...Assignment 4: Automotive Production Levels General Motors Shelia Lott Eco 550 - Managerial Economics and Globalization Dr. John Ilokwu Ph.D. September 5, 2012 General Motors Company General Motors Corporation (GM) is the largest company in an industry that has a major impact on the American economy and in the world. GM has led the auto industry in innovation and for most of the 20th century. From 1931 to 2008 GM led in the industry only to be surpassed by Toyota in 2008. After major cutbacks for over two years, GM found itself at the brink of bankruptcy and accepted government financial assistance and plan for debt reconstruction and recovery. Under this plan, brands Chevrolet, Cadillac, and GMC became the base brands for General Motors Company. General Motors sales cars in 31 countries, these brands also include Opel, Holden, and Vauxhall. The law of demand states that the higher the price of a good or service, the less likely will people have a demand for that good or service with all other factors being constant. As a result the higher priced a GM product the less quantity demand by the consumer. A picture of this would indicate a downward slope in the demand curve. The law of supply states that quantities sold at a higher price will cause an upward slope in the curve and unlike the demand curve the price will remain high because this will increase revenue. In the example to the Chevrolet Camaro a slack in production may increase the price even...
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...The problem to be investigated in this study is the economic importance of the automotive industry. It will explore the social impact it has brought worldwide and how it is affecting the world of commerce. It will also explain the foreign trade and the different automotive industries of each country. The following sub-questions will be evaluated: * What pollution-control strategies each automotive industry are practicing? * What are the latest in automobile safety measures? * How does motor vehicle production affect the economy? * What are the standards of manufacturing efficiency in an automobile? INTRODUCTION The automobile industry is concerned with profits and competition; with consumer demands for styling, safety, and efficiency; and with labor relations and manufacturing efficiency (“,” 2008). About 250 million vehicles are in the United States. Around the world, there were about 806 million cars and light trucks on the road in 2007; they burn over 260 billion gallons of gasoline and diesel fuel yearly. The numbers are increasing rapidly, especially in China and India (“” 2008). In 2008, with rapidly rising oil prices, industries such as the automotive industry, are experiencing a combination of pricing pressures from raw material costs and changes in consumer buying habits. The industry is also facing increasing external competition from the public transport sector, as consumers re-evaluate their private vehicle usage...
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...The European Journal of Development Research Vol. 20, No. 1, March 2008, 31–55 Staying alive in the global automotive industry: what can developing economies learn from South Africa about linking into global automotive value chains? Justin Barnesa and Mike Morrisb * Benchmarking and Manufacturing Analysts, and PRISM, School of Economics, University of Cape Town, Cape Town, South Africa; bPRISM, School of Economics, University of Cape Town, Cape Town, South Africa, and School of Development Studies, University of KwaZulu-Natal The insertion of the South African automotive industry into the global mainstream of vehicle manufacturing highlights a number of valuable analytical lessons for developing country automotive economies. The global value chains that dominate the automotive industry have fostered substantial upgrading within the South African automotive industry but pervasive international trends also limit the opportunities for value addition and more substantial increases in vehicle output. Key trends in this regard relate to tightening market conditions in the developed economies into which South African vehicle producers and automotive component manufacturers supply, excess global production capacity and the emergence of new low cost production locations principally in Asia. The benefits to the South African automotive industry of engaging in global value chains are clear but the long term sustainability and development of the industry remain in question. The importance...
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... 2009 7 Globalisation of the automotive industry: main features and trends Timothy J. Sturgeon Industrial Performance Center (IPC), MIT, 292 Main Street (E38-104), Cambridge, MA 02139, USA E-mail: sturgeon@mit.edu Olga Memedovic* United Nations Industrial Development Organization, Vienna International Centre, A-1440 Vienna, Austria E-mail: O.Memedovic@unido.org *Corresponding Author Johannes Van Biesebroeck Department of Economics, University of Toronto, 150 St. George Street, Toronto, Ontario M5S 3G7,Canada E-mail: jovb@chass.utoronto.ca Gary Gereffi Department of Sociology, Duke University, Durham, NC 27708-0088, USA E-mail: ggere@soc.duke.edu Abstract: This paper lays out the main features of the global automotive industry and identifies several important trends. A boom in developing country sales and production has not yet overshadowed the importance of existing markets in developed regions. Regional integration is very strong at an operational level, yet the industry has recently developed a set of global-scale value chain linkages, and retains national and local elements as well. The paper highlights how global, regional, national and local value chains are nested to create a pattern of global integration that is distinctive to the industry. We use global value chain analysis to help explain the limits of build-to-order in the industry, the role of regional and global suppliers, the shifting geography of production and how the characteristics of value...
