The automotive industry is the largest economic

Strategic
management

Strategic management 1
Contents
Background to the study............................................................................................... 2
Five forces model and PEST analysis explaining international new car motor vehicle industry.........2
Five forces model.................................................................................................... 2
PEST analysis......................................................................................................... 3
Reasons of doing import than doing manufacturing in Australia...............................................4
References................................................................................................................ 6

Strategic management 2
Background to the study
This report is about the strategic management of motor vehicles worldwide. The fives forces
model has been explained in the report concerning global new car motor vehicle industry
along with the political, economic, social and technological analysis. Finally the reasons have
been explained why producers select to import than manufacturing in Australia.
The world automotive industry includes an extensive range of the organizations involved in
the design, enlargement, producing, marketing and retailing of the motor vehicles. The
automotive industry is the largest economic sector in terms of proceeds worldwide. The
automotive industry began its operations in 1860s with the hundreds of manufacturers. US-
dominated the world for several decades in motor vehicle production. Till 1929, it was
deliberated that 90% of the vehicles were produced by US. In 1980, Japan became active in
motor vehicle industry and became world’s leader of motor vehicles in1994. The automotive
industry focuses mainly on safety which means to offer safety to the operators while using
them. It infers to no risk or damage. In the case of safety issues, users can request the
company to return or makes changes in the vehicle.
Five forces model and PEST analysis explaining international new car motor vehicle
industry
Five forces model
The five forces model has attained the capability to examine the attractiveness of the new car
motor vehicle industry.
The threat of new entrants:
There is normally low threat in the worldwide new car motor vehicle industry. The factors
causing a threat to obstacles to entry are upfront capital necessities, brand equity, regulation,
and government policy and capability to allocate the product (Mathooko, and Ogutu, 2015).
The companies of the automotive industry are required to spend a great amount on
promotional activities in order to maintain business and facilities. Such costs create cost to
the barriers to the entry as every company cannot spend sufficient amount.
Rivalry among the existing firms