Symbol of Success is Auto Industry in South Africa

3405 Words7 Pages
bulb-icon

Recommended: The impact of globalization on the South African industry

Introduction

A successful automotive industry is often seen as a symbol of the economic success of a country and the automotive industry plays a key part in the economic well-being of South Africa’ South Africa has its own original equipment manufacturers (OEMs) such as BMW, Nissan, Ford, Volkswagen, Daimler-Chrysler/Mercedes, General Motors and Toyota and automotive components manufactures (ACMs), which are located in three of the nine provinces in south Africa (Naude, 2009:10). An important and most efficient tool that is used by the South African automotive industry is buyer-supplier collaboration which is aligned with the objective of this assignment to identify and discuss the factors that influence buyer and supplier collaboration in South African automotive industry. This assignment will firstly define the automotive industry and the industry buyers and suppliers as well as the relationship between the two. The factors include Pressure by OEM to reduce prices, Lack of advanced communication between the buyer and the supplier, trust, Geographic location, product design, technology, interdependency, Supplier inflexibility/delivery reliability and rapid change of demand in terms of quantity by the buyers. Furthermore the impact of globalisation in South African automotive industry will be underlined. Much emphasis has been placed on globalization in the automotive industry as a result of the rapid increase in automotive exports.

Background to the South African Automotive Industry

The automotive industry has been in existence for decades in South Africa, since the introduction of Ford and GM assembly plants in the 1920’s the industry has seen tremendous growth in the past years to make it one of the biggest contributors ...

... middle of paper ...

...ies could make commitment of an on-going senior leadership communication and change to the same ERP systems for easy access of information this could enhance the communication between OEMs and ACMs. Negotiating discount or set a high cancellation fee could avoid cancelling orders each time the buyers are facing economic crisis instead opt to reduce the quantity that was previously demanded.

Conclusion

From the above mentioned factors it has become clear that the are some of the issues that are significant factors that influence the buyer and supplier collaboration negatively such as the pressure from OEMs for price reduction results in the total sales and employment to decline in the long-run and put the management under pressure to lower costs to regain market share. The cancellations of orders resulted in the excessive slow-moving inventory for ACMs.

Show More
Related

  • Harley-Davidson Motor Company

    1188 Words  | 3 Pages

    Any time the company is looking into software project, there are areas associated with risk such as cost, time and relationship with suppliers. However, for Harley-Davidson, “collocation of suppliers with production facilities and their integration into company’s development process was the essential part of long-term relationship development”. Through a continued focus on collaboration and strong supplier relationships, the company could position itself to achieve strategic objectives and deliver cost and quality improvement over the long-term. Since, at that time company had no centralized system in place to handle relationship with suppliers and consequently, most of company’s time was spent on supplier management activities. For example, reviewing inventory, expediting and data entry. Furthermore, each supplier had different information systems for “Maintenance, Repair, and Operations (MRO), Original Equipment (OE), Parts and Accessories (P&A), and General Merchandising (GM) purchasing activities”. The systems, already provided by supplier, had to be further modified to meet individual need at each location, such as “the OE system at Harley-Davidson’s York, Pennsylvania site was different from the OE system in Kansas City”. However, due to long-standing tradition of gradual change implementation and focus on quality, quick transitions were unwelcome and did not come easy for the company. The size of the project determined how much risk was involved in terms of cost, time, and supplier relationships. The idea of switching to global purchasing system was seen as a threat not only in supplies and production flow interruption, but also in damaged dealer/customer relationships and lost sales. Furthermore, failure of the sy...

    Read More

  • The Success of Dell Computer

    1176 Words  | 3 Pages

    The suppliers bargaining power is generally strong because of the big monopolies and the high importance of purchasing components and operating system, therefore it decreases the profitability of the market players.

    Read More

  • Christianity and the Economic Impact of the Automotive Industry on Canada

    2560 Words  | 6 Pages

    In many ways, the automotive industry has huge impacts on Canada. The impact it has creates jobs, and services. It also boosts economy and contributes to its success. Over the last two decades, the automotive industry has been a leading contributor to Canada’s economy and is a primary factor as to whether or not the economy will be successful. There are many contributing branches of the sector that allow it to be successful. This is shown through the production and manufacturing of vehicles, as well as the sale of the vehicles. The automotive industry has had a significant impact on Canada’s economy over the last 10 years. If the production and sale of domestic vehicles were to decline, Canada’s economy to be severely crippled and fall back into a recession.

