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Industry Analyses and Strategies – Automotive Industry
Author: Orlin Malinov, Marius Albers Registration number: 205540, 205133 Course: AWS Japanese 7. Semester Subject: International Management Lecturer: Mr. Fischer Date: 19.11.2009
2. Porters 5 forces 4. crisis) 5. Analysis 6. SWOT 3.Table of contents 1. Strategy of Toyota 6. PEST 3. Analysis of the Automotive Industries (incl. Chery Automobile 7. General Motors 18.104.22.168.2. Present time 3. Sources Orlin Malinov. Strategy Conclusion 9. Analysis 7.2. History 2. 10. Executive summary 2. Strategy 7. Analysis of Toyota 5. Analysis-Methods (theoretical) 3. Automotive Industry overview 22.214.171.124. Future 8. Toyota 5.1. Marius Albers 2 International Business .1.
Before his time the automobile industry was built up of a large number of very small companies with equal to none competition. His achievement lays in weaving together elements of existing technologies into an efficient mass production system. Ford realized the farmers as a potential group of customers. Many people could not be able to imagine life without their cars. or to go broke. Toyota comes on focus. With the cutting down of the production costs and cycle. the automobile industry has gone a long way from its start about 2 centuries ago. Toyota succeeded in becoming number one motor vehicle producer in the world few years ago. holding the steering wheel and driving on the fast lane. It is fair to say. 1885 was the year when Karl Benz invented an automobile which was powered by his own gasolineengine. Today in the automobile industry is not necessarily important who you are. Automotive Industry overview The first automobiles originate from the 19th century.1” At that time an assembly line worker could afford to buy a Model T-car with just 4 monthly wages. however after 1950s demand on vehicles grew more and more and towards the beginning of the 80s several other 1 Evolution of Organizational Structure and Strategy of the Automobile Industry Orlin Malinov. LTD. Henry Ford could gain great advantage over his competitors. because already for the last few years is a global leader in motor vehicle production. but many others failed to compete with Ford: companies had either to introduce the assembly – line method. but in the same time has great opportunities for the future as the company has been established some 10 years ago. Ford was dominating the American car market with a market share of around 50% […] Ford did not invent all the new methods and techniques. As customer group were seen only the rich and wealthy. But not many of us really know what happens inside the big corporations and what will be the future of the automobile industry. One of the biggest problems for US manufacturers is that unlike Toyota and its future plans. The first internal combustion engine was created in 1806 by the Swiss inventor Francois Isaac de Rivaz. we will examine carefully using these analysis in praxis to the two global car producer Toyota and General Motors as well as the Chinese newcomer Chery Automobile Co. today. but at that time the design of his motor vehicle was not very successful. but who your partners are. and the moving assembly line. produce and sell vehicles to the world. the interchangeability of parts. Chery Automobile suffers some problems because of its Chinese origin. it is about style. Today having a motor vehicle is not just about getting from place A to place B – it is about showing prestige. What will happen in 100 years – will cars be replaced by flying jets? Here we will try to do the necessary research in order to bring you the facts about the automotive industry. He started his company Benz & Cie in 1883 which quickly became the largest automobile company of that time with 572 units produced in 1899. altogether. becoming the biggest motor vehicle company of its time. pointing out the global players of today and try to describe the influence of the economic crisis which started to occur in 2008. The automotive industries are the car companies and suppliers who design.2 minutes in 1913 [… ] Within several years after the introduction of the Model-T. After explaining theoretically the analyse methods SWOT. develop.1. that Henry Ford was among the first to implement some type of strategy in his motor vehicle production. PEST and Porters 5 Forces. Mostly because of his rural background H. so the car could not gain wide popularity. GM is its greatest competitor for the moment and Chery Automobile is a representative of the quickly emerging Chinese automobile market. 2. Marius Albers 3 International Business . Henry Ford opened his branches in Europe during the 1920s. We will start with the history of the automobile. together were responsible for the cut in cycle time performed by one worker from one day at the introduction of the Model-T in 1908 to 1. Citroen was the first European company which used the production line principle. it is also a way to express yourself. Executive summary Let us face reality. Before the WWII the USA didn’t face any notable competition in the automotive industry. The result was that till the end of 1930s more than 250 companies faced bankruptcy. But the real turning point in the automobile history will be the production-line. He expanded the concept of production-line manufacturing thus he was able to produce cars on a scale larger than ever before and this made the automobile affordable “The division of labour. companies like GM still have difficulties moving forward from its heyday from the past. Because of his great success in the US. Our term paper focuses on the automotive industries. The craftsmen in the separate companies were able to assemble not more than 1000 units worldwide.
