...AUTOMOTIVE INDUSTRY ANALYSIS Submitted by Team A Donald Bradley Morgan Bruns Adam Fleming Jay Ling Lauren Margolin Felipe Roman Presented to: Prof. Alan Flury December 5, 2005 ME 6753: Principles of Management for Engineers Executive Summary Chosen industry: This analysis focuses on the automotive industry, specifically, large-scale manufacturers of automobiles. The automotive industry is inherently interesting: it is massive, it is competitive, and it is expected to undergo major restructuring in the near future due to globalization and decreasing oil reserves. The analysis team members (we) feel qualified to perform this investigation due to our familiarity with the industry and our education—several of us have studied and worked on problems associated with automobile manufacturing and we are all mechanical engineering graduate students. Analysis Methodology: The report begins with a historical overview of the automotive industry. This is followed by an analysis of the industry’s structural characteristics using Porter’s 5 Forces Model as a framework, which provides an understanding of the automotive industry as a whole in its current state. Next, ten representative companies of varying sizes are analyzed and compared; the chosen companies and selection criteria follow. General Motors, Ford, and Toyota were chosen because they are the current market leaders. DaimlerChrysler, Nissan, Volkswagen, and Honda were chosen because of their status as stable international...
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...Tata Motors: Can it become a global contender in the automotive industry? Executive Summary The objective of this report is to provide an analysis of Tata Motors’ current strategies and a detailed inspection of the financial situation, the company’s strengths, weaknesses, opportunities and threats and the competitive nature of the car market in order to make a recommendation as to whether or not it is in Tata Motors best interests, to propel itself into the global automotive industry at this point in time. On close inspection there were three key issues identified. Firstly the financial condition of the company is analysed to determine the viability of an expansion into the global automotive industry. Secondly the safety issues & standards of the vehicles produced, particularly related to the Tata Nano need to be addressed, and thirdly the detailed market research to be undertaken by Tata Motors in relation to the competitive needs and expectations of the motoring public in countries Tata Motors is trying to move into eg. United States and Europe when it comes to passenger cars as well as ability to continue to effectively capture the Jaguar and Land Rover markets globally, along with their bus and truck range which are strong in India but not as strong in other countries. Economic conditions not only in India but globally are a consideration for Tata Motors. As of 2012 India was the 7th largest nation in area, the second most populous country on earth with...
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... 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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...Volkswagen Group Business Strategy & International Management Content 1 2 Introduction Volkswagen Group 2.1 2.2 Figures, Data, Facts History 2 2 2 4 5 5 6 8 8 10 12 12 15 16 17 18 3 Strategy Planning 3.1 3.2 Overall Strategy Strategy 2018 4 Business Risk Analysis 4.1 4.2 Porter’s Five Forces Resources and Capabilities 5 Financial Risk Analysis 5.1 5.2 Key Financial Figures Risks 6 7 8 SWOT-Analysis Conclusion References 1 Business Strategy & International Management 1. Introduction Whenever you visit another country and you say that you come from Germany on of the first things you ever hear is “Germany, oh I like German cars” and then they say e.g. BMW, Mercedes or Audi. That shows that German cars are not really German cars, instead they are world cars, produced and sold in countries all over the world. In my case I choose the Volkswagen Group because it is the biggest German car manufacturer and the second largest in the world. Moreover the strategy of Volkswagen is to be the largest car manufacturer until 2018. To reach this goal it is very important to understand the globalized world to compete with their competitors in a more and more competitive environment. Furthermore it is very important to show attention to emerging markets to increase the company’s sales especially when some markets like America and Europe are satisfied. In this report I want to analyze the Volkswagen...
