The Pressure built up during the harsh years of military dictatorship, economic boom, and management style had caused several labor strikes.
For thirty years, South Korea had been ruled by a military dictator and growing calls for democracy had echoed through the 1970s and early 80s. South Korea’s economic boom put Hyundai in a position wherein their strategy of low wages and hard work were no longer suffice in the face of rising competition from other developing nations and swelling demands from the country’s more independent youth generation.
At Hyundai, employees viewed the owners’ style as authoritarian in which the consensus is what the boss says it is. Also, company had created an image that was unwilling to change with the times. IV. Point of view
Chung Ju Yung: The founder of Hyundai, he is willing to tackle the impossible and unwilling to accept “no” from subordinates. Hyundai Workers: They want better working conditions and environment. They have been looked down on in Korea. They don’t have voices in management decisions and experienced erratic job schedules with lower wages. V. Objectives
1. To improve the management style and cope with changes along with time. 2. To address the dispute between the management of Hyundai and its workers, such that the result will provide a positive sum that will satisfy both parties’ concern.
VI. SWOT analysis Strengths: 1.The Hyundai group makes a wide range of products. 2.The company’s chairman is very persistent. 3.Workers are disciplined, para-military, single-minded, and self-sufficient machine. 4.The company has a good reputation. 5.The company has low cost of production thereby low-priced products. Weaknesses: 1.Authoritarian leadership style 2.Top management is not committed to high-tech. 3.The company adopted paternalism corporate management. 4. Labor union issues Opportunities: 1.Large market share 2.Potential market for ASEAN Threats: 1.Rising competition 2.High dependency on exports 3.Technology gap to advanced countries VII. Alternative courses of action A.Go. Give an increase in labor wages by 28% and recognize labor union. Advantages: 1.Workers’ rights are protected. 2.Higher wages encourage employees to work. 3.Voices of employees are heard with the formation of labor union. Disadvantages: 1.Additional costs are incurred in the part of Hyundai. 2.Lessen the flexibility of workers. 3.Workers may demand follow-up increase in their wages. B. No Go. Do not give an increase in labor wages and do not recognize labor unions. Advantages: 1.No additional costs will be incurred regarding labor wages. 2.Employees cannot easily complain. Disadvantages: 1.Employees will continue their labor stike. 2.Employees remain unsatisfied with the current wage. 3.They will not be motivated to work hard. 4.The company’s operation will continue to be interrupted and demand for products is not met. C.Encourage participative management style, recognize labor union and increase workers’ wages and adjust working hours. Advantages:
1.Employees’ satisfaction and commitment to work. 2.With the formation of labor union, workers’ right are protected. 3.Participative management style allows the voices of employee to be heard. 4.Workers tend to be loyal to the organization. Disadvantages: 1.Costly. An increased in labor wages lessens company’s profit. 2.Shortening working hours reduce production output. 3.Labor unions can limit the flexibility of workforce. VIII. Recommendation Alternative C which is to encourage participative management style, recognize labor union and increase workers’ wages and adjust working hours is considered as the best alternative course of action. With this alternative, the demands of the workers are satisfied as well as those of the management. Participative management style allows the interchange of ideas between the management and workers. Workers’ rights are protected because of the formation of labor unions. Moreover, operations in Hyundai will be stabilized. IX. Conclusion
Hyundai played a vital role in Korea’s economic development, and that was intricately interdependent with a number of other forces such as government, economic and non-economic factor. The authoritarian type of government greatly influenced businesses as shown in the management style of the Hyundai’s founder Chung Ju-Yung.
The call for change in management style, higher salary increase and demand for respect caused the workers to rebel. Participative management style, creation of labor union, increased in wages and shortening working hours answer the said problem. The solution benefited the workers and the management. X. Courses of action
Government actions are beyond the control of Hyundai’s management. The degree of respect demanded by workers varies individually.