20501005 - Entry 13

Hyundai Motor targets Russia`s middle class


▲Rolf Altufijevo dealership in Moscow

Summary
MOSCOW - Hyundai Motor Co. is looking to tap the growing middle class to consolidate its position in the Russian car market. Since first exporting to Russia in 1990, the company has grown rapidly to become one of the country`s largest carmakers. The company currently has the second largest market share among foreign carmakers in Russia after General Motors Corp.`s Chevrolet. Among all carmakers, Hyundai Motor holds the third largest market share. Last year the company sold about 148,000 units and recorded a market share of 9.3 percent. For 2008, the company hopes to raise sales by 35 percent to reach 200,000 units. "In the past, cheaper Russian cars like the Lada were popular but with more people joining the middle class, Hyundai cars are gaining more and more attention," said Dmitry Sergeev, the director of the Rolf Altufijevo dealership in Moscow.

My Opinion
When I was in New Zealand, I was very proud that there were many Korean company cars on the streets. Among those I could see many Hyundai cars. Most of my foreign friends said they prefer Hyundai cars to Japanese cars such as Toyota, Mizda. I asked them why. The reason was cheap price but also practicality. As you see Hyundai cars have comparative advantage in price compared to other cars, Benz, Toyota, GM etc. So Hyundai decided to reposition in Russian car market for the middle class. The middle class people might be eager to have a car that has lower price than luxurious cars and practicality. I think Hyundai made a good decision. Getting into international market is very important for Hyundai because of domestic market which is already saturated. A few monthes ago, I heard Hyundai launched selling new model 'Genesis'. When I saw its prototype, I was shocked. It was amazing, and I could not believe Korean company made it. Anyway Genesis has many advantages(strengths) in price, practicality, design, and power. I think Genesis will be a beneficial model for positioning in the middle class. In FTA era, we can only survive by improving and changing ourselves. I hope Hyundai will successfully change into a real global company by knowing foreign customer's value and needs.

20400442-ENTRY 13

One Laptop Meets Big Business

For this week's article, I chose the story of "One Laptop for Per Child" planned and exercised in Peru by the government. The article is cynical about so many problems of bringing about OLPC in third world countries to innovate the social and educational conditions.

They say that the fate of OLPC is uncertain, and it's too early to judge the effectiveness of the computers. Still, it's possible to draw lessons about the difficulties of such grand-scale social innovation. The group's struggles show how hard it is for a nonprofit made up largely of academics to operate like a business and compete with powerful companies. They also show what happens when differing philosophies of education and beliefs in how software should be created go head-to-head. Values the group has promoted have met resistance in the marketplace, government bureaucracies, and classrooms. That Negroponte and his colleagues took on way more tasks than they could handle only complicates the situation further.

Opinion

Reading this article paraphrasing how hard it is to implement one laptop for every child in third world coutries, one thought came to my mind that it could be a chance for Korean portal sites like Naver or Daum to go worldly-known sites. Google, for instance, has not only their original English sites, but also so many sites world-wide in so many different language and properly culturalized services and programs.

Third world coutries, in another words, are countries where potential markets with less competitors exist, especially internest business. In my opinion, carefull and thoughtful marketing can be a first big step toward the world for Korean big portal sites to become so much successful like Yahoo and Google through OLPC!

Reference: One Laptop Meets Big Business by Steve Hamm and Geri Smith , Business Week, June 5, 2008

20501034 - Entry 13

Lee's trouble deepens, undermining mandate

Original Article by Hwang Jang-jin on Jun. 3. 2008

(Korea Herald)

The relationship between political crisis and candle business

Summary.

President Lee is in trouble. Tens of thousands citizen took to streets in recent days demanding scrapping the beef import deal. Following violent police crackdowns Saturday, the slogan changed to “Resign Lee Myung-bak, Down with the Dictatorship.” Not only US beef import deal but also English-only education and Canal bring people into the street to protest against President Lee with candle.

My opinion

It is very natural that sales of products increase along with economic growth. However, sales of certain items such as noodle and Soju increase when economy go down. It is called ‘Giffen goods’.

I found the peculiar products like candle that has tendency to boost its sales along with political crisis. In most developed countries, Candle is obsolete as the infrastructure became stable and there is less and less possibility to happen electrical black-out. However, somebody found another way of using candle and they started to use candle to protest against government policy. Once candle protest culture settled in Korea, the sale of have been soared whenever political crisis happened. It could be compared with the concept of value preposition which Professor Lee taught us in the class with example of baking soda.

For business students, it is so important to think out of the box. From now on, not only somebody who create something new but also someone who can find different use of existing material will be valuable business man.

20820007 Entry – 13

Coach builds It’s Brand in China

The leather goods maker has opened a new Hong Kong flagship and plans to acquire all of its outlets in China, Hong Kong and Macao managed by local distributors.