    Read More

  • The Alliance Between Honda And Rover

    2434 Words  | 5 Pages

    Honda, like other automotive companies, also came to the conclusion of firming a joint venture. At the moment, Honda was already famous for motorcycles in UK, but it was less well known in terms of the automobiles. While Honda’s cars enjoyed reputation for good quality and durability, the import restrictions limited its success it the European market. However, the European market was essential for the company’s global expansion. With the joint venture, Honda could avoid the restrictions on the import quota by assembling cars locally, because these cars would be considered locally produced. Moreover, a local partner could assumedly offer a better insight of the market.

    Read More

  • Michael E. Porter's Five Forces In Pepsi

    1756 Words  | 4 Pages

    In such situations, the buying industry often faces a high pressure on margins from their suppliers. The relationship to powerful suppliers can potentially reduce strategic options for the organization.

    Read More

  • The Beer Game

    1181 Words  | 3 Pages

    Quickly becoming apparent after only a few rounds of play was in the absence of coordinating direction the individual supply chain links immediately focused upon acting in their own best interests much more so than the organization as a whole. Whether the end use customer was satisfied became secondary to avoiding stock outages for the next link in the chain, or their specific “upstream customer”. The real world application of this example is that focus on the end use customer must be consistent and maintained throughout the process up to and including delivery. Undoubtedly internal customers, such as retailers to wholesalers and distributors to production, must be serviced along the way for the transaction to ultimately occur. However, unless an end use customer is involved no profit can be realized by anyone.

    Read More

  • Toyota Case Study

    1845 Words  | 4 Pages

    The automobile industry can be considered one of the most competitive industries that exists today. The production has to be flawless, the employees hardworking and the managers fully aware of their product. This case study discusses the Toyota production plant in Georgetown, Kentucky.

    Read More

  • Toyota Supply Chain

    2794 Words  | 6 Pages

    Generally, a superior supply Chain is an important and unique source of competitive advantage. Its importance is especially illuminated in Multinational companies such as Toyota. Putting this into consideration, the question that now begs for an answer is whether Toyota’s supply chain is effectively serving the organization. Without a doubt, Toyota ha...

    Read More

  • Economics of the Automobile Industry

    2412 Words  | 5 Pages

    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

    Read More

  • Creating Sustainable Competitive Advantage: The Toyota Philosophy And Its Effects

    1024 Words  | 3 Pages

    Outsourcing is increasing the importance for car makers because 85 percent of the direct cost of car production comes from engineering and component fabrication. The companies try to externalize many of these direct costs and minimize market risk. They also can receive the benefits of using specialized suppliers.

    Read More

  • Automotive Industry Analysis

    794 Words  | 2 Pages

    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).

    Read More

  • Auto Ford Motor Company Case Analysis

    911 Words  | 2 Pages

    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

    Read More

  • Reflection On Contemporary Information Systems

    1369 Words  | 3 Pages

    After getting some basic idea about Honda’s business operation and structure, we agreed to choose its world famous automobile division as our focus for analysis. A rich picture was used to identify key information to be collected from Honda’s supply chain process. This information also served the purpose of guiding Honda’s management for decision support and strategy optimization. During this time, we had some communications and checked in on each other’s

    Read More

  • Essay On Buyer And Supplier Relationship

    1816 Words  | 4 Pages

    H5. Cooperation between the firm and its supplier has a positive influence on the level of satisfaction perceived by industrial buyer.

    Read More

  • The Importance Of Procurement Performance

    1546 Words  | 4 Pages

    This system connects, accumulates, processesas well as provides imperative information to all parties thus enhancing continuity in the procurement process. However, if valid output is to be expected, features as well as requirements of the procurement process must be compatible to current system technologies (Giner, et al, 2011). The harmonization of suppliers as enhanced through the adoption of electronic sourcing enables firms to readily identify new potential suppliers for specific needs when old suppliers` capabilities are in question. The adoption of E-tendering that supports sending requests of pricesand information to suppliers as well as receiving suppliers responses improves on procurement efficiencies as it leads to significant cost reductions thus leading to better procurement performance through cost savings.For this system to achieve desired results however,all users must beready and willing to adopt the new systemsso enable seamless adoption and consequently ensure optimal

    Read More

More about Symbol of Success is Auto Industry in South Africa

Open Document