logo

HI5003 - Economics for Business Toyota

6 Pages1299 Words36 Views
   

Holmes Institute Sydney

   

HI5003 Economics for Business (HI5003)

   

Added on  2020-03-04

About This Document

HI5003 - Economics for Business Toyota related The article is very simple and focused which makes it easy to understand the different issues it is discussing, issues that are often difficult to identify in other articles because they aretoo focused on painting the car manufacturers as the evil ones for wanting to exit the Australian market. The whole point of the article is, car manufacturers such as Mitsubishi, Ford, Holden,and Toyota want to exit the Australian market because the opportunity cost of operating in thecountry is way too high.

HI5003 - Economics for Business Toyota

   

Holmes Institute Sydney

   

HI5003 Economics for Business (HI5003)

   Added on 2020-03-04

ShareRelated Documents
Running head: NEWSPAPER ANALYSISNewspaper AnalysisNameInstitution Affiliation
HI5003 - Economics for Business Toyota_1
NEWSPAPER ANALYSIS2The article is discussing challenges car manufacturing companies such as Mitsubishi, Ford, Holden, and Toyota are facing in Australia. These companies want to move their assembly line to other countries due to the high cost of production in Australia. The stakeholders in this issue are of course car manufacturing companies, suppliers, tens of thousands of Australians whowill lose their jobs as well as the Research and Development (R&D) sector that is greatly influenced by the motor vehicle industry. The higher cost of production in Australia’s car manufacturing industry is due to several things (Valadkhani, 2016). These car manufacturing companies are looking to move into cheaperproduction inputs overseas including both labor and parts because the country’s market is not sufficiently large which makes it impossible for the manufacturing industry to exploit the economies of scale fully. Australia’s domestic market is weak due import tariffs that are too low as well as Free Trade Agreements; unions asking for higher wages and better working conditions; the appreciation of the Australian dollar. The cost of production in the car manufacturing industry in Australia cannot be compared to that of countries in Asia especially when it comes to labor costs. The article is very simple and focused which makes it easy to understand the different issues it is discussing, issues that are often difficult to identify in other articles because they are too focused on painting the car manufacturers as the evil ones for wanting to exit the Australian market. The whole point of the article is, car manufacturers such as Mitsubishi, Ford, Holden, and Toyota want to exit the Australian market because the opportunity cost of operating in the country is way too high. If this happens, a lot of people will lose their jobs which will significantly affect the unemployment rate regarding supply and demand as workers will be available but employers will be limited (Sherk, 2013).
HI5003 - Economics for Business Toyota_2
NEWSPAPER ANALYSIS3The Australian government is too focused preventing monopolies and unfair practices that it has developed unnecessary regulations and quotas that have interfered with the natural process of equilibrium that is supposed to exist in a perfectly free market and has resulted in inefficiency that could have easily been avoided. Further, the Australian government seems to betaking the comparative advantage approach with too low import tariffs and too much free trade agreements which greatly put car manufacturers at a disadvantage. Another problem involves thecompanies’ variable costs most especially when it comes to labor. Labor unions are asking for unreasonably high wages and conditions that do not correspond with the companies’ level of output. This situation resembles that of a monopoly because labor unions are selling labor to these companies at a very high price, prompting them to hire less labor than they would in equilibrium which affects their production capabilities (Library of Economics and Liberty, n.d.). The appreciation of the Australian dollar is another problem that is making exporting parts more expensive and imports way cheaper due to lower inflation. The appreciated Australian dollar has also caused a fall in the domestic Aggregate Demand (AD) due to lower demand in exports and greater spending on imports. As a result, it has slowed the market growth in the country which has prevented car companies from fully exploiting economies of scale.There are various things that the car manufacturing companies could do to reduce the costof production without withdrawing from the Australian market. The cost of production can be reduced by decreasing the number of platforms (critical structures in forming the base of various automobile models) that are used in producing vehicles. Producing a greater number of models using a common platform will considerably reduce the high number of expenditures that designing and developing multiple platforms would require (Sedgwick, 2014). Further,
HI5003 - Economics for Business Toyota_3

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Manufacturing cost-structure in Australian industries
|5
|1377
|60

Management: Strategic Analysis
|8
|1329
|388

Essay on Toyota- Economies of Scale
|4
|1209
|272

Analysis of Car Manufacturing Industry in Australia
|10
|1762
|344

Impact of IMC on Organization Essay 2022
|6
|1339
|22

Reflective Journal of Toyota | Case Study
|5
|711
|60