By Frederik Balfour

Hong Kong is label- conscious society where you can identify women’s place by the bag on her arm. Many people are making bee lines for these luxury hand bag stores like Luis Vuitton, Ferragamo, Gucci and Hermes. President of Coach Bickley says that they see a big opportunity in China and if they opened flagship store it will find a place on shoppers’ itineraries. Coach bags cost from $200- $400 making it top of the premium segment or the bottom of the luxury segment. According to New – York based Coach figures that Coach has more awareness and attracts loyal customers. Bickley estimates the market for woman’s leather goods in Great China region will more than double in the next five years, from $1.2 billion to $2.5 billion. He is going to increase the current sales from $30 million with a 3% market share to 10% with $205 million in sales. In order to achieve this growth they made a decision to manage its own stores. It currently has 24 locations and planning to open 50 new stores in China, Hong Kong, and Macao within the next five years. Also company hopes to open Coach’s first flagship store in Shanghai within the next 12 to 14 months. Bickley think that now China and rest of Southeast Asia will keep the company busy and Coach is not going to enter India where retail distribution is still immature.

My Opinion

I found that according to New - York based Luxury Institute’s Luxury Brand Market analysis for luxury hand bags Coach has largest mindshare among wealthy customers, 52 % of them said that they are familiar with Coach Brand and it leads at 29% of market share. It means that Coach is leading company in producing luxury hand bags in America and Europe. I think hand bags are very important accessory for woman which defines the wealthy woman’s social class and her fashion tastes. Therefore it is very common phenomenon in China too, especially in Macao and Hong Kong where many people can afford for Coach Bags worth $200. It is realistic that Chinese rapidly growing economy with 1.3 billion people can keep 50 stores in it driving the company to increase its market share within 5 years. Moreover Coach’s partnership with Imaginex will build brand awareness in Greater China to win customer’s confidence about the brand.

Reference: http://www.businessweek.com/globalbiz/content/jun2008/gb2008064_054209.htm?chan=top+news_top+news+index_global+business

20820014 Entry- 13

Infosys CEO Muses on Globalization

How are India-based tech companies trying to win U.S. customers, dealing with high turnover, and globalization?

Gopalakrishnan, CEO of the India-based outsourcing company Infosys talk about some issues his company is facing. Some highlights:
*The tech-services industry continues to evolve rapidly. While India-based companies made their names offering low-level programming at a low price. The one tactic to expand its margin Infosys would like to buy small consulting firms in countries.
*Tech companies in India have high attrition rates because there’s so much demand there for experienced engineers. One way that Infosys is combating the problem is transferring employees to facilities in smaller, more remote cities in India–where there are fewer competitors to try to steal its workers. To encourage workers to move, Infosys pays the same regardless of whether someone is in Bangalore, the city at the heart of India’s tech boom, or Jaipur, a city in the rural state of Rajasthan where the cost of living is substantially lower.
*Infosys is sensitive to immigration concerns in the U.S., but the tech sector is evolving makes further globalization inevitable. India graduates 450,000 engineers each year and China 650,000. The U.S. only graduates 150,000. With numbers like this, U.S. companies will have little choice but to hire engineers from abroad or open development centers overseas.

Gopalakrishnan points out that globalization is a two-way street: U.S. products from corn flakes to California wine are now widely available in India, which is hurting the 70% of the population there that works in agriculture. “These people are the poorest of the poor and they are losing jobs,” he tells us.

My opinion
This article seems very similar our case study article in someway. They both use same strategy which is to buy small firms to expand its market and deal with troubles. I realized that how marketers take advantage from small business companies or globalization especially if those companies were placed in developing countries with low expense, and low labor cost. In one hand it seems unfair. Because those small firms product have same quality and acceptable to the market like big brand company. But they cannot sell it under own name with same price as big companies. Once professor mentioned that Samsung had sold under the name of Sony in U.S. In fact customers get same value of both those products.
On the other hand, both companies can take advantage from this commitment, could be mutually lucrative. Even though small firm sells its product with lower price, their market share has high potential to increase rapidly. In this case if small firms indeed can produce high quality or high tech product it has high potential to increase its market and make high profit. After that probably small firm could separate its business and sell its products under own name or evolve brand.
Also, I see that how marketers prevent from competitors by building invisible wall between them
– move high experienced employers to countryside. In addition, it is very astute and deceptive decision to move workers in lower cost of living area. Even though company pay same salary as it did before, because of lower cost of living this same amount of salary could be incentive.
Reference: Infosys CEO Muses on Globalization
http://blogs.wsj.com/biztech/2008/06/05/infosys-ceo-muses-on-globalization/
June6, 2008 author name was not written.