Business Management and Strategic Management in the Auto Industry

This case study examines the contrasting approaches of the American and Japanese auto industries, highlighting the impact of cultural values on business strategies and outcomes. The analysis reveals that the American auto industry prioritizes innovation and consumer convenience, driven by economic stability and developing trends. In contrast, the Japanese auto industry emphasizes environmental sustainability and responsiveness to consumer demand, influenced by stricter environmental regulations and a focus on long-term business viability. The study explores how cultural views affect the ability of these industries to adapt to market changes, such as shifts in fuel costs and environmental concerns. It also assesses the limitations of each culture's approach, particularly in adapting to changing consumer preferences and environmental standards. The paper underscores the importance of considering both economic and environmental factors in product design and strategic planning to ensure long-term business sustainability, as failing to do so can result in loss of market share and missed opportunities. This document is a comprehensive analysis of the auto industry's cultural dynamics and strategic implications.

Running head: BUSINESS MANAGEMENT AND STRATEGIC MANAGEMENT
Business Management and strategic management
Name of the Student
Name of the University
Author Note

1BUSINESS MANAGEMENT AND STRATEGIC MANAGEMENT
Drivers of change for American and Japanese culture
The case study indicates that automobile industry in America is more reliant towards
the innovation, while sustainability remains as a mere concern. However, the launch of SUVs
led to a significant growth in sales but economy in United States remains as a significant
driver, as it is found that economy was stable and oil price was consistently low in 90’s
compared to the previous years. The stable economy in the country increased the average
disposal income which influenced and increased consumers ‘demand towards innovative
products. In addition to this, it has also been identified that American culture is mostly
surrounded by the developing trends and convenience (Dunning 2014). On the other side, a
significant cultural characteristic supporting the development of automobile industry is the
establishment of United Auto Workers Union which acquired tremendous recognition in the
sector at the time of World War II by making the initiatives of developing the working
conditions. The initiatives include the plans of paid pensions, health insurance for employees
and their families. Such initiatives work as the motivation for employees towards their duties
and responsibilities (Form 2015). Consequently, the automobile sector in America is able to
produce more innovative and user-friendly vehicles.
On the contrary, Japanese culture in trade is more concerned the sustainability of
business and the environment. According to the case study, Toyota, Nissan and Honda are
always considered as the leading manufacturer of smaller more fuel-efficient vehicles as the
firms adequately comply with the principles of Clean Air Act in 1970. The manufacturers
developed the engines in a way that produce limited emission which is a significant way to
meet the principles of Clean Air Act (Bohnsack, Pinkse and Kolk 2014). Considering the
environmental sustainability as the path to lead the business further in US market, the leading
Japanese car manufacturer like Toyota was after the development of lower emission-based
vehicles. Another significant growth driver found in Japanese culture is the identification of

2BUSINESS MANAGEMENT AND STRATEGIC MANAGEMENT
consumer demands. This means that Japanese manufacturers tend to consider what their
customers want and how environmental sustainability approaches can be aligned with the
products that are manufactured on the basis of those demands (Gwynne 2017). The Japanese
would know that any business can gain consumer trust and market position when it considers
environmental sustainability. For example, in the case study, it was found that Toyota was
aware of the demands related to cleaner air and greater fuel savings and thereby, Zero
Emission Vehicle program influenced the car manufacturers to respond to the stricter
environmental standards.
Culture’s views affect their ability to change and adapt
It is identified that even though Japanese culture is more supportive towards the
environmental sustainability but it lacks the ability of adapting to both environmental and
financial changes in the market. For example, in 2008 there was a sudden demand of trucks
with the focus of gas mileage in which Honda proved its ability to produce the most efficient
fuel efficient models but Nissan lack the ability to meet the newly grown demands of trucks.
Wallace (2017) mentioned that businesses in all sectors must have the ability to deal with the
growing or flexible demands and trends of the industry. Even though Japanese manufacturers
are better at making profits from sustainability based strategies but such views of leading a
business should also have a thought towards the market dynamics. On the other side, the
views if American culture lacked the ability to change and adapt because consumers and the
businesses influenced by the consumers are more favourable towards the convenience and
demands, where economy and efficiency remains as the secondary concerns (Bergek,
Berggren and KITE Research Group 2014).
The manufacturers are not able to meet the fuel efficiency standards as their designs
of products are based on customers’ demand. It is found in the case study that despite the

3BUSINESS MANAGEMENT AND STRATEGIC MANAGEMENT
technological advancements, customers are not much worried about the miles per gallon as
their vehicles are larger and faster than before. Conversely, both the cultures did not consider
the fact that auto industry can be highly influenced by increasing fuel costs and
environmental regulations (Law 2017). Therefore, when designing a new car to meet
customer demands, the business must consider the fact that whether their initiative is aligned
to economy barriers and environmental standards. Failing to comply with the environmental
regulation was the consequence of losing market share of gas vehicles. Moreover, when a
business is responding to market demands, it should always consider the future trends and
challenges or any other back-up to strengthen the business from its loss. In addition to this, it
is worth stating that cultural views of both Japanese and American did not include the long-
terms of plans such business sustainability when aligning products design with current market
demands.

4BUSINESS MANAGEMENT AND STRATEGIC MANAGEMENT
References
Bergek, A., Berggren, C. and KITE Research Group, 2014. The impact of environmental
policy instruments on innovation: A review of energy and automotive industry studies.
Ecological Economics, 106, pp.112-123.
Bohnsack, R., Pinkse, J. and Kolk, A., 2014. Business models for sustainable technologies:
Exploring business model evolution in the case of electric vehicles. Research Policy, 43(2),
pp.284-300.
Dunning, J.H., 2014. The Globalization of Business (Routledge Revivals): The Challenge of
the 1990s. Routledge.
Form, W.H., 2015. Blue-collar stratification: Autoworkers in four countries. Princeton
University Press.
Gwynne, R., 2017. New horizons? The Third World motor vehicle industry in an
international framework. In Restructuring the Global Automobile Industry (pp. 61-87).
Routledge
Law, C.M., 2017. Restructuring the global automobile industry. Routledge.
Wallace, D., 2017. Environmental policy and industrial innovation: Strategies in Europe, the
USA and Japan. Routledge.