The automobile industry is undergoing rapid technological changes and is recently facing increased deregulation, ever-changing tastes in their customers and accelerating globalization. Similarly, firms in this industry are exploring new ways to cope with demand in the marketplace and still be competitive. The automakers in the U.S are struggling with an ever diminishing market share and so far have failed to bridge with other counterparts on reliability, quality, product design, production and cost effectiveness. The paper below reviews the strategies pursued by General Motors and other automobile manufacturing companies in the U.S AND Japan (Sundarakani et al., 2012)
General Motors (GM), for instance, incurred a huge loss of $8.6billion dollars, the highest ever, in 2005 alone and plans to eliminate 30,000 jobs or more and close or scale back operations in 12 facilities in the coming two or three years. A misstatement in its accounting records could drive up its total loss to a whopping $10.6 billion. Ford Motors recorded a loss of $1.5 billion from its North American operations and Daimler Chrysler A.G while performing slightly better than its peers in the U.S (Sundarakani et al., 2012)
Delegate your assignment to our experts and they will do the rest.
Increased globalization, limited domestic growth opportunity, free trade and the severe competitive economic landscape forced overseas carmakers operating outside their origin country, precisely the U.S, to adopt various strategies to increase their market share and enhance their financial viability. Some of the strategic financial, production and marketing tools adopted by General Motor and other automobile companies include market share, customer orientation, continuous process improvement, training, low employee turnover among others.
There have been arguments by Sundarakani et al (2012) that General Motors among other automobile manufacturers prefer meeting financial goals even at the risk of minor reductions in service or safety by the auto industry. This is based on the idea that the environments of the global industry determine the optimal strategy. For instance, competition on product market ensures that only the most efficient firm strategy will survive. Firms, therefore, are treated as similar production function notwithstanding their national identity.
Conclusion
From the above discussion, it is evident that automobile manufacturer’s preference for meeting financial goals even at the risk of minor reduction in services is mainly necessitated by the economic risks and opportunities. The environment of the global industry determines the optimal strategy for these companies. This, therefore, means that the firms that survive are the ones with effective strategies.
Reference
Sundarakani, B., De, S. R., & Goh, M. (January 01, 2012). A Case Study of Singapore’s Automotive Supply Chain.
