Analysis of Car Manufacturing Industry in Australia

Running Head: STRATEGIC MANAGEMENT
Strategic Management
Student’s Name
University Name
Author’s Note

2STRATEGIC MANAGEMENT
Table of Contents
1. Introduction..................................................................................................................................3
2. Background of Study...................................................................................................................3
3. Five Forces Analysis....................................................................................................................4
3.1 New Entrants..........................................................................................................................4
3.2 Existing Competitors..............................................................................................................4
3.3 Threats of Substitution...........................................................................................................5
3.4 Bargaining ability of the Purchasers......................................................................................5
3.5 Bargaining power of the Suppliers.........................................................................................5
5. Situational Impact Analysis.........................................................................................................5
5.1 PEST Analysis.......................................................................................................................5
5.1.1 Political Impacts..............................................................................................................5
5.1.2 Economic Impacts...........................................................................................................6
5.1.3 Socio-Cultural Impacts....................................................................................................7
5.1.4 Technological Impacts....................................................................................................7
6. Conclusion...................................................................................................................................7
Reference List..................................................................................................................................9

3STRATEGIC MANAGEMENT
1. Introduction
This report analyses the industry of car manufacturing in Australia in a comprehensive
manner. In this process, the report utilizes the porters’ five forces and the pest to highlight cause
and effects of the shutdown of car manufacturing in Australia.
2. Background of Study
At one point of time, the motor vehicles manufacturing industry of Australia produced
500000 vehicles every year. In fact in the beginning of this decade, General Motors was
apprehending an increase in vehicles production and thereby enhance export in countries like
US. However, factors like high costs of production, poor supply framework and finally the
Turnbull Government deciding to end the subsidy policy for the industry, the manufacturers
started to pull out o Australia (Abc.net.au 2014).
Along with Holden, several other car manufacturers like Ford were among the early
entrants of the car manufacturing industry of the country. The influx aggravated after the Second
World War. Holden beginning their journey as a saddle manufacturer in 1856 shifted to
automobile manufacturing in the year 1931 (Ashford 2013). Initially the operations of Holden,
Ford, Mitsubishi and other car manufacturers accounted to a peaking production of cars in the
year 1970 when 475000 units of cars were manufactured. The production volume began to slip
by the start of this millennium, when the volume drastically reduced to 167538 by the year 2015
since the slow exodus of the car manufacturers turned out in to a rout. The opportunities of
production in the emerging markets like Vietnam, Thailand, China and India as well. On the
contrary, the production costs started to increase in Australia. By the mid of the decade, Ford had
also shut down 2 of its most productive units. The company only had its Broad-meadows unit of