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Hyundai Motor Company: Globalization and Environmental Impacts Essay

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Introduction

Globalization can be described as a system of interaction among different countries, economies and societies (Steger 2003, p. 15). This interaction is mostly aimed at coming up with a global economy that will accommodate everybody’s interests. As a matter of fact, it is characterized by the integration of societies and economics around the world (Sachs 2005, p. 43). According to Barbara Parker (2005, p. 153), a business economist globalization affects various facets of individual’s lives. Some of these relate to economic, social, political, technology and culture.

Most of these interactions have been brought about by advancements in transport, communication and infrastructure (Capra 2002, p. 19). On the other hand, globalization has been defined as the tendency of different businesses to advance their operations across the world (Tausch 2008, p. 23). The spread of technologies and philosophies to other parts of the world can also be considered as globalization. In this case, our daily experiences can be diffused to other parts of the world through commodities and ideas.

There are various avenues through which various societies have been affected by globalization. According to Paul Dickson, a business analyst (2006, p.49), some of the factors which have stimulated globalization relate to increased international trade and the high rate of technological innovation especially information technology. In addition, there have been numerous reductions in trade barriers between countries thus enhancing flow of products and capital. However, it is worth noting that the course of globalization has not been continuous but has been characterized by a back and forth trend (Paul 2006, p. 49).

According to Glyn (2006, p. 18), globalization has been brought about by the opening up of different national markets. This has allowed different companies and people to do business in new markets. In this case, different barriers have been done away with as time goes by thereby enhancing such markets (Glyn 2006, p. 18). Another driving force behind globalization has been the cut- back of trade restrictions. In extreme cases, organizations have been formed to remove trade restrictions and enhance the functioning of different markets. Such organizations include General Agreement on Tariffs and Trade (GATT) that has removed many trade restrictions (Osle 2010, p. 9).

In addition, globalization has been increased by speedy and cheaper overcoming of distance. This distance has been reduced by advancements in technology and good progress in the transport sector. As a matter of fact, the internet has been instrumental in enhancing globalization as time goes by (Hobson 2004, p. 32). Wholesomely, the privatization of many state owned businesses and enterprises has encouraged competition. Competition has allowed other companies to venture in such markets thereby increasing globalization (Stiglitz 2006, p. 19).

Another driving force behind globalization has been the liberalization of international flow of capital in different countries and markets. In a broad perspective, there have been some arguments in relation to economic and technological forces behind globalization (Smith 2007, p. 16). The expansion of communication systems has also enhanced the pace of globalization as people can communicate well. In this case, one document can be distributed to other people around the world within a very short period of time.

Globalization has had different impacts on the automobile sectors and other sectors (Sen 1999, p. 18). As much as the automobiles sector is technologically advanced, the continued integration of low income nations has put a lot of competitive pressure on established countries. As a matter of fact, automobile countries like Germany and USA have been forced to outsource various segments. Such segments include labor intensive activities like value chain (Capra 2002, p. 29).

Low skilled workers have suffered as a result of globalization. This has been seen in the deterioration of wages and employment prospects. Such problems have mostly occurred in traditional automotive industry locations (Gowan 1999, p. 37). Fierce competition has been coming from new end producers form Asia, Latin America and Southern Europe. In this case, traditional; producers have been forced to adjust their operations. For instance, the USA automobile industry has turned out to be poor when compared with other producers like Japan and Germany.

The most renowned traditional automotive producing countries include Japan, USA and Germany. Globalization in the automobile sector has increased the intricate network of alliances (Hobson 2004, p. 37). This has increased cross- shareholding as companies strive to enhance their operations in different countries and regions. As a matter of fact, there have been a lot of mergers and acquisitions. This mergers and acquisitions have involved end producers and input suppliers (Lewis 2009, p. 15).

There is a relationship between globalization and foreign direct investment in the automotive sector. Globalization has made it easy for people to invest in different countries (Murray 2006, p. 35). This means that an individual can invest in different countries without any problem. Globalization enables foreign individuals to invest in their countries of choice. This means that as long as globalization is there, foreign direct investments will be on the upward trend (Friedman 2005, p. 28).