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...The Brazilian automotive industry is at a crossroads. If the industry and the government take the right steps, there are great prospects on the domestic market and increasing export opportunities. That is the conclusion of a study conducted by Roland Berger Strategy Consultants entitled "The Brazilian automotive industry at crossroads". "Brazil is an up-and-coming market with great potential – also for the automotive industry," says Stephan Keese, Principal in the Automotive Competence Center at Roland Berger Strategy Consultants. But with increasing global competition, Brazil needs to define a clear agenda to ensure future production growth. This plan should include encouraging domestic sales to ensure enough satisfactory growth for all market participants. It is also important to increase exports to compete on a global level. In addition, it is necessary to improve domestic competitiveness to translate sales growth into production growth for established players. Joint industry-government action recommended If the necessary steps are taken, Brazilian automotive sales have tremendous potential to grow in the future, fueled by the positive development of the economy. Analysis shows that sales of 6 million vehicles by 2020 are likely. But this sales forecast may require additional efforts and action by the industry and the Brazilian government. For example, joint industry-government action could be undertaken to drive domestic sales growth in Brazil, such as reducing the...
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...Introduction * Overview of an Automotive Industry * Place of the industry in an economy * Automotive industry in world’s economy * Automotive industry in Turkish economy * Trade perspective * Conclusion The automotive sector is a developing sector in the world. Its importance has increased drastically for the economies of countries. In this sector, the competition between companies has been increasing and with this expected increase; the elements such as efficiency in production, efficient use of resources have become an essential part of it. Therefore characteristics such as; investing on research & development , quality management , relationships between main and sub-industry collaboration , qualified employment has been on the competitors list in order to beat the competition. Automotive industry is one of the world’s largest industry that have been received the largest investments. In the scope of research & development and production, it has received 85 billion euros investment and the countries that have received an investment, have a tax income of 433 billion euros which proves us how big the industry is in the world. Automotive industry has a turnover of two trillion euro. Therefore this economy scale equals to economy of a country that is the sixth one of the world. In Turkish automotive industry, we would witness the same kind of structure. If we take a look at the proportion of it in the production and also contribution margin...
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... 2009 7 Globalisation of the automotive industry: main features and trends Timothy J. Sturgeon Industrial Performance Center (IPC), MIT, 292 Main Street (E38-104), Cambridge, MA 02139, USA E-mail: sturgeon@mit.edu Olga Memedovic* United Nations Industrial Development Organization, Vienna International Centre, A-1440 Vienna, Austria E-mail: O.Memedovic@unido.org *Corresponding Author Johannes Van Biesebroeck Department of Economics, University of Toronto, 150 St. George Street, Toronto, Ontario M5S 3G7,Canada E-mail: jovb@chass.utoronto.ca Gary Gereffi Department of Sociology, Duke University, Durham, NC 27708-0088, USA E-mail: ggere@soc.duke.edu Abstract: This paper lays out the main features of the global automotive industry and identifies several important trends. A boom in developing country sales and production has not yet overshadowed the importance of existing markets in developed regions. Regional integration is very strong at an operational level, yet the industry has recently developed a set of global-scale value chain linkages, and retains national and local elements as well. The paper highlights how global, regional, national and local value chains are nested to create a pattern of global integration that is distinctive to the industry. We use global value chain analysis to help explain the limits of build-to-order in the industry, the role of regional and global suppliers, the shifting geography of production and how the characteristics of value...
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...Started over one hundred years ago in Germany and France the automotive industry has become a major source of industrial and economic stability worldwide. In this report we will describe how the auto industry is affected by new companies entering the market, mergers, and globalization, on pricing and the sustainability of profits. We will explore mergers and merger activity within the industry as well as current and expected government policies and regulations in place to address issues related to externalities. We will also take a look at the effects of global competition on the decisions made by management with regards to change in labor demand, supply, relations, unions, and rules and regulations in the auto industry. Considering the aforementioned topic on the auto industry’s competitive strategies and Government policies you will say that this report aims to explain how these two areas have impacted the auto industry and will affect it going forward. Globalization Increasing globalization in the automotive industry is changing the way of traditional partnerships. Ten years ago, it was questionable to pursue business in markets such as India and China because political and business conditions were not conducive to direct foreign investment (Emerging Markets, Emerging Opportunities , 2012).As a result, many automotive companies such as General Motors, Toyota, Honda and Ford viewed strategic partnerships as a way to dip their toes into the water and expand into different...
