Hyundai Motor Company’s Leadership and Facilitation

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Introduction

The role of leadership in the success of the company cannot be overestimated. Traditionally leaders are represented as strategists, capable of creating a detailed plan of achieving specific objectives and embody it in real life. However, it can be stated that the role of a leader is not limited by the latter, and goes far beyond the formulation of the company’s strategy. The influence of leaders can extend toward the emotional atmosphere of the company, where a research by Daniel Goleman found that a key role of the financial success of the company is played by “the leaders’ emotional style”, causing the right emotional and behavioural chain reaction to occur (Goleman et al., 2001). Accordingly, a difference can be identified between the notions of leadership in past and present settings, where the old paradigm of leadership, expressed through the motto command and control, is obviously outdated. Currently, as a replacement for orders comes the understanding of management as a collaborative effort and cooperation, specifically in the context of the current dynamic environment.

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The role of leadership can be outlined in the context of Hyundai Motor Company in particular, and Hyundai Chaebol in general. Founded by Chung Ju Yung in 1946, Hyundai being ruled by the iron hand and will of Yung became “the largest conglomerate in South Korea –total sales in 1992 topped $52 billion” (Clawson et al., 1994). Fighting for quality, Hyundai Motor Company whose helm was taken by Yung’s son, Chung Mong Koo, improved the quality of the cars to “a level that allowed the company to post record earnings even in the wake of a slump in Korean consumer spending” (Frey, 2007). With the company intending to enter the market of luxury cars, this paper approaches such decision as a leadership challenge, providing an analysis of the challenge and its theoretical foundation, as well as an action plan that will address the leadership challenge of the company.

The Issue

In brief, it can be stated that the current issue faced by Hyundai Motor Company is related to two phenomena, which are increasing the production and entering a new market of luxury cars. It cannot be stated that those two key decisions are driven by any financial problems. On the contrary, at the moment of introducing the first model of the company’s luxury line –Equus, the company was generally in a good financial situation. As stated by CNN’s Fortune analysis, Alex Taylor, the company currently established a reputation of record breaker. Hyundai, inspired by the availability of an updated family of products, is rapidly building up production volumes on large international markets. Controlling the market in Korea, in which it shares in the past year reached 80%, the company also had a major success in other markets. In the US, the generous promotions for retail and wholesale buyers caused a stable sale increase by 7%, against an overall decrease in market indices by 24% (Taylor, 2010). The sales grew by 46%, in comparison to previous year, while in China, largely due to government stimulus, the sales has reached an astronomic 150% increase, which helped the company reaching the second place in the place of the most successful international car manufacturers, coming second to Volkswagen (Taylor, 2010).

Despite the success, the company does not intend to stop at what has been accomplished, which comes at the two emphasized in this paper. With the current total capacity of 5.8 million trucks, the next goal put by the company is reaching the indicator of 6.5 million units in two years. The latter can be seen as a challenging step, which challenge can be seen in the criticism that predicts that a sharp increase in volume might be significantly reflected in the quality of the company’s production, and decrease the value of the brand.

The next issue is directly related to the latter, where the entrance to the premium market can be described as an “ambitious, arrogant, or ignorant” move (Taylor, 2010). In that regard, the issue can be seen in the association of Hyundai as people’s car, rather than a prestigious brand, worth a prestigious price. The issue can be also related to the fact that Hyundai just relatively recently overcame the perception of manufacturing cheap cars. The latter can be seen similar to the perception of Samsung’s products abroad (Bartlett and Ghoshal, 2000), as well as the perceived lack of prestige for the Lexus brand in Europe (2005). Thus it can be stated that pulling the Hyundai brand into the luxury market, not only through new models, but also through enforcing the prestige of the brand is one of the company’s challenges.

Analysis of Leadership Challenge

The leadership challenge for the company can be seen directly related to the leadership position of the company itself. The latter can be seen through the example of companies, taking the second and the third positions in the ratings of an industry, while they are nevertheless, are major manufacturers. Accordingly, having the aim of taking the leading position in the industry can be seen largely reflected through the role of leadership in the company. The latter is not only related to aligning the long-term strategic plans of the company with the short term actions, but also through behavioural changes, in which leadership plays a major role. In that regard, literature indicates that “leadership influences the alignment of individual behaviour along corporate brand identity” (Vallaster and Chernatony, 2006). The latter can be specifically associated with the change processes, in which leadership behaviour can be directly responsible for their facilitation. Capacity changes along with the entrance in new market segments are changes, the management of which is influenced by the leadership of the company. The history of Hyundai is an illustration of the role of leadership in managing changes, where historically Korean chaebols “had relied on the unique strategies and styles of their founders to help them manage and grow successfully” (Clawson et al., 1994). In that regard, although the success of the company is not dependant on such styles anymore, such traits as aggressiveness still can be seen reflected through the company’s past achievements as well as future goals.

