1. Introduction
Automobile firms like GM Holden, Toyota, and Ford decided to shut down their plants in Australia and shift to another country. The automobile industry ranks among the crucial significant business phenomena of the twentieth century and remains vitally important today. Other words, the world’s automobile industry has played an important economic role (Wynn-Williams, 2009, p. 2). It is now is one of the largest industries in the world, the industry of industries (Drucker, 1972 , p. 176). It can be seen that there exists a fairly wide degree of consensus among car industry commentators over a large number of issues. The industry has found it hard to adjust to recent challenges and is no longer much valued by the capital markets. The slowing down in car sales in the more mature markets such as North America and Western Europe similarly with the much faster growth of sales in the relatively countries of the third world like China, India. Consequently, this assignment firstly overviews Australia’s automobile market-the operations in Australia and then highlight both challenges and opportunities in China, a potential automobile market in order to suggest a way for Holden entering China’s market. The assignment is intended to investigate the competitive advantages of China and how China could attract many foreign automobile companies in short period. The assignment also uses a number of journals, books, reports, and internet sources to deeply understand the Australian automobile context as well as China’s context.
2. Operations in Australia
2.1. The factors that changed the competition landscape in the automobile industry
First, the automobile industry is in the decline period of its life cycle (Whytcross, March 2014) w...
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... have to pay depreciation and rent like plant ownership. Hence, the automobile industry has been influenced on the decrease of sales volume. Next, there are some impacts on the competitiveness due to the high Australian dollar such as the significant increase import penetration, because vehicles are imported Australia will have a lower price in comparison with vehicles are manufactured locally and making exports more expensive on the global market. In other words, far cheaper imports have flooded the Australian market. Indeed, local manufactures’ lack of competitiveness has resulted in falling sales volume (Whytcross, March 2014). Thus, based on the strategic trade theory, local companies like Gm Holden, Toyota, and Ford do not have a competitive advantage. Because the main idea of the theory is that trade policies can raise the level of domestic welfare in a give
They have dominated the Chinese market since the early 1900s, and as of 2011 they were the number one automaker in the country. They have brand familiarity and brand loyalty from their consumers. They are still seen as an elite brand with an impeccable image of luxury and glamor, which definitely attracts the status-conscious Chinese consumers. They are ahead of the competitors because they are in tune with their costumers wants and produce cars that are relevant and appeal to them. If Buick continues with the same strategy they should stay ahead of the game. However, they have to be aware of the threat of other companies trying to win over the Chinese market. If, in the future, one of Buick’s competitors is able to satisfy the needs of the Chinese consumers better than Buick, then the company could be in
Hyundai-Kia continues to grow and expand its product sales by offering dependable and affordable compact cars and SUVs with 100,000 mile warranties for example (Uzwyshyn 2013). And while the traditional barriers such as technology and capitol or managing and marketing skills limit competition and new entries. New potential threats to the Detroit big three’s market share loom in never before realized corners of the world like India and even China. In both nations right now domestic auto production is growing at a rapid annual rate and demand continues to be high for automobiles. In fact the increasing demand has sparked industrial development; provided job; and improved the infrastructure where the autos are manufactured (Kearney 2013). This push toward growing industries in India and China which produce practical and affordable compact cars will not limit sales only to those local regions. Instead, over time these new manufacturing centers will be exporting their products throughout the entire world. At which time the big three from Detroit will face stiffer completion in three geo-realms, first there in India and China, next throughout the developing Asian market and possibly world market and finally here at home in America potentially. Yes, soon not only will you see tiny Fiat
...nsumer interest and sales began to increase. However, without attaining economies of scale, the cheaper pricing of cars without making much of a profit is not sustainable and an alternative method of producing products at a cheaper price long term was to be sought. Consumer demand of imported vehicles, had sparked an increase in imports into the country causing local manufacturing to cease production and move overseas in order to reduce costs per unit to maintain profit margins. It is clear that this move is to achieve economies of scale as well as maintaining competitiveness in the evolving industry. Therefore the analysis concludes that the manufacturing of automotive vehicles is declining and will soon cease to exist in Australia. Profitability is declining, until a cheaper alternative of cost per unit is achieved, hence economies of scale will also be achieved.
Automobile is the primary mode of transportation in all the major economies of the world. The urge to accelerate the economy at faster pace has made the automobile industry is one of the most prominent economic sectors by revenue of the world. Automobile companies around the world are working day and out to formulate the strategy to bring their brand on top and be a world leader.
Spatz, J., & Nennenkamp, P. (2002, January). Globalization of the automotive industry-traditional locations under pressure. Retrieved January 14, 2012, from http://www.uni-kiel.de/ifw/pub/kap/2002/kap1093.pdf
(4) Abel, Ivan, Maali Ashamalla, and Robert Camp. Competitiveness of the US Automotive Industry: Past, Present, and Future. Rep. 2nd ed. Vol. 10. Indiana: American Society for Competitiveness, 2010. Print.