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...R e se a rc h a n d Stat i s t i c s B r a n c h working paper 16/2009 Impact of the Global Economic and Financial Crisis over the Automotive Industry in Developing Countries UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION RESEARCH AND STATISTICS BRANCH WORKING PAPER 16/2009 Impact of the Global Economic and Financial Crisis over the Automotive Industry in Developing Countries Peter Wad Copenhagen Business School UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Vienna, 2010 This paper was prepared by Peter Wad, UNIDO consultant and backstopped by Nobuya Haraguchi, UNIDO staff member, Research and Statistics Branch, Programme Coordination and Field Operations Division. Iguaraya Saavedra provided administrative support. The designations employed, descriptions and classifications of countries, and the presentation of the material in this report do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations Industrial Development Organization (UNIDO) concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries, or its economic system or degree of development. The views expressed in this paper do not necessarily reflect the views of the Secretariat of the UNIDO. The responsibility for opinions expressed rests solely with the authors, and publication does not constitute an endorsement by UNIDO. Although great care has...
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...1. History: For more than 90 years, MAHLE has played a decisive role in promoting the development of automotive and engine technology, setting standards time and again. Driven by performance—every MAHLE employee demonstrates surpassing enthusiasm for performance, precision, and perfection. MAHLE has a local presence in all major world markets. Approximately 49,000 employees work at over 100 production plants and eight research and development centers in Stuttgart, Northampton, Detroit (Farmington Hills, Novi), Tokyo (Kawagoe, Okegawa), Shanghai, and São Paulo (Jundiaí). Around the world, approximately 3,000 development engineers and technicians are working on forward-looking concepts, products, and systems for the ongoing development of vehicle power trains. As a leading global development partner for the automotive and engine industry, MAHLE offers unique systems competence in the internal combustion engine and engine peripherals. With its two business units Engine Systems and Components and Filtration and Engine Peripherals, the MAHLE Group thus ranks among the top three systems suppliers worldwide for piston systems, cylinder components, as well as valve train, air management, and liquid management systems. Almost all automobile and engine manufacturers around the world are customers of MAHLE. The Industry business unit bundles the MAHLE Group's industrial activities. These include the areas of large engines, industrial filtration, as well as cooling and air-conditioning...
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...Team B’s Week 5 Assignment ECO/365 Automotive Industry Introduction The automotive industry is one of most important businesses in the World, creating a variety of vehicles for consumers worldwide. Management teams must learn to recognize how changes in other businesses can directly or indirectly affect the success of firms in the same industry or another type in domestic and global markets. The following paper analyzes the effects of changes in the automotive industry and how regulations held by the government control the financial and consumer aspects this industry maintains domestically and globally. A Company Emergence in Market Mergers and Globalization Functioning as an evolving market, automotive firms all the world find innovative ways to appease customers by offering the multitude of vehicles meeting consumer needs. New companies entering the automotive industry are competitive businesses exploring ways to expand professionally through vertical mergers. “The automotive industry is literally built on the concept of vertical integration – that is, one company owning both the manufacturing and as much of the supply chain that leads to the factory floor as possible,”(Gorzelany, 2014.) For instance, currently Tesla Motors in building a $5 million dollar “giga-factory” to power its electric vehicles with half of its investment coming from Panasonic, Tesla’s partner in this vertical merger. Panasonic is a successful battery...