This paper will try to talk about Hyundai Motor Company and its globalization activities. Hyundai Motor Company is the world’s fifth largest automaker (Hyundai 2007, para. 1). As a matter of fact, it is the world’s fastest growing automaker (Sachs 2005, p. 47). The company operates a very large and integrated manufacturing unit that has the capacity to produce more than 1.6 million units annually. To show how global the company is, their vehicles are sold in more than 193 countries all over the world. In addition, it has more than 6000 dealerships around the world to advance its operations and activities (Hyundai 2010, p. 12).

Globalization Impacts on Hyundai Motor Company

Globalization has had various impacts on Hyundai Motor Company. These impacts can be either actual or potential aspects that affect the company in one way or the other. There have been concerns about the company’s response to heath issues in different perspectives (Sang-hun 2006, p. 17). As a mater of act, many countries and markets have been complaining that the company through its vehicles emits a lot of hydrocarbons in the air. In a broad perspective, vehicles lead to air pollution that has a lot of health implications on different people and customers.

As a result of globalization, most of the world’s chlorofluorocarbons in the air are accounted for by the automotive sector. Because the company has been expanding its activities in the global market as time goes by, there has been a lot of exposure to pollutants. In addition, long term exposure to air pollutants has caused cardiovascular and respiratory diseases (Doron 1999, p. 32).

Hydrocarbon emissions have had a lot of health effects on different people around the world. Because the company has a large number of vehicles in the market, it has received a lot of complaints in relation to hydrocarbon emissions in different countries, like Sweden and the Republic of Ireland. Hydrocarbon emissions can be said to be off- road vehicle emissions that have a lot of health impacts and effects on people. The world has a large number of vehicles that turn out to be a significant source of pollution (Hyundai 2010, p. 22).

Motor vehicles are a major source of air pollution. This arises from the fact that they emit dangerous gases. The carbon dioxide emitted from the vehicles contributes to climate change by increasing the rate of global warming (European Conference of Ministers of Transport 2001, p. 15). Some countries in which major vehicle manufacturing companies are located have not implemented laws to minimize air pollution arising from gases emitted by motor vehicles. Failure to manufacture environmental friendly vehicles will result into these firms such as Hyundai Motor Company being blamed for the rise in climate change as a result of carbon dioxide emitted into the environment.

Particulate matter is brought about by hydrocarbon emissions. It accumulates in respiratory system and causes a loft of respiratory diseases and even death. Criticism related to air pollution can damage a firm’s publicity. In order to avert this, firm should develop strategies to ensure that their operations are environmental friendly. One of the ways through which this can be attained is by incorporating green technology. Therefore, the company has come up with different responses to correct this problem. This has seen the company receive a number of environmental accolades. Hyundai Motor Company has developed the new Hyundai ix35 to respond to various health concerns (Hyundai 2010, p. 17). The company’s Kia Sportage has also received a lot of environmental recognition from various organizations and governments around the world.

These two models have been examined in relation to their economic impact on the society. This has been done by considering the materials that were used in the production of these cars and various engine emissions. In a broad perspective, the company has come up with good methods to cut on fuel consumption as time goes by. In this case, the company uses water soluble painting processes to cut down on hydrocarbon emissions from its vehicle in the market (Hyundai 2010, p. 25). It should be known that the company will always strive to be the best in environmental issues and matters.

Because various critics have argued that diesel is a large air pollutant, the company has developed vehicles that use bio-fuels like bio-ethanol to answer various health issues and concerns (Vladimir 2008, p. 25). This is because bio-fuels do not emit a lot of dangerous gases like diesel. In a broad perspective, the company has always strived to deliver safe and environmental friendly cars to the market. In this case, the company has invested a lot in research and development to come up with vehicles that will reduce exhaust emissions.

As a matter of fact, the company has concentrated a lot on zero emission technologies and low emission vehicles. This has been seen in hybrid electric trains and the fuel cell (Taylor 2010, p. 29). There has also been an effort in the use of eco- friendly materials in the manufacture of cars. Such efforts have reduced the release of hazardous substances to the environment. These green vehicles have contributed a lot in the reduction of green house emissions.

