Hyundai Motor Company and Globalization Impacts

Hyundai Motor Company’s response to the forces of globalization

As an organization that operates in an international environment, Hyundai Motor Company has to respond to the forces of globalization. One of these forces is the growing concern about the hydrocarbon emissions and especially their effects of health (Brimblecombe & Maynard 2001, p. 220). It should be noted that these toxins contribute to smog in many modern cities. Moreover, they are associated with a variety of widespread diseases, namely, asthma, cancer, and various liver or lung diseases (Tarlo, Culliman & Nemery 2011, p. 104; Selmer-Olsen, 2002). Many health risks associated with hydrocarbon have yet been identified and fully examined. These risks attract close attention of medical workers, policy-makers, and legislators.

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This is the reason the member states of European Union introduced a set of regulations specifying the maximum limits for hydrocarbon emissions for passenger vehicles or buses (The European Parliament 2006, unpaged). Those car-manufacturing companies that do not comply with these norms will have no access to this market, and they have to find ways of improving their environmental efficiency. Similar thing can be said about other countries such as the United States, Canada, or Australia. It is quite possible to say that in the future such standards will be established practically in every region (OECD 2010, p. 214). This trend began to manifest itself several decades ago, and nowadays, it can still be observed. Health concerns are one of the main factors that prompt many automotive companies change their production policies.

Hyundai Motor Company is not an exception to this rule, and they also have to act responsible corporate citizens. The company launched the production of vehicles that can significantly reduce the emissions of hydrocarbons to a minimum. In this case, one can speak about the hybrid version of Hyundai Sonata which relies on lithium battery technologies (Hybridcars.com 2011b, unpaged). The main advantage of these technologies is that they have a greater energy density which subsequently reduced the consumption of fuel (Hyundai Motor Company 2010, p. 35). Thus, we argue that this organization is willing to eliminate those technical inefficiencies which pose a threat to the health or even lives of many people.

This automobile can be regarded as one of the most fuel-efficient cars. According to the company, the life-cycle output of emissions for this vehicle is “24.9 tons of CO2-equivalent” (Hyundai Motor Company 2010, p. 39). So, the company was able to reduce the total amount of emissions by 1,4 tons for the hybrid version of Sonata (Hyundai Motor Company 2010, p. 39).

It is worth noting that this emphasis on hybrid engines significantly increases the sales rate of the company. For instance, only in the United States they sold 4,177 hybrid Sonatas at the end of summer in 2011 (Hybridcars.com 2011, unpaged). Moreover, this hybrid version of this vehicle accounts for more than 20 percent of total Sonata sales throughout the world (Hybridcars.com 2011, unpaged). According, to the estimations presented by the company at the end of 2010, the customers throughout the world purchased 146,099 units (Hyundai Motor Company 2010, p. 23).

Furthermore, one should not forget about such model as Tucson ix which is also fuel-efficient. In comparison with the previous model Equus released by Hyundai, Tuscon reduced the total amount of emission by 12.8 percent (Hyundai Motor Company 2010, p. 39).

So, from financial point, these models are also very successful, and their production costs can be justified. Still, financial performance and profitability are not the only reasons why cars like Hyundai Sonata are important. Environment-friendly vehicles create a positive image for this company and help distinguish these organizations among other car manufacturers (Hyundai Motor Company 2010, p. 8 ). The thing is that these cars create extra value for those customers who want to act in a social responsible way. Many of these people can afford to pay for such vehicles, and such products can be really attractive to them. The demand for such automobiles will only grow in various regions of the world.

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Additionally, we can mention diesel-powered automobile such as Hyundai i30 that also received favorable reviews from environmental experts and customers (Comyn 2008, p. 526). This car uses bio-diesel, and this type of fuel emits a lesser amount of hydrocarbons. More importantly, the sales indicate that customers value the eco-friendliness of the car. In 2010 this company sold 500, 000 I30 units and this is a significant part of their total sales (Brogan, 2010, unpaged). Therefore, it is possible to say that their decision to launch the production of these models is quite justifiable from ethical and financial points of view. It is worth mentioning that Hyundai i30 is one of bio-diesel powered cars produced by the company.

In order to measure the total contribution of Hyundai Hybrid Sonata to the reduction of CO2 emissions, one should multiply the decrease of hydrocarbon emissions per vehicle and the number of production units. In this case, we can speak about 1.4 tons reduction per one hybrid and 146,099 units purchased throughout the world (Hyundai Motor Company 2010, p 23, 39). Therefore, by selling these cars the company was able to cut CO2 emissions by 203538 tons. This is a very significant result. Unfortunately, similar calculations cannot be done for other models of the company because there is very little statistical information about their fuel efficiency.

