KIA Motors

Apr 17, 2019
folder_opencategory: Business

KIA Motors is a Korean brand founded in 1944. The company started its work with the production of bicycles and motorcycles. Later, it became the oldest vehicle producer in the region and developed into the Hyundai-Kia Automotive Group. Production takes place in 14 countries, producing 1.4 million vehicles a year that are distributed and sold in 172 countries with the help of various dealers. However, in the terms of high competition worldwide, crises in Russia, cutting expenses in European countries, limited buying abilities in Asia, and the policy of high taxes in Turkey, KIA needs to pay more attention to the Middle East market because of its constant economic growth and purchasing abilities (KIA Motors Corporation, n.d.). One of the most developed countries in the region is the Kingdom of Saudi Arabia that is famous not only because of its resources and prosperity of the population but also a stable political and economic situation which is good for international business. Taking into account the international experience and work in specific markets, KIA Motors has developed a proper attitude to the Middle East market and can meet its needs. The needs should include cultural and climate specifications, and monetary abilities of the upper and middle classes. At the same time, the company should develop an attitude to colors and shapes. All the above mentioned points would be depicted further and would be taken into account when providing recommendations in regard to the further development strategies. Due to an ability to collect and analyze the received data, the research will be able to generate important strategies, theories, and recommendations that might influence the development of the company in the Kingdom of Saudi Arabia not only in regard to consumers but also the government.

In order to define possible strategies that KIA Motors might utilize for developing its position in the Saudi Arabia market, this research offers to determine consumer abilities and habits basing on the published articles and researches. At the same time, the research would consider the general market stability of the country when defining the probability of creation of specific products and circumstances for consumers and vehicles. The Kingdom of Saudi Arabia might be defined as one of the most interesting markets for selling cars produced by KIA Motors because of wide monetary and economic opportunities of its citizens. According to the 2013statistics, the citizens of the kingdom bought 750,000 cars produced by the company; that makes the half of the company`s global sales. At the same time, they prefer Japanese, Korean, and American producers (Riaydh, 2014). Therefore, Korean products such as KIA cars might be widely appreciated in case the company applies a smart strategy. Moreover, according to the 2015 Index of Economic Freedom, the country has 76.4% of trade freedom and 65.8% of business freedom that makes it 77th in the world and 8th in the region. Establishing the production in the country does not limit minimum investment, and the government is ready to invest 80% to cover electricity and fuel costs. However, as it is a religious country, directed by Islamic laws, the company might be unable to running a business in the country if it lacks cultural and religious understanding. At the same time, the country shows positive tendencies in its development: the Kingdom of Saudi Arabia has the population of 30 million people and GDP of $937.2 billion. The country demonstrates a stable monetary growth - 5.5% during last five years and 3.8% last year. At the same time, the citizens might easily make expensive purchases taking into consideration the rates of inflation (3.5%) and unemployment (5.5%) (Saudi Arabia, n.d.). Apart from vast monetary abilities and freedoms, the citizens of Saudi Arabia have a specific buying culture that distinguishes them from other nations: the global recession has not reduced consumers’ needs and activities; they prefer luxury brands and items that would underline their status; they pay more attention to high tech products; they use comfortable and fast travelling and modern healthcare facilities (Consumer Lifestyles in Saudi Arabia, 2014). Therefore, the market of the Kingdom of Saudi Arabia is stable and safe for trading cars because of government policies, positive GDP tendency and consumers’ abilities and desire to spend their money.

