UK automotive industry report
Describe the key strategic issues that UK carmakers have faced since the global financial crisis, including current quality & environmental scandals that have hit some of the major car manufacturers (e.g. Toyota, Volkswagen). In your response, consider the implications of these issues on the competitive performance of your selected carmaker.
The global financial crisis happened at the transit of the year 2007-2008. During these years, the world experienced a global financial problem. Industries dropped in performance; financial routines lagged behind denying companies across the globe a chance for growth. The car manufacturing industry, especially in the United Kingdom, was not spared by this occurrence. The impact of the crisis resulted into a falling off cars. Car producing companies in the United Kingdom had to evaluate whether to drop the rates or the quality of the goods they produced or to drop the prices of the cars. The industry was therefore faced with the choice of whether to drop completely or whether to put up with the reduced profits. Holweg (2009), a UK-based researcher admits that the global financial crisis of 2008 met a growing competition in the automobile industry of this country. Sooner than later, the global crisis soon cleared competitors who were young in the market (Holweg & Podpolny, 2009). There was, therefore, need to develop a lifelong strategic goal to meet these problems head on.
The global financial crisis in the UK automotive industry could be said to have been steered by the unpreparedness of such an occurrence by the firms. In the first place, the firms were neither expectant that the world would ever experience a financial crisis following the great depression in the 1930’s. Many firms, therefore, had never insured themselves. Notably, when the financial recession came to be, the firms were thrown out of operation instantly. Whereas some were able to stand the financial test, the firms later came to establish the need to insure their firms in case another financial crisis happens to be. Insurance is a preparedness measure towards any occurrence that may cause harm to an organization’s financial policy. Notably, an insurance cover would have protected the organizations from falling out of operations during the crisis.
UK automotive industry analysis
As a strategic issue, carmakers in the United Kingdom engaged in a ruthless search for profitable or reliable insurance agencies to cover. Any automobile industry would seek to have a company that offers them a reliable and adequate insurance cover. However, insurance firms in the UK are still young and may lack the capacity to insure established companies like the Toyota (Holweg & Podpolny, 2009). The companies also note that by it is not sufficient to rely on one company for an insurance cover. Therefore, some are forced to diversify the risk by insuring in different companies which are costly.
Another issue that the automobile industry in the UK faces is the problem of centralized manufacturing. Many companies noted that in as much as there was a global financial crisis, it was not event around the globe. Some countries experienced severe effects of the crisis while others at least experienced just a little bit of the crisis. With this in mind, the companies decided on decentralization of processing operations as a strategy to overcome future occurrence of a financial crisis (Harner, 2012). Decentralization of processing processes, however, has come with its own problems. The firms are required to meet new regulations in the countries where they decide to extend operations. They are also forced to form better ties with the government for the case of better foreign relations and working condition in the countries where they seek to expand to.
The global financial crisis brought more of a war of supremacy among different car manufacturers in the UK. It is worth noting that after this crisis, competition has increasingly grown. Volkswagen, a renowned production industry has at least been hit by various strategic issues that translate to compliance issues. One strategy that was adopted by car producing companies in the UK was sustainable production so that extra production costs could not affect pricing. In this view, Volkswagen adopted a sustainable production strategy by producing from a central point where they could manage wastes, fuel efficiency and also produce different brands of cars (Harner, 2012). However, the expect results did not occur, soon Volkswagen was unable to manage emissions origination from their factory making them face prosecution for violating the clean air Act. This lawsuit instantly damaged the image of the renowned car production company, making it succumb to a kind of competitive environments from companies like Ford who justified themselves and their products on the basis of environmental protection.
Japanese automotive industry analysis
Assess the lessons that have been learnt and influence that the Japanese car manufacturers (i.e. ‘lean thinking,' ‘quality’ leadership) have had for your selected carmaker and implications for setting up operations and/or supply chains in low cost countries (i.e. BRIC countries).
The Japanese automobile market is probably the single most and top surviving automobile industry in the globe. While much is said about the Japanese car industry, it is more than obvious that the Japanese industry has emphatically triumphed over other car producers. Marketing and production analysts relate the growing Japanese automotive industry to the actual application of defined strategies. Good leadership is experienced in almost every company that decided to venture into the Japanese car production space. Some of the most bought car brands from Japan are Toyota, Honda, and Nissan. These brands vary in regard to quality, efficiency, and cost. Many car companies in the globe, inclusive of the UK believe in producing high-quality cars with a purpose of high pricing. However, the Japanese automobile undertakes a specialized strategy while producing their cars (Smith & Crotty, 2008). They very well understand that at least, not all their customers have the ability to purchase costly cars. In this understanding, they also note that most of their customers tend to need cars for different purposes where the quality of the cars they use would not be that meaningful.
This approach has continuously seen Japan rise from a simple producer to a world leading car producing nations. Notably, the highest consumption arises from developing countries where the road network is not that established to hold prestigious cars as those produced by competitors. The Japanese car industry has therefore made tremendous steps towards development by adopting a diversified production approach.
Japan auto industries
Toyota, for instance, is an automobile producer who has invested palpable energy towards the cause of remaining the best player in the field of production. At the blink of the year 2010, Toyota came up with the goal of reaching the new and emerging markets in the developing countries as well as meeting the requirements of the existing market. This millennium goal came as a shock to the existing car producing companies wondering how a production company would seek to produce cheaper cars at the wave of a growing world. However, Toyota was less concerned about the growing world. Their main target was to acquire new customers in developing countries. They set a price for cheap and reliable cars for middle-income earners at the price of USD 12,500 (Smith & Crotty, 2009). They set to roll out the sales campaign to more than 100 countries in the world. This led them to establish production as well as assembling units all over the world inclusive of India among other developing countries. Different models were produced, the leading branch in India producing 9 models at the wake of 2015. By December 2015, the organization had reached a millennium goal of producing 1,000,000 units of cars whereby 80% have since found a market in the developing countries.
In the exact interpretation of these figures, it turns out true that the Japan automotive industry has adopted a rather all-inclusive approach which takes into account all buyers irrespective of their income class. Drawing an example from Toyota, it is true that the company has made tremendous improvement and has taken the cover of the emerging markets. The companies tend to focus on the European financial crisis which drooped the automotive industry instrumentally. Setting operation in low-cost countries has allowed Toyota to grow, face less competition as well as a reduced relative cost of production is felt. UK based companies, therefore, should draw examples from the Japanese automotive industry concerning venturing into markets in low-production companies.
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