This report is going to discuss why the car manufacturing industry in Australia is closing by using five forces analysis which are the barriers of entry, competitors, purchasing power of buyers, supplies and subsidies segments, and a life cycle analysis.
Five forces analysis
Barriers of entry
To being with the barriers of entry which including strong currency and higher labor have the most significant impacts on auto making industry. In 2013, Holden would cut 12% of its workforce and has announced a three-year pay freeze agreement to the reminding workers to keep operates the manufacturing plant in South Australia (Thurlow, R. 2013). Moreover, a strong currency not only lead to less competitive on nation exportation but also increases the amount of cheaper imports from emerging market like China and Thailand caused by globalization. For instant, China which enjoys plenty of human power which strengthen its competitive of export products (Curran, E. 2013). Australian manufacturers, therefore, have lower competitive power against imported goods and services. Although the total number of car sales increased, the sale of Australian-made vehicles has significant (20%) fall as Thurlow, R. & Glynn, J. 2013, stated. It seems barriers of entry blocked the auto making industry hardly.
Power of rivalry
Furthermore, small domestic market contributes highly damage to automotive industry. According to the Australian’s department of industry, there are 66 vehicles brand can be chosen by customers, compare with 51 in U.S (AMS), according to Timothy,C. 2014,even less only 36 brands. Therefore, local car-makers are hard to survive in this tiny market without any advantages. Unfortunately, active used-car market which cars...
... middle of paper ...
...ts See Risk of Australian Recession, New York, N.Y.
Fraser, K., Watanabe, C. & Hans-Henrik Hvolby 2013, "COMMITMENT TO SERVICE QUALITY IN AUTOMOTIVE DEALERSHIPS: RESULTS FROM AN AUSTRALIAN PILOT STUDY", Journal of Services Research, vol. 13, no. 1, pp. 7-29.
Thurlow, R. & Glynn, J. 2013, Imports Pummel Australian Car Makers --- Strong Currency, Shift to Sport-Utility
Vehicles Cause Local GM, Toyota Operations to Lean on Government Aid, Hong Kong.
Glynn, J. 2013, Australian Manufacturers Yet to Solve Strong Dollar, New York, N.Y.
Thurlow, R. 2013, Auto Makers Struggle in Australia; Industry Battles Cheaper Imports, Rise in Australian Dollar, New York, N.Y.
Ford's Exit Down Under; Australians have paid again and again for car tariffs 2013, , New York, N.Y.
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- Question 1: Barriers to entry Entry into the car manufacturing industry involves overcoming steep barriers; car manufacturing is a highly capital-intensive market, thus forcing new entrants to acquire large sums of capital simply to enter. This capital goes into purchasing a manufacturing plant, sophisticated equipment, raw materials and supplies, and the development of extensive supply chains. (MarketLine, 2015) Additionally, car manufacturing firms must invest in research and development. In economic terms, this last item is deemed a sunk cost because the firm must undergo the research and development/engineering expense prior to even selling a single vehicle.... [tags: Automotive industry, Ford Motor Company, Renault]
1079 words (3.1 pages)
- Entry into the car manufacturing industry involves overcoming high barriers; car manufacturing is a highly capital-intensive market, thus forcing new entrants to acquire large sums of capital simply to enter. This capital goes into purchasing a manufacturing plant, sophisticated equipment, raw materials and supplies, and the development of extensive supply chains. Additionally, they must invest in research and development. In economic terms, this last item is deemed a sunk cost because the firm must undergo the research and development/engineering expense prior to even selling a vehicle.... [tags: Automotive industry, Ford Motor Company]
1091 words (3.1 pages)
- AUSTRALIAN CAR MANUFACTURING INDUSTRY The Australian car manufacturing segment is one of the prevalent contributors to the market sector of the Australian financial system. Comparative to the additional sectors that composite the Australian market segment, in 2012-13 the manufacturing sector provided the fifth prevalent share of value accumulated. The Australian car manufacturing segment had the second prevalent allocation of hours operated and the third leading employer. The Australian car manufacturing segment had the fourth leading share of venture, and the fifth prime allocation of net capital reserve (Barnes, P., Soames, L., Li, C.... [tags: strategic management analysis]
1409 words (4 pages)
- Manufacturing in Australia is a deteriorating industry, which has seen over 125,000 jobs dry up since the global financial crisis (Biddle 2013). With the decline in demand for Australian made vehicles (Biddle 2013) and a rapidly evolving global economy, car manufacturers have taken to decision to cease the production of vehicles in Australia. With the demise of an entire industry, a large percentage of skilled workers will be out of work forcing unemployment up and a loss of skills no longer required in Australia.... [tags: global financial crisis, vehicles]
2091 words (6 pages)
- The Australian automotive industry has been important to Australia’s economy for numerous decades. Unfortunately, due to factors regarding the cost of manufacturing in Australia, including the higher wages and benefits of Australian workers, the 3 main manufacturers, Holden, Ford and Toyota, have all announced they will be moving their manufacturing overseas. This move comes on the back of a motion put forward to the government to continue providing financial assistance to prevent them doing so.... [tags: subsidise, government, unemployment]
741 words (2.1 pages)
- Executive Summary: The purpose of this report is to figure out the impacts and effects of GFC over the Australian Motor Industries which is said to be owned by TOYOTA, and this company has its own reputation for their products among the several other Automotive Industries in the present era. However even this industry has undergone a severe impact in accordance with the Global Financial Crisis which is said to be briefly discussed in this report. And entirely this report is done only in accordance with the Strategic management which has the various stages of analysis that evaluates about the industry in all the perspectives possible, further which some recommendati... [tags: GFC, Tyota, Dealership, Cars, Car Industry]
926 words (2.6 pages)
- Western European Car Industries & Economies of Scale There are a lot of factors that determines whether or not a company will be successful. These factors are usually derived from economics. One factor that I plan to focus on is scale economies or better known as economies of scale. Firms that have expanded their scale of operations to obtain economies of mass production have survived and flourished. Whereas smaller firms who have not been able to expand have usually ended up as high-cost producers.... [tags: Business Economics Car Industry]
983 words (2.8 pages)
- The car industry receives AUD$4.27billion from only three government Initiatives (Productivity Commission, 2014, p9). Many support these funding decisions of the government however many also disagree that one industry should receive such large amounts of funding. This essay will demonstrate that the Coalition government’s decision not to provide monetary support to Australian car manufacturers which resulted in their decision to move manufacturing overseas was justified. Australia is a capitalist society which private businesses, such as the car industry, aim to make a profit.... [tags: funding, market, handouts]
815 words (2.3 pages)
- Introduction and Summary of case study Toyota Australia, the leader in Australia automotive industry, immediately expressed its fear that facing unpredictable pressure and they would continue with their transformation plan after General Motors Holden announced to exit car manufacturing in Australia. It is true that Toyota is considering whether leave Australia automotive market but it is not decided. However, David Smith, secretary from the Australian Manufacturing Workers Union, said it was almost be true that Toyota would leave Australia.... [tags: Automotive industry, General Motors, Holden]
1027 words (2.9 pages)
- Criteria 1 Why the profitability of Toyota Australia can not increase even after Ford and Holden’s leave. This criteria is to help analyze the impact that external environment changes bring to Toyota’s profitability. By using the PESTLE and SWOT analysis, executives and observers could classify the factors into several aspects, more beneficial to recognize the influence. Also, the strengths, weaknesses, opportunities and threats could be listed which show the positive and negative factors to Toyota.... [tags: Automotive industry, Volkswagen Group]
1743 words (5 pages)