The Industry Structure of the Automobile Car Industry - Coursework Example

AUTO INDUSTRY Analysis There are many factors that can be examined in an analysis of the automobile industry. Some believe that there should be a sort of world car, with optimized hybrid or fuel saving technology in order to save the environment. However, a global economic slowdown and recession in 2008-2009, stifled consumer behavior, thus driving automobile costs down in many cases, as fewer and fewer buyers made it into automobile dealerships. “New car sales for the month of December fell 3.9 percent to 1.07 million units in the European Union. The loss of sales was largest in Germany, Italy, France and Spain. The automobile industry has seen a fierce price war, many fresh car models and strong revenue for most Japanese manufacturers” (Exports, 2009). Since the late 1970s, Japanese products such as the Civic have been known for small size and fuel efficiency; today, hybrid options prevail. “The only vehicles that are currently able to get very high gas mileage while simultaneously reducing both smog-forming emissions and global- warming emissions are hybrids, when theyre done right,’ says Scott Nathanson, national field organizer for the Union of Concerned Scientists clean vehicles program” (Brown, 2006). Hybrid cars are hypothetically part of a solution to many global problems. “Yes, hybrids are not nearly the solution we need, but as the name implies it is a step between the past (oil based) and new (fuel cell) ways of powering the vehicles that our societies seem powerless to live without. Politicians are failing in their responsibility to tackle climate change” (Frost, 2005). Hybrids have many good features, but they also have some drawbacks. However, as one source predicts, “Performance in respect of driving, reliability, speed and stability would improve enormously during the next few decades. The automobiles of the future would rarely have any performance complaints” (Amin, 2000). Analysis is as varied in the current investigation as portrayals are varied in the existing literature. Evaluation of critical success factors The automobile industry in which many UK companies play a part is very dynamic, as is the level of service in the industry in which the new automobile is a part. This industry requires massive economies of scale and high risk attitudes. The customer service aspect of the automobile industry is especially dynamic in terms of developments that have come about since the new availability of technology and new fuel efficiency standards to be integrated into industry standards. The automobile industry has also been able to take advantage of extra-environmental and macro-environmental industry factors in recent times, partly due to the fact that in its dealings with other companies, it operates within a sphere of favorable status that can be questioned and often is questioned in terms of favorable contracts. The industry is still very competitive however, with many options for consumers. Drivers of change The main driver of change in the automobile industry is fuel saving technology, in comparison with other competition, and is also basically about cutting costs and being more cost effective. The chosen technology most commonly takes the form of electric and hydrogen based hybrid technology used in cars. Aside from those mentioned above, there are also other types of hybrid, as well as similar solutions such as using ethanol instead of unleaded gasoline in combustion engines, but they are currently more rare. Hybrid cars are currently not just in the stage of prototype or development: they are available to mass market consumers in the form of cars like the Toyota Prius and Ford Fusion Hybrid. There has also been a recent increase in SUV hybrids. These cars and light trucks usually demand a premium price in comparison to their counterparts which use gasoline engines only. However, there is some debate whether these SUVs are really effective as hybrid, because they are not as fuel efficient as a baseline compared to a smaller car using diesel fuel, such as those made by BMW. PEST Analysis A PEST analysis considers political, economic, social, and technological factors. Politically, more and more governments in Europe subscribing to international protocol are involved in clean fuel as an issue of pro-environmental politics. Economics in the automobile industry, however, are still mainly based on oil prices. In terms of technological factors, the basic technology of hybrid technology used in cars is that, in the exemplified case of an electric hybrid, the car runs on electric fuel cell power at a certain mile per hour speed, and then goes over to gasoline power at other speeds. It also applies the use of more gasoline power when the car needs to accelerate, and goes back to electric power when less is needed from the engine. The same basic principle is employed in the hydrogen fuel cell vehicle, but in this type of hybrid, there is less of a need for charging and recharging the car’s alternate fuel cell. People are still debating which type of hybrid is best for the environment. Key competitors There are many competitors internationally in the automobile industry. Despite recent fluctuations in US and European economies, many major players in this industry, including Ford, BMW, and Renault, have been in the business for many years, and are monolithic companies. “Seven years ago, the Renault Scenic was launched at Geneva and created the mid-sized MPV market,and this year its second generation was one of the star