Competition is among the natural catalyzers of progress. It has helped the humankind to develop and withstand numerous challenges provided by hostile environment thousands of years ago. Today, it helps companies and organizations develop and implement innovations in various spheres all over the world. Considering the Porter’s Diamond of National Advantage, the paper aims to analyze KIA Motors and its activities on the European market, evaluating the company’s efforts on the international market, and the influence of the four Porter’s factors on the company’s operations.
Factor Conditions
According to Porter (1990), factor conditions are the position of a nation in such production factors as skilled labor or critical infrastructure needed to assure competition in a particular industry. KIA Motor Europe (KME) is the division of the KIA Motors Corporation (KMC). The company (KME) is located in Frankfurt, Germany and it has rather small, but very motivated and skilled personnel, including representatives of more than fifteen nationalities. The company must have utterly skilled employees, as it is responsible for the marketing activities in about 30 countries in the European Union (KIA, 2010). Additionally, KME has invested more than €1 billion into the first European factory of KME at Zhilina, Slovakia. Thus, the company has highly motivated international personnel as well as the necessary infrastructure to succeed on the international market.
Demand Conditions
Porter (1990) defines demand conditions as “The nature of home-market demand for the industry’s product or service” (p. 77). For KMC, demand conditions are a rather challenging factor of innovations since local market models differ from its international analogs. KME had to develop models for the European market exclusively (Cee’d, for example) demonstrating, however, substantially increased market share to 12% in 2012 (Madslien, 2012) because of such thorough approach to the analysis of the international market needs (Hyundai-Kia Boost, 2012). According to Hetzner (2015), KIA is considered more than a serious competitor on the European market to Nissan, aiming at the same market niche with its Qashqai.
Related and Supporting Industries
Related and supporting industries’ determinant is explained as the presence/absence of local industries (in the nation) that would supply the needs of the national market and be competitive on the international scale at the same time (Porter, 1990). KMC has technologies and supporting industries locally that can provide international production facilities with their own materials and supplies. Hyundai, as the mother company for KMC, has built the factory in Slovakia, so Hyundai/Kia produces about 60% of cars in the European Union (Reed, 2012). In other words, the company has enough local capacities to support the competition on the international market such as European one.
Firm Strategy, Structure, and Rivalry
Finally, the determinant of firm strategy, structure, and rivalry is about the conditions of national governing of companies in terms of their creation, organization, and management, including the essence of local rivalry (Porter, 1990). KMC is a large corporation on the local market since it is a part of the Hyundai/KIA Company. The nature of domestic rivalry differs from the international challenges of KIA considering the nature of the European rivalry. The local market is less diverse, and KMC has a substantially stronger position on it. However, KME, being a rather small company, focuses all resources on few but promising projects like compact Cee’d and a successful SUV – KIA Sportage (Madslien, 2012). Such an approach is beneficial in terms of gaining the competitive advantage since the company manages to keep market share on stable level despite the situation on the market.
Conclusion
The paper explored the Porter’s Diamond of National Advantage, and its determinants were applied to the analysis of KIA Motors and its activities on the European market. The company’s efforts in the international market and influence of the four Porter’s factors on company’s operations were assessed appropriately. The outcomes of the analysis showed that KIA Motors Europe is successful due to the nation’s advantages and the peculiarities of the automotive market development on the domestic market.
References
Hetzner, C. (2015). How Hyundai and Kia will raise image, prices in Europe. Automotive News Europe. Web.
Hyundai-Kia Boost European Market Share. (2012). The Sydney Morning Herald. Web.
KIA (2010). KIA Motors Europe. Web.
Madslien, J. (2012). Kia grows in shrinking European market. BBC News. Web.
Porter, M. E. (1990). The competitive advantage of nations. Harvard Business Review, 73-93.
Reed, J. (2012). Hyundai and Kia firmly in the driving seat. Financial Times. Web.