Most of the newest companies established in the last years come from the Middle and Far East.11. development. Especially in the beginning of the 20th century many small firms were created and soon later they collapsed. marketing and sale of automobiles it is not only the motor vehicle producers. play an important role in the automotive industry.ilo.1).html 17. That’s why it is fair to say that counting all brands is rather impossible.htm 15.4 million people worldwide who were employed in the field of automobile production4 which contributes to the fact. JIT.09 4 http://www. and so also the automotive industry is becoming more and more important. Just to mention.technologically advanced nations such as Germany. Marius Albers 4 International Business .09 http://oica. The most people employed in motor vehicle production are living in Europe. In accordance to an annual report of the ILO in 2004 there were more than 8.rian. It is impossible to name all the automobile brands which have been created as many companies have been on the market for just few years. China and US (fig. The current situation in the automotive industry differs a lot from what it had used to be for example 10 years back than. only for the years from 1896 to 1930 there have been about 1800 brands only in the USA. Japan first opened their borders for the outer world in 1868. A really remarkable growth in the automobile industry was shown by Japan. who are many other companies from the steel or plastic industry for example.09 Orlin Malinov. The biggest automobile producers in the world for the 2008 were Japan.11. What is important is that as of the beginning of the 21st century the number of the biggest motor vehicle producers can be reduced up to about 40.principle.S. such as: Lean Production. that approximately one out of 10 workers in the industrialized countries is employed by the automobile industry. followed by China and North America. Many developed countries are suffering stagnation in their own automobile industry.net/category/production-statistics/ 14. 2 3 http://en. the beginning of the automobile industry had already started towards the end of the 19th century. while developing countries are gaining momentum and are threatening to surpass already established automotive forces like France and Italy. While in some European countries and the U. For the first 9 months of 2009 China was the largest automobile market and manufacturer in the world. Nevertheless the Japanese Government had the ambition to become in short time one of the leading forces in the automotive industry – nowadays it is the Japanese to thank for many of the inventions they implemented in the Automotive industry. France and Japan even started to import cars in the US.2 Figure 1: Biggest Motor Vehicle Producing Countries in the World As the automotive industry deals with the design.ru/world/20090206/120007709.org/wow/Articles/lang--en/WCMS_115469/index.11. The Chinese economy is undergoing very high growth rates.
Another thing is the increasing CO2 emissions in the atmosphere and the green house effect which threatens our environment.Chain management is put at risk.Volkswagen AG 4.The situation on the motor vehicle market changes rapidly. Marius Albers 5 International Business .09 Orlin Malinov. Hyundai Motor Company 9. Hella and Philips. .2 millions. Experts from the International Labour Organisation fear that if companies should fire personal according to the slump in sales. Thus the whole Supply. It is expected that the development of the new technologies in the future will help the automotive industry to deal with some of its major threats. 2009). Nissan Motor Company 7. 8. Some of the prominent suppliers are Bilstein and BOSCH for different component of autos and also trucks or busses.A.supplyexcellence. Many companies had to reorganise their business plan in order not to go bankrupt. Auto-experts predict that the high sales from 2007 will not be reached again until 2012-2013 (Berger.p. General Motors Company 3.A. MAN.com/blog/2009/03/13/toyota-tier-1-auto-supplier-bankruptcies/ 18. In 2008 there were more than 70 million cars sold in the world. Because of the cut down sales the supplier Industry also suffers a lot from the economic crisis. Ford Motor Company 5. as the cars today and even more in the near future become dependent on hightechnologies.Suzuki Motor Corporation 11. Honda Motor Company 6. Ford and Chrysler) have long time undisputed leaders on the market . In the automotive industry the relations between suppliers and producers are more important than almost anywhere else. Fiat S. There are a few companies who are aiming for the same customers group. but nevertheless for the last few years the top 3 motor vehicle producers remained the same. more than 1 million people worldwide would lose their job. Orion (Mercedes Group) – busses. PSA Peugeot Citroen S. are at a “high risk” of going bankrupt in the next 3 months due to the massive drop in manufacturing in December/January (which is the period they are currently being paid for by auto makers) and the credit crunch. If the chain ruptures then the bad consequence will affect everyone involved. Smart – small cars. It is being said that manufacturing industries tend to be oligopolies. This is certainly the case in the USA where the Big Three (GM. 5 http://www. Because of the rapid changes on the market it is always more and more difficult for one to know what is owned by one company or by another. first because of their high price to purchase and second. Kamaz – Trucks. 1. or 40% that industry segment. no one knows for how many years from now there will be enough oil to be burnt by engines. who have found their own niche in the automotive industry and have specialized for certain types of automobiles: Porsche – sports cars.5” In the last 10 years also different electronic companies have became partners with motor vehicle producers. For the electronic system of the cars are responsible brands like Osram. still there are also producers. Toyota Motor Corporation 2. GPS etc. In some countries the number of purchased cars has dropped to 50% compared to 2007. Japan has proved itself as the leading automobile manufacturer. for tires Continental and Good Year stay on top of the sales. The economical crisis hit the most the luxury cars. Together with Toyota there are 3 other renovated Japanese companies who belong to the top 10 motor vehicle manufacturing groups. because with the oil prises rising. Almost all new cars are equipped with a board computer.11. JEEP – SUVs. The oil reserves on our planets are becoming scarce. „500 Tier 1 auto suppliers. The results from the economic crisis are worse than most of the car producers have placed on the market. However this is not always the case and on certain local markets fierce competition can be observed. while because of the economic crisis in 2009 the sales reached only 56 millions. in 2007 their number was about 71. imagined.
