Samyeong Cable Company Essay Example
Samyeong Cable Company Essay Example

Samyeong Cable Company Essay Example

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  • Pages: 4 (834 words)
  • Published: August 8, 2018
  • Type: Case Study
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Background Samyeong Cable

Samyeong Cable is a cable manufacturing company specializing in the production of various cable parts for motor vehicles. These include control cables, speedometer cables, ignition cables, and filter elements. The company distributes its products both domestically and internationally. Its main customer is Hyundai Motor Company, but it also supplies other major motor companies such as Kia and Daewoo. Additionally, Rockwell International relies on Samyeong Cable for its door regulator cables. With an impressive growth rate, the company's revenue increased by 153% from 8.7B Korean Won in 1991 to 22B Korean Won in 1995 over a span of four years.

In the mid-1990s, 68% of the revenue for Samyeong Cable Company (SCC) was generated from domestic operations, while only 32% came from international customers. The growth of SCC relies heavily on their developmen


t action plans - CR 30, "2 by 2", and "100pm" - and it is crucial for the management of Hyundai to be responsive to these plans. This analysis specifically considers the perspective of SCC's management during this time period.

Samyeong is facing a problem with its customers, both domestic and overseas. In 1995, the majority (3/4ths) of the company's revenues came from sales within Korea, while a smaller portion (1/4th) came from sales outside of Korea. Hyundai, a major customer in Korea, has recently implemented a capability-based single sourcing approach in their supply chain management. Given Hyundai's global potential and the need for Samyeong to stay competitive in the automotive cable solutions and automotive parts industry, the company must find ways to enhance its operations immediately while maintaining a profitable relationship with Hyundai in the short-term and positioning itself for long-term global

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In the Hyundai's Supplier Rating Report, it is assumed that Samyeong has a class B rating due to average ratings in Production Management (18-20%) and Quality Management (18-20%), and below average ratings in Technological Development (15-18%). It is also assumed that there will be no significant changes in the political and economic environment of South Korea that could impact Samyeong's operations. Samyeong specializes in producing control cables, speedometer cables, ignition cables, hood latch cables, and other related products.

Plant operations are heavily influenced by labor disputes. We need information on Hyundai's direct competitors as suggested by Sir. We can consider tapping into other potential customers as long as they do not directly compete with Hyundai. For instance, Chrysler caters to a higher class market compared to Hyundai. Show actual and projected vehicle sales in Asia from 1995 onwards, sourced from Standard and Poor's DRI-Global Automotive Group. Also, provide information on labor disputes in South Korea, sourced from the Ministry of Labor, S. Korea.

Global Market Potential – Motor Vehicle Production by Manufacturer in 1998 (in thousands, Top 15) and Motor Vehicle Production by Country in 1997 (Top 15). World Motor Vehicle Production (in thousands) and Compounded Annual Growth Rate by Country:* Countries in BLUE on the table are also countries included in top motor vehicle production by the manufacturer (98) and top motor vehicle production by country (97). Countries in bold on the table are countries not included in top motor vehicle production by the manufacturer (98) but are included in top motor vehicle production by country (97). Recommendation: The remaining countries in blue and bold are the ones feasible for either placement of a future

manufacturing plant or a distribution channel. Since all the countries in the table above have exhibited substantial positive growth from 1991-1997, these are countries that present some potential for Samyeong’s global market. SHORTEN!!! Manufacturing overseas - China and India, both known for their low labor costs, had a compounded annual growth rate (CAGR) from 91-97 of 13.18% and 11.

11% respectively. Due to the substantial growth potential of these countries, Samyeong may consider establishing a manufacturing plant in these locations, taking advantage of their low labor costs. This can be achieved through joint-ventures, leveraging the knowledge and connections of local companies. The benefits of such an approach include risk mitigation in the face of labor disputes and the opportunity to tap into potential markets. Additionally, China's close proximity to major PVC and copper suppliers adds to its appeal. Although India lacks this advantage, copper and PVC enjoy strong worldwide distribution nevertheless.

Germany, USA, and France are all potential distribution channels with a high market potential. These countries are home to the largest car manufacturing companies in the world and show a growing demand for cars based on their increasing car production through the CAGR. For Samyeong, collaborating with car manufacturing companies in these countries offers an opportunity to boost exports. It is assumed that the main raw materials for auto cables, namely copper and PVC, are similar to 2005's major world copper producers. The issue of labor productivity in these potential countries should not be a concern as Samyeong has implemented successful programs, with Hyundai's assistance, in their Korean plants. With their experience, they can replicate or address this issue if necessary.

In 2005, the percentage of copper

output compared to the top producer (Chile with 5,320,500 tonnes) was shown. Green represented 100% and Yellow represented 10%.

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