The automotive industry is one of the most important sectors of the economy for every country in the world. It involves a large number of corporations and institutions engaged in the manufacturing process of motor vehicles including designing, developing, manufacturing, marketing, and selling. It contributes to the global economic growth by generating a significant return and creating a ripple effect on supporting the supply chain as well as providing job opportunities for the skilled workers (ACEA, 2016).
A thorough analysis of the external forces that shaped the global automotive industry in 2009 reveals how the rivalry between established car makers set the stage for some to successfully survive the global recession while others were forced to seek Chapter 11 bankruptcy. A closer consideration of the impact of consolidation, demand and supply, fixed costs, product differentiation, and exit barriers on rivalry within the industry reveals how new entrants and weaker competitors were able to take advantage of environmental opportunities during the recession and gain profit shares. These considerations illustrate the critical importance of analyzing the forces that shape competition in an industry and how such an analysis serves as the foundation for strategy formulation and implementation. Ultimately, in order to succeed, “a company must either fit its strategy to the external environment in which it operates or must be able to reshape the environment to its advantage through its chosen strategy” (Hill & Jones, 2012, p. 56).
Ford’s production plants rely on very high-tech computers and automated assembly. It takes a significant financial investment and time to reconfigure a production plant after a vehicle model is setup for assembly. Ford has made this mistake in the past and surprisingly hasn’t learned the valuable lesson as evidence from the hybrid revolution their missing out on today. Between 1927 and 1928, Ford set in motion their “1928 Plan” of establishing worldwide operations. Unfortunately, the strategic plan didn’t account for economic factors in Europe driving the demand for smaller vehicles. Henry Ford established plants in Europe for the larger North American model A. Their market share in 1929 was 5.7% in England and 7.2% in France (Dassbach, 1988). Economic changes can wreak havoc on a corporation’s bottom line and profitability as well as their brand.
This paper examines the expansion of General Motors overseas in its various phases, as well as triggers for internationalization and the problems faced during the process. The paper also considers what benefits have been achieved through international growth, and how the company can be classified with regards to Bartlett and Ghosal’s 4 typologies. Finally, the paper discusses the concept of a “world car,” meeting the demands of customers across the globe.
At the end it will also provide some recommendations for the government to salvage this business. One of the principal reasons for which Australian car manufacturing industries are struggling to compete globally is the high labour costs in Australia compare to other car manufacturing country. The most promising countries in the car manufacturing sector are China, India and Korea have a very low labour cost (one fourth of the labour cost in Australia), which is reflected on the car price. Since people are getting same model of the car with comparatively cheap price,
The automobile industry is a pillar of global economy. Globally automotive contributes roughly 3 % of all GDP output. It historically has contributed 3.0 – 3.5 % to the overall GDP in the US. The share is even higher in the emerging markets, with the rates in china and India at 7 % and rising. China produces the highest number of automobiles followed by US and Japan (oica.net, 2015). The industry supports direct employment of 9 million people to build 60 million vehicles and parts that go into them (oica.net, 2015). Many other industries such as steel, iron, glass, aluminium, textiles etc. are associated with the automotive industry and resulting in more than 50 million jobs owed to the auto
Future Outlook The United States automotive industry has a promising future because of its resurgence that aims at strengthening the production and market structures. According to Rubenstein (2012), the adoption of the technologies will transform the production of automobiles to meet the changing needs and attitudes of the consumers. For instance, the industry will adopt the electric car production technologies to counter the rising costs of fuel and preferences of the customers. The big three (General motors, Ford and Chrysler) is set to experience increased competition from the global players, an aspect that makes it imperative for the companies to adjust its strategies to remain relevant in the market.
Automotive legend of the last century, GM, is one of the biggest corporations in the world. Although GM had big turmoils in its business, it still operates successfully in all over the universe. The aim of this assignment is to determine the GM's business strategies with rises and falls by looking into their history, having the data of what and how did they do in their businesses and analysing their company activities. Being a leader and pioneer of the automobile industry since this sector's infancy times , General Motors Corporation still keeps its successful place in this competitive business. Since 1908, General Motors Corporation (GM) is one of the largest auto producer in the world as measured by global industry sales, whose headquarters
The Australian automotive industry has been important to Australia’s economy for numerous decades. Unfortunately, due to factors regarding the cost of manufacturing in Australia, including the higher wages and benefits of Australian workers, the 3 main manufacturers, Holden, Ford and Toyota, have all announced they will be moving their manufacturing overseas. This move comes on the back of a motion put forward to the government to continue providing financial assistance to prevent them doing so.