Business Submission - Hyundai Motor Company - Case Study Example

Business Submission: Hyundai Motor Company Commitment to the Global Compact As one of the signatories to the UN Global Compact, Hyundai Motor Company believes in pursuing growth that contributes to a sustainable future. The company proactively seeks for opportunities to not only achieve business growth but also to make a positive contribution to society. In alignment with the principles set in the Global Compact, Hyundai strives to promote economical, social, and environmental responsibility through its business practices (Hyundai 2012). A wide range of the company’s business practices center on two key principles of the Global Compact namely; Principle 8: Undertaking initiatives to promote greater environmental responsibility Principle 10: Working against corruption in all its forms, including extortion and bribery.  Business Practices In alignment with principle eight of the UN Global Compact, Hyundai has formulated an environmental policy that provides a blue print on how the company can to promote greater environmental responsibility in order to protect and preserve the environment for the benefit of local communities. In order to promote greater environmental responsibility, Hyundai has exerted significant efforts towards ensuring low carbon manufacturing in all the stages of automobile lifecycle starting from the manufacturing process to the vehicle manufacturing process. Moreover, the company regularly takes Greenhouse gas inventories so as to monitor its Greenhouse gas emissions and ensure that there is low emission in the environment (BC Air Quality 2013; Hyundai Czech 2013). Additionally, the company initiated the Blue Drive project which has seen the development of hybrid vehicles that enhance fuel efficiency and the use of biofuels (Hyundai America 2013). In compliance with principle ten of the UN Global Compact, Hyundai does not condone corruption in any of its forms throughout all of its regional operations. The company’s policy against corruption is clearly outlined in its employee code of conduct and ethics charter. In the purchasing division where corruption is more prone to occur, there is a specific ethics charter that provides specific guideline to on how to deal with issues pertaining to corruption. Moreover, in 2007, the company formed an ethics committee comprising of external directors so as to facilitate effective and independent monitoring, supervision and regulation of internal business transactions. In addition to this, the company institutes regular employee training so as to equip employee with relevant knowledge and skills on how they can uphold regular high ethical standards (Hyundai 2012). Performance Over the years, Hyundai has implemented a wide range of initiatives in order to promote greater environmental responsibility according to principle eight of the UN Global Compact. For instance, its Greenhouse gas inventories and low carbon manufacturing throughout its automobile lifecycle has helped to reduce carbon emissions in the environment. Moreover, through its Blue Drive initiative the company has managed to provide consumers with vehicles that are fuel efficient. However despite of these steps that Hyundai has taken, there have been concerns over air pollution, chemical and heavy-metal poisoning from Hyundai factories in some regions especially South Korea (Lee & Choeng 2001; Lansbury, Suh & Kwon 2007). Although the company is known for producing fuel-efficient vehicles, the company has also been faulted for increasing its production of fuel guzzling car models. This is inconsistent with its business practices which aim at promoting greater environmental responsibility. Moreover, as compared to environmental- friendly vehicles released by the Ford Company, it is apparent that Hyundai falls slightly behind. Vehicle models such as Ford Escape Hybrid and Ford Focus from the Ford Company have won over competitors due to their revolutionary design that contributes to increased fuel economy and low carbon emissions. According to data from the Environmental Protection Agency (EPA), Hyundai ranks third when it comes to the production of environment friendly vehicle (MSN Autos 2013). Secondly, through its stringent anti-corruption policies and ethical standards that are in-line with principle ten of the UN Global Compact, the company has managed to avert and minimise incidences of corruption within its internal structure and supply-chain system. Furthermore, through the implementation of regular ethics training programs, Hyundai has managed to inculcate high ethical standards and practices among its staff and supply chain partners. Conversely, Toyota has been faced with a number of corruption incidences involving the sale of fake vehicle parts. Although the company has put forth significant measures to curb corruption in its internal systems, its supply and distribution system is characterised by incidences of corruption. One of its key limitations as far curbing corruption is concerned lies in its monitoring and quality control systems (Motor Trend 