...Cause and Effect of Out Sourcing Auto Parts Jim Banta Strayer University English 115 Professor Daniel Burrello November 25, 2012 An increase in foreign auto parts supplier has cause grave concerns amongst some American suppliers the protectionists have set their sights on eliminating these new competitors: The foreign manufacturers, especially Japanese auto parts makers that have built plants and limited distribution in the United States and according to some are having an adverse effect on the U.S. economy. A small but politically vocal coalition of American auto parts manufacturers and their unions is complaining that the Japanese auto parts suppliers located in the United States do not supply the quality of parts for their cars. By purchasing auto parts from Japanese suppliers located in Japan and in the United States, automakers are accused of nothing less than a conspiracy to "colonize" American industry. The increased competition provided by Japanese auto parts manufacturers provides significant benefits to the auto industry and workers and to consumers. Consequently, any legislative action that restricted such competition would have harmful effects on the economy. As with all protectionist legislation, such actions would provide short-lived benefits to a small segment of the auto parts industry but would be harmful to the industry in the long run by reducing its incentives to produce better products. An estimated 15,000 parts and accessories...
Words: 2166 - Pages: 9
...Policies Learning Team A ECO/365 Competitive Strategies and Government Policies To call the automobile the single most important contribution to fuel the wheels of industry for the last century might be an understatement. Not only did this new invention and the market it created change the literal face of this nation, it created hundreds of new markets and industrial opportunities for a rapidly growing country (U.S. Department of Transportation). In the driver’s seat of this revolutionary new world was Henry Ford and Detroit; also known as the motor city. The landscape of the auto industry has seen significant changes over the century, be it mergers, new players, buy outs, labor disputes, federal loans, federal regulations, economic booms, and economic disasters. The industry and its ever changing climate has been endured and survived by 3 major American companies, a handful of companies originating in Japan, and a few higher-end manufactures in Europe. The industry has seen its fair share of changes over the decades, mostly consumer driven, but not limited to. The highway system and most of the safety innovations we have seen over the century have been direct results of the automobile industry (FEDERAL MOTOR VEHICLE SAFETY STANDARDS AND REGULATIONS U.S., 2011). The automobile industry today is much the same, with companies competing to provide consumers with the lasts in driving technology. One of the biggest variables throughout history has been the ever...
Words: 1821 - Pages: 8
...THE AUTO INDUSTRY The automobile industry played a critical role in the current USA recession. In recent years, the auto industry has made a rapid growth, propelled by the governmental bailout and technological innovation stemming from international competition. Businesses The acquisitions in the auto production were part of a series of consolidation in the global automobile industry (BEA). The American car industry introduced many new vehicles that have attracted consumers as they pay attention to fuel efficiencies, and environmental soundness. There is a stronger than ever need for cars in the automobile industry as new and efficient models are being manufactured. This has driven a fierce competition between auto-makers with price a major factor. The industry sold over 15 million in 2013 which was 1 million higher than that of 2012. The forecast for 2014 is even higher as a result of many factors, one of them a renewed economy as well a constant high demand. The average age of vehicles on the road is 11 years and consumers want and need to upgrade to higher mileage, safer, higher-tech vehicles with the latest electronic gadgets and personal comforts. An example is General Motors who is abreast of the competition with many redesigned vehicles expected for 2014. Small cars, as well, will stay competitive as it serves as a point of entry into this business by younger people purchasing their first vehicle with maybe student loans and concerns about the cost of gasoline...
Words: 1607 - Pages: 7
...The Auto Industry For most of the twentieth century, the American automobile manufacturing industry was the most productive in the world. Over the past 20 years, however, the American industry has lost its comparative advantage. The state of the economy and the recession the country is experiencing is making it difficult for any industry to turn a sound profit. The auto industry is feeling the squeeze. The “Big Three” auto makers in the United States and Canada consist of, General Motors (GM), Ford and Chrysler. These companies are competing during these hard economic times and faced with competition from foreign manufactures as well. This paper will analyze the changes implemented in the auto industry, and the problems addressed by the leadership. It will identify new changes the company will implement for their organization to remain competitive within the industry and assess the effectiveness of the changes already implemented and the potential benefit of the new changes. The Big Three reigned as the largest in the world and two of these corporations are still the backbone of the top five. Ford has held the position of second-ranked automaker for the past 56 years, but the state of the economy has affected it powerful edge and responsible for their decent to third in North American sales, and passed by Toyota in 2007. That year, Toyota produced more vehicles than GM, however GM still outsold Toyota that year, holding fast to a consecutive 77 calendar years of...
