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It is suggested that the globalization of the automotive industry, has greatly accelerated during the last half of the 1990's due to the construction of important overseas facilities and establishment of mergers between giant multinational automakers (Hiroaka, 2001). And, there's no reason that they could repeat that achievement.
Globalization and the current mergers in the automobile industry has been correlated with today's controversies over high petrol prices and fuel-guzzling SUVs in the huge American market. According to The Economist (September 8, 2005), this picture of the automobile industry only offers a partial detail of what future holds for industry as a whole:
It may well be fully mature in markets such as North America, Europe and Japan, where over-capacity continues to sap profitability. But globally the industry is set for huge expansion with the motorisation of China and India. Within a few years China will replace Japan as the second-largest national market after America. Some experts predict that over the next 20 years more cars will be made than in the entire 110-year history of the industry.
In the same report, Garel Rhys, director of the Centre for Automotive Industry Research at Cardiff University in Britain, enlightened that this growth will create the need for 180 new factories, each producing 300,000 cars (and light trucks) a year-in effect, almost doubling the production capacity of the global industry to over 110m units annually. Thus, today's car plants will need to be "renewed, retooled, refurbished and replaced to remain competitive. There is nowhere for the inefficient to hide."
Automobile manufacturing is an industry in which it is difficult to achieve optimized procurement, production and sales on a global scale. Yet in the period from 1998 to 1999, major assemblers began to form strategic partnerships based on capital relationships, and since then there has been an accelerating trend toward the creation of structures that allow manufacturers to supply a diverse range of vehicles tailored to consumer needs in markets throughout the world.
For vehicle assemblers to develop their global operations efficiently, they need to balance the merits of centralization as a strategy for achieving economies of scale, with localization, which is the key to the supply of products that match national and regional needs. Three additional requirements for the development of global strategies are the clustering of internationally competitive suppliers, the establishment of management systems to support global operations, and the use of IT networks.
To note, great achievements have been copped by the European automobile industry. According to the Trade Issue Website, in 2001 alone, the European - Automobile Industry achieved a world wide turnover of 452 BN , of which 271 BN in Western Europe, providing direct employment to 1.1 Million people in the EU (1.6 Million world wide) to which another 11 to 12 Million directly or indirectly supported jobs can be added. Thus the sector involves roughly 8.5% of the EU's active workforce.
The EU-15 motor vehicles industry (manufacturers and suppliers) represents about 9% of the EU manufacturing sector in terms of value added (operating profit).
EU-15 exports of motor vehicles reached 59 BN in 2001, representing 6% of the value of total extra EU-15 exports.
Tax revenues from the motor vehicle industry amount to about 334 BN , i.e. 15% of EU governments revenues and 4% of EU GDP, excluding oil
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The purpose is to analyze that for what reason the prices are different in different country. Price comparison of IKEA 365 + Gnistra Bread Knife with different economies Source: (IKEA Systems, 2011) Question 1 Are the prices after conversion to U.S. dollars identical?
A few faults were made along the way which slowed the development of the automobiles and lead the group into dilemmatic situation which in the end resulted making big loss for company. Under the new management the automobile segment looks to make a promising start and the strategies have been formulated for achieving the goals and objectives beforehand.
We have been utilizing petrol and diesel over a span of century and now the time has come that we switch on to another alternative fuels in an effort to save the living standard of the people of the 21st century. According to (Wald)“One of the nation’s biggest energy problems is that nearly all of its ground transportation fuel is derived from oil”.
Recently there has been a considerable increase of corn prices across the globe. The prices have increased by 74 per cent within one year. (Source: Riley, 2011). Rise in price of corn has decreased the demand for the product in developing economies. This has resulted in creating numerous people going without food, in the poor countries.
This is not causing strong imbalances in the balance of payments for many nations but also creating significant socio-economic problems in most of the countries. From malnutrition to starvation, increase in prices of food items has almost created a vicious circle for most of the poor nations- finding themselves to struggle in order to meet the new challenge of high food prices.
Because the increase in household incomes signifies an increase in the purchasing power among consumers, for every price level of automobiles, households will demand a greater quantity. The increase in purchasing power does not cause a movement along the demand
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