Automotive Industry Analysis Essay Example

income growth, play a role in driving consumer spending on automotive products. When income levels rise, more people buy cars; however, if there is a decrease in income growth, spending decreases and demand for cars also declines. Additionally, the stage of the product life cycle influences demand significantly. Cars in the growth stage experience higher demand due to their extended presence in the market and technological advancements compared to those in the decline stage.

Demographic, social, cultural, and political trends all have a significant impact on product demand in a country. An increase in individuals migrating to a country leads to higher demand for various products compared to when people move away. In certain demographics, the demand for a specific car rises if individuals within that demographic share similar needs. The desire to associate with a particular type of car among certain social classes also increases demand, but it decreases when social trends change. Conversely, political instability greatly reduces demand as people hold onto their money during such times and are unable to spend on commodities like cars. Technology also plays a crucial role in the automotive industry; introducing new technology at an affordable price point tends to boost demand for the product. Similarly, incorporating new technology into a product leads to increased demand (Hiraoka, 2009).

Programs developed by companies in the industry can increase the awareness and popularity of automotive products, leading to an increase in sales and demand. Additionally, pricing trends play a significant role in determining demand. Lower prices tend to result in higher spending and increased demand, while higher prices lead to reduced spending on expensive items (Heneric, 2006).

Part B

The stage of the

product life cycle has an impact on investment patterns. During the maturity stage, the cost structure remains constant, along with cash flow and profitability. In the growth stage, the industry experiences higher profits and invests heavily to ensure continued growth. During the decline stage of the product life cycle, cash flow is minimal, resulting in low profitability. Industries at this stage often set a minimum price to manage their product's performance (Wippel, 2014).

During the growth stage of an organization, it is common for a higher amount of investment to be required compared to the profit received. Consequently, the firm may choose to set prices above the breakeven point (Niewenhuis and Wells, 2003). The automotive industry's cost and profitability are influenced by Porters Five Forces of industry competition. Should a new product present a significant threat to existing ones, this can lead to reduced sales and lower profitability. In response, the company may consider lowering its operating costs. Additionally, if there is fair buying power within the industry, it will result in fair performance costs in the automotive sector and ultimately increased profits.

The general cost of production and level of profit in the automotive industry are impacted by competitive rivalry and the threat of substitute products. These factors decrease the number of potential buyers who can contribute significantly to profits (Ahlstrom and Bruton, 2009). The automotive industry incurs costs from labor, raw materials, and manufacturing. Manufacturing accounts for 20% of total investment, while labor costs make up 20% and raw material acquisition comprises 17% of total investment.

Part C

There are various opportunities within the automotive industry that can lead to profitability for organizations. One such opportunity is

weak competitor rivalry, allowing the industry to act as a monopoly and dominate the market. Additionally, the industry thrives on the intensive application of technology, which keeps organizations ahead through innovation.

The organization has stable financial management. One of its major strengths is serving additional customer groups, which will help expand into new markets and attract more customers. The industry is not only integrating forward and backward movement, but also experiencing strong increase in market demand.

Part D

Some industry threats include changing buyer’s needs and tastes, which can frustrate the company and even result in competitors taking away some customers.

Additionally, the implementation of new government rules and regulations poses a challenge for the business to survive. Furthermore, the entry of new competitors into the market is diminishing the customer base. These factors have led to a need for an organization analysis.

Organization analysis

Our company is dedicated to delivering high-quality products and exceptional customer service. As competition increases and customer preferences change, our mission has evolved to meet their evolving needs. The organization culture of our company determines how employees respond to the challenges faced in the market. We sell approximately 200,000 units per year and have over 300 employees based at our headquarters.

The company has been operating for ten years and has accumulated assets valued at $50,000,000. It is conveniently located near important raw materials and benefits from efficient transportation and communication networks (Hiraoka, 2009). Previous strategies have primarily aimed to enhance fuel efficiency, resulting in increased market share in developing countries. The company possesses multiple strengths that have sustained its competitiveness over time. Additionally, its strong financial position has facilitated expansion into new markets. Moreover, it is

a renowned manufacturer and market leader in personal vehicles, acclaimed for its outstanding customer service.