Words: 2594 - Pages: 11
...Actes du GERPISA n° 34 89 THE IMPACT OF GLOBALISATION ON THE CHINESE AUTOMOBILE INDUSTRY: POLICY ASSESSMENTS AND TYPOLOGY OF STRATEGIE Chunli Lee Takahiro Fujimoto, Jin Chen During the 1990's foreign enterprises from Japan, the U.S. and Europe were entering the Chinese market, and in due course they began to take an interest in China’s automobile industry. These foreign makers competed with each other to explore the promising auto market in China. But academic research has been mainly concerned with the quantity of the investments. An analysis of the change in the competitive infrastructure within the Chinese auto industry has seldom been undertaken. This paper will focus on the impact which globalization has had on the Chinese auto industry. We will evaluate Chinese auto industry policy and foreign investment policy first. Then we will have a look at the change in the investment pattern of foreign makers between the 1980's and the 1990's. We will also distinguish between the competition structures in the commercial vehicles market and passenger cars market. Finally we will classify the types of foreign enterprises that have advanced into the Chinese market. Through all the above analyses we will keep in mind the competition situation facing foreign enterprises in China. This paper is mainly based on the field research undertaken by the authors. POLICY ASSESSMENTS: CHINESE AUTO INDUSTRY POLICY AND THE NINTH FIVE YEAR PLAN The purpose of the Open Door Policy and China's...
Words: 5484 - Pages: 22
...compare and contrast General Motors and Ford which have undergone fairly substantial change in the recent past; and how they handled the pressure of change. Lapratt04@yahoo.com HRM-587-12043 Managing Organizational Change Professor Joseph Phillips Due September 7, 2014 Abstract Ford and GM experienced serious issues during the pre and post TARP causing them to restructure and change how they do business. Each of them reacted to these pressure differently. Ford Motor Company as one of the greatest automobile manufacturers of all time started under the leadership of Henry Ford in Detroit, Michigan. His first production was in 1903, the Model A, with an under the floor engine selling for $850. In the first season it sold 1,708 cars (HISTORY of Ford Motor Company, 2014). Whereas General Motors was founded in 1902 by William Durant, who saw that the automobile would one day replace the horse-drawn carriage. The company did not really catch on until 1908, and at first, it was just a Buick holding company. At the end of 1908, however, GM had acquired Oldsmobile, and in 1909, they bought Cadillac, Elmore, and Oakland. The early 1900s were a difficult time for auto manufacturers; the market crash of 1907 adversely affected a lot of small companies, which relied on the banks for credit. Durant saw the economic downturn as an opportunity; he bought smaller car makers, as well as companies that built auto accessories and parts. In 1908, these were all folded into the GM stable (The History...
Words: 2106 - Pages: 9
...The Automotive Industry Recovery Prepared for: Transmittal Letter TO: FROM: DATE: SUBJECT: Report Overview The following report discusses the automotive industry recover from the “Great Recession” that occurred in 2008/2009. Information presented will be the state of the automotive industry before the recession, after the recession, how the industry is doing now and how the future looks for automakers. Contents The Automotive Industry Recovery 1 Transmittal Letter ii Contents iii Figures iii Executive Summary iv Introduction 1 Finding 1 Pre-Recession 1 Post Recession 2 How is it now? 3 The Future Outlook 3 Analysis 3 Summary 3 Conclusions 4 Reference 5 Figures Figure 1, Annual Auto Sales in the U.S. 2 Executive Summary The Automotive Industry was hit hard by the “Great Recession”. Jobs and sales declined rapidly as the economy and Americans were coming up short financially. After a couple years and some restructuring the automotive industry started making a comeback. Increasing sales by focusing on consumer needs helped bring workers back to work. Now the industry is booming again with continued growth in the future. The Automotive Industry Recovery INTRODUCTION PURPOSE The nationwide effect from the Great Recession on the auto industry was apparent everywhere. With the bail-outs of some of the big auto makers and loss of jobs, the economy really went into a slump...
