The Acquisition of Kia Motors by Hyundai Motors Essay

1044 Words Oct 26th, 2013 5 Pages
Every company has a purpose, and part of that purpose is to create wealth and value. However, there are other responsibilities that have been entrusted with companies. The environmental and social responsibilities of a company have an important role in its ability to maintain a social license to operate, ensure a consistent pool of resources that are required for the business to perform its functions, and to generate profits.

The Acquisition of Kia Motors by Hyundai Motors
Fikre Y. Wondimu
CalUniversity

Author Note
Fikre Y. Wondimu is a student at California Intercontinental University.
Special thanks to Dr. Troy Roland and Dr. Fathiah Inserto for providing suggestions to improve this document format and content.
Correspondence
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Keywords: merger and acquisition, restructuring, synergy

The Acquisition of Kia Motors by Hyundai Motors
A Review of the Literature Korea’s automobile industry, which had grown remarkably over the last decade, had entered a period of transition. In addition to weak domestic demand since the mid 90s, the industry suffered from continuous oversupply of automobiles resulted from the introduction of new companies and the expansion facility by existing ones, (Seungwha Chung and Sunju Park, 2009). Kia Motor was the number two automaker in Korea between 1990 and 1997. Fueled by Kia’s ambition to be a global top ten player, substantial amount of investment were made to build overseas plants to expand its production capacity. While many industry analysts viewed the expansion plan as significant progress, Kia’s financial vulnerability triggered a crisis point, causing capital deficiency and forced the company to bankruptcy in 1997. The Kia Motor’s collapse can be explained in several aspects. Firstly, it should be pointed out that the company’s profitability worsened with the excessive domestic market competition triggered by Daewoo’s interest-free sales campaigns from the early 90s. Secondly, the company’s mismanagement was one of the critical factors for the cause of the crisis, (Byoung-Hoon Lee, Sung-Jae Cho, 2000).
Hyundai’s Acquisition of Kia and its Effects Hyundai acquisition of Kia can be

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