2013). Recommendations Principle 8 Recommendation 1: Investing in Research and Development Although Hyundai has exerted significant effort to enhance fuel efficiency and minimise carbon emission, there is need for the company to redirect its resources and manpower towards research and development in order to find solutions for addressing the pollution intensive nature of its operations. Recommendation 2: Consumer Education Ensuring greater environmental responsibility is a challenging task that not only requires the participation of motor companies but also the joint effort of consumers operating motor vehicles. It is therefore crucial for Hyundai to initiate consumer education programs that focus on equipping consumers in the local community with relevant skills and knowledge on how they can become effective environmental stewards. Benefits By investing in research and development the company will be able to come up with innovative approaches and products that will aid in reducing carbon emissions and enhancing fuel efficiency. Furthermore, investing in research and development may help the company discover more efficient processes of undertaking its operations. Educating consumers on environmental responsibility may enhance their awareness on issues affecting the environment as a result compelling them to adopt practices that promote environmental sustainability. Challenges Nevertheless, investing in research and development and consumer education can be very expensive and difficult to manage. Consumer education and research and development do not promise instant results and can take a long time before any substantial results are realised. Implications Investing in research and development may lead to the development of solutions, products and efficient business process that will help both stakeholders and consumers to minimise costs associated with fuel and overall operations. Consumer education may influence consumers’ environmental practices and purchasing behaviour. It could draw consumers towards the purchase of environment friendly car models that are fuel-efficient and the use of fuel products that emit less carbon in the environment. Principle 10 Recommendation 1: Institution of regular training programs on ethics for supply chain partners and networks As a multinational company operating in many regions across the world, Hyundai collaborates and networks with thousands of supply chain partners. This in turn makes it difficult for the company to effectively control the practices of its supply chain partners and networks. In order to combat corruption in its supply chain networks, there is need for the company to institute regular training programs on ethics for its supply chain partners and networks. Recommendation 2: Formation of Regional Anti-Corruption Regulatory Bodies In order to effectively avert or minimise incidences of corruption throughout its supply chain network, Hyundai should formulate regional anti-corruption regulatory bodies which monitor or supervise practices of supply chain partners and ensure the set standards of practices are adhered to. Benefits Through regular training programs on ethics and the formulation of regional anti-corruption bodies, the company will be able to enforce its ethical standards and minimise incidences of corruption in its supply chain network. Challenges Due to Hyundai’s wide network of supply chain network, effectively executing regular training programs on ethics may be challenging. There is likelihood that some supply chain partners may be unavailable for regular training sessions. Moreover, there is likelihood that some partners may exhibit little motivation or commitment to the training program. Additionally, effectively monitoring and supervising supply chain practices are a demanding task that requires a substantial amount of resources and manpower. Implications A reduction in incidences of corruption within the company’s supply chain would help company stakeholders to minimise costs associated with legal lawsuits. Averting incidences of corruption through regular training programs on ethics and regional anti-corruption regulatory bodies may help to enhance customer satisfaction. References British Columbia Air Quality, Impact of Ozone Depletion, Retrieved on December 28, 2013 Hyundai America, Sustainability, Retrieved on December 28, 2013 Hyundai, 2012 Sustainability Report: The Road to Sustainability, Retrieved on December 29, 2013 Hyundai Czech, Environment, Retrieved on December 28, 2013 Lansbury Russell, Suh Chung-Sok & Kwon Seung, The Global Korean Motor Industry: The Hyundai Motor Company’s Global Strategy, (New York: Routledge, 2007), 49-51. Lee, Ki-Hon & Choeng, In-Mo. “Measuring a carbon footprint and environmental practice: the case of Hyundai Motors Co. (HMC).” Industrial Management & Data Systems.111, no 6 (2001): 961 - 978 Motor Trend, Toyota: A culture of corruption? Toyota Salesmen Arrested Over Sales, Retrieved on December 29, 2013 MSN Autos, Top Environmentally Friendly Cars, Retrieved on December 29, 2013 Read More

 

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