It is quite possible to say that this corporation has a good environmental record. For example, according to the U.S. Environmental Protection Agency, some of their models are among the most fuel-effective cars, for example, Hyundai Sonata is the most economical vehicle among larger cars (2010, unpaged). Up to this point, this corporation has not been accused of social irresponsibility or any violations of environmental laws. This attentiveness toward environment is quite understandable. The thing is that modern customers as well as authorities have become more aware about the dangers of C02 emissions, and car manufacturing companies have meet much higher standards in effort to sustain themselves (Merson & Mills 2006, p. 423).

In order to better illustrate their policies, we need to look at those practices Hyundai Motor Company adopts in effort to reduce environmental risks. For example, this corporation attempts to reduce water consumption by installing zero-discharge water circulation systems in many of their plants (Hyundai Motor Company, 2010, p. 45). This approach enables them to decrease water consumption by approximately 33 percent (Hundai Motor Company 2010, p. 45).

This policy have recently been implemented and at this point, there is very little information about the total reduction in water consumption throughout the company. Apart from that, this company develops methods reducing electricity consumption. In particular, they frequently lower voltage of their power supplies especially during off days. Furthermore, this company pays close attention to the recyclability of their vehicles. In particular, during the design stage they attempt to determine if it will be easy to dismantle the car and process the materials (Hyundai Motor Company 2010, p. 44). It should be kept in mind that the poor recyclability of many vehicles and the use of hazardous materials pose significant difficulties to modern environmental agencies. This is why many scholars, for example, Mark Reuter, who is an expert in recycling process, believe that automotive companies should increase recyclability of their vehicles (2005, p. 217).

Hyundai implements these strategies because they are willing to maintain their reputation of an eco-friendly company. Yet, at the same time, they are aware of the fact such practices can soon become a norm for every company that operates in an advanced countries. Thus, to some degree, their policies can be oriented to future changes in technology as well as legislation.

It should also be noted that this company makes significant effort to reduce the emission of carbon dioxides. This is one of the reasons why they offer flexible-fuel vehicles which use gasoline and ethanol (Hyundai Motor Company 2010, p. 44). These cars use E85 fuel which helps to reduce the consumption of gasoline by 85 percent. Overall, the adoption of these technologies enables the company to reduce average emissions of carbon dioxide. This chart illustrates the average reductions in emission within the period between 1995 and 2009.

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The reduction of CO2 emissions.
Figure 1. The reduction of CO2 emissions. (Hyundai Motor Company 2010, p 33).

Certainly this information is related primarily to the European Union, but one can still say that this company has made significant progress in making their cars more eco-friendly. We can also talk about the decrease in the greenhouse gas emissions. This decline can be exemplified by this chart:

Greenhouse gas emissions.
Figure 2. Greenhouse gas emissions (Hyundai Motor Company 2010, p 33).

According to this graphic, Hyundai managed to reduce the average emission of greenhouse gas per unit by approximately 25 percent during the period between 2005 and 2009 (Hyundai Motor Company 2010, p 33). This is a considerable achievement. Besides, one can mention that this company produces buses that run on compressed natural gas, and this type of fuel also allows them to decrease the emission of CO2 by 20 percent (Hyundai Motor Company 2010). Thus, this statistical data shows us that the vehicles produced by this company and their technologies enable to decrease environmental threats and minimize health risks. Another thing which one cannot overlook is that many countries lack infrastructure that will allow the use of environmentally friendly vehicles. In particular, many Hyundai customers living in developing countries have to access to E85 fuel (Yacobucci & Schnepf 2010, p. 190). Therefore, it is necessary to remember that the reduction of C02 emissions requires close cooperation of car manufacturing companies and governmental organizations.

This willingness to minimize the emission of carbon dioxide improves not only the environmental record of this company. This strategy contributes to the increase of sales especially in the European Union where there are many E85 stations. For instance, one can refer to such Hyundai i20 that allows the customer to user seven engine options, and currently. Currently, this car enjoys great popularity among Swedish customers; this country proved to be a very good market for this company because the government of this state supports the development of bio-fuel infrastructure (OECD 2008, p. 29). This evidence shows that Hyundai attempts to adjust itself to the demands made by the governments of different countries and customers.

The key argument is that this corporation regards technological change as an opportunity to explore new markets. For them environmental responsibility is the indispensible condition for the profitability of the organization and continued growth (Hyundai Motor Company 2010, p. 6). Their financial performance proves that they have chosen the right strategy.

Conclusion

Various forces of globalization affect every company that operates at an international company, and Hyundai Motor Company is not an exception. Increasing attention to the environmental threats and growing concern about the health risks force this organization to modify the technologies that they use. This examples and statistical data discussed in this paper indicate that the management of this organization understands the importance of environmental factors which influence car-manufacturers in the long term. As it has been demonstrated they implement a variety of approaches which can reduce water and electricity consumption. Moreover, they attempt to improve the recyclability of their cars. To a great extent, these practices are aimed ensuring that the environmental record of this organization remains impeccable, and it is essential for every representative of automotive industry.