Words: 1111 - Pages: 5
...President George W. Bush still has to be approved by Congress. This Free Trade Agreement would be the largest for South Korea and the second largest for US, after the NAFTA. As the fourteenth largest economy of the world, South Korea is the seventh largest trading partner of the United States. An agreement was reached in which it was concluded that an FTA between both countries would increase the investments industry and bilateral trade. In the proposed FTA issues like trade, investments, autos, agricultures, and financial services were included. However, there has been some dispute over the KORUS FTA (mainly about the auto and agricultural industry), which hasn’t allowed it to be finalized. U.S. debates about the non-tariffs impact South Korea can impose on the beef and automobile industry. Recommendations: In order for the KORUS FTA to be eligible for approval and both parties can be benefit from economic growth, an alliance, and stability, some changes need to be done. This review recommends approval to change the following key point of the agreement: • Auto industry: 1. The United States should ensure the complete or mostly elimination of South Korea’s non-tariff barriers that are created without input from foreign automakers and forced without warning. For example, the license plate size, keyless entry systems, power window configurations, tinted windows, and bumper configuration. 2. United States should negotiate the removing of tariffs such as owners of imported...
Words: 1101 - Pages: 5
...1. What are your views of the Chrysler-Fiat auto alliance and its status in 2012? Despite some drawbacks, the alliance has worked well, and has been beneficial for Chrysler and Fiat. The growth and survival of both companies had faced problems in the areas of technology and quality standards. Chrysler needed the alliance for survival due to its bankruptcy position and conditions of bailout. It also needed a partner to bring innovation, increased R&D opportunities, low cost technology and access to European markets. Fiat wanted to reenter the North American market and needed access and distribution through an established manufacturer that knew the market, and had the technology available; which would be possible through a strategic alliance with Chrysler. There were concerns that all synergies would not be successful due to cultural differences and integration issues; however, the opportunities that existed to reduce costs, expand into new markets, and provide low priced fuel -efficient automobiles outweighed those concerns. As of 2012, Chrysler and Fiat seemed to be in a good position regarding capitalizing on the alliance. It has brought major savings in the areas of joint product development, supplier networks, and dealer networks. Both Chrysler and Fiat have raised their quality ratings and established dealer networks in the U.S. and Europe. The alliance sold 4.2 million vehicles worldwide in 2011 and planned to sell six million automobiles worldwide by 2014. ...
Words: 1181 - Pages: 5
...Challenges in the Business Environment Facing the American Auto Industry The American auto industry has faced many challenges throughout the years since Henry Ford’s first Model T rolled off the production line in 1908. From an initial reluctance on the part of the public, as noted in The Evolution from Horse to Automobile: A Comparative International Study (Chiu, 2008) to more recent challenges such as the repeated oil crises and competition from foreign manufacturers, the automobile industry has had many ups and downs. However, the current business environment may be bringing a challenge that will change the face of the auto industry as we now know it world-wide. For the many decades car ownership has been a given in the United States, as...
Words: 859 - Pages: 4
...Iranian automotive industry and global economy: Future study based on game theory Ebrahim Nabiuny, Reza Madjidzadeh, Monir Sadat mirjamali Mehrabadi and Sohaila Alahverdizadeh Jihad Daneshgahi, Markazi province, Iran Key words Game theory, chaotic trends, automotive industry. Abstract Being one of the main drives of Iranian industrial development, automotive industry has been received government extensive attention in order to become competitive. There are many backward and forward linkages between automotive industry and other industries because of technical and structural properties of that. Thus development of Iranian economy is closely related to the competitive advantage of Iranian automotive industry. This paper tried to develop a primary forecast of industry future equilibrium and trends under the condition of nongovernment protection based on chaotic learning in game strategies. Forecasting possible equilibrium lead us to improve strategic behavior and establishing the win-win situation. Despite the adoption of some network strategies in Iranian automotive industry, there is still a single nature and because of activity in low – risk with middle income, this industry does not have the ability to compete in highly competitive markets. More investment on the national car with quite unique coordinates and quality and prepare the low risk financial resources are the needs of the industry in the global economy. Introduction It is essential to do futurology studies...