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...& Poor's Base-Case Scenario Company Description Business Risk Financial Risk Liquidity Recovery Analysis Reconciliation Related Criteria And Research www.standardandpoors.com © Standard & Poor's. All rights reserved. No reprint or dissemination without Standard & Poor’s permission. See Terms of Use/Disclaimer on the last page. 1 1152377 | 300642892 Renault S.A. Corporate Credit Rating Profile Assessments BUSINESS RISK BB+/Stable/B FAIR Vulnerable Excellent FINANCIAL RISK INTERMEDIATE Highly leveraged Minimal Rationale Business Risk: Fair • Very weak profitability of the group's core automotive operations. • Small size by global standards. • Good market positioning in the small car and entry segments. • Potential to improve scale and geographic spread through cooperation with Nissan. Financial Risk: Intermediate • Robust credit ratios for the rating. • Positive free operating cash flow generated in 2012 and expected again this year. • Positive contribution to cash flow from its captive finance arm, RCI Banque and, through dividends, from its equity associate Nissan. Standard & Poor’s | Research | June 26, 2013 © Standard & Poor's. All rights reserved. No reprint or dissemination without Standard & Poor’s permission. See Terms of Use/Disclaimer on the last page. 2 1152377 | 300642892 Renault S.A. Outlook: Stable The stable outlook on France-incorporated French carmaker Renault S.A. mainly reflects Standard & Poor's Ratings Services'...
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...indirectly. Hailed as the ‘industry of industries’ by the Management Specialist, Peter Drucker, the automobile industry (US) set standards in manufacturing activity by contributing mass production techniques during early 1910s. The Japanese soon followed by offering lean production techniques in the 1970s. Riding high on economical revival in many developing countries in Asia and Europe, the industry’s global output touched 79,9 million vehicles in 2011. But with a downward slide in market share, the Big Three, Ford Motor Company (Ford), General Motors Corporation (GM) and DaimlerChrysler (DC), was fast losing their dominant position to Toyota, Honda, and Nissan, thereby setting the ground for the emergence of New Six. The report on “Automotive Industry Analysis” consists on a comparison between the Big Three and New Six. Ford, General Motors and Toyota are taken as examples. I. Industry Overview Hailed as ‘the industry of industries’ by Peter Drucker, the founding father of the study of management, in 1946, the automobile industry had evolved continuously with changing times from craft production in 1890s to mass production in 1910s to lean production techniques in the 1970s. The prominent role played by the US till late 1990s had of late been cornered by the Japanese automakers. The global output from the automobile industry touched 79,9 million vehicles in 2011, thereby retaining its leadership in manufacturing activity, providing employment to one in seven people...
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...College, HRM 300, Dr. Nicole Runyon March 9, 2014 Our economy had a downturn in 2007-2011 and the automotive industry was hard hit. GM and Chrysler filed for bankruptcy due to increasing labor costs and decreased demand in automobile from consumers. Therefore, U.S. automakers turned to two-tier wage structures to control labor costs over the next several years. GM started using a two-tier wage structure in late 2007. Any new hires after September 2007 received an hourly Tier II wage of $14, about one half the hourly of the $28 hourly wage of Tier I existing employees (Milkovich, Newman, Gerhart, 2014, p.242). In the U.S. in the late 1990’s had over one million people employed in the automotive industry, the number dropped to 550,000 during the recession. The Center for Automotive Research projected that in 2012 the numbers could increase to 650,000 and in 2015 it could be more than 750,000 employees (Milkovich, Newman, Gerhart, 2014, p.242). Two-tier wages systems has helped the automotive industry recover because the reduced hourly wages for new hires helped decreased labor costs to compete with labor costs internationally. With the downturn in the economy there were many people that were unemployed and having these two-tier wage systems allowed the automotive companies to hire in eager and willing employees for the $14 an hour wage, compared to these applicants receiving unemployment or minimum wage positions. The...