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...Contribution of the Automotive Industry to the Economies of All Fifty States and the United States 3005 Boardwalk Drive Ann Arbor, MI 48108 www.cargroup.org January 2015 All statements, findings, and conclusions in this report are those of the authors and do not necessarily reflect those of the Alliance of Automobile Manufacturers. Contribution of the Automotive Industry to the Economies of All Fifty States and the United States Center for Automotive Research Report Prepared by: Kim Hill, Director, Sustainability & Economic Development Strategies Group Director, Automotive Communities Partnership Associate Director, Research Debra Maranger Menk Joshua Cregger Michael Schultz Report Prepared for: Alliance of Automobile Manufacturers 1401 Eye Street, N.W., Suite 900 Washington, DC 20005 January 2015 ©Center for Automotive Research 2015 i ACKNOWLEDGEMENTS The Center for Automotive Research (CAR) would like to thank the Alliance of Automobile Manufacturers for support of this work. This study is the result of a group effort. The authors would like to thank our colleagues at CAR for their assistance with this study, in particular, Bernard Swiecki for his assistance with organizing and conducting interviews and Yen Chen for his input and guidance on economic ...
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...Demand and Supply Structure of the Automative Sector 8 a) Sector Highlights: 8 b) Motor Vehicle Production and Sales in Turkey 9 c) Concentration of the sector 10 d) Chacteristics of products, elasticies, characteristics of consumers, entry and exit barriers, resources and capabilities of the firms, 11 3) Government Policies 12 4) International Competition 14 a) Passenger Car and Commercial Vehicle Market Import 14 b) Vehicle Market Export 14 5) Analysis Of FORD OTOSAN A.Ş. 15 a)Company Profile: 16 -Shareholders: 16 - Headquarter & Branches, Foreign Country Operations: 16 -Field of Operation 17 -Strategy of the Company: 17 -Financial indicators of the company 18 -Products, Export-Import and Domestic Market Performance: 19 -Research and Development: 19 6-Ratio Analysis: 21 7. Conclusion 23 8.Appendix 24 1) Historical Development and the Importance of Automative in Turkish Business Enviroment a) History The development of the Turkish automotive sector has been closely related to the market policies implemented by the Turkish government. The protected market regime, prevailing since the foundation of the Republic, had come to end during the 80’s. The assembly of the commercial models of Ford, Chrysler, BMC, Mercedes-Benz and Deutz started under licence, during the 60’s. In 1970's, passenger car production of FIAT and Renault began. During these years, the development of...
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...Industry in UK - An Internal and External environmental study Introduction: The automobile sector in United Kingdom (UK) is very vibrant and innovative with Seven commercial vehicle manufacturers, nine bus and coach manufacturers, eight major premium and sports car producers, seven mainstream cars manufacturers; eight formula one teams; thirteen R&D centers; and over 100 specialist brands and niche manufacturers. Some of the best premium and sports cars manufactured in UK are Aston Martin, Bentley, Daimler, Jaguar, Lagonda, LandRover, Lotus, McLaren, MG, Mini, Morgan and Rolls-Royce. UK automotive industry is producing over 1.5 million vehicles and 2.5 million engines every year. Another key point about the UK automobile industry is that it exports around 75 % of its production which makes UK the largest exporter of cars in the world. Apart from automobile manufacturing, UK also has notable presence in motorsport industry and auto racing industry. UK motorsport industry contributes with an annual turnover of £6 billion out of which more than 50% is exported with about 4500 companies involved in this industry. UK automobile sector has undergone tremendous change since its inception in the 19th century. From being the second largest manufacturer of cars in the world (next to United States), it went down to be the 14th largest producer of cars by 2012 because of the rising competition from countries like France, Germany...
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...Most organizations seek long- term relationships with their respected suppliers in order to secure valued resources and technologies, link supplier skills and strengths and to gain from quality. [Kalwani and Narayandas, 1995] Businesses struggle to achieve the desired level of collaboration and the expected benefit of buyer- supplier relationships, this is due to the critical details often being overlooked, such as selecting the right suppliers, matching inter- organizational needs and capabilities and clearly defining standards and goals. [Daugherty et al, 2006] Questions arise about whether buyers and suppliers benefit from collaborations. A study of collaborative relationships found that even though both the buyers and suppliers benefited from the collaboration but there was a feeling of inequality in the collaboration on the suppliers’ part. It is crucial for this issue to be addressed in order to achieve future success. [Terpend et al, 2008] The South African automotive industry “The South Africa’s automotive industry is a global, turbo- charged engine for the manufacture and export of vehicles and components.” [Van der Merwe, 2009] In the past years South Africa has been able to develop a major automotive industry with local vehicle manufacturing plans for companies such as Volkswagen, BMW,...
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