Furthermore, they are willing to provide the customers with such vehicles that are eco-friendlier. Among them one can single out flex-fuel vehicles such as Hyundai i20 or hybrid cars like Hyundai Sonata. These models enjoy considerable popularity among the customers from many different countries. In this case, one should speak about those states impose heavy regulations on CO2 emissions. Thus, Hyundai has to use innovative technologies due to several reasons: 1) customers’ concerns about the environmental threats; 2) legal regulations imposed by the states. Hence, their investment in eco-friendly technologies is quite justifiable. Such policies are typical every automotive company that wishes to retain its competitive positions in the globalized market.

Overall, the strategies of Hyundai are premised on the idea that eco-friendly vehicles should not be viewed as some luxury products. More likely, they should be regarded as necessities that must be accessible to various customers. This is one of the reasons why they are able to maintain leading positions leading positions. Moreover, one should take into consideration that the technologies used by Hyundai Motor Company will become compulsory for every company. So, this organization attempts to anticipate technological change, and their investment will eventually bring the expected results. This organization is really aware of various globalization forces, and they are able to adjust to them or even benefit from them.

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Recommendations

At this point, it is possible to put forward various recommendations for this company. First of all, this company should produce more vehicles that use several engine modes. In particular, they should manufacture cars that can rely on different energy sources like bioethanol, gasoline, compacted natural gas, and electricity. Such cars will certainly appeal to the buyers. They will enable them to minimize the CO2 emissions and cut their expenses on fuel. These cars will enjoy considerable demand in those countries where customers have access to different types of bio fuel.

This corporation should invest more effort in the development of electric vehicles. A great number of customers are willing to use such products, in part because the price of gasoline fuel continuously rises. Besides, the governments of many countries understand that the increased dependence on oil is no longer permissible (Sandalow 2008, p. 41). The company that would be able to create a cost-efficient electric vehicle will be able to achieve leading positions in the market. Admittedly, gasoline will still be in use, at least in the near future, but this energy source can be eventually substituted, and this car manufacturing company should be ready for this change.

The third recommendation is related mostly to the marketing strategies of this company. They should target those regions or countries where the governments try to minimize CO2 emissions, for example, Sweden, Australia,, or the United Kingdom. Hyundai Motor Company will be more likely to succeed there. By adopting these strategies, this corporation will be able to gain competitive advantage.

References

Brimblecombe, P, & Maynard R. 2001. The urban atmosphere and its effects. NY: World Scientific.

Brogan, M., 2010. Hyundai i30 sells 500,000 units worldwide, Australian sales strong. Car Advice. Web.

Comyn, P. 2008. Hyundai’s i30 CW Delivers on Comfort and Handling. Engineers Journal, 62(8), p. 526.

Hybridcars.com, 2011. 2011 Dashboard: Hybrid Sales Show Signs of Recovery. Web.

Hybridcars.com, 2011b. Hyundai Sonata Hybrid. Web.

Hyundai Motor Company, 2010, The Road to Sustainability. Web.

Merson, M. & Mills, A. 2006. International public health: diseases, programs, systems, and policies. NY: Jones & Bartlett Learning.

Organisation for Economic Co-operation and Development, 2008, Biofuel support policies: an economic assessment. Brussels: OECD Publishing.

Organisation for Economic Co-operation and Development. 2010. Globalisation, transport and the environment. Brussels: OECD Publishing.

Reuter, M., 2005, The metrics of material and metal ecology: harmonizing the resource, technology and environmental cycles. London: Elsevier.

Sandalow, D., 2008. Freedom from oil: how the next president can end the United States’ oil addiction. NY: McGraw-Hill Professional.

Selmer-Olsen, S. 2002. Sustainable energy policy to accommodate socio-economic, technical concerns. Offshore, 62(10), 144 – 150.

Tarlo, S., Culliman, P., & Nemery, B. 2011. Occupational and Environmental Lung Diseases: Diseases from Work, Home, Outdoor and Other Exposures. NY: John Wiley and Sons.

The European Parliament. 2006. The Automotive Industry. Web.

The U.S. Environmental Protection Agency, 2010. Highest Fuel Economy by Vehicle Class: 2012 Model Year. Web.

Yacobucci, B. & Schnepf, R. 2010, Energy: Ethanol: The Production and Use of Biofuels, Biodiesel, and Ethanol, Agriculture-Based Renewable Energy Production Including Corn and Sugar, The Ethanol “Blend Wall”, Renewable Fuel Standard (RFS and RFS2), Cellulosic Biofuels, 2007 Energy Bill. Melbourne: The Capitol Net Inc.

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