unveilings. Renault chief executive Louis Schweizer said it had set the trend and been more successful than anticipated” (Motor, 2003). Many major imports as well as domestic brands are working to take advantage of new clean fuel technologies in auto production. “Hybrid SUVs, like the Toyota Highlander Hybrid or the Lexus RX 400h, work the same way as other hybrids, but theyre skewed in one extremely important area: size. ‘Part of the way you get good gas mileage with a hybrid is by having a small engine and a light car” (Brown, 2006). There is a lot of debate about the efficiency of hybrid cars and different fuel cells and fuel options, but they are currently widely available. “Ford is likely to spread its technology from C-Max into other marques within the brand, such as Mazda and Volvo. These will be taking on new MPVs like the Vauxhall Meriva, Volkswagen Touran and Fiat Punto BMPV” (Geneva, 2003). Strategic groups The re-engineering design as a strategic grouping tendency in the automobile industry, is unique because it really challenges the company to change. A lot of companies, especially if they get big enough or are around long enough, or reach a certain economy of scale, tend to fear change. Whereas when the company was young it may have been an agent of change, as it got bigger, it became more of the status quo itself, and it was easier to just accept this status quo and hope that everything would be stable. I think that re-engineering is unique because it shakes up this point of view, and I think that this point of view and the notion of tradition in the automobile industry, needs to be shaken up, because it can be very dangerous for a company to be too traditional. Future recommendations New trends can be evinced in actions like the automobile company’s restructuring of its internal culture along the lines of risk management and networked cooperation rather than individual competition between people working on pet projects. The modern automobile company also needs to show an increasing willingness to outsource and work in cooperation with many companies that had previously been competitors, as can be shown in its recent projects leasing new projects and markets. Industry trends show a marked realization within the field that in the twenty-first century, the networked and teamed global business paradigm has shown itself to be effective in terms of positive communication, in which both the sender and receiver benefits from the information (Porter, 1995). It is possible that sometime in the future there will be a successful hybrid car that everyone can agree on. This would be convenient and economical, and the car could be designed to meet strict standards for safety and universal navigability and labels. This would impact the industry of mechanics and specialized auto repair shops, but it would also make life simpler for many people. It is most likely that the hybrid car of the future would not be able to go everywhere in the world, as geographical conditions differ, but it would have to be engineered to work equally well in a wide variety of climates and circumstances. The hybrid car of the future would have to operate equally well in deserts and on city streets. Many observers see that the world is becoming smaller and closer knit due to new communications technology and the inexpensive nature of air travel. So an international hybrid car is definitely a possibility for the future, and would probably appear first in Japan, the UK, America, and Western Europe, and then the rest of the world. America in particular has an established car culture of large sedans with big V8 engines, though, so this may be difficult to change. But it is definitely possible. Overall, the world is in need of these alternate sources because some of the practices already in place in terms of culling energy are wasteful, expensive, and/or environmentally unfriendly to the future of the planet fuel cell technology. “The interactive relationships between materials selection, cell design and fabrication will be highlighted, with the aim of providing those attending with an appreciation of the current state-of-play and the potential for development and commercial realisations” (Future, 2009). New products are also coming onto the market at all times. There are many competitors in this industry. "The final analytical task is to zero in on the strategic issues that management needs to address in forming an effective strategic action plan. Here, managers need to draw upon all prior analysis, put the companys overall situation into perspective, and get a lock on exactly where they need to focus their strategic attention" (Porter, 1980). REFERENCE Amin, K (2000). Automobile production — future trends. Economic Review. Brown, J. (2006). Fuel for thought: Are regular cars that get great gas mileage almost as good as hybrid vehicles? Vegetarian Times. Frost, K. (2005). Hooray for hybrid cars. E: The Environmental Magazine Porter, M.E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: Free Press Exports and competition in the auto industry (2009). http://encarta.msn.com/encnet/refpages/RefMedia.aspx?refid=461556261&artrefid=761558787&sec=-1&pn=1 Europe new car sales falls (2009). http://www.faqs.org/abstracts/Business-international/Europe-new-car-sales-fall-despite-price-competition-BMW-shows-Europe-gains.html Future of the auto industry—UK (2009). http://www.autoindustry.co.uk/events/archives Geneva Motor Show (2003). News Letter (Belfast, Northern Ireland), The. Motor Max (2003) Liverpool Echo (Liverpool, England). Read More