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...Despite the high concentration ratios seen in the U.S. market (see Appendix D), which typically signify that a lesser degree of competition is seen in the industry, rivalry in the U.S. and the global automotive industry is intense. Clearly, the concentration ratios do not tell the whole story. The automotive industry in the U.S. is no longer the playground of the Big 3 (GM, Ford, and Daimler Chrysler); global companies compete in the U.S. market, while U.S. companies have globalized themselves. In the 1980s, the Japanese car makers Honda and Toyota entered a fairly disciplined U.S. market and have been very focused in growing their shares of the market. The great diversity of rivals in terms of cultures and associated philosophies has intensified rivalry in the industry. Market growth is slow in the established markets of the U.S. and Western Europe, and companies must fight fiercely to eke out gains or prevent losses in market share. However, growth is potentially huge in the rapidly industrializing nations of China and India; in these booming markets, companies could take advantage of the opportunities to reap handsome rewards. The degree of rivalry in the automotive industry is further heightened by high fixed costs associated with manufacturing cars and trucks and the low switching costs for consumers when buying different makes and models. Threat of Substitutes The threat of substitutes to the automotive industry is fairly mild. Numerous...
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...in a suburb of Detroit, Michigan founded by Henry Ford and incorporated in 1903, 109 years ago. Ford introduced methods for large-scale manufacturing of cars through the use of the world famous assembly lines. Ford Motor Company engages in the development, manufacture, distribution, and service of vehicles, parts, and accessories worldwide. Ford markets cars, trucks, parts, and accessories through retail dealers in South America, Europe, Turkey, Russia, and the Asia Pacific region (SEC). Ford is the second-largest US-based automaker behind General Motors and the 5th largest in the world behind its domestic counterpart, GM and foreign rivals Volkswagen, Toyota, and Hyundai. The company operates through two sectors, Automotive and Financial Services. Under the Automotive sector, the company sells automobiles and commercial vehicles under the Ford brand and luxury cars under the Lincoln brand. Ford also owns small stakes in Mazda of Japan and Aston Martin of the United Kingdom. The financial services sector provides financing products, which include retail installment sale contracts for new and used vehicles; leases for new vehicles to retail customers, government entities, daily rental car companies, and fleet customers; wholesale financing that comprise loans to dealers to finance the purchase of vehicle inventory; and loans to dealers to finance working capital, purchase dealership real estate, and/or make improvements to dealership facilities, as well as offers insurance services...
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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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...Automotive Industry 13 Industry Analysis By: Francis Asuquo Crispin Charles Tivon James Ricky Araujo Sornrat Thawornyutikan Table of Contents Executive Summary 2 2.0 Industry Overview 4 2.1 Quantitative Overview 5 2.2 Evolution of the industry 7 2.4 Major Opportunities 12 2.5 Major Threats 12 2.6 Porters Analysis 13 Threat of Entry (Low) 13 Bargaining power of suppliers (Low) 13 Bargaining power of Buyers (High) 14 Threat of Substitutes (high) 15 Industry rivalry (Medium – High) 15 3.0 Company Overview 17 3.1 Company Overview 17 3.2 Operational Model 17 3.3 Company Evolution 18 3.4 Life Cycle 18 3.5 Growth Strategy 19 3.6 Financial Ratio Analysis 20 4.0 Customer Profile 21 4.1 Target Market 21 4.2 Product Usage 21 4.3 Purchase Motivation 21 5.0 Company Strategy 22 5.1 Resources 22 5.2 Value Drivers 22 5.3 Cost Drivers 23 5.4 Corporate Strategy 23 5.5 Business Level Strategy 23 5.6 Functional Level Strategy 24 5.7 International Strategy 24 5.8 Value Chain Analysis 24 6.1 Competitive Analysis 25 6.3 Effectiveness of Strategy 26 Volkswagen Group 27 3.0 Company Overview 28 3.1 Company Overview 28 3.2 Operational Model 28 3.3 Company Evolution 29 3.4 Life Cycle 29 3.5 Growth Strategies 30 3.6 Financial Ratio Analysis 30 4.0 Customer Profile 31 4.1 Target Market 32 4.2 Product usage 32 4.3 Purchasing Motivation 34 5.0 Company Strategy 34 5.1 Resources 34 5.2 Value Drivers...