In a broad perspective, the company has made a commitment to the European unions CO2 reduction strategy by producing environmental friendly engines (Hyundai 2010, p. 29). These engines have reduced the number of hydrocarbon emissions in a great way (Alphen 2009, p. 15). As much as these engines have reduced the rate of emissions, they have also offered high fuel efficiency. By 2009, the company had targeted to reduce emissions from its vehicles by 29 %( Alphen 2009, p. 15).

In its operation, Hyundai Company is committed at attaining environmental sustainability. This has been attained through incorporation of the concept of innovation. For example, by developing the new Hyundai i30 and Tucson FCEV, the company’s commitment towards attaining environmental sustainability has been recognized. This arises from the fact that the new model has got minimal emission. In addition, the company’s Tucson FCEV is economical in that its fuel consumption is minimal. This has contributed towards the company’s competitive advantage.

The company has improved fuel efficiency when compared with other company’s vehicles that use gasoline powered engines. In 2010, the company recorded a 120% soar in sales of its new Tucson FCEV (Taylor 2010, p. 21). As a matter of fact, the model which was launched in January 2010 has received overwhelming consumer response and an increase in sales. It can be said that the company has increased its profitability from this new models. Wholesomely, it should be known that the model recorded a 128% increase in sales in the first month (Hyundai 2010, p. 28).

As a result of introducing the new models, the firm’s performance has been improved. This arises from the fact that consumers are increasingly considering the models to be appealing. This has greatly enhanced the firm’s sales (Dowling 2010, para. 7). For example, Hyundai i30 sales were enhanced by the models curtain airbags and side fitments. In addition, the new models have made the firm to be effective positioned in the market compared to other firms’ such as Mazda (Dowling 2010, para. 8).

Environmental Impacts on Hyundai Motor Company

Environmental issues have also come up as one of the potential impacts of globalization on Hyundai Motor Company. This is because the company is the world’s fifth largest automaker and as a matter of fact, it is the world’s fastest growing automaker (Hyundai 2010, p. 27). In a broad perspective, Hyundai Motor Company has also received complaints as far as environmental issues are concerned.

The company has continued to engage in a number of environmental management activities as time goes by. This has been mostly seen in technologies and green production to ensure that it is in a capacity to address a number of environmental issues (Kitamura &. Ohnsman 2010, p. 24). Apart from moving towards green vehicles, the company has also come up with various environmental projects to improve its image as far as environmental issues are concerned. An example of these projects is the Hyundai green zone that is located in Beijing (Hyundai 2010, p. 47).

The United States Environmental Protection Agency (EPA) which deals with environmental protection from various forms of pollution has appreciated the company’s efforts and approach to environmental issues (EPA 2004, 1). In this case, the agency has been reviewing the company’s efforts to meet various environmental concerns. In 2009, the company was named as the second most fuel efficient automaker by the agency. This was after Hondas combined fleets that are more fuel efficient than the company’s models (Hyundai 2010, p. 57). In addition, the company has also been using good materials to reduce hydrocarbon emissions from its cars.

In a broad perspective, the company is determined to ensure that it complies with all environmental expectations that are needed for sustainability. This is the trend that has been set by other companies and the company’s is not ready to be left behind. It should be known that the company has invested a lot in research and development to come up with fuel efficient cars.

Hyundai Motor Company has always reduced water and energy consumption in its cars. For example, in 2008 the company’s water usage was 39.5 million metric tones. This was further reduced to 25 million metric tones in 2009(Alphen 2009, p. 15). Most of its new models have been known to reduce water consumption in a broad way.

In addition, since its establishment in 1967, the company has been developing vehicles that minimize the consumption of water. These vehicles have also reduced C02 emissions offering double efficiency than other vehicles (Murray 2006, p. 55). Good research has ensured that the company is guaranteed to have effective vehicles. This is because consumers are nowadays concerned about their health and will continue demanding fuel efficient vehicles.

For instance, the company’s models are made in an effective way to reduce fuel consumption. As a matter of act, reducing speed reduces fuel and water consumption by more than 10% (Hyundai 2010, p. 15). Most of the company’s new models use multi point fuel injection technology that reduces the consumption of water in its engines. Hyundai Motor Company has continued being environmental conscious in its operations. In this case, the company has come up with a socially responsible approach to environmental issues.