Strength/Weaknesses analysis the focus is on the company itself.businessballs. It is a useful tool for understanding market growth or decline. Marius Albers 6 International Business . competitor evaluation.11.09 http://www. The strategy is the reaction of the environmental change.com/matrix.berifar.11.11.de/international/business/0. It is the result of the internal organized process. Weaknesses.com/swotanalysisfreetemplate. a PEST analysis measures a market.”7 The SWOT-Method is an analyse system which can be used for business planning.09 8 http://www. Only compact cars producers succeeded in achieving record sales as for the first months of 2009.610076. Using SWOT as an analyse system it is important to clearly identify the subject. It is also to say that.htm 14.00.people are anxious not to buy cars with high gasoline consumption. what might be a threat in one category can turn into an opportunity or became a new strategy in the future. In case of our term paper SWOT is used for analysing the companies. “Volkswagen expects February sales to reach 120. more than ever before. S-O strategies pursue opportunities that are a good fit to the company’s strengths.com/swotanalysisfreetemplate.09 Orlin Malinov.html In the external. “The PEST analysis headings are a framework for reviewing a situation. In the internal.”6 Analysis-Method SWOT SWOT is an acronym for Strengths. Opel. “A SWOT analysis measures a business unit.11. or rathe their position in the market.html 17. strategic planning.000 cars.htm 14.htm 14. Economical. “The SWOT analysis headings provide a framework for reviewing strategy. a proposition or idea. Before a company creates a business plan or a new strategy it should scan the external environment. and can also be used to review a strategy or position.com/pestanalysisfreetemplate. Opportunities and Threats. selling 40. marketing. business and product development and research reports.businessballs. ??? SWOT analyse External analysis Strengths Opportunities Internal analysis Weaknesses W-O strategies overcome weaknesses to pursue opportunities W-T strategies establish a defensive plan to prevent the firm’s weaknesses from making it highly susceptible to external threats. position and direction of a company or business proposition or any other idea.businessballs.09 9 http://www. direction of a company”8 The PEST factors are. Threats S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats http://www. Social and Technological. experienced its best month in five years this February.1518. compared to SWOT.”9 The results of PEST analysis are often used for the external part of the SWOT analysis. Analysis-Method PEST PEST is an acronym for Political.similar is the case with SUVs (Sport Utility Vehicles). And the Romanian auto manufacturer Dacia has even had to boost production lately to keep up with high demand in Germany. Opportunities/Threats analysis the focus is on the technical. social and ecological environment of a company. 6 7 http://www.000 cars. which is struggling to survive as its parent company GM sinks further into economic woes. only external analysis and they include competitors.spiegel.
But when using the Porter’s 5 forces method a company can notice the power of supplier and buyer as well as the product and technology development of an industry. Technology Legislation. Specific Industry Factors. Intellectual Property Issues. Impact of Emerging Technologies. the rivalry among competitors. In the Porter’s 5 forces model the following forces are shown. Lifestyle Choices. Buying access and Trends. Market and Trade Cycles. Trading Policies. Labour Supply. Demographics. Innovation Potential. Information and Communications. Corruption. eg: • • • • • Supplier Power. Fashion and Role Models. Manufacturing Maturity and Capacity. Technology Images. Social/Employment Legislation. eg: • • • brand reputation geographical coverage product/service level quality entry ease/barriers geographical factors incumbents resistance new entrant strategy routes to market Buyer Power. Public Opinion. Technology Access. Maturity of Technology. Seasonality/Weather Issues. Marius Albers International Business . Customer Drivers. Law Changes Affecting Social factors. Consumer Buying Patterns. Consumer Buying Mechanisms/Technology. Technological: Competing Technology Developments. Press. Interest and Exchange Rates. Therefore this method can not be used to analyse one company. Global Communications. Company. Impact of Technology Transfer. The Porter’s 5 forces method can help creating a good strategy of a company. Likely ScioCultural Change. International trade/Monetary Issues. Brand. Labour Costs. Research Funding. Home Economy Situation. General Taxation Issues. International Pressure Groups. Globalization. eg: • • • • buyer choice buyers size/number change cost/frequency product/service Competitive Rivalry. Market Routes and Distribution Trends. Consumer Attitudes and Opinions. Government Stability. Ethic/Religious Factors. Patents.The PEST analysis can be converted as necessary. It is always referred to a whole industry. Likely Economic Change Social: Lifestyle Trends. Attitudes and Taboos. Impact of Internet and Reduced Communication Costs. eg: • • number and size of firms industry size and trends 7 Orlin Malinov. Likely Political Change Economic: Growth. New Market Entrants. Major Events and Influences. Associated/Dependent Technologies. Rules of Law. Likely Technological Change Analysis-Method Porters 5 forces The method is used to analyse the competitive position. Media Views. Bureaucracy. Replacement Technology/Solutions. Inflation Rate. Freedom of Press. Political: Government policies. Advertising and Publicity. Unemployment. Regulation/De-Regulation Trends. Licensing.