Thus, it can be stated that the facilitation of change is one of the roles of a leader. Unlike management, which is concerned with ensuring effective performance of current systems, leadership is more concerned with creating and determining the direction of new systems (Storey, 2004, p. 95). Accordingly, the creation of the directions of new systems should be aligned with shifts in values and behaviours, where “[n]o real change is possible without a shift in value priorities and the development of new skills and behaviours to live them” (Avery et al., 2004). Thus, the role of leaders can be seen in the creation of a change environment, providing support, and leadership development. The latter can be seen as a provision for the company’s requirement for leadership, which was expressed through the statement of John Krafcik, president and CEO of Hyundai Motor America’s, referring to Hyundai as “an ambitious company that looks for boldness and leadership” (Taylor, 2010).

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Leadership Theory

In analyzing the leadership challenge in Hyundai Motor Company, it can be stated that an appropriate approach in managing the change in the organization can be seen in situational leadership. The advantages of situational leadership can be seen in its ability for generalisation. As the title implies, the situational approach is not attached to a particular leadership styles, rather than a focus on leadership in situations. The basis of the theory is that “different situations demand different kinds of leadership” (Northouse, 2007). Thus, the ability to adapt the style can be seen as the main attribute of such theory.

The basis of situational leadership can be seen through the impossibility of determining effectiveness irrespectively from the situation. In that regard, situation leadership is not a management through facts, data, indices and reports. It is the management through events, where the key aspect of situational leadership is the ability to create them. The chosen style is another aspect important to the theory, where the leadership style contributes highly to the leader’s success or failure. The style determines the effectiveness of the organisation’s ability to accomplish specific objectives. Although some leadership styles are innate to some individuals, effective leadership styles can be learnt or adopted. The notion that leaders are born and made is debatable. In that regard, it is true that many leaders were born with leadership qualities and traits, but the latter does not imply that leadership cannot be developed. Individuals can develop leadership qualities or improve on leadership style through effective learning (Koestenbaum, 2002)

Success of a leader depends on the ability to choose a good leadership style for different situations (Kouzes and Posner, 1987). The choice of a leadership style differs from one individual to another. However, many individuals have dominant leadership styles that they use in most of their leadership roles. Although some dominant leadership styles may be effective, there are times when the style may not be effective. To overcome this limitation, a leader should develop various leadership styles that can be applied according to specific needs. The notion of needs and situations in situational leadership are largely connected to the types of leadership styles that the leader might adopt. In that regard, the categorisation of styles can include different theories and different versions, depending on the criteria chosen for categorisation, e.g. task-oriented leadership, people-oriented leadership, transformational leadership, transactional, directive, supportive, etc. In the current case, the choice should be driven by the specific context of the situation of Hyundai Motor Company. The rationale of the situational theory can be seen in the dynamic nature of business as well as the facts of leadership under Chung Ju Yung, in which the existent trends of at the time “implied that the older generation’s values of experience, aggressiveness, and intuition would no longer suffice in a dynamic and complex business environment” (Clawson et al., 1994).

Following the framework, outlined in Sims, Faraj and Yun (2009), the strategy of defining a personal theory of leadership can be seen through the following points:

  • Identification of important outcomes.
  • Identification of leadership types.
  • Identification of situational conditions.
  • Matching leadership to conditions.
  • Making the match.

The important outcomes, as previously outlined, are the increase of volume production of the company and entering into the luxury segment market. Other outcomes associated with the aforementioned can be seen in changing the perception of brand as a non-prestigious category, creating an environment supportive for change, and establishing leadership development initiatives. The leadership types that can be selected in this context are transformational charismatic, empowering, and directive. The empowering leadership type is a style that “focuses on influencing others by developing and empowering follower self-leadership capabilities”, while transformational leadership “entails inspiration, and the transformation of a follower’s motivational state” (Sims Jr et al.). The directive style, o0n the other hand, can be defined as those behaviours, which help group members accomplish goals by giving directions, establishing goals and methods of evaluation, setting time lines, defining roles, and showing how the goals to be achieved” (Northouse, 2007).

