Challenge and Response in Quality Management at Hyundai Motor in the 2000s
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Hyundai Motor, in spite of its late entrance to the automobile industry in 1967, has grown very rapidly to become the 5th largest auto maker in 2009 with its affiliated company, Kia Motor. It has kept its ranking in 2014, producing 8 million vehicles. Hyundai has met many diversified crises since its foundation as a late entrant into the market. It also met multiple crises during the turmoil of the IMF bailout in the late 1990s, including a quality crisis. The purpose of this paper is to analyze the crises and innovation in quality management at Hyundai during the period from 2000-2015 by way of an in-depth case study. The quality crisis induced Hyundai to reshuffle the quality management system. This reorganization can be classified into 3 generations. The first generation was focusing on getting over the crisis by reducing the number of defects during the period from 2000-2007. The second generation was focusing on quality marketing campaigns to enhance corporate brand value during the years from 2008-2010. The third generation aims to introduce a new global quality management system and has been ongoing since 2011. The findings of this study are as follows. First, it was found that this case study supports the challenge and response paradigm, a resource-based view of the firm, and Garvin’s evolutionary perspective in quality management. Second, this case also supports Aaker’s proposition about quality-brand-industry leadership relations: Some time is needed to pass until the profit due to quality management efforts is realized. Third, it shows that the strong leadership of the founding family was one of the important resources for accumulating capability to overcome the quality crisis through dynamic learning. Hyundai was able to transform a quality crisis into a stepping stone opportunity for a turnaround in the U.S market, as well as an aggressive globalization in the 2000s.
Abstract
Hyundai Motor, in spite of its late entrance to the automobile industry in 1967, has grown very rapidly to become the 5th largest auto maker in 2009 with its affiliated company, Kia Motor. It has kept its ranking in 2014, producing 8 million vehicles. Hyundai has met many diversified crises since its foundation as a late entrant into the market. It also met multiple crises during the turmoil of the IMF bailout in the late 1990s, including a quality crisis. The purpose of this paper is to analyze the crises and innovation in quality management at Hyundai during the period from 2000-2015 by way of an in-depth case study. The quality crisis induced Hyundai to reshuffle the quality management system. This reorganization can be classified into 3 generations. The first generation was focusing on getting over the crisis by reducing the number of defects during the period from 2000-2007. The second generation was focusing on quality marketing campaigns to enhance corporate brand value during the years from 2008-2010. The third generation aims to introduce a new global quality management system and has been ongoing since 2011. The findings of this study are as follows. First, it was found that this case study supports the challenge and response paradigm, a resource-based view of the firm, and Garvin’s evolutionary perspective in quality management. Second, this case also supports Aaker’s proposition about quality-brand-industry leadership relations: Some time is needed to pass until the profit due to quality management efforts is realized. Third, it shows that the strong leadership of the founding family was one of the important resources for accumulating capability to overcome the quality crisis through dynamic learning. Hyundai was able to transform a quality crisis into a stepping stone opportunity for a turnaround in the U.S market, as well as an aggressive globalization in the 2000s.
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