JIT scheduling Product and Technology Development. Consequences are dramatically losses. eg: • • • • alternatives price/quality market distribution changes fashion and trends legislative effects http://www. the strength of the euro relative to the dollar compelled a number of non-American automobile manufacturers to consider establishing production sites in the United States. Also taking advantage of the currency differences when considering position of future plants: “Between early 2006 and mid-2008. Marius Albers 8 International Business . P. Grosche. strategy importance volumes. Schmid.outsourcing of the automobile parts production plans. The automotive market in emerging countries like China or India. USA and Europe are experiencing a dramatically decline.businessballs. p.”10 Analysis In the following we analyse the automotive industry using 3 analysis methods SWOT.com/portersfiveforcesofcompetition. Strengths: High technology JIT Supply chain management Weaknesses: A strike at one plant or factory can accelerate and stop the production. crisis) Strategy: The Automobile producers and suppliers aim to save up to $8 billion annually by reducing the raw material costs in the production and assembly of cars. also because of their resources. Because of the latest financial crisis 2008/2009 the automotive industry. Outsourcing to cheap labour countries like China and India .htm Analysis of the Automotive Industries (incl.• • relationships with customers bidding processes/capabilities • • • fixed v variable cost bases product/service ranges differentiation. 12 Orlin Malinov. is growing continuously even though there is a slow down noticed. Opportunities: Electronically vehicles Global warming 10 S. in particular Japan. PEST and Porter’s 5 forces.
09 Orlin Malinov. This would lead to governmental and political problems. Trading Policies. Inflation Rate. 65% of each manufacturer's newly registered cars must comply on average with the limit value curve set by the legislation. Market Routes and Distribution Trends. General Taxation Issues. also. Market and Trade Cycles. that’s why producers need to create new designs investing heavily on marketing. Interest and Exchange Rates. International trade/Monetary Issues. Globalization. Seasonality/Weather Issues.” Phasing-in of requirements: in 2012. Rules of Law. low power of Supplier The Supply in most countries exceeds the Demand. International Pressure Groups. In many countries the government and state have their roots deep in the automobile industry in their country.htm 18. Home Economy Situation. 80% in 2014.europa. Because of the conditions given by president Obama.11. Corruption. Freedom of Press.eu/environment/air/transport/co2/co2_home. S-O strategies pursue opportunities that are a good fit to the company’s strengths. The automotive industry is an international Pressure group. ??? Government policies. „Another point is the laws concerning the regulations on CO2 emissions in the atmosphere. Regulation/De-Regulation Trends.Threats: Global warming (high production costs. S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats Analysis-Method PEST Political: Automotive Industry has a strong lobby because if were to have problems a lot of workers would lose their jobs.“ The political regime in a country also is very important for the cars produced in the country – The motor vehicles in the former Eastern Block had to conform to the philosophy of the Socialism. Social/Employment Legislation. From the 20 really big global players it is expected in the future to remain just 5 – 6 greater empires. Unemployment is a very important issue regarding the current economical crisis which struck the world in 2008. 11 and 100% from 2015 onwards. GMC had to give up the future production of one of its signature brands for the past decades – Pontiac. Marius Albers 9 International Business . Likely Political Change Economic: Customers are most important. Growth. This obliges all companies to invest a lot of capital in R&D. Bureaucracy. Unemployment. Now in the time of crisis it was again the government to boost GM in the US. Customer Drivers. Specific Industry Factors. Labour Supply. This will rise to 75% in 2013. Likely Economic Change Social: 11 http://ec. increase R and D costs) Oil problems (increase R and D costs) Switch to public transportation (Flugzeuge. For the design and launch of a new model on the market is needed about $1 billion – main reason for establishment of Joint Ventures or acquirement of smaller companies by the bigger corporations. Bahn) SWOT analysis External analysis Strengths Opportunities Threats Internal analysis Weaknesses W-O strategies overcome weaknesses to pursue opportunities W-T strategies establish a defensive plan to prevent the firm’s weaknesses from making it highly susceptible to external threats. Government Stability. Labour Costs.
SUVs. Law Changes Affecting Social factors. Attitudes and Taboos. Global Communications. Intellectual Property Issues. Consumer Buying Patterns. Patents.rwm. The Formula One series also helps a lot for the commercialism of the automobile industry. electro and other new technologies. Customers want environment friendly cars since 1970s. Technology Access.html 18. Information and Communications. Media Views. Advertising and Publicity. There are different trends on the market to be observed.Grant. Consumer Attitudes and Opinions. 12 13 http://www. the expensive and luxury car makes its way to the dreams of many people. For many people brand name and model is crucial for them to show social status. Consumer Buying Mechanisms/Technology. Public Opinion. Press. Technological: In the last 5 years more and more people show courage in purchasing cars from the internet. also rivals make R and D together. Lifestyle Choices. Marius Albers 10 International Business . Advertising is very important and influences customers. electric and hybrid “Small and medium-sized auto companies have been acquired by larger rivals simply because they lacked necessary volume over which to amortize the costs of developing new models”13 Different automobile manufacturers. Likely Technological Change Analysis-Method Porters 5 forces New Market Entrants. mass production is necessary otherwise the cars are to expensive for customers – you can not compete (you can not start with low capital and grow slowly). Technology Images. Impact of Technology Transfer. High innovation potential. Impact of Emerging Technologies. Licensing and Patents is very important because … Global communications is essential because almost all automobile manufacturers are global player. Competing Technology Developments. 229 Orlin Malinov. It takes an extreme amount of capital not only to be able to manufacture the products but also to keep up with the research and development that is necessary for the innovation requirements. The film industry also influences the customer’s choice in a lot of ways. People liking sports cars. Major Events and Influences. p. retro cars. Likely ScioCultural Change. Ethic/Religious Factors. Company.09 R. fuel-efficient cars. Research Funding. Technology Legislation. There are many emblematic cars from certain movies who have later become to a top seller model.12 Lifestyle Trends.org/rwm/articles/automotive-careers. eg: High capital necessary. Maturity of Technology. Replacement Technology/Solutions.11. Associated/Dependent Technologies. Demographics. ustomer buy via internet. Second to owning a nice house . people feel better when they drive a good. There is a big technological change since the last 15 years from diesel and gasoline to hybrid. Impact of Internet and Reduced Communication Costs. society judges people on the type of their car. Buying access and Trends. Innovation Potential.Customers want safer automobiles since 1960s. new car. Manufacturing Maturity and Capacity. Licensing. In the industrialised countries relative high salaries for qualified employees. Brand. Fashion and Role Models.