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...to output barriers will be discussed. Oligopolies are also known as imperfect competitions. Concentration ratios are often determined in these markets because most markets have four firms that are counted on but in the automotive industry, there are a few more. Concentration ratios are defined as the “total output in the market supplied by the largest firms” (Mankiw, 2007). The automotive industry is considered oligopoly because it is only so many firms in the United States who manufacturer automobiles. Oligopoly is defined as a “market structure in which only a few sellers offer similar or identical products” (Mankiw, 2007 p.346). Another definition for oligopoly would be that it is a “market condition in which sellers are so few that the actions of any one of them will materially affect price and have a measurable impact on competitors” (Answers.com, 2011). The organization that has been chosen for this paper is the automotive industry. The automotive industry would be considered an oligopoly because there are only certain manufacturers that make cars in the United States. The manufacturers discussed will be the major manufacturers in the United States. Although many Americans may drive foreign cars such as Mercedes, Lexus which is made by Toyota and other luxury cars, this paper will discuss the large firms that are made in America. The automotive industries major players in the United States are General...
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...structure of the automotive industry Introduction This analysis and explanation of the structure of the automotive industry shall be limited to the boundaries of the UK. The automotive industry has a few larger businesses that have a larger market share and then some slightly smaller businesses competing with each other. Due to these facts the industry has been described as an oligopoly. This is because within an oligopoly there is a large number of product differentiations, which mirrors the automotive industry as the same company usually produces a wide variety of different models, shapes & engine sizes. Another feature is that the barriers entry are generally high as the few firms with a larger market share have already established themselves within the market and the firms with a reasonable market share are also fairly established and have a lot of capital. This makes it difficult for small & upcoming businesses to enter the market. The overall global automotive market is in a period of strong growth and profitability, and sales have reached prerecession levels in some areas. However the European and UK market is recovering the slowest due to the scale of the recession (Hirsh et al, 2014). This may have altered the structure of the industry as a whole. Industry Structure This chart is a representation of how the market share of each company is divided up in UK market in 2014. This evidence helps to further back up the point that the automotive industry is an oligopoly...
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...April 22, 2012 Authored by: Ana Romero, Roshan Picardo, Carlos Castro, Shikhar Agarwal 0 General Motors Co Strategic and Financial Analysis Executive Summary This report provides an evaluation of strategic and financial evolution of General Motors Company (GM) in the last ten years. Events like the global economic recession lead to a deep restructuring of the firm, filling for bankruptcy and a government bailout. The report provides an analysis of GM’s business model, products, the markets it is competing in, the global automotive and manufacturing industry and it also assess its attractiveness for incumbents and new entrants is also With a brief history of GM we evaluate its reaction to the global recession. We compare their business model before, during and after the recession, comprising the strategic and financial implications of their restructuring plan. We provide results from this restructuring, including improvements in GM’s financial ratios like ROA (from 0.05 in 2010 to 0.07 in 2011) and ROE (from 0.23 in 2010 to 0.25 in 2011). While the recession significantly affected GM, it also affected the rest of the automobile industry, including their American competitor Ford Motors. We compare the main differences between these two important companies and analyze the way they reacted to the recession. We also observe the approach that Ford has taken to recovery, in terms of governance, recession reactions and financial branches. The report ends with a conclusion summarizing...
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...largest two-wheeler and tractor manufacturer, the fifth largest commercial vehicle manufacturer and the fourth largest car maker in Asia. Apart from serving the domestic market, the Indian auto sector has also become a sourcing hub for the global auto giants. In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. The Government of India has introduced an ambitious project of setting up world-class automotive testing and R&D infrastructure to place India in the USD 6 trillion global automotive business. This book details the current status and factors influencing the growth of the Indian automobile industry; its future prospects and the success stories of some automobile giants in India. It also focuses on the future growth of the industry as a result of the newly adopted technologies and strategies. India is set to emerge not only as a large domestic market for automotive manufacturers, but also as a crucial link in the global automotive chain. Among other industries, the automotive industry in India is understood to be the most dynamic. It has been experiencing strong growth rates after de-licensing of the industry in 1991, when major economic reforms took place in India. In this report...
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