The company benefits from economies of scale through its large manufacturing plant. It has also invested in innovation and skilled labor, resulting in the creation of various car designs. The management team is experienced and driven by the changing needs of the automotive industry. However, high inventory levels increase storage costs for important car components, and a limited product line restricts customer options when purchasing certain products.

Recommendations

The company should prioritize advertising to increase sales and generate more revenue, ensuring its financial stability. Additionally, the company should continue to prioritize customer needs and conduct extensive research to identify specific car models that meet those needs (Papulova&Papulova, 2006). It is also recommended that the company invest more in employee training to enhance their skills in innovation and overall management (Markos&Sridevi, 2010).

Weaknesses

The company should improve its just-in-time procurement system to reduce the current inventory levels (Burns &Janamanchi, 2006). Moreover, the company should focus on product differentiation by offering a variety of options for customers to choose from.

Threats

Furthermore, the company should address employee needs to minimize staff turnover.

The company should prioritize providing a good working environment and motivating employees through further training and a good compensation package. Additionally, the company should focus on uniqueness and customer satisfaction to stay competitive.

Opportunities

The company should keep up with changing technology by incorporating the latest technology in its production and marketing efforts.

International management

The goal of business enterprises is to expand their operations beyond the initial

market to achieve anticipated growth. Limiting focus to the local market hinders market coverage and necessitates expanding to other countries.

The internationalization of a firm's operations is a crucial process that involves assessing both internal and external competencies to target international markets. The management is typically concerned about the risks and benefits of such expansions, but the specific approaches and factors to consider can vary based on the company's vision and sector. This section examines competition, cultural diversity, resource and cost management issues, and strategic approaches to reducing exposure when seeking international presence. Expanding operations to international markets increases business competition.

The level of competition in the market determines how much effort management must put into improving operations to strategically position the business above other companies in the industry. Competition has two effects on businesses: it can lead to successful growth and development, or it can impact the firm's ability to compete in terms of market coverage and profitability. In their study, Lu, Pattnaik, and Shi (2016) examined how competition affects global organizations by analyzing the spillover effect of marketing expertise. They specifically looked at how multinational corporations are using loyalty programs to counter the challenges posed by intense competition and industry dynamics.

The research discovered that implementing international strategies is crucial in gaining a substantial market share and promoting profitability. The adoption of loyalty programs stems from the growing competition among companies that have expanded their market reach.

Implications of business internationalization

Furthermore, organizations aiming to globalize their operations encounter challenges in managing customer services that reflect cultural diversity. When a business operates in multiple markets across different countries, the range of customer demands becomes varied.

The success of large

firms looking to expand their operations relies heavily on understanding the culture associated with different customer tastes and preferences. According to Hofstede (2017), culture plays a crucial role in businesses across all sectors, and this complexity only increases when organizations enter international markets. Hofstede's study focused on the development and implementation of cross-cultural management strategies. Using a conceptual-based analysis, the study utilized the sociological status power theoretical framework to identify potential patterns and changes that arise from conducting international operations.

The scholar presented a gaming and computational simulation to improve cross-culture management. The goal was to identify unexpected consequences. The study demonstrated that incorporating multiple aspects of culture attracts business growth. When companies expand internationally, they need to adjust their management techniques to accommodate different cultures. This includes collaborating across borders, reorganizing systems, and managing teams. Additionally, internationalizing business operations impacts resource management and cost sustainability processes.

Expanding a business operation to the international market brings changes to the financial, physical, technical, and human resources within an organization. The complexity arises in managing knowledge, production cost, talent, and integrated systems. A study conducted by Furusawa, Brewster, and Takashina (2017) analyzed the impact of international operations on the integrated system of human resource management. The research examined 93 Japanese firms with global presence, specifically focusing on employee orientation and coordination in a transnational management context. The scholars presented their findings, highlighting the significance of integration aspects for the success of internationally operating firms in Japan.

Algorta and Zeballos (2017) conducted research on the conditions and practices that define the resource management. They found that working with modern knowledge management methods ensures the growth and sustainability of a

business. According to Algorta and Zeballos (2017), integrating resource management and knowledge presents a management dilemma for international firms.

Cross-cultural management

Expanding operations to an international market poses critical challenges for firms. However, these challenges can be addressed by strategically approaching the key elements mentioned above. Research recommendations suggest that enterprises can adopt various approaches to enhance their success and minimize exposure and vulnerability.

