Impact of Global Retreat on Car Manufacturing Industry in Australia

STRATEGIC MANAGEMENT
Assessment Task 1 - Individual Authentic Learning
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STRATEGIC MANAGEMENT
Contents
Introduction.................................................................................................................................................3
1) Background to the study..........................................................................................................................3
2) A Five Forces model and competitor analysis explaining the industry...................................................4
3) A situational impact analysis..................................................................................................................7
Conclusion...................................................................................................................................................8
References...................................................................................................................................................8
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STRATEGIC MANAGEMENT
Introduction
According to Hanawalt and Rouse (2017), with global economy developing fast MNCs, in
particular car manufacturing industry are opting towards arranging the productive activities in
international market for capitalizing on the global resources and market potentials. However,
since 2013 the car manufacturing industry in Australia is witnessing a shrinking period with key
players like Ford, Holden, and Mitsubishi pulling out resulting into others choosing to close their
operations under the influence of global retreat.
1) Background to the study
As reported by Griffiths (2014), General Motors Holden in 2013 had has announced closure to
its vehicles manufacturing in Australia by the 2017 following a row with the federal government
over subsidies for keeping the iconic car maker here beyond 2020– putting an end to its 65 years
of glorious history further reflecting the exemplary upheaval of adverse impact the motor
vehicles industry faces within the region that encompass the sustaining strength of AUD, higher
production costs, smaller domestic market and possibly the most competing and disintegrated
auto market globally. The decision which is seen as the "dark day" for manufacturing in
Australia was followed by approximately 2,900 people losing their jobs and putting the
remaining car and components industry in Australia and its 45,000 workers into abrupt
uncertainty. However, the sales division, a parts distribution centre, and a global design studio
will be retained after 2017, ensuring that sales and service of Holden remains unaltered. With
this announcement, according to Taylor (2013), multinational automotive manufacturer Toyota
acknowledged of placing unparalleled pressure on the local supplier network and their capability
of building cars in Australia further magnifying the fears of having a knock-on effect. Holden
was criticized for its failure in immediately clarifying its long-term intentions in Australia
despite of being commissioned by the industry minister, Ian Macfarlane to report what ongoing
subsidies should be provided to car manufacturers. According to Hanson, et al., (2014) citing
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