American Axle

Tracey Taschereau

BUS401

February 3, 2013
April Miller

Abstract

American Axle Manufacturing (AAM) has already expanded globally into many areas. In order to better understand how a company initiates this process, we will walk through many areas together, including an overview/history; types of products and services offered; Australia and it’s cultural norms, the roles ethics and cultural diversity play; the political, legal, cultural, and economic make-up of Australia; the role that Information Technology and the Internet will play; the advantages or disadvantages of manufacturing and material location; and AAM’s approach to marketing and advertising.

International Expansion

American Axle Manufacturing is a leading, global Tier-One automotive supplier of driveline and drivetrain systems and related components for light trucks, SUVs, passenger cars, crossover vehicles and commercial vehicles. AAM is a multi-billion dollar company with more than 30 locations around the globe serving over 100 customers on five continents (AAM, 2013,). AAM announced the opening of its Winter Test Center in Arjeplog, Sweden on March 9, 2012 (AAM, 2013, Investors/Media).
Overview and History of AAM According to AAM’s website the foundation for what is now AAM was established in 1917 when General Motors Corporation built an aircraft parts manufacturing facility in Detroit(AAM, 2013) . Later, automotive parts were added to the product mix. By 1920, two additional plants had been built in Detroit to meet the increased demands of the burgeoning automotive industry (AAM, 2013). Two additional plants were constructed in Detroit in the ‘40s and ‘50s. The facilities remained under the General Motors umbrella until late 1992(AAM, 2013). On March 1, 1994, AAM became a stand-alone, independent, multi-billion-dollar Tier One automotive supplier (AAM, 2013).

