Strategic Management on Australian Automobile Industry

This article discusses the history of the Australian automobile industry, Porter's Five Forces analysis of the industry, and the situational impact analysis of the withdrawal of passenger motor vehicle manufacturing from Australia. It also explores the political, economic, social, and technological effects of the withdrawal on the country.

Strategic Management on Australian Automobile Industry
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Table of contents
Strategic Management on Australian Automobile Industry 1
Table of contents 2
Background of the study 3
Five Forces Analysis of Australian Car Manufacturing Industry 4
New Entrants 4
Existing Competitors 4
Substitution threats 4
Purchaser Bargaining Ability 4
Supplier bargaining capacity 4
A situational impact analysis explaining the political, economic, social and technological
effects of the withdrawal of passenger motor vehicle
manufacturing from Australia. 5
Political impact 5
Economic Impact 5
Social Impact 5
Technological Impact 6
References 7
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Background of the study
The history of the company in Australia did the back to 1856 when a saddlery business was
originated by James Alexander holding. Your organisation made it first ferry origination
history in Adelaide South Australia. The organisation involved in terms of scale production
of vehicle body cells which in 1924 became the Exclusive supplier of the general motors in
Australia which is an American car manufacturer. After a series of operation in South
Australia to 1920, the organisation started supplying tramcars for Melbourne. Marching and
becoming General Motors Holden Limited in 1931 was one of the important dates for the
organisation to be remembered as this change because of operation that it previously had.
New headquarters, therefore, was opened in 1936 and assembly Plant was prepared in Port of
Melbourne at Fishermans Bend.
During the event full year of 1950, the domination of the organisation remained unscratched
in competition. The production of the sedan and utility models increased, in the year 1950.
Around 40% of the total car sales in Australia was seen by the organisation in the year 1958
which was because of the introduction of the engine power Chrome facelift in 1953 the FJ
Holden. The year 1950 also saw the decision to export to New Zealand for increasing the
market structure by starting them with the utility model (Abe, 2017).
The concept of organisational development in 1980 saw challenges. Challenge was mostly
related to the automotive industry as Falcon a new organisation surpassed the sales figure of
holden and became the best selling Australian car for the upcoming next 6 years. In the 1980s
to 1986, it remains controversial for the organisation as because it was he that the proportion
of the Komodo that was released in 1982 uses Nissan engine. The controversy of the New VL
Commodore using Nissan engine did not last for long and Holden reclaimed the number one
Australian spot for top car manufacturers.
The year 2000 and saw the fall of 15.2% was seen in the market share of Holden. The
operation of the organisation which opened in Port Melbourne begin to export their product
to Korea Mexico and China from a new 400 million dollar V6 Engine plant. The accounting
for the large car sales hike responsibly made 34.6 % of all new vehicles and resulting in
rising of sale to 203504.A total number of factory workers in the year around 2000 where
7350 and made the organisation one of the important places for employment. However,
Toyota overtook holden as top-selling brand in the year around 2000 and from them the
organisation held in the position ever since (Carnegie, et al. 2016).
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The recent context of the organisation Holden is, it has been outsold to Mazda from Japan. In
the history of topping as the local chart sales height, the Imported car was seen at the top of
the charts. The headquarter of the organisation the holden is still in Port Melbourne,m with
the operation of the manufacturing engine is seen in the process it also has its operation in
300 dealerships nationwide. However, the operation of the organisation has somehow
changed and it has affected the general aspect of the business which is why the following
observation related to the porter's five Force model survival and PEST analysis are conducted
to ensure the operation and its traits.
Five Forces Analysis of the Australian Car Manufacturing Industry
The Porter's Five Forces model is a comprehensive way of analyzing the Australian
automotive industry.
New Entrants
The local manufacturers do not have enough competitive power to handle competition from
multinational companies. Cars imported from foreign manufacturers put huge pressure on the
local industry and a decrease in the export tax attracts a lot of foreign interest of exporting
duty-free foreign cars to the Australian market. These series of exported cars from brands like
Suzuki, Honda and Nissan develop a series of challenges and the manufacturers retreat from
Australian industry to avoid extensive competition from these imported cars.
Existing Competitors
The Automotive industry of Australia has a strong regional developmental trend with the
majority of the manufacturers located in Melbourne, Adelaide and other regions. There are
four historical car brands in Australia, namely Holden, Ford, Toyota and Mitsubishi (Mishra
and Smyth, 2017). As the total market value is limited these local manufacturers face severe
competition from each other. Australia’s total population of 20 million people is not enough
to support and satisfy the rapid development of the four manufacturers to a substantial extent.
The pressure for survival is increased significantly due to the competition of these four
manufacturers. At the same time, other domestic companies also become more relevant in the
industry.
Substitution threats
With regards to the actual product, the car, a lot of substitutions are available in daily life for
the consumer that include bicycles, motorbikes and other modes of the public transportation
system of Australia which has also seen a significant development in the recent years. With
traffic jams becoming more and more severe, an increasing number of people are opting for
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the public transport options and instead of using private vehicles. Though this trend is highly
beneficial from a lot of standpoints, it will have a grave effect on the Automobile industry on
a large scale.