“Small and medium-sized auto Orlin Malinov. SUV’s sport utility vehicles. Marius Albers 11 International Business .Access to distribution channels is another high barrier to entry Manly from emerging economies. Nissan. Mazda. Renault. BMW AG. buyers size/number: getting bigger in emerging markets. Chrysler Group. Kia. Tata Motors Ltd. • change cost/frequency • product/service importance volumes.(?) buyer choice: switch to environment-friendly. GMC. PSA Peugeot Citroen. stagnation in industrialized nations. eg: Rivalry is very strong among competitors. JIT scheduling Product and Technology Development. they do not have much power. eg: Customer buy via internet. eg: Power of buyer is high because cars are not existential necessary. First Automotive Group Corporation (China) (evt. trucks. fuelefficient cars (electric and hybrid). Hyundai. Tabelle einfügen) Extremely cost pressure. hybrid and electronic cars. eg: Supplier power is relatively low • brand reputation • geographical coverage • product/service level quality • relationships with customers • bidding processes/capabilities The bargaining power of suppliers is very low in the automobile industry. Fiat. The largest 20 motor vehicle manufacturing groups are: Toyota Motor Coproratioin. Suzuki. discount. it is hard to entrants the automotive industry because the industry is already very mature. that it takes many suppliers to accomplish this. All manufacures produce the same or similar products – cars. Strategy: new customer group. Volkswagen AG. Mitsubishi. new competitors from emerging markets • • • • • number and size of firms industry size and trends fixed v variable cost bases product/service ranges differentiation. small cars. Mord Motor Company. There are so many suppliers to this industry. • entry ease/barriers • geographical factors • incumbents resistance • new entrant strategy • routes to market Supplier Power. OAO Yvto VAZ. Daimler AG. market entrants as a affiliate Routes to market: bonus. Honda. Competitive Rivalry. There are so many parts that are used to produce an automobile. manufactures can easily switch to another supplier if it is necessary. strategy Buyer Power.. When there are many suppliers in an industry.
co. Moreover Toyota created new words like „kaisen”. The main fundamentals of this system are lean manufacturing system and Just-in-Time principle.toyota. For instance was Toyota the first company which introduced the just-intime system. That means the so called “Toyota Way” spread to all overseas production locations. that fully satisfy customer requirements.co. . in order to deliver the vehicles as quickly as possible. Also it is necessary that every base is as less as possible independent from the headquarter Japan???? (www. 11. Toyota Strategy As the first industrialized Asian country.15" Also in the present time Toyota is continuously improving the TPS.jp/en/vision/production_system/ 17. To overcome the globalization the most important thing for Toyota is “quality assurance” which means that whereever a Toyota vehicle is made. environmentally friendly technologies (cars) alternatives price/quality • • • market distribution changes fashion and trends legislative effects 5. p. the TPS can efficiently and quickly produce vehicles of sound quality.co.Grant. one at a time. list of cars Bottom up system Analysis 14 15 R.toyota. Based on the basic philosophies of jidoka and Just-in-Time. These improvements lead to disciplined and successful business strategy. 229 http://www2. The idea behind TPS is "making the vehicles ordered by customers in the quickest and most efficient way. After many years of continuous improvements TPS became the most successful production system and was and is studied all over the world (www.toyota. Toyota Motor Corporation’s vehicle production system was created. 09 Orlin Malinov. it has the same quality as if it was produced in Japan. Japan copied a lot behaviour patterns and techniques from Europe and the US.in case of problems the production line stops immediately and prevents defect goods from being produced.companies have been acquired by larger rivals simply because they lacked necessary volume over which to amortize the costs of developing new models”14 Low cost cars. management and leading systems. a principle of continuous improvement in manufacturing activities or “jidoka”. The first 2 decades after WW2 the TPS. Also in the automotive industries most notably Toyota copied and improved western production.jp). Marius Albers 12 International Business .jp).