Words: 3101 - Pages: 13
...and insurance markets more specifically. When combined with globalization and regulatory reform, these advances have forced the insurance industry to become more competitive. We will discuss here specifically the split or disruption in the insurance business with a focus on the auto insurance product and less complex personal insurance products. These two products are on a trajectory to become fully commoditized with little or no agency interaction within 30 years. To the extent that the Internet reduces transaction costs, it also creates opportunities for new intermediaries as well as existing ones. It also has a natural influence on product design. For example - in some cases it is economically attractive to unbundle and repackage various forms of coverage. We will discuss this further in reference to driverless cars and bundling the insurance with the product later in the paper. This paper is organized in the following manner. First, we will briefly look at internet trends as the introduction. Next we will summarize the traditional insurance business, and the reduction of transaction costs through internet insurance. Then we will look at the data showing the split with relation to Steven Klepper’s Product life cycle model. We will then look at the current market share for the Auto Insurance Industry, followed by the future of the Auto Insurance product. Finally, a set of concluding remarks based on our initial hypothesis. Introduction Insurance firms saw the need to...
Words: 3741 - Pages: 15
...Robert McCormack Western Governor University Author Note This paper is being submitted on August 30, 2015, for WGU C200 Managing Organizations and Leading People Managing Organization and Leading People- FCA Company and SWOT The Corporate American dream is undergoing a major overhaul. Not all that long ago there was plenty of opportunity for the average American worker to obtain employment in the automotive industry and earn what was considered a competitive wage. The internal and external challenges for the FCA LLC (Fiat Chrysler Automotive) company in recent years have caused the company to take on a systematic approach to building and maintaining a profitable business. The discovery of the root cause for the FCA turn around can be found in the leader CEO Sergio Marchionne. In the paper, we will review his top three leadership practices, and perform SWOT analysis of the FCA- North America organization. The FCA- North America LLC has its headquarters in Auburn Hill, Michigan. The FCA- North America divisions include SRT, Dodge, Chrysler, and Ram. The primary products made by this company are SUVs, trucks and automobiles. The Dodge autos include the Dart, Challenger, Charger, and the Avenger. The Chrysler autos include the 200, the 300, Town and Country. The Ram Truck line includes Ram 1500, 2500, 3500. The SUV lineup is Jeep, Dodge Durango. The FCA- North America LLC product has a target of the general public as well as the commercial side to meet the...
Words: 4156 - Pages: 17
...Impact of Importing Intermediate Automotive Parts The United States auto industry provides an estimate of 1.6 million jobs across the 50 states and it is the second-largest manufacturing employer. The domestic automakers strive in order to design their vehicles more and more appealing to the consumers. The U.S. auto makers are able to maintain their cost lower and provide quality product by outsourcing most of the vehicle intermediate parts such as tires, batteries, and wheels. The American people and economy are affected by the outcome of the U.S. auto industry when purchasing these intermediate parts from foreign manufacturers. Figure 1.0 – Reflect the amount of imported parts from foreign manufacturers. The United States automotive industry chooses to outsource most of their intermediate parts from foreign manufacturers when building their vehicles. The most important outcome of this practice is that domestic auto makers are able to maintain the final vehicle cost lower for the consumers. By outsourcing the intermediate parts the U.S. auto industry is able to eliminate the overhead cost of manufacturing these parts. If the auto industry where to manufacture their own intermediate parts they would have to increase the cost of their vehicles. Another important reason why manufacturers outsource the intermediate parts is to be able to provide quality parts to the consumer. The U.S. auto industry is able to focus their efforts towards the building of the vehicle...
Words: 773 - Pages: 4
...South Korea, which was the most important since the 1994 NAFTA (Gabriel. H, Oct, 2007). According to the Office of the U.S. Trade Representative, today South Korea is the world’s 10th-largest economy and America’s 7th-largest trading partner. The KORUS FTA is expected to abolish about 95 percent of tariffs on all industry within three years (Gabriel. H, Oct, 2007). It is not easy to affirm that who is the winner and who is the loser between the two countries of KORUS FTA, which was finalized at March 15th, 2012. However, as considering the domestic situation for each country, there are clear winners and losers. First, on the side of the United States, the winners include international financiers who will benefit from foreign investor rights and auto makers who will benefit from increased auto-exports (California Fair Trade Coalition, n.d.). On the other hand, the losers are manufacturers, workers, farmers, and consumers who will lose their competitive powers from decreased benefits (California Fair Trade Coalition, n.d.). In addition, on the side of South Korea, the main winners would be the automobile companies such as Hyundai or Kia who can increase the amount of auto-exports to the U.S by cheap price and high quality (Naver Q&A, April 2nd, 2007). However, Korean domestic agricultural and livestock production will be reduced because of the cheap American’s importation to Korea if this trade is passed (Naver Blog, Dec 8th, 2010)....
Words: 934 - Pages: 4
