Case Study on Hmc

• What corporate composition strategy was used by HMG
• What corporate management ensures the most synergy

DeWit and Meyer Business Systems Model :Resource Base/Stock of Assets, Activity System/Value Chain/, Product Offering/Value Proposition

Drivers of industry Development: New Entrants, Suppliers, Buyers, Substitutes & Complementors, Rivals

Political/Regulatory, Economic, Socio-Cultural, Technological

• 1960 South Korean economy on the rise
• 1961 Park Chung Hee seized control
• 1947 Company founded
• HMC established in 1967
• In the 1990’s Hyundai had 60 subsidiaries, 200 000 employees, with total annual revenue at $90 Million
• 1997 Asian financial crisis
• Owner acquired Kia Motors and 60 % of LG Semicon
• 5 major Chaebols went bankrupt
• 30 conglomerates were seen as financially stable
• Recorded $8.7 billion deficit In Asian financial crisis
• HMC posses 34 % of Kia motors, which holds 17 % of parts and in turn Mobis owns 21 % of HMC
• HMC into vertical structure would cost $9.6 Billion according to research in 2012

After analysis of the case, it is clearly evident that HMC started as a integrated organization that focus on

Syndergy as a whole, but as government pressures grew HMC had to re structure the family conglomerates

And focus on the core businesses. (portfolio organization perspective)

Alternative actions are listed in the case, it provides two options:

1 – take apart the current structure into vertical and estimated expenses sit at $9.6 billion but as

sacrifice to make HMC a chaebol once again.

2 – Keeping HMC as is now is risky, as cross shareholdings are looked down upon and perceived

as a problem