still remain firmly anchored in Japanese companies. First in Japan in 1997 and worldwide in 2001. Hino.wikipedia. However this is of course also a good opportunity in the future. Therefore one of the most notable strengths is the market leader position. Hino in the Asia Pacific. If competitors can implement a strategy or plan for example in the innovation sector faster than Toyota it maid be difficult to compete.finanzen.net). For example Toyota has introduced the Prius hybrid power car.jp/en/news/09/10/1020_1. This is due to the Japanese culture.. Other new models like the Sai.html Orlin Malinov. This explains the trend why Toyota is always anxious not fire people as fast as western rivals and has their own working conditions. Let’s not forget the huge market share as the market leader. TPS Because of its continuous and successful R&D strategy. SWOT Strengths: The Toyota Motor Corporation does business in 170 countries and has manufacturing operations in 27 countries (http://www2. Marius Albers 13 International Business . It was the first mass production hybrid vehicle (www.toyota. This may lead to a conservative behaviour of investors and shareholder all over the world. except India and Scion only in North America.16 Toyota Motor Corporation which first was established 1933 as Toyoda Automatic Loom Works. This is also a threat. Toyota produced and sold 9 Mio vehicles in 2008 (http://www. North America and South America. Toyota is leader in sales figures but not under the top dividend payout automobile manufactures. Another point is that it takes relatively long time to make decisions. Because of its Japanese origin.co. is today owner of Daihatsu.co.jp) Daihatsu is operating worldwide except in North America and Australia. GM for example had a dividend payout in this period for at least 1 Dollar (www. (www. Toyota has different principles compared to western car manufacturer.jp/en/vision/globalization/index.org/wiki/Automotive_industry http://www2.html).pdf).co.co. Lexus globally.toyota. Let’s face only the last 5 years. Despite the fact that Japanese culture is changing.oica. Ltd.toyota. the main principles regarding the Japanese management life-long employment and the principle of seniority. As a pioneer in regards to the JIT principle and Lean production. Toyota itself merchandises all over the globe. The dividend payout was except 2009 under 1 Dollar. Weaknesses: To show some weaknesses. Lexus and Scion. Toyota till today shows best results in regards to motor vehicle production’s efficiency. which is planned to go on sale in Japan on December 7.toyota.net/wp-content/uploads/world-ranking-2008. “The Sai is based on a concept derived from the Japanese word sai —which means "talent" [… ] —as a hybrid-only sedan combining advanced talent and multi-color sophistication17". It could be said that Toyota Motor Corporation is also the leader in developing new models. On the other hand a long-time- 16 17 http://en. Toyota can be proud with Another strengths is because of a continuously and successful research and development Toyota launch regularly new car models. 2009 are following.jp).
php/1924.gm. 244. Canada.jsp Alfred Sloan. TQM etc. http://www.gmnext. This was and is always an immense opportunity for Toyota. Orlin Malinov. The strategy forwarded by Sloan was to divide the US automotive market into 2 segments by price range.gmnext. A successful strategy and implementation can also lead to a great opportunity. Brazil. As already mentioned the hybrid sector is a good opportunity to keep the leader position. the United Kingdom.com/corporate/about/company. JIT. GM also has a huge market share in China. SWOT analysis External analysis Strengths Opportunities New models R and D Hybrid cars Market leader Internal analysis Weaknesses It takes a long time to make decisions W-O strategies overcome weaknesses to pursue opportunities Threats S-O strategies pursue opportunities that are a good fit to the company’s strengths. lean manufacturing. more efficiently. a long time president and chairman in the early times of General Motors explained his famous market segment strategy in 1924 "a car for every purse and purpose" http://wiki. safety and well designed vehicles. http://wiki. Opportunities: Another opportunity is high savings which probably used in research and development and leads to strong competitiveness in innovative. which more or less were first introduced at Toyota. 6. Because of lifelong employment and the principle of seniority Toyota might be not flexible enough in the modern fast-changing market. Chevrolet was to be focused at the low end and Cadillac at the high end. Threats: Because of the changing to environmentally cars Toyota has to keep up with their competitors._%22A_Car_for_Every_Purse_and_Purpose%22 The present headquarter is in Detroit.com/wiki/index. This can also be an opportunity because of high quality and knowledge elder workers are to offer. If competitors use TPS. This is a dramatically change in producing and placing the new vehicles on the market.php/1924. S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats Low dividend payout W-T strategies establish a defensive plan to prevent the firm’s weaknesses from making it highly susceptible to external threats.com/wiki/index. General Motors Strategy & Analysis General Motors Corporation was founded in 1908. Besides the largest national market the United States.500 people are working for General Motors and the sales figures of 2008 are 8.decision can become an opportunity because it maid be several times reconsidered and not overhasty.35 million cars and trucks all over the world. Marius Albers 14 International Business ._%22A_Car_for_Every_Purse_and_Purpose%22 to shareholders of GM.
