Strategic Management in the Australian Automotive Industry

This document discusses the decay and impact of the Australian automotive industry, focusing on the rise and fall of Holden Limited. It explores the situational impact and analyzes the industry using the model of five force analysis.

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Individual Authentic Learning Case-
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Table of Contents
Background............................................................................................................................................2
Model of Five Force analysis..................................................................................................................3
Analysis of situational impact...............................................................................................................5
References.............................................................................................................................................7

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Background
It is founded that the automotive industry contains several organisations as well as businesses
that include the process like “designing, developing, manufacturing, marketing, and at last
selling the motor vehicles.” Considering revenue, it is founded that it is biggest grossing
industry. Therefore, it does not include those industries that are committed toward the
maintenances of automobiles after delivering those to the final user such as motor fuel station
for filling or repair shops of automobile. Besides this, several models of automobile have
been growing well worldwide. It is known to be one of the competitive and powerful
industries among various other industries. Taking into account the case of Australia,
automotive industry has taken its wings during the time of formation of “Ford Australia.”
During such time, Holden, a person from Australia has intended the car in 1948. Australian
Automotive industry has one distinct feature in terms of process of production on large scale
of passenger vehicles. Automotive industry was also able to get a high rate of growth until
the year 2004 (Hutchens, 2013). The unique characteristic of Automotive industry Australia
has included the process of production on large scale of passenger vehicles. After this, the
imported automotive vehicles from Europe as well as Asia were dominating the automotive
industry.
In the assignment, the key focus is taken on the decay in Australian automotive industry
including how this influence various other factors in the country. In addition, the rise and fall
of Holden limited are also being identified that has given focus fully on the deceitful and
importing of those vehicles. In Melbourne Victoria, Holden Limited was incorporated in the
year 1856 that started as the trade of saddler. Later on, it moved into the automotive field.
Further, it moved and became the subsidiary of General Motors that is US-based international
automotive industry in the year 1931. The company has also discovered a wide range of
original and domestic vehicles like Holden Commodore. Moreover, they also offer some of
the GM models in the market which are distinct in terms of their feature. At that time, the one
automotive industry has made the automobile with the use of the confined Parts in
manufacturing. Moving further, the charge of high tariff during the time of importing has also
inclined the manufacturing automobiles popularity locally (Green, 2017). It is also seen that
after the globalization in the market of Australia, automated reduction in tariff for import has
occurred by exposing the Australian automotive industry for the very first time to the inside

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competition. It has also resulted in the termination of several manufacturing plants. The
closure of such businesses was because of their incapacity in transforming and give
something unique in the automobile manufacturing (Dowling, 2014). Due to this reduction in
the tariff, a chain reaction has produced that led to the downfall in the market of cars that are
produced domestically. In relation to Mitsubishi in year 2008, it leads to the closure of
various manufacturing businesses. Due to this, the Australian car industry has placed into the
“kind of wobbly three-legged chair.” In addition to this, such businesses are not giving tough
competition to the global businesses and the reduction in the import tariff, periods of the
government grants of country, and increment in the rate of labour in the country is also the
key cause. Moreover, damage and decline in the “Ford” besides executed as the slanting point
for the Australia automotive industry (Masinde-Indiatsy et al., 2014). Hence, automobile
industry is highly impacted due to such sort of withdrawal.
Model of Five Force analysis
The model of five forces is based on Porter framework that analyses the industry based on
five aspects that aids in identifying the range of rivalry inside the industry. This helps in
finding out the level of profitability. It is true that stronger will be the competitive focus, less
will be the profitability in the industry (Porter, 2008). This model includes this analysis -
Considering various aspects of Porter's five forces, a pure and complete analysis of
automobile industry in Australia can be achieved. It is outlined like below –
1. Threat of substitute - Consumers has various sorts of alternatively available in-terms
of train, metro, bicycle, motorbikes and so on. Though nowadays, many individuals
seek public transport for their transportation instead of their owned cards . It will
definitely affect the performance of all the car manufacturing in Australia at larger
extent. Besides this, in recent time, each person who is using public transportation for
the sake of environmental protection has resulted in the decline of personal care as
compared to the past few years.
2. Threat of new entrant – Considering this aspect, it is identified that the local
manufacturer power in terms of competition is not inequality that results in
threatening of international companies. Due to this, it is being identified that the cars
that imported within Australia also put force on the Australians manufacturing