Setting strategies to control the effects of competition is crucial for the growth and sustainability of businesses. In their analysis, Singh and Kota (2017) emphasized the importance of competitive advantage and innovation in family businesses' internationalization efforts. The scholars conducted an evaluation of the company's environment while considering its intention to expand operations internationally. They focused on how business innovation and competitive advantage are crucial factors for firms aiming to invest in foreign countries. The research also compared different approaches to strategic management in the internationalization process, as well as the significance of having a presence in foreign markets, providing a foundation for the success of family-based businesses.

The study's findings indicated that family businesses with international operations were more innovative and competitive compared to non-family businesses. However, it also highlighted the importance of innovation and competitive advantage for any business seeking to expand internationally, regardless of ownership structure. Additionally, cross-cultural management can be assessed from two perspectives: conterminous or cross verging. In a study conducted by Kanungo (2010), the aim was to determine which perspective could improve the integration of an organization's cultural needs within its management structure when dealing with various market scopes. The study emphasized the crucial role of values in establishing and protecting culture, as they significantly influence business

affairs. It is worth noting that diversity and inclusion form a crucial aspect of culture management.

The review study determined that the values of managers create a harmonious perspective of cultural diversity to improve the management process, which is directly related to performance efficiency. The interconnectivity of these values creates a unique market for operations that can be strategically integrated into the organization's structure to mitigate business vulnerability and minimize the risk of failure.

Intra-organizational knowledge exchange

Considering intra-organizational knowledge exchange becomes crucial when a company aims to expand its operations to the international market. Schotter and Bontis (2009) emphasized the significance of subsidiary autonomy in reducing the vulnerability of businesses operating in various countries. Creating an environment that recognizes diversity and implementing effective management strategies are essential for establishing a solid foundation for stable and sustainable coordination within the company.

Although most firms are hesitant to implement skills developed by subsidiaries in their home countries, sharing international environment capabilities improves management efficiency. Focusing on innovation and institutionalized embeddedness of the business, based on performance targets and industry orientation, safeguards the organization against competition, poor market representation, and deteriorating customer services. According to Pogrebnyakov (2014), aligning strategic plans for innovation with industry trends helps the firm keep up with changes in various markets. Therefore, management must incorporate changes in different operational areas without generalizing internal and external environmental factors. Additionally, firms leveraging international presence should also consider risk management. Andersen (2011) suggests that multinational structures can offer high flexibility rates, attracting excellent performance and significant adaptability.

According to Andersen (2011), the volatility of anticipated earnings and corporate performance risks is reduced by this phenomenon. The study used a two-staged

regression to analyze the collected data and found that efficient management of performance challenges and shifts in internationalized organizations is based on lower downward risks and potential for growth. In summary, the decision by organizations to improve performance through international presence is affected by internal and external complexities. Key factors include competition, culture management, and resource and cost sustainability. These factors create gaps that need to be addressed to enhance firm output, but they can also be limiting factors for business expansion.

However, organizations can reduce exposure and vulnerability in their industry of operation by implementing strategic planning, knowledge management, risk control, inclusion and diversity, innovation, and institutionalization of the managerial process (Algorta & Zeballos, 2017; Andersen, 2011; Furusawa et al., 2017; Hofstede, 2017; Kanungo, 2010; Lu et al., n.d.).

(2017). T Spillover effects of marketing expertise on market performance of domestic firms and MNEs in emerging markets. Management Decision, 54(1). T Retrieved 12 March 2017, from http://www.emeraldinsight.com/doi/full/10.1108/MD-12-2014-0667

; Bontis, N. (2009).T Intratorganizational knowledge exchange: An examination of reverse capability transfers in multinational corporations. Journal of Intellectual Capital, 10(1).T Retrieved 12 March 2017, from http://www.emeraldinsight.com/doi/full/10.1108/14691930910922969
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(2017).T A study conducted in India investigated the relationship between resource dependency and the innovation and internationalization of family businesses. The findings were published in the Journal of Entrepreneurship in Emerging Economies, volume 9(2). T The full article can be accessed from http://www.emeraldinsight.com/doi/pdfplus/10.1108/JEEE-04-2016-0013