Competitive Strategies and Government Policies
ECO/365
May 1, 2013
Competitive Strategies and Government Policies
The automotive industry is a diverse and ever evolving market. With equally as diverse consumers, products and regulations. However firms often have to overcome new competition in the form of new companies entering the market as well as mergers through the course of a company’s history. Often forming large new competitors from smaller firms. As well as government regulations at the local and international level, from environmental issues to safety standards. Meeting these standards comes at the expense of the firm, though it is an expense that can be passed off to the ...view middle of the document...
Often these mergers only affect the merging parties having little impact on the rest of the market only affecting its consumers. The affect varies however as the consumers opinions of the merging companies vary. Some may be for the rebranding while others object the change. Either way most end up more profitable after the fact.
On the other hand other than competition the auto industry faces significant government regulations in the United States alone. Having to adhere to strict safety regulations. Doing costly testing and changing prototypes and designs to meet these regulations. Often the nations they wish to sell vehicles in have to meet some kind of regulation so while one car may sell in South America is may not even be permitted to enter the market in North America or Europe depending on the requirements of the local government. Today automakers have to have their long term sights set on meeting the minimum requirements for fuel efficiency. This is an added cost that both the consumer and producer have to deal with as research and designs are altered to try and achieve this requirement. Though they because of this reason they have managed to alter to the regulations and taxes by simply increasing the cost of their product. Since these regulations affect all of the industry they can pass these cost on to the consumer having an equal increase so as to not give one an advantage over the other.
Though by far what the auto industry seems to excel at is in its production. The plants by some of the auto industry are plants with the latest in automated manufacturing, often setting the standard or creating a new method in efficient manufacturing. Add this with the labor cost of developing countries but not just developing countries but countries with the ambition to learn and grow. Although this comes at...
