Risk Management in Automotive Vehicle Industry in Australia - RMI 2101

Running head: RISK MANAGEMENT IN AUTOMOTIVE VEHICLE INDUSTRY
Project on Risk Management in Automotive Vehicle Industry in Australia
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1RISK MANAGEMENT IN AUTOMOTIVE VEHICLE INDUSTRY
Literature Analysis
Introduction
The risk in automotive vehicle industry is mainly due to the present variation in
the exchange rates of the country (Dawson, Searle & Paterson, 2104). The variation in rates of
the currency between US dollar and the British pound is about 60%. The variation rate of the
Japanese Yen is even much higher.
According to Drauz (2014), Australia’s economy is another risk that trends on the
risk management. If the risk of the automobile vehicle industry is not controlled then the
economy of the country also gets decreased. Spare parts production and assembling of car is
going very high in Australia. Changes are also seen in the development of the technology of the
automobile industry. There is hazard and risk of the trade of the automobile industry.
The brake component manufactures have more risk than hood component
Manufacturer Company. The risk that is involved in the automotive industry depends on the total
volume of the production (Pinkse, Bohnsack & Kolk, 2014). A manufacturing company that
sales $50.000.000 amount would be experiencing hazard of risk to that of the company which
sales $50.000 US dollar.
Australia’s strategic role in the global market
According to Litman (2014), the main challenge of the automotive manufacturer
is to achieve satisfactory amount of profit. The cost of newly made vehicles is significant as

2RISK MANAGEMENT IN AUTOMOTIVE VEHICLE INDUSTRY
stated by Research and Development. To compensate with the production cost of manufacturing,
sufficient amount of sale should be done.
There is extreme competition in the vehicle automotive industry of Australia as there are
many companies that emerge from other regions from the global markets (Bell et al., 2014).
This creates a pressure on the other brands that are established in Australia.
The important part of vehicle automotive industry is the exchange rates that are available
in Australia. The vehicle automotive manufacturer of Australia mainly operates in the global
market. Many manufactures depends on the exports that gains acceptable sales of the company.
The exchange rate risks are lessen by establishing the company in the places near to the company
where the vehicle is sold (Huckvale et al., 2015). Recent decrease in the Japanese currency Yen
to US currency Dollar had led to much profit in the Japanese car manufactures. It is much
difficult for Australia to maintain its competition in the market globally due to its high rate of
currency. To gain profitable mount of sale, necessary exports are to done by the manufactures of
Australia in this competitive market. The vehicle automotive industries of Australia have stated
that government assistance is needed in order to cope up with the competition of the exchange
rate in the market of Australia.
According to Bahr (2014), with the rise of motor vehicles in the coming economy, the
demand is expected to rise in the future globally. The countries that are developing economies
have an interest to buy a motor vehicle. In emerging countries, the demand of buying motor
vehicle are much higher than that of the developed countries where there is already a hike of
motor vehicle and that is always expected to remain the same.