Final Analysis & Recommendations
Final Analysis & Recommendations
Generally, global competition in the vehicle manufacturing notably affects my organization in different ways. Predominantly, the automobile business is often facing aggressive price war during harsh economic situations and recession times as a result of the growing global competition. In this insight, major international automobile producers from all over the world and in particular those countries known to major in vehicle production like Japan thus tend to offer valuable vehicles at competitive prices, thus forcing other automotive companies like my organization to lower our pricing significantly.
The distinctive feature of these major automotive manufacturers is the fact that they are much more efficient in their operations. Consequently, the reduced market pricing and the increasing costs of raw material do not affect them much as they do to my organization; therefore, their survival chances are much higher. The efficiency of these manufacturers comes from the quality of equipment that the companies own, the overall management as well as professional employees dedicated to providing the best quality of vehicles in the international markets. Having faced some tough economic times in the recent past, the efficiency of my organization has been reducing significantly and thus my sales.
Additionally, these major automotive companies have gained economies of scale in the market. The ability to obtain the raw materials in large quantities and at a lower price increase production units, thus they have better chances of lowering its costs. Hence, the major market segments have been taken by such companies due to their fair prices and therefore affecting our sales rates considerably.
Furthermore, these organizations have built manufacturing bases in some low-cost countries like China, where cheap labor and engineering skills are available. In the end, the global production of cheap low-quality automotive dominates the market affecting my organization that provides quality vehicles at reasonable cost, in a great way (Xiao-Dong, 2015).
Should the organization/industry continue, expand, or reduce current operations to maximize profits? Explain your reasoning
The team should certainly aim at expanding the current operations to maximize profits. The abundant international markets are still open despite the numerous barriers to entry, and the organization should, therefore, exploit them fully, therefore, reducing the operations is not an option having such opportunities. Likewise, the fierce competition from other great automobile manufacturers cannot allow the company to continue to the current state of operations as this would give them the chance to drive us out of the market for good. Therefore, in order to remain relevant in this competitive global marketplace the best tactic to expand. Additionally, this strategy will assist the organization to exploit new market opportunities globally especially from the low-cost countries such as China and India (Vatsa, Chakrabarti, Kumar, & Singh, 2015).
Even though it may seem safe to reduce operations or completely to shut them down due to the prevailing legal problems, the organization can also decide to redesign the current processes in the existing plants to make the production run smoothly and efficiently. Alternatively, the organization can set up new more efficient plants to replace the old ones operating on traditional lines that are less proficient. Consequently, having plants that work effectively will provide a smooth transition in taking new opportunities in new markets and therefore, expanding to the global markets will be much easier.
If your answer is to expand: Should the organization/industry invest in new plants, equipment, or technologies? Should the organization/industry
consider a merger with another organization? Explain your reasoning and explain global competition implications.
The organization should consider investing in new plants that do not operate under traditional lines which are less efficient in operation thus making much easier to expand globally. Additionally, it is also wise to invest in equipment to improve the effectiveness of the organization’s activities. Similarly, investing in technologies is the best decision that the company can make to keep up in the competitive automobile marketplace. The new technologies not only improve the operational rate but also help in identifying new opportunities that would enable expansion of the company. Moreover, the technologies improve communication as well as assisting in the tracking of purchases and prices in the market.
Sometimes the organization should think of a merger with another bigger company to gain larger market share globally. Therefore, the organization will be able to achieve a better marketing network. Likewise, merging will also assist the company to cut costs of operations. This economic strategy basically, supports the organization in gaining economies of scale which in turn allow the company to maximize total profits. Above all, merging would be essential for survival in the market especially during the harsh financial crisis.
Analyze the effects of government policy, social diversity, and business ethics on your recommendation.
Several agencies are set up to ensure that all the automotive industries operate in regard to the government policy. Such agencies regulate production, standard and quality of vehicles made as well as and sale of these automobiles. This government policy also controls import and export of the vehicles from one country to another. However, it may have a great impact on the organization since some of the strict regulations act as a barrier to global market penetration. Therefore, the company needs to think about the required regulations before undertaking any operations (Palma & Kilani, 2008). Similarly, society diversity may impact on sales due to cultural differences and preferences of the automobile industry. Thus, it is important to consider the kind of people the vehicles are made for, to meet their demands and preferences. Finally, the organization must adhere to the principles and standards which determine the acceptable conduct of business. When the said values are ignored, the organization may get into trouble with government regulators and criticize by consumers.
Conclusion
In summary, the global competition has significantly impacted on my organization’s pricing as some companies are gaining economies of scale in the marketplace. It has also affected our sales considerably as some bigger companies continue to produce low-quality vehicles that are sold cheaply. Despite these challenges, my organization will expand its operations as much as possible through investing in new plants, equipment, and technologies as well as merging with other successful automotive companies to maximize profits.
References
Palma, A. D., & Kilani, M. (2008). Regulation in the automobile industry. International Journal of Industrial Organization, 26(1), 150-167. doi:10.1016/j.ijindorg.2006.10.008- http://www.sciencedirect.com/science/article/pii/S016771870600141X
Vatsa, M., Chakrabarti, M., Kumar, R., & Singh, J. V. (2015). GMS is Powerful Force in Passenger Car Segment of Indian Automobile Industry to Enhance Innovation and Widen Profits. IJERT International Journal of Engineering Research and, V4(09). doi:10.17577/ijertv4is090377- https://www.kpmg.de/docs/Auto_survey.pdf
Xiao-Dong, L. (2015). Technology Innovation and Global Competition-evidence from Global 500 Strong Construction Enterprise. Journal of Entrepreneurship & Organization Management J Entrepren Organiz Manag, 04(03). doi:10.4172/2169-026x.1000144- http://www.omicsgroup.org/journals/technology-innovation-and-global-competitionevidence-from-global-500-strong-construction-enterprise-2169-026X-1000144.php?aid=58294
References
Palma, A. D., & Kilani, M. (2008). Regulation in the automobile industry. International Journal of Industrial Organization, 26(1), 150-167. doi:10.1016/j.ijindorg.2006.10.008
Vatsa, M., Chakrabarti, M., Kumar, R., & Singh, J. V. (2015). GMS is Powerful Force in Passenger Car Segment of Indian Automobile Industry to Enhance Innovation and Widen Profits. IJERT International Journal of Engineering Research and, V4(09). doi:10.17577/ijertv4is090377
Xiao-Dong, L. (2015). Technology Innovation and Global Competition-evidence from Global 500 Strong Construction Enterprise. Journal of Entrepreneurship & Organization Management J Entrepren Organiz Manag, 04(03). doi:10.4172/2169-026x.1000144
