Analysis of an Automobile Manufacturing Industry
The automobile industry is one of the most competitive industries across the world. Over the past few years, the industry has been characterized by chaotic competitiveness, a rising cost of fuel and growing concerns for environmental sustainability has made it very difficult for companies to operate (Ellwood, 2008). While most companies within the automobile industry have embraced the need for small and efficient cars that utilize very minimal amount of fuel, the expansive need for eco-friendly cars still contributes to high rate of competitive leading to an emergence of hybrid and electric motors. However, a dynamic shift in the level completion has subjected such companies to shift their focus …show more content…
The industry is characterized by high rate of retaliation making it so hard for new companies to venture into the automobile business unless it comes in with a new innovative product or idea (Porta, Lopez‐de‐Silanes & Shleifer, 2011). There are prohibitive forces, substantial and legal barriers that exist in the automobile industry. Therefore, it has been only possible for new companies to form alliance, a technique that has contributed to an efficient scale for companies that are already in existence (Porta, Lopez‐de‐Silanes & Shleifer, 2011). Moreover, an automobile manufacturing company requires specialty in terms of machinery and personnel that do not allow condoning events of failure. Therefore, most governments often impose high customs duty on imported parts so as to protect the reputation of such an …show more content…
In the current world, buyers do have a wide range of information concerning the car they would want to buy. For instance, a customer from Africa can easily login to Toyota business portal, view the specifications for a car, place an order, pay and wait for his shipment from Japan. Also, customers have the greatest purchasing power enhanced by the comparatively homogeneous products of the automobile industry (Porta, Lopez‐de‐Silanes & Shleifer, 2011). As a result, there is a harmonized switching cost as they can select their products of interest from a wide range of brands. Consequently, buyers associated with the automobile industry are free to either buy a single car or order in bulks, a similar trend reflected by corporate institutions and government. The trend contributes to a privilege to bargain for a reduced cost price (Porta, Lopez‐de‐Silanes & Shleifer,
The automobile industry is one of the most competitive industries across the world. Over the past few years, the industry has been characterized by chaotic competitiveness, a rising cost of fuel and growing concerns for environmental sustainability has made it very difficult for companies to operate (Ellwood, 2008). While most companies within the automobile industry have embraced the need for small and efficient cars that utilize very minimal amount of fuel, the expansive need for eco-friendly cars still contributes to high rate of competitive leading to an emergence of hybrid and electric motors. However, a dynamic shift in the level completion has subjected such companies to shift their focus …show more content…
The industry is characterized by high rate of retaliation making it so hard for new companies to venture into the automobile business unless it comes in with a new innovative product or idea (Porta, Lopez‐de‐Silanes & Shleifer, 2011). There are prohibitive forces, substantial and legal barriers that exist in the automobile industry. Therefore, it has been only possible for new companies to form alliance, a technique that has contributed to an efficient scale for companies that are already in existence (Porta, Lopez‐de‐Silanes & Shleifer, 2011). Moreover, an automobile manufacturing company requires specialty in terms of machinery and personnel that do not allow condoning events of failure. Therefore, most governments often impose high customs duty on imported parts so as to protect the reputation of such an …show more content…
In the current world, buyers do have a wide range of information concerning the car they would want to buy. For instance, a customer from Africa can easily login to Toyota business portal, view the specifications for a car, place an order, pay and wait for his shipment from Japan. Also, customers have the greatest purchasing power enhanced by the comparatively homogeneous products of the automobile industry (Porta, Lopez‐de‐Silanes & Shleifer, 2011). As a result, there is a harmonized switching cost as they can select their products of interest from a wide range of brands. Consequently, buyers associated with the automobile industry are free to either buy a single car or order in bulks, a similar trend reflected by corporate institutions and government. The trend contributes to a privilege to bargain for a reduced cost price (Porta, Lopez‐de‐Silanes & Shleifer,