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Even though the citizens of the country have wide monetary abilities and wish to spend their money, they are limited by some specific legislations and cultural peculiarities. Driving in Saudi Arabia might be considered dangerous with a high rate of deaths: 6,500 in 2010 and 19 deaths per day this year. At the same time, human factor plays an important role in 85% of all fatal cases. Therefore, the culture of driving in the country is rather poor. The problem is widely spread among both youth and adults and requires wider social, governmental and auto-producers` responsibilities. At the same time, the market is still attractive because of the poorly developed public transport infrastructure. Thus, almost all citizens or at least each family needs a car. In order to be able to drive in Saudi Arabia, there are following requirements: one has to have a driving license, to register a car, and to insure the car. At the same time, the car insurance policy is a rather new requirement (Legal Requirements for Driving in Saudi Arabia, n.d.). Moreover, the absence of the insurance might lead to a fine; therefore, the buyers of new cars are interested in full package services. At the same time, it is important for all car producing companies willing to sell their products in Saudi Arabia to understand women`s roles and rights in the society. Even though there are no laws that forbid women to drive, the society condemns women, who drive a car without being accompanied by a male relative (Ammar, 2015). Therefore, gender orientation in the market does not play an important role right now.

In order to enter a new market, KIA Motors is supposed to appeal to one of the theories of organizational adaptation. In the terms of expensive production and logistics and long-term work in the market, the company is supposed to implement a strategic choice approach. Thus, KIA motors might not only offer interesting products that are usual for customers but also adopt new technologies that might be more environmentally friendly and socially responsible (Strategic Management and Business Policies, Lecture 1). Taking into account the above mentioned findings, there are some major points that should be taken into account. First of all, there is no need to orient on female consumers in the market, and male customers of all age groups are interested in fast and quality cars. Second, the citizens enjoy comfortable housing, job security, and monetary sources. Third, the citizens prefer luxury products because there are no monetary limitations. At the same time, the selling services should be modernized, and cars should include all modern technical and electronic devices. Taking into account all the above mentioned peculiarities, the company should take into account Porter’s Competitive Strategy. Taking into account that most consumers in Saudi Arabia prefer luxury products, the products offered by KIA Motors should be created according to the high cost principles. Moreover, more attention should be paid to consumer segmentation and their needs: most drivers are male; customers prefer fast and luxury cars; high level of traffic fatalities because of speeding (Strategic Management and Business Policies, Lecture 5). The company should implement the strategy taking into consideration the customers` preferences determined in the paper. At the same time, the company should create totally new products that would appeal to status, high quality, security, and luxury principles preferred by the citizens of Saudi Arabia.

Recommendations

In order to enter the market, KIA Motors is recommended to conduct a detailed research of the market to identify particular consumer needs and preferences. According to the research, the company might be defined as competitive as it offers luxury cars that appeal to the target customers` taste and fashion.

In order to be able to sell its cars successfully in the Kingdom of Saudi Arabia, the company should create a limited series of luxury cars produced in Korea. The new exclusive product should be available in a limited amount for the specific region only. Therefore, the company should present itself as an exclusive producer of luxury cars for specific clients. For example, the company may offer the client a four-wheel-drive jeep, enabling both in-city and sand-driving, which are popular in the country and appeal to the modern local culture. The interior of the car should include only natural materials such as gold, wood and leather. At the same time, the newly developed products should include modern electronic systems for comfortable and safe driving and might please both the car drivers and the passengers. Exclusive voice systems and individual programming might be implemented in distribution salons. Such systems might include automatic call for help in case of an accident, prevention of excessive speeding, etc. Taking into account the high level of accidents and the absence of a careful driving culture, the cars might include safe driving systems that might be used by parents who worry about their children. Moreover, the company might develop a new protection air-bag system to reduce the number of road deaths. At the same time, the advertising of the product should be limited and appeal to the exclusive side of the product. Moreover, the distributors should provide additional services such as individual programming, registration of a car and completion of insurance contracts with the lowest level of consumer participation.

Therefore, to enter the market, KIA Motors is recommended to conduct additional researches to identify consumers’ abilities. At the same time, it should use only modern technologies and designs to attract the customers living in Saudi Arabia. For example, the company may offer the clients a limited series of cars produced in Korea and supplemented with modern electronic devices. Moreover, the company has to take into consideration the drivers` particular needs and difficulties concerning unsafe driving and amount of accidents.

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