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Current events exercises

Article/Source Details: ‘Toyota plans green and gold car’ by John Kerin, The Australian Financial Review, Tuesday June 10th, 2008, p. 4

Chapter/s in text article related to: Chapter 1 and Chapter 11.

Article Summary: During a recent visit to Japan by Australian Prime Minister Kevin Rudd, Toyota announced plans to produce a hybrid Camry at its Melbourne plant. The announcement comes after months of behind the scenes negotiations between Industry Minister Kim Carr and Toyota executives.

Mr Rudd is anxious to have a locally built hybrid car available to the Australian market as soon as possible. There are two reasons behind Mr Rudd’s push for the hybrid car. Firstly, he believes Australians should have the option of buying a locally built hybrid car, and secondly, recent sharp rises in fuel costs have accentuated the need for more fuel efficient vehicles. As further incentive, Mr Rudd stated that government fleet purchases would include the Australian built hybrid car.

Critical Thinking Questions:

Question 1: In what way does this agreement underline the different strategic conditions at work in a smaller economy such as that of Australia?

Question 2: Without government intervention and financial assistance, what would most likely be the trigger that would prompt a car manufacturer in Australia to produce a new model based on new technology?

Question 3: Discuss the implications of the Federal Government making a commitment to purchase locally built hybrid cars as a major component of the government car fleet.

Suggested Answers:

1. The actions of the Australian government suggest that market forces may not always create enough impetus for the provision of products or services that may be seen to have important environmental and/or social impacts on a smaller country. Toyota must balance the cost of setting up the required manufacturing infrastructure against the long-term benefit that might accrue, and the likelihood that local demand can be met with imported products.

2. For the hybrid Camry to be a viable locally built product, Toyota would require some assurance that local demand would warrant local production. Since they have not already committed to this course of action, it can be assumed that the market demand is currently insufficient to trigger a commercial decision to manufacture the hybrid in Australia.

3. The decision by the Australian Government to encourage the assembly of a hybrid car in Australia demonstrates the need for smaller economies to go beyond market forces to ensure that desired products and services are available to a small market. Should the Australian Government make a commitment to purchase considerable numbers of the locally built hybrid, it could be seen as using its large purchasing power to influence both business strategy and the market.

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