Purchaser Bargaining Ability
With the rapid development in the global economy and implementation of technological
innovation, customers can stay updated about the various kinds of cars that are from the
foreign market and other factors that will help them choose the cheapest and most economical
choice amongst the competition (Meharg, et al. 2015). The modern consumer can compare
brands in a comprehensive way and thus to a large extent these customers have an
advantageous position when buying from local manufacturers. This increasing bargaining
ability of the consumer will have a huge threat to the Australian car manufacturing industry.
Supplier bargaining capacity
The automotive industry has a specific character of scaling the economy. Generally, suppliers
who provide parts to manufacturers might provide other parts to other manufacturers. Thus
these suppliers are not dependant on these manufacturers and thus they can transfer buyers
and their marketing easily. Thus manufacturers from Australia are at a disadvantage when
they purchase parts from these suppliers. They cannot produce their parts due to limited
revenue and the supplier bargaining ability increases creating a disadvantage for the
manufacturers 858.
A situational impact analysis explaining the political, economic, social and
technological effects of the withdrawal of passenger motor vehicle
manufacturing from Australia
Political impact
● The Australian Labour Markets capability to absorb these complete shutdowns will
determine the extent of how much the labour market might and will continue to
soften.
● Without any taxpayer support for the industry, there is a potential for growth will help
lower the cost of vehicles and redeploy labour in other more productive sectors of the
country (Swinburne.edu.au, (2018). But local disruption will be inevitable as there
will be no option of re-employing displaced employees in other portions of the car
industry (Langcake, 2016).
● From a public policy perspective, the considerable focus will be needed on retraining
opportunities and developing alternative public projects especially infrastructure and
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the stance of the fiscal policy needs to change both at the state and national levels
were changed circumstances and challenges need to be recognized (Pomfret, and
Sourdin, 2016).
Economic Impact
● The annual production of passenger motor vehicles has declined from over 400,000 in
2004 to 220,000 in 2012 sales in the domestic market has also declines severely from
286,000 in 2003 to 131,000 in 2012 (Macrobusiness.com.au, 2018). Exports have
halved and imports have doubles. The commonwealth department of industry have
announced that the Australian Automotive industry has not returned a trading profit
since 2003
● The car manufacturing industry does not operate in isolation and employs around
73,772 full-time employees and produces a gross output of A$20 billion approx.
● 2 and 7 are the output and employment multipliers of the industry thus suggesting that
$1 million in additional final demand can, directly and indirectly, generate $2 million
extra output and seven jobs in the economy (Timmer etal. 2015).
Social Impact
● Around 600 workers lost employment when ford closed its factory at Broadmeadow,
another 1400 lost theirs after general, and motors closed their Holden plant in
Elizabeth, Adelaide. Moreover 1500 to 2000 jobs from the goods and services supply
chain where lost.
● The decline in people's income and overall investment reduction in the economy of
south Australia by Holden have larger impacts that are visible throughout the society
(Webb, Wilson, and Briggs, 2017).
● Most of the growth in the labour market of South Australia has been in part time and
casual employment opportunities and it is hard for the former auto workers to find
new and secure permanent employment
Technological Impact
● The collapse of the automotive industry will have an adverse impact on the viability
of the PSTS industry as it provides scientific research, engineering, architecture,
computer systems design, accounting, law, market research, advertising, veterinary
science management and another consultancy, and professional photography
(Swinburne.edu.au, 2018).
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● R&D intensive industries like the automobile industry have a key role in the process
of technology diffusion (Kohpaiboon, 2015). Innovation will be halted and collapse
will create a lowering of research and development activities in the long run.
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References
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Carnegie, A.J., Kathuria, A., Pegg, G.S., Entwistle, P., Nagel, M. and Giblin, F.R., 2016.
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Kohpaiboon, A., 2015. FTAs and supply chains in the Thai automotive industry. In ASEAN
and Regional Free Trade Agreements (pp. 247-273). Routledge.
Langcake, S., 2016. Conditions in the manufacturing sector. RBA Bulletin, June, pp.27-33.
Macrobusiness.com.au, (2018) Accessed from
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closure/ Accessed on 5 December 2018
Meharg, S., Kirono, D.G.C., Butler, J.R.A., McEachern, S. and Hajkowicz, S., 2015.
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Indonesia Centre, Monash University.
Mishra, V. and Smyth, R., 2017. Conditional convergence in Australia's energy consumption
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Pomfret, R. and Sourdin, P., 2016. Trade between Australia and the EU (pp. 2016-10). 1990-
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Swinburne.edu.au, (2018) Accessed from
https://www.swinburne.edu.au/news/latest-news/2016/10/collapse-of-australian-car-
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Swinburne.edu.au, (2018) Accessed from
https://www.swinburne.edu.au/news/latest-news/2016/10/collapse-of-australian-car-
manufacturing-industry-.php Accessed on 4 December
Timmer, M.P., Dietzenbacher, E., Los, B., Stehrer, R. and De Vries, G.J., 2015. An
illustrated user guide to the world input–output database: the case of global automotive
production. Review of International Economics, 23(3), pp.575-605.
Webb, J.C., Wilson, C. and Briggs, M., 2017. Automotive modal lock-in: a theoretical
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Australasian Journal of Environmental Management, 24(4), pp.406-422.
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