Quality Index(TM) (TQI), which measures total vehicle satisfaction among new car owners. Clinching the top spot in three distinct vehicle segments is a first for Hyundai. The Strategic

Vision results released today placed the Hyundai Azera sedan atop the large car segment, the Entourage (tied with the Kia Sedona and Nissan Quest) in the top spot for the minivan segment and the Santa Fe on top in the small sport utility vehicle (SUV) segment. ”

Research And Development-ENGINE & MISSIION

The pride of Hyundai Motor is now measured worldwide ! As Hyundai Motor Company continues to develop cutting edge engines that will beat as the heart of next generation cars, we are confident that we will be the major player of the automobile industry in the future.

THE 'S-ENGINE'-THE NEW CONCEPT THATOVERCAME PREVIOUS LIMITATIONS

The S–Engine, the world's highest quality V6 engine, developed solely by Hyundai, achieves a powerful performance–generating 240 horsepower and the super fuel efficiency. This engine boasts the most economical fuel efficiency available today. It not only offers fast response time, but also overcomes limitations of existing diesel engines. Its power output is equivalent to gasoline engines and it also meets the Euro 4 Environmental Regulation standards, proving this is the most advanced new concept diesel engine, with top quality engine performance, fuel efficiency, and environmental friendliness, all at the same time. The S–Engine, currently available in the Veracruz, is also attracting industry attention for its superb performance and fuel efficiency.

Quality Management

The world's automobile makers closely watch to see what Hyundai will do next. With uncompromising craft man ship, we will build only the most superior vehicles.

The Hyundai Sonata, Elantra, and Tucson were selected as the 'Most Ideal'cars in three segments in Auto Pacific's 2007 Ideal Vehicle Awards, which conducts studies to determine if cars meet the needs and expectations of customers and selects the most ideal cars by calculating customer responses on 15 measurable points.

"Quality control in Production & Manufacturing"

Manufacturers across a wide range of industries face many common challenges in their efforts to meet rising quality control and standards. The growing mix of complex products, global expansion of operations, and outsourcing requires a new approach to quality management. Many organizations are deploying either industry standard quality management methodologies such as Six Sigma and ISO 9000, or implementing other quality practices to reduce costs, shorten cycle times and improve overall product and process quality. But what do you think how and what are the methods organisations can adopt to ensure quality control in their production and manufacturing.

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