GLOBAL AUTOMOBILE INDUSTRY

Global Automobile Industry

Table of Content

Introduction1

Discussion1

Lack of Single Market for Automobile Products and Parts2

Nature of Multimarket Competition3

The Automobile Industry5

Barriers of Cross Border Trading in Automobile Industry9

Regulations10

Laws11

System Stability11

Public Policy11

American, European and Chinese Automobile Industry12

American Automobile Industry12

Chinese Automobile Industry14

Impact of Barriers on Cross Border Trading15

Entity Survival and Profitability15

Market Access16

Profitability16

Differential Advantage17

Conclusion17

References19

Global Automobile Industry

Introduction

As Porter observes that if one of the two elements of competitive strategy is about identification, selection, and choice (on the part of the firm) to be in one or more industries to achieve long-term profitability, the other concerns with retaining a competitive position in any specific industry the firm decides to operate. Of these, the analysis of the first element of industry attractiveness is done by using Porter's Five Forces Model of the structural determinants of the intensity of competition in an industry. Similarly, the second element of developing and maintaining a competitive position within a specific industry become the objective of Porter's Generic Strategy Framework (comprising focus, cost leadership and differentiation as being the three generic strategies available to a firm) (D'Aveni 2002, p. 39).

Discussion

Multimarket competitive dynamics has seen a dramatic growth in both theoretical and empirical literature over the last fifteen years. This has helped expand our understanding of how multimarket contacts between firms together with their micro-level competitive actions and retaliations affect their overall competitive positioning. But the likely influence of the multimarket competitive context on competitive strategy remains understudied (Boeker, Goodstein, Stephan and Murmann 1997, p. 126).

Lack of Single Market for Automobile Products and Parts

In Porter's words, a firm differentiates itself from its competitors when it provides something unique that is valuable to buyers beyond simply offering an economical price. One expects that because competition emerging across multimarket makes the competitive context of firms increasingly complex, differentiation as a competitive strategy will begin to playa critical role compared to the alternate generic strategies of focus and cost leadership. This is so because theoretically a firm has an almost unlimited number of ways of positioning itself in comparison with its competitors based on a choice of a differentiation strategy. The potential is only limited by the creativity of the firm's strategic managers (Boeker, Goodstein, Stephan and Murmann 1997, p. 126).

In contrast, competitive positioning based on either cost-leadership or focus can only take a firm so far, beyond which the potential of continued competitive gains from adoption of these strategies gets limited. Therefore, how the multimarket competitive context affects aspects of a firm's overall competitive positioning (such as differentiation and performance) become crucial to investigate, in order to contribute to the growth of strategic management as a field of study.

When firms operate in multimarket, the competitive space between them acquires far higher complexity than is the case in individual markets (Boeker, Goodstein, Stephan and Murmann 1997, p. 127). Several additional parameters now need to be considered, which not only affect the nature of competition in the industry but must also be taken into account by the firm's managers as they formulate the organisation's ...