Also Saab was sold to the Swedish Koenigsegg Group in 2009. http://www. (http://www. plants and dealerships. And finally the tip of the iceberg is the financial crisis. The market leader in the niche for civilian High Mobility Multipurpose Wheeled Vehicle “Hummer” which is originally used for military was sold recently to Sichuan Tengzhong.gm. which might weaken GM in the long-term. experience and technology potential. This leaded to a renovated and well known image and an enormous capacity of knowhow. By 1994 the market share decreased to 33 percent. That is why it can be deducted that GM lost its interest in vehicles that needed long time to find costumers. Chinese. GM was the biggest company in one of the most important industries in the world. In 2007 GM cut his production by 10 percent. Since 2009 GM is majority owned by the Canadian and US government and started a reorganization which is called chapter 11 with fewer employees.html? inline=nyt-org 18 The * after the brand’s name indicates that the brand is being wither sold or has faced insolvency : To point out the strengths of General Motors it has to be said that GM was till 2007 the biggest automotive manufacturer in the world for more than 70 years. Toyota for example has only 5 sub-brands. German. By July 2008 the sales figures in the US fell to just 20 percent from the whole market share. However GM has a variety of sub-brands including a Korean. In the following years GM was spending millions to launch new vehicles on the market. http://topics. In addition GM has manufacturing operations in 34 countries and does business in 140 nations.com/corporate/about/company. In the 1990s GM created a program that workers were paid even if the plants were not running.jsp For most of the 20th century from 1931 to 2008.gm. The government support became irreplaceable for GM and other American automotive producers.wikipedia. In the following decades GM started a series of strategic and cultural missteps including less and unsuccessful innovations. But the cars and trucks could only be sold with big incentives. Marius Albers 15 International Business . Australian and English car producer. argued with product developers but they failed because of less and unsuccessful advertising. Also because of the high gas prices and strong competitors the downward spiral moved on. General Motors has still a huge market share and belongs to the most successful and most influential car producer in the automotive industry.org/wiki/Automotive_industry Orlin Malinov. GM owned half of the United States car and truck market.com/corporate/about/global_operations/) Despite the drop off the leader position to Toyota.which except Scion are all Japanese. Weaknesses: 18 http://en. Another strengths is that GM is holding 11 different car producers as shown in the graph. In the 1960s.nytimes.Russia and Germany. In 1999 GM took his EV1 electric car after only 3 years from the market.com/top/news/business/companies/general_motors_corporation/index.
GM made a lot of strategic and cultural missteps in the last decades. The largest market for GM is the United States http://www. modern and ecological car from GM? Wages in the US and Europe are quite high and rise the production costs. : SWOT analysis External analysis Strengths Opportunities Threats Internal analysis Weaknesses W-O strategies overcome weaknesses to pursue opportunities W-T strategies establish a defensive plan to prevent the firm’s weaknesses from making it highly susceptible to external threats. Chery Automobile Orlin Malinov. Furthermore in Asian countries for instance strike is not common and is therefore a strength for Toyota and Chinese newcomer compared to western companies. it leads to a strong image. Threats: Threats are the newcomers especially the Chinese and Indian car producer like Tata or Chery which just entered the market for 10 or 15 years. With every strike that GM goes throw. S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats 7. but to produce a high volume of cars in the United States or for example in the case of Opel in Germany. S-O strategies pursue opportunities that are a good fit to the company’s strengths. Why should they not buy also a new. which is way they could not hold the leading position in the automotive industry.especially for a well known company like General Motors.oica. If GM can enter these countries with its strong market dominance successfully it would be setting a new strategic direction in the future. Obviously a lot of inhabitants of the United States have great confidence in GM. A relative low production of heavy commercial vehicles and heavy buses compared to for example Toyota or Daimler in 2008 published by OICA. They also try to copy foreign car and truck designs and often produce motor vehicles due to low wages in their local countries cheaper than entrenched producers.pdf) might be a lack of market control in this branch. Of course outsourcing is always a possibility and is practiced. The International Organization of Motor Vehicle Manufacturers (http://www.jsp but they are relatively saturated. If people have secure jobs the association to their working place and company will be good. Another point is the often used medium strikes.com/corporate/about/company. Also this threat of high costs for wages and losing costumers in the local market can be turned into a great opportunity when the image can be improved through saving jobs . India and other emerging economies. Opportunities: One of the most favourable opportunities is the new market in China. as already mentioned before. On the other hand this can be an opportunity in the future if GM can bring new environment friendly cars to the market.gm.Let us look at some weaknesses. the competitors gain and make up leeway. Marius Albers 16 International Business .net/wp-content/uploads/world-ranking-2008.
energy-saving and eco-friendly vehicles.7 Mio Dollar because Daewoo found great resemblance between the Chery QQ model and Daewoo Matiz’s body structure.com/company-overview Ranked 27th in the world auto industry. together with the ‘Made in China”??? known for cheap. Threats: Chery as well as a lot of other Chinese car producer is notorious for copying models from other car brands. “no stability without domestic market. Marius Albers 17 International Business . low quality products. S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats In the external. Furthermore Chery is not allowed to sell some of its models on the European market. Great chance for Chery to expend more and more.20 Opportunities: The local market in China is not saturated yet. 19 20 http://www.co. Has the chance to share experience with key people responsible for the creation of some Lamborghini and Ferrari. The strategy is the reaction of the environmental change. and promoting the domestic market with overseas market and flexible mode”19 Chery Automobile has the vision of producing safe.11.Strategy As a Chinese company Chery is bound to contribute to the local and regional development both in economical and social means.cheryinternational.bbc. no strength without overseas market. SWOT Strengths: One of the largest automobile manufacturer in china First Chinese automobile producer with exports Chery is cooperating with renovate western companies. AVL etc. nevertheless Chery Automobile manages also a strong export politic. It is the result of the internal organized process.cheryinternational. Opportunities/Threats analysis the focus is on the technical.uk/2/hi/business/4528565. Strength/Weaknesses analysis the focus is on the company itself. Analysis Chery products are exported in 60 countries http://www. makes a lot of people living outside China reluctant to buy a Chinese car in the short-term. In the internal.com/company-overview 19. S-O strategies pursue opportunities that are a good fit to the company’s strengths. social and ecological environment of a company.stm Orlin Malinov.09 http://news. Daewoo sued Chery Automobile for 9. Shares hands in the teamwork also with leading supplier companies like Bosch. SWOT analyse External analysis Strengths Opportunities Threats Internal analysis Weaknesses W-O strategies overcome weaknesses to pursue opportunities W-T strategies establish a defensive plan to prevent the firm’s weaknesses from making it highly susceptible to external threats. This fact. Chery already posseses full set of R&D Weaknesses: The Korean sub brand of GM.