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businesses. In addition, decline in the export tax tariff inside the country also
fascinates the foreign car manufacturers in order to distribute the duty-free cars to the
marketplace of Australia (Fleischmann et al., 2000). It has also resulted in several
challenges to the Australian manufacturers. It has led to the shutting of most of the
multinational companies from the manufacturing industry of Australia. It is done in
order to limit the financial loss as well as evade the severe competition due to the
imported automobiles.
3. Bargaining power of suppliers – Not any business in the manufacturing industry
include such business where there is presence of only one supplier. In addition, it
includes various suppliers who keep on contacting other businesses and bring
productivity. It can also be said that supplier can reduce they depending on the current
buyers that will result in the market transfer. Therefore, this causes a disadvantage to
the Australian manufacturing industry in acquiring any product from this type of
supplier. Besides this, it will also require each manufacturer to produce any part by
them in order to reduce its reliability.
4. Bargaining power of consumers - It is founded that more advancement in
technology has resulted the decrement in prices of cars. Due to the implementation of
information technology, customers can easily come to know the current information
relating the automotive industry sooner as before. Hence, it becomes easy for them to
compare the various other brands. Hence, these benefit help the customers to be at
higher position at the time of purchase and cause threat for Australian Automotive
industry growth. In addition, reductions in the profit, industry will definitely lose the
benefit of local production plant as well (Clark & P., 2010).
5. Competition among the existing players - Considering majority of industrialists
who are located in the City of Adelaide, Melbourne as well as any further region, one
can found development trends in domestic car industry of Australia. Due to restriction
in total market volume, major brands of Australia comprising Mitsubishi, Ford,
Holden, and Toyota getting strong competition from each other. It is also founded that
total population of Australia is not able to get the fast growth of these types of
manufacturers. Due to presence of inside conflict from the Australian market
increased the survival pressure of such automotive industry. In current period, many
native car businesses are also becoming competitive that more upsurges the
sustainability burden.

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Analysis of situational impact
Situational analysis refers to the gathering of several methods and approaches that are utilized
by the manners in order to examine the internal as well as external environment of the
organization for gaining the concise and clear understanding regarding the customer base,
organizational abilities and business environment (Lake, 2018). Several approaches are there
in order to carry out the effective situational analysis like Pest, Pestle, 5C’s, SWOT analysis
and Porter's five forces analysis (Steenburgh & Avery, 2010).
Automotive industry is one of the most significant as well as high revenue generating
businesses. Same, Automotive industry of Australia also plays an essential role in the
development of Australian technology and economy. However, with the increment in
competition and decrement in the profit generation, automotive industry is also changing its
focus from manufacturing to the importing of those automobiles. In this way, automotive
industry is most influencing as well as revenues generating business. This can be further
presented by halting of manufacturing of automobile by the automotive giant like Ford.
Toyota, Holden and Mitsubishi that were the largest manufacturer I the locally produced
automobiles as well as cars.
1. Political aspects - The extraction of local manufacturing cause imposition of various political
effects within Australia. This withdrawal has forced the government of Australia in order to
improvise the import tariff for amending the legal policies and ensuring the easier importing.
At the same time, the improvisation has also adversely affected the economic growth as it
leads to reduction in possibility of revenue generation due to gathering of tax at the time of
importing of automobiles (Kwon, 2013). It has also affected the local manufacturing as
lowered tariff leads to reduction in the cost of imported car by lowering down the sales of
manufactured automobiles of Australia (O’ Brien, 2018).
2. Economic impact - One more vital impact of the drawing on the economic front is the loss
of individual person employment who all are employed in the manufacturing plant. Thereby,
it affects the development and growth of the economy (RMIT.edu.au., 2011). Same, the
reduction in the importing of tariffs also reduces the cost per vehicle as well as reduces the
revenue that is generated by the country (Valadkhani & Smyth, 2016).

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3. Social impact – Another impact of withdrawal will levy because of reduction of per vehicle
buying busying cost and increment of the import would lead into the rise in issues that are
associated with pollution and traffic. Furthermore, the increment in the automobile
population will adversely affect the health status of people.
4. Technology effect - the essential or key impact of the withdrawal has happened on the
technological aspect that is in the area of research and development within Australia. As per
the review of Steve Bracks, automotive industry has played an essential role for the
knowledge spillover in the other aspect of industries within Australia. Besides this,
withdrawal has also affected the research and development work in the concerned sector
(Department of Innovation, 2008). It is also being expected from the several automobile
industries for transferring their research and development into the close proximity within
their plants of manufacturing. Besides this, cuts in budget to the organization like CSIRO has
further exacerbated the contrary impact on the research and development in long run
(Hopkin, 2014).

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References
Clark & P., D. (2010) Scale economies and intra-industry trade. Economics Letters, 108 (2),
pp.190–192.
Department of Innovation (2008) Review of Australia’s automotive industry : final report.
[Dept. of Innovation, Industry, Science and Research].
Dowling, J. (2014) Why Australia’s car manufacturers — Toyota, Holden and Ford — all
conked out [Internet]. Available from: <https://www.news.com.au/why-australias-car-
manufacturers-toyota-holden-and-ford-all-conked-out/news-story/
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Fleischmann, M., Prentice, D., Fleischmann, M. & Prentice, D. (2000) Strategy, Scale or
Policy? Exit in the Australian Car Industry. School of Economics, La Trobe University.
Green, R. (2017) The truth about the Holden shutdown in Australia [Internet]. Available
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20171010-gyxogj.html> [Accessed 9 December 2018].
Hopkin, M. (2014) CSIRO cuts ‘will rob Australian industry of research expertise’ [Internet].
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Hutchens, G. (2013) Australia’s ailing car industry in desperate need of a saviour [Internet].
Kwon, R. (2013) Is Tariff Reduction a Viable Strategy for Economic Growth in the
Periphery? An Examination of Tariff Interaction Effects in 69 Less Developed Countries.
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[Accessed 9 December 2018].
Masinde-Indiatsy, C., Stephen Mwangi, M., Nyamboga Mandere, E., Miroga Bichanga, J. &
Enock George, G. (2014) The Application of Porter’s Five Forces Model on Organization
Performance: A Case of Cooperative Bank of Kenya Ltd. Online.

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