Matching the aforementioned styles with the outcomes for Hyundai Motor Company can be implemented through creating situational conditions, in which each of the style will better suit its purpose. Generally, leadership is about motivating others to work collaboratively, where in the context of situational theory the latter can be seen in identifying the key behaviours and contextual variables involved in this process (Vroom and Jago, 2006). The directive approach should be used in situations, in which goals achievement are required. In that regard, situations that requires setting the next goal, i.e. 6.5 units, the time limit, i.e. two years, or the process of establishing the capacities and resources required for such process, the directive leadership style will be triggered. The empowerment approach can be seen in the promotion of leadership development in the company, which is basically about transferring learning to the work place (Storey, 2004). Transformational leadership style can be triggered through managing the external relations of the company and its brand perception, communication, and providing inspiration to the company, through establishing its values, creating its culture, which will be helpful to achieve the objectives associated with the other styles. In that regard, it can be seen that in situational leadership, there are generally styles, which is implemented in a default situation, while the emerging needs of the subordinates as well as external factors cause the leader to adapt his/her style to meet the new needs and requirements (Northouse, 2007).

Practical Plan of Action

The actions which are related to directive leadership styles can be seen in a situation when the goals are clear, and thus, the actions can be seen in a clear delivery of information to the followers. In that sense, the goal of the followers’ development is not as important as the established goals long and short-term goals of the company.

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The actions that can be related to empowering leadership style can be seen through giving the opportunity for the followers to grow and develop. A representation of the latter can be seen through being proactive in providing training, courses, and knowledge sharing. The key aspect of the empowerment leadership style is putting strategy ahead of training, in a way that connects business objectives and learning. An example of the latter can be seen in fostering creativity in the company and providing opportunities to think independently, directed on the employees’ self-development. With leadership being an essential quality in Hyundai Motor Company, demanded from its employees, learning leadership can be seen as a part of the empowering style. Thus, the actions of the leaders can be seen in establishing management training and development activities, which “provide the space for leadership to emerge and to be discovered” (Storey, 2004). It should be mentioned that such approach is mostly suitable in situations when there are no emergent issues (Sims Jr et al.).

Transformational/charismatic leadership style can be seen largely as direct connection to inspiration, behaving in a way that motivate and inspire others, giving meaning to their work (Frey, 2007). The relation between the brand, its strength and the perception it causes can be seen directly related to leadership style, where for a brand to be successful, the leader needs to believe in the brand promise, support it internally, and to the customers (Augment Marketing, 2010). These steps can be seen directly related to transformational leadership style, where a transformational/charismatic leader will influence employees, so that their values will be transformed. The mechanisms through the latter is achieved can be seen through serving as a role model, directly communicating of the values to the employees, outlining the symbolism of the business processes and their moral aspects. Additionally, the results of a study by Vallaster and Chernatony (2006) that the internal building of the brand can be seen through the following emerging themes:

  • The establishment of corporate structures which convey “coherent and consisted brand-related messages for staff (Vallaster and Chernatony, 2006). The structures implied, in that regard, are related to corporate culture, corporate design, corporate communication and corporate behaviour. The significance of the latter can be seen in that if the intended message was Hyundai are people’s cars, then such message was reflected through the corporate structures of the company. The company cannot change the perception of Hyundai into a prestigious brand, without changed such identity internally in the company through its leaders. “Corporate culture is the carrier of stories and gossip that spread information about valued behaviour and “heroic myths” around the organisation” (Vallaster and Chernatony, 2006).
  • The leader as energiser” for internal brand building (Vallaster and Chernatony, 2006). Although the results of the research do not indicate the leadership style, it can be assumed that the transformational leadership is the most appropriate, as to the tasks of the leader in the brand-building process. These tasks include communication that supports the credibility of the statements through facts, non-verbal communication, including “showing commitment, living brand values and identity, and trusting and enabling employees”, and providing “[s]trong, highly visible support” (Vallaster and Chernatony, 2006).

It should be noted that the aforementioned actions, concerning the leadership challenge of Hyundai Motor Company, does not imply that one or some of the actions are already implemented by the company. The key aspect is situational leadership is its appropriateness to various situations. In that regard, assuming that different outcomes are required, in which other leadership styles might be used, the modification of situational conditions will adapt the style to the emergent situation. Accordingly, the provided framework might be used as an answer to the question: is there an ideal leadership style? Reaching a point when the team is not moving further and the financial indices decease can be seen as the moment through the answer of such question might be necessary. The latter is specifically important in the context of Hyundai Motor Company, where the style of the founder Chung Ju Yung, although contributing to the success of the Corporation, was heavily criticised at the latter stage of his position in the company. In that regard, the directive style implemented by Jung and later by his brother Chung Se Young was suitable at some points of the company’s history, while at the latter stage was one of the company’s challenges (Clawson et al., 1994).

Conclusion

It can be concluded that the role of leadership was historically significant of Hyundai Motor Company. This aspect did not change with the company facing new successes and challenges. In that regard, transforming the current issues of the company into leadership challenges, demonstrated a framework through which the challenges can be managed. It was suggested in this paper that the adoption of a situational leadership style can be seen as an effective method of driving the company’s rapid growth and success, and reaching their newly established goals.

References

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