Chery was a newcomer in a small area that had little tradition of manufacturing and was far from the country’s traditional centers of auto production.jpg http://krasses-auto.mckinseyquarterly. Shanghai.09 http://www.09 http://sharkride.09 http://blog.gif http://profile.gif http://www.gif http://www.gm. Bertelsmann Stiftung 2008.jpg 13.leasetrader.gif http://upload.wordpress.toyota.jpg 13.com/buyersmarket/toyota_logo.com Few people took Chery Automobile seriously when it was established. Robert.jpg Links: http://www.11.caravantrekker.mckinseyquarterly.com/2009/02/peugeot.moldova. Orlin Malinov.streetsource. in Anhui Province.nl/images/logo/Volkswagen.org/auto/FIAT/Fiat_Logo.jpg http://www.pictures-of-cars.caravantrekker.gif http://www.scienceclarified.com/dojo/4/images/client_logos/gmlogo.11.net/object3/81/3/q22166130048_3790. p. and Wuhan.nl/images/logo/Hyundai.nl/images/logo/Suzuki.11. Sixth Edition 2008.com/images/uesc_02_img0067. in the city of Wuhu.foursightonline.files. in Beijing. 12 http://www.gif http://layofflist.caravantrekker. Changchun.11.09 Logos: http://www.com/Automotive/Strategy_Analysis/Reducing_waste_in_the_a uto_industry_1622 http://www.fbcdn.jpg 13.com/Automotive/Strategy_Analysis/A_new_segmentation_for_ electric_vehicles_2464 Books: Grant.png 13. Philipp Grosche.com/images/makelogos/nissan. China.Sources: Internet: Photos: http://www. Managing the International Value Chain in the Automotive Industry p.com/images/blog_leasetrader_com/WindowsLiveWriter/ToyotasPriusis LessEfficientandEnvironmen_EA2B/2006.jpg http://www.com/blog/wp-content/uploads/2008/10/audi-concept-rear.ak.de/img/cars/Honda/honda-logo-s.wfir960. Contemporary Strategy Analysis. 229 Stefan Schmid.prius-thumb.com/American-Muscle-Car. Marius Albers 18 International Business . a little more than a decade ago.
Marius Albers 19 International Business . Our study. (That isn’t true for gas-fueled vehicles. Given the current cost of energy storage. and the frequency of stopping and starting). examined the factors underlying the energy storage requirements. since a larger gas tank is almost cost free. “Chery kept hitting the wall over the past decade. Orlin Malinov. are intended for multiple driving missions of differing lengths and speeds. environmentally conscious.” Chery truly has moved on. and thus the costs. bureaucratic obstacles prevented the company from selling it. After this first car had been built. even if their size and total number of miles driven remained the same. we just reoriented and moved on. We divided energy use into two major categories: the energy required. It can also shape its brand and advertising messages and go-to-market strategies for such products more efficiently. or technically enamored buyers. speed. it sold 381. these companies will need to develop products that satisfy the consumers’ main concern—good value for money.) But we found that the energy storage requirements of cars used for different missions could be vastly dissimilar.000 passenger cars. as well as many electric ones now on the drawing boards. As chairman and chief executive officer Yin Tongyao puts it. by the way the vehicles are used (such as driving distance.. by the vehicles’ physical characteristics (such as rolling resistance and mass) and.) The company is among a handful of Chinese carmakers that have proprietary technology to build core. of car batteries. To reach beyond affluent. first. a company can match a vehicle’s energy storage requirements to a consumer’s particular needs and thus design more economic vehicles.86 billion (20 billion renminbi) in sales and ranking fourth in the domestic passenger-car market. to the way they use their vehicles. A recent McKinsey study suggests that one way companies can achieve this goal would be to focus on tailoring battery-powered vehicles to the actual driving missions of specific consumers—that is. which focused on typical driving missions in the United States.. Every time we hit a wall. Chery is an independent manufacturer. Driving missions—much more than the size of vehicles—determine energy storage requirements. there was little choice but to manufacture a car of its own so that the engine could find a home. Most existing gasoline-fueled cars. Global carmakers are trying to define a future market for electric vehicles. By focusing on specific driving missions of consumers.When the start-up failed to find buyers for a motor engine it had developed. (The top three are brands associated with joint ventures between Chinese and foreign automakers. that is a considerable challenge. In 2007. generating $2. It is well understood that the addition of incremental energy storage increases an electric vehicle’s cost substantially. second.
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