This can be explained from the fact that the company has received a lot of certificates for producing environmental friendly cars. The company is engaged in a number of environmental friendly practices like the production of fuel efficient vehicles that emit less carbon emissions (Hyundai 2010, p. 7). For instance, Hyundai ix35 runs a supper efficient diesel engine that reduces CO2 emissions. This therefore explains the company’s commitment towards good environmental friendly technologies.

Hyundai Motor Company has also continued to develop flexible- fuel vehicles that reduce carbon dioxide emissions. In this case, the company has developed Tucson FCEV that has scored well in reduced emissions, fuel efficiency, exhausts and noise. This model has increased its sales volume in many countries thereby enhancing profitability (Vladimir 2008, p. 27). Other models like the new Hyundai i30 have been developed to reduce the number of hydrocarbon emissions and ensure that the company is environmental friendly.

The company has also developed bio-ethanol cars to reduce carbon emissions in the atmosphere. This has been integrated into the vehicles design and development. Hyundai Verna is one of the new bio-ethanol car models that the company has continued to develop (Hyundai 2010, p. 9). This vehicle has immensely reduced carbon dioxide emissions. In the process, the company has built its image as an environmental friendly company. This has enabled it to get a large number of customers in the competitive automotive industry.

Bio-ethanol vehicles are cheap to produce and develop because there is low taxation (Hyundai 2010, p. 14). This is because governments are encouraging companies to produce bio-ethanol vehicles. Hyundai i10 has also been developed to reduce carbon emissions in the atmosphere. This model has enhanced the company’s research and development activities to build on its existing image. Such models have ensured that the company is on the right path of research and development (Vladimir 2008, p. 17). In addition, the company has continued to produce environmental friendly cars by developing a sustainable recycling society.

As a global leader in the motor vehicle industry, the company has continued being passionate about environmental friendly cars. The development of alternative fuels is being seen as the right step to reduce carbon emissions in the atmosphere. Alternative fuel vehicles will respond to the depletion of oil and emissions (Hyundai 2010, p. 17).

Conclusion

In the 21st century, there has been a rise in the rate of globalization. Considering the fact that businesses do not operate in a vacuum, firms operations have been affected either positively or negatively by globalization. This arises from the fact that there are various facets through which globalization can affect a firm. These relate to various business environments which include economic, social, political, legal and cultural environments. There are various factors which are enhancing the rate of globalization. For example, technological innovation such as growth of information technology has enhanced the rate of interaction between firms located in different countries. In addition, globalization has been enhanced by elimination of trade barriers.

This has further improved international trade. Due to the high rate of globalization, the size of market has been increased. In an effort to tap the market opportunity presented, firms in different economic sectors are increasing their production. However, this has come at a cost with regard to the environment. For example, the motor vehicle industry has been a major contributor of environmental pollution especially air pollution. This arises from the fact that motor vehicles emit carbon dioxide and other gases which are a major cause of climate change. The high rate of environmental pollution by motor vehicle manufacturing companies such as Hyundai Motor Company is enhanced by their high rate of production and lack of laws to control the emissions.

By polluting the environment, a firm’s public image can be damaged. The resultant effect is decline in its performance. In addition, the firm can incur huge financial cost as a result of taxation. In order to avert damage of their publicity, firms should operate in a social responsible manner.

One of the ways through which this can be attained is by incorporating the concept of new product development. In an effort to attain this, Hyundai Motor Company has developed new vehicles which include Tucson FCEV and Hyundai i30. Decision to incorporate the new technology is inline with the firm’s environmental sustainability objective. The new models are considered by a large number of consumers to be economical in terms of oil consumption and environmental friendly due to their minimal emission. The new models have resulted into an improvement in the firm’s financial performance. In addition, the firm’s competitive advantage and market position has been improved relative to its competitors.

Recommendation

In order to improve its performance and publicity, Hyundai Motor Company should consider the following.

  • Improve its social responsibility by going green. One of the ways through which the firm can attain this is by incorporating new technology. The firm should continuously improve its car models to ensure that they are environmental friendly.
  • The firm should determine the amount of carbon emitted from its operation by incorporating the concept of carbon foot printing which entails determining the amount of carbon dioxide emitted into the atmosphere.

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