Products and Services Founded in 1994, AAM is a leading automotive supplier of driveline and drivetrain systems and related components, chassis systems and metal formed products (AAM, 2013). AAM is the supplier for such illustrious companies as American Axle GM, Chrysler, Daimler, Volkswagen, Audi, Scania, Tata Motors, Audi, Harley-Davidson, Mack Truck, John Deere, Mahindra Navistar, Nissan and others (AAM, 2013). The Company’s product portfolio has expanded from high-volume products including front and rear axles and propeller shafts, to include advanced, electronically-activated components and systems - all characterized by the company’s determination to provide world-class innovation and quality (AAM, 2013). AAM’s driveline system products currently include rear axles, front axles, TracRite axle differentials, SmartBar electronic stabilizer system, torque transfer device, propeller shafts, independent rear drive axles and constant velocity joints. Systems for vehicle drivetrains include transfer cases, power transfer units, and TracRite transmission differentials, Transmission/Transfer Case Components, Intake Manifolds, Oil Pans, and Bell Housings (AAM, 2013). Chassis and structural components include Sub-Frame (Cradle), Upper/lower Control Arms, Attaching bushing/hardware, Assembly, and SmartBar Electronic Stabilizer System (AAM, 2013). Metal formed products offered by AAM include Axle and Driveline components, Chassis and Steering Components, Power Transfer Unit/Transfer Case components, and wheel hubs and spindles (AAM, 2013).
Australia and its Cultural Norms Australia is an island continent located between the Indian and Pacific Oceans, that combines a wide variety of landscapes. The highest mountains are part of the Great Dividing Range that lines the east coast from Cape York Peninsula south to the state of Victoria. West of the Great Dividing Range the landscape consists mostly of plains and plateaus; the Macdonnell Ranges near the country's center are an exception (National Geopraphic, nd). Australia was founded in 1788 as a British convict colony, was a place of banishment and gold strikes in 1851 opened floodgates of immigration National Geographic, nd). Australia became independent in 1901, with a constitution adapted in part from that of the United States (National Geographic, nd). Immigration has boosted Australia's development since 1788; from 1945 through 2000 almost six million immigrants arrived (National Geographic, nd). Aborigines, one of the first settlers, number about 517,000, with the government making efforts to settle aboriginal land rights National Geographic, nd). With 85 percent living in urban areas Australia has one of the world's highest living standards (National Geographic, nd). Australia defines itself by its Aboriginal heritage, vibrant mix of cultures, innovative ideas and a thriving arts scene (Killarney, Southern Downs, QLD, nd). Aboriginal beliefs state that, totemic spirit ancestors emerged from the earth and descended from the sky to awaken a dark and silent world (Killarney, Southern Downs, QLD, nd). They created the sun, moon and stars, forged mountains, rivers, trees and waterholes and changed into human and animal forms. Australians believe in mateship and a ‘fair go’ and have a strong affection for the underdog or ‘battler’(Killarney, Southern Downs, QLD, nd). Australians have a unique colloquial language, coined ‘strine’ which combines many long lost cockney and Irish sayings of the early convicts with words from Aboriginal languages. With more than 120 national and thousands of local, regional and state sporting organizations, it's estimated that six-and-a-half million people in Australia are registered sport participants. Since 1945 Australia’s population has increased to more than six million people from across the world living there today (Killarney, Southern Downs, QLD, nd). Australia has a very diverse culture with more than 20 per cent of Australians being foreign born and more than 40 per cent are of mixed cultural origin (Killarney, Southern Downs, QLD, nd). In residents homes they speak 226 languages - after English, with the most popular being Italian, Greek, Cantonese and Arabic (Killarney, Southern Downs, QLD, nd). The country’s rich cultural diversity is reflected in its food, which includes most of the world’s cuisines and artfully fuses quite a few of them to create new experiences (Killarney, Southern Downs, QLD, nd). You can also experience the melting pot of cultures in the many colorful festivals, such as samba and capoeira at Bondi’s Brazilian South American festival, dance behind the dragon parade during Chinese New Year or stroll through streets transformed into a lively piazza during the annual Italian celebrations. (Killarney, Southern Downs, QLD, nd). The Effects of Ethics and Cultural Diversity AAM’s core values integrity ;ethical behavior in all that we do; engineering, manufacturing, operational excellence, quality and warranty performance; serving the needs of our customers, associates, stockholders and other stakeholders; teamwork, training, technology & building trust; and state-of-the-art technology will complement the Australian principles and values very well (AAM, 2013). AAM prides itself on honesty, trust, respect, working together to achieve the best solution, loyalty, dependability, accountability, taking every necessary action to exceed our customers' expectations, a lean focus to identify and eliminate waste, and associates are encouraged to proactively turn challenges into opportunities (AAM, 2013). AAM supports local communities by demonstrating responsible corporate citizenship by active, knowledgeable participation in activities and charities in each of the communities and countries where they do business (AAM, 2013). AAM supports the environment by complying with all applicable environmental laws and regulations in Australia. And we will aggressively pursue the prevention of pollution, the reduction of emissions, the elimination of waste, energy conservation, the preservation of natural resources and continuous improvement utilizing our environmental management systems and ISO14001 standards (AAM, 2013). Diversity management will begin to develop rapidly to assume more dotted-line responsibilities that will touch corporate strategy, corporate social responsibility, organizational design & effectiveness, corporate marketing and even sales (Llopis, 2011). Some of the things that will assist in diversity management are operating more holistically in a general management and operational capacity to ensure that diversity becomes an embedded mindset with common threads that touch all functional areas (internally) and the supply chain (externally) (Llopis, 2011). Companies must understand their protocols, their ways of doing business in the countries they are operating in and diversity must move from just a value, to being operational Llopis, 2011).
The political, legal, cultural, and economic make-up of Australia The current Australian political system is not as old as that of Britain or the United States elements of both of which have been integrated into its own system, but it is older than that of many other countries in the world, dating from the constitution which created the nation in 1901 Darlington, 2012). Australia is a constitutional monarchy, therefore, it is ruled by the monarch of the United Kingdom. There is a growing movement in Australia to change this and turn the country into a republic. There are three major political parties: the Australian Labor Party which is Centre-Left and traditionally tended to align with workers but now refers to support for the "battlers"; the Liberal Party which is Centre-Right and tends to align with the interests of business and the self-employed; and the National Party which traditionally aligns with graziers, farmers and other rural voters (Darlington, 2012). The Australian legal system is based on a fundamental belief in the rule of law, justice and the independence of the judiciary. Australia follows the United States in having a common law system, which means that that judges’ decisions in pending cases are informed by the decisions of previously settled cases (Australian Government, Dfat, 2013). The Australian Constitution of 1901 established a federal system of government, which distributes powers between the federal government and the states. Its exclusive powers include investing the federal government with the exclusive power to make laws on matters such as trade and commerce, taxation, defense, external affairs, and immigration and citizenship and concurrent powers Which allow both tiers of government to enact laws (Australian Government, Dfat, 2013). The states and territories have independent legislative power in all matters not specifically assigned to the federal government. Where there is any inconsistency between federal and state or territory laws, federal laws prevail. Federal laws apply to the whole of Australia. In effect, Australia has nine legal systems—the eight state and territory systems and one federal system. However, it is the state and territory criminal laws that mainly affect the day-to-day lives of most Australians.

