Hyundai Auto Company Essay Example | Topics and Well Written Essays - 2250 words

Hyundai Auto Company - Essay Example With focus on the automobile industry of the US, it can be apparently observed that the market structure prevailing in the economy is a monopolistically competitive market (Nguyen & Kira, 1998). The major features of a monopolistically competitive market include: The inclusion of a large number of market players, availability of substitute (but not identical) products, Higher price-elasticity with minimum influence of producers on commodity price increasing the bargaining power of customers, Fierce competition in terms of promotion, quality as well as other non-price factors, In a MCM structure, a firm also enjoys the liberty of ‘free entry and exit’ which again raises the threat of new entrants (Nguyen & Kira, 1998) Hence, operating in the MCM structure, Hyundai needs to face steep competition along with the barriers of high price and demand elasticity along with greater bargaining power of both suppliers as well as customers owing to the availability of close substitut e products. This can be better illustrated with the assistance of its demand-supply curve. For instance, if the price for Hyundai Sonata increases with a single unit (e.g. from US$ 37.79 as on 2009 to US$ 38.79) it is quite likely that the demand for the brand will reduce proportionately with the availability of close substitute product of Toyota Camry. Therefore, its demand-supply curve can be formulated as below. Figure 1: Demand-Supply Curves of Hyundai As can be witnessed from the above diagram with a shift in the demand curve, the brand also needs to shift its supply curve in order to satisfy the equilibrium condition. Due to the fact that firms have limited influence over price structures, it... It is in this context that both Hyundai Sonata needs to focus on their competitive strategies to preserve their leading positions in the monopolistic ally competitive market of the US. The company is further observed to focus on its profit maximization strategies, placing emphasis on the aspects of marginal costs as well as average total cost. This, in turn, depicts the impact of an MCM structure on the company strategies. Operating within the MCM structure, a company needs to maintain its MC as equal to MR. The competitive position of Hyundai Sonata, in relation to its profit maximization strategies, can be better observed in comparison to the position of Toyota Camry, which is a close substitute of the brand in the MCM structure of US automotive industry. In this context, the total cost of Toyota at the end of the year 2009, 2008 and 2007 stood at  ¥20.99,  ¥24.02 and  ¥21.71 million respectively. Moreover, the quantity of units sold by the organization in the year 2009, 2008 and 2007 was recorded as 7.23, 9.23 and 9.49 million units respectively. Therefore, the MC for the year 2009 is 1.52 and 8.47 for the year 2008 in the case of Toyota. On the basis of the aforementioned figures, the ATC of Toyota for the year 2009 and 2008 is 2.90 and 2.60 million respectively. Similarly, the revenue of Toyota for the year 2009 was  ¥6.22 million and for 2008 was  ¥9.42 million.Thus, the calculated MR for the year 2009, in the case of Toyota, is  ¥ 4.29, whereas, the AR for three consecutive years is  ¥ 8 million.