Hyundai Kia Essay

827 Words4 Pages
Hyundai & Kia Case Study 1. Explain how the rise in the value of the Korean currency, the won, against the dollar affects the competitiveness of Hyundai and KIA exports to the United States. The rise of the won against the dollar will cause the value of imports to increase. Cars sold in the US would cost less than it would prior to the increase. The best thing about Hyundai is that they are affordable and the company will have to raise its price if it wants to stay afloat. Both Hyundai and Kia will have to abandon their low cost strategy. Since Hyundai and KIA open automobile plants in the US they can now both compete on the same level. The company that has less production cost will have the competitive advantage over the other as it would be able to sell its car at a lower price. Hyundai is now able to reduce cost burdens rather than depending on the won’s depreciation. Hyundai will be able to sell more cars than KIA and sell them at a cheaper price. KIA will not be able to keep its car prices at a low if the value of the won continues to rise. This will mean less profits for the company, if the company wants to operate within the same margin level then it will have to sell more cars. This is evident as Kia had to sell 15 cars on average in the United States in 2006 to make the same amount of revenue and profit it got from 14 cars in 2005 2. Hyundai and KIA are both expanding their presence in the United States. How does this hedge against adverse currency movements work? What other reasons might these companies have for investing in the United States? What are the drawbacks of such a strategy? Hyundai and Kia expanded production in the United States. Hyundai has a plant in Alabama, and Kia in Georgia. Both companies hope that having a U.S. manufacturing site will help protect them against adverse currency movements. With both

More about Hyundai Kia Essay

Open Document