The principles and shared values that support Australia’s way of life include: respect for equal worth, dignity and freedom of the individual, freedom of speech and association, freedom of religion and a secular government, support for parliamentary democracy and the rule of law, equality under the law, equality of men and women, equality of opportunity, peacefulness and a spirit of egalitarianism that embraces tolerance, mutual respect, and compassion for those in need (Australian Government, Department of Foreign Affairs and Trade, 2013). Australia also holds firmly to the belief that no one should be disadvantaged on the basis of their country of birth, cultural heritage, language, gender or religious belief (Killarney, Southern Downs, QLD, nd). The economy is basically free-enterprise in structure, with some of the largest components being finance, manufacturing, services and trade. Australia has some of its strengths being a stable political system; an Anglo-Saxon respect for law and private property; a well maintained and extensive infrastructure; and vast mineral resources (Sullivan, nd). Its GDP is $374.6 billion with a national per capita of $20,720, an inflation rate of 2.5% and an unemployment rate of 8.9%. Australia is mainly in the Industrial age due to its monetary economy yet it is moving into the Information age (Sullivan, nd). The role that Information Technology and the Internet will play “The electronic linking together of individuals, institutions, and companies in a worldwide web has created an unprecedented public data base that heralds the ultimate realization of the information society” (Peterson, 2012). There is no doubt that the internet has already had a significant effect on the conduct of international business. The digitization of production processes has also reduced the costs of switching from one line of manufacturing to another, thereby enabling more flexible production with a lower minimum efficient scale of operations (Westbrook & Williamson, 1993). The Internet has enhanced the possibilities of finding potential foreign partners in possession of complementary assets with which a firm may share production facilities and technology. Human resources are affected by staff being able to initiate and carry through a range of new activities and deal with a variety of new technologies. The loss of competitive advantage and the creation of more transparency across markets may reduce the disadvantage of foreignness in terms of being unknown to local investors affects the financial aspect of international business.
Advantages or disadvantages of manufacturing and material location Business owners who are looking to expand their operation or to cut costs may consider the option of opening a production facility in a foreign country. In some cases, foreign production can offer a number of advantages. Expanding internationally has benefits such as lowering labor costs, many foreign countries offer lower operating costs, particularly reduced labor costs; reaching untapped markets helps a company reach a brand-new market where demand for its products and services is high and initial competition is minimal (Joseph, 2013). It also helps the company increase its brand recognition (Joseph, 2013). However, the decision requires careful considerations, as foreign expansion also comes with a certain amount of risk. Disadvantages include the possibility of instability because a booming economy one day could collapse quickly if a radical change in the form of government occurs (Joseph, 2013). and backlash if the company may chooses to eliminate American jobs to take advantage of the cheaper labor, meaning that many valuable long-term employees could find themselves out of work (Joseph, 2013). AAM has international locations in Brazil, China, Japan, Luxembourg, Germany, India, Mexico, Poland, Scotland, South Korea, Sweden and Thailand (AAM, 2013). Initiating a joint venture would be the ideal way for AAM to gain access to doing business in Australia. This would allow them to maintain the product standards and save valuable resources on the costs of importing materials and shipping charges.

Marketing and advertising approach Australia has The Advertising Standards Bureau which administers a national system of advertising self-regulation through the Advertising Standards Board and the Advertising Claims Board (Advertising Standards Bureau, 2013). The self-regulation system recognizes that advertisers share a common interest in promoting consumer confidence in and respect for general standards of advertising (Advertising Standards Bureau, 2013). The Bureau works to promote the work of the Boards and the role of the Advertising Standards Bureau in the system of advertising self-regulation and is governed by a Board of Directors (Advertising Standards Bureau, 2013). One type of advertising utilized in Australia is comparative advertising, which is any advertising, that explicitly or by implication, identifies a competitor or goods or services offered by a competitor (European Commission, 2000). AAM advertises through such mediums as word of mouth from clients, job fairs, auto summits, automotive magazine ads, and newspapers AAM, 2013). With AAM’s dedication to fair practices these mediums will avoid comparative advertising, which can have consequences if a competitor complains.
Conclusion
American Axle Manufacturing is a company who that has weathered the automotive crisis, and continues to grow. With more than 30 locations around the globe serving over 100 customers on five continents, AAM is always looking for new markets to expand into. Australia presents an ideal possibility with the matching values, economic structure, legal structure, and ethnic assortment of residents. By joining a joint venture, AAM would save on having to build a new facility and shipping charges. This would also allow them to gain employees that are already knowledgeable of how things are done in Australia, making it an easier transition. Technology and the internet would present a more convenient and faster way for the multiple locations to connect with one another and pass on valuable information.

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