Strategies to Achieve Competitive Advantage: Comparison of Nissan and Hyundai in Car Industry
Executive Summary
This essay will focus on the process of technological accumulation of Nissan (Japan) and Hyundai (Korea) in shaping their competitive advantage. Technological capabilities can be achieved from leveraging multinational corporations via external or internal modes. Government should also play an active role in providing institutions and supportive industrial policies to enhance the economy. Last but not least, a good adaptive strategy is required in order to compete in the ever-changing economy. The interactions of these three factors together with the presence of innovation in the evolutionary learning process could then yield Nissan and Hyundai with distinctive competitive advantage over a long period of time.
Role of multinational corporations and the effectiveness of technology transfer
In Hyundai and Nissan cases, integrating them into existing value chains of developed firms in the form of joint ventures, licenses, and contract manufacturing services can leverage the resources of their collaborating partners and gain new technological and organizational skills as well as market access (Hobday, 1998; Mathews, 2002).
In the 1980s, Hyundai began to seek strategy of externalized technology transfer in the first stage by developing licensing with advanced foreign carmakers, Mitsubishi, to gain technological capabilities. They obtained parts that were difficult to manufacture, such as engines and power trains directly from Mitsubishi, but fabricated the cylinder head and blocks, housing, and transmission case in house (Chung, 1996, pp.1). Licensing was chosen because it lowered the risk of Hyundai as a licensee to fail in manufacturing certain components, and could cut the cost associated with manufacturing the components that were difficult to produce. While it might be incurred as disadvantages for Mitsubishi as a licensor, licensing could serve as a source of competitive advantage for Hyundai, because it may develop a formidable market
This essay will focus on the process of technological accumulation of Nissan (Japan) and Hyundai (Korea) in shaping their competitive advantage. Technological capabilities can be achieved from leveraging multinational corporations via external or internal modes. Government should also play an active role in providing institutions and supportive industrial policies to enhance the economy. Last but not least, a good adaptive strategy is required in order to compete in the ever-changing economy. The interactions of these three factors together with the presence of innovation in the evolutionary learning process could then yield Nissan and Hyundai with distinctive competitive advantage over a long period of time.
Role of multinational corporations and the effectiveness of technology transfer
In Hyundai and Nissan cases, integrating them into existing value chains of developed firms in the form of joint ventures, licenses, and contract manufacturing services can leverage the resources of their collaborating partners and gain new technological and organizational skills as well as market access (Hobday, 1998; Mathews, 2002).
In the 1980s, Hyundai began to seek strategy of externalized technology transfer in the first stage by developing licensing with advanced foreign carmakers, Mitsubishi, to gain technological capabilities. They obtained parts that were difficult to manufacture, such as engines and power trains directly from Mitsubishi, but fabricated the cylinder head and blocks, housing, and transmission case in house (Chung, 1996, pp.1). Licensing was chosen because it lowered the risk of Hyundai as a licensee to fail in manufacturing certain components, and could cut the cost associated with manufacturing the components that were difficult to produce. While it might be incurred as disadvantages for Mitsubishi as a licensor, licensing could serve as a source of competitive advantage for Hyundai, because it may develop a formidable market
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