Introduction
This report is going to discuss why the car manufacturing industry in Australia is closing by using five forces analysis which are the barriers of entry, competitors, purchasing power of buyers, supplies and subsidies segments, and a life cycle analysis.
Five forces analysis
Barriers of entry
To being with the barriers of entry which including strong currency and higher labor have the most significant impacts on auto making industry. In 2013, Holden would cut 12% of its workforce and has announced a three-year pay freeze agreement to the reminding workers to keep operates the manufacturing plant in South Australia (Thurlow, R. 2013). Moreover, a strong currency not only lead to less competitive on nation exportation but also increases the amount of cheaper imports from emerging market like China and Thailand caused by globalization. For instant, China which enjoys plenty of human power which strengthen its competitive of export products (Curran, E. 2013). Australian manufacturers, therefore, have lower competitive power against imported goods and services. Although the total number of car sales increased, the sale of Australian-made vehicles has significant (20%) fall as Thurlow, R. & Glynn, J. 2013, stated. It seems barriers of entry blocked the auto making industry hardly.
Power of rivalry
Furthermore, small domestic market contributes highly damage to automotive industry. According to the Australian’s department of industry, there are 66 vehicles brand can be chosen by customers, compare with 51 in U.S (AMS), according to Timothy,C. 2014,even less only 36 brands. Therefore, local car-makers are hard to survive in this tiny market without any advantages. Unfortunately, active used-car market which cars...
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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
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