Competitive Strategies and Government Policies ECO 365 - Essay Example

Competitive Strategies and Government Policies Global competition has affected almost every industry in the economy of the world with motor vehicle manufacturing industry experiencing the greatest competition. New companies have been emerging in this industry because of globalization. Moreover, organizations have been merging and expanding to increase their competitiveness. This has made pricing of products and sustainability of profits in this industry difficult. The type of merging that has greatly affected this industry is horizontal merging.

According to Arnold (2008), a horizontal merging in a type of merging in which two or more organizations, dealing in similar products, and operating in the same market combine to make a single organization. The reason why this type of merging has been affecting the industry is that it increases the competitiveness of organizations. According to Gerber (2010), changes in various aspects of the economy have great effects on the level of competition experienced in an industry. One of the changes that have greatly affected the motor vehicle manufacturing industry is the introduction of new government policies and regulations.

Tax waives and regulations designed for encouraging global investments have resulted to emergence of new organizations in this industry. This has greatly affected the global competition in the industry. As a result, this industry has been facing an increased labor demand, reduced supply of resources, and lack of good relations with each other. Motor vehicle manufacturing could handle these identified points in various ways. This ways include improving service delivery and employing various types of merging.

Organizations in this industry should employ horizontal, vertical, and conglomerate merging when expanding their operation. Another way is making organization’s policies to be in line with the government policies and regulations. The point of effects of global competition could be avoided through merging, acquisition, and expanding. ReferencesArnold, R. A. (2008). Microeconomics. Mason, OH: South-Western Cengage Learning Ltd.Gerber, D. (2010). Global Competition: Law, Markets, and Globalization.

New York, NY: Oxford University Press.