Strategic Management For Motor Industries

Business and Corporate Strategies

Discuss about the Strategic Management for Motor Industries.

Australian motor industries were established in 1926, where the investment was in the Eclispse Motors Melbourne. The investment in the company Australian Motors Industries was decided by J. F. Crosby and he secured the company while investing it into automobile industry. The company is a successor of Toyota Motor Corporation and the headquarters are in Port Melbourne Australia. The Victorian agency was secured to the Standard Motor which changed the name to Talbot. The standard motor product was the holding company that was formed by the Crosby family that assembled the cars in their new assembly in Melbourne. The subsidiary company which was actually responsible for other vehicle assembly was Australia’s Standard Motor Company (Bracks, 2008). There were certain changes that were handled by the Mercedez Benz. The associations were large and this held to the Triumph cars with the other subsidiary company. The strategic management operations in the company are carried out according to the business functions that has marketing, human resource department, production and finance department.

The business strategies and the corporate strategies are discussed while implementing the capabilities and the leadership skills that enhance the communication and culture of the company. Pestle analysis and Porter’s five force model do affect the business goals. The business objectives and goals are discussed while implementing the change management as and when necessary in the business (Bracks, 2008). The strategic business plan is formulated in accordance with the growth and development of the company. The analysis and the information of the company describes about the strategic plan that needs to be carried out in accordance with the internal environmental analysis while evaluating the competencies and resources. The internal and external analysis help to gain information that results in the findings with its conclusion and analysis of the case (Workplace Express, 2014).

PESTEL analysis for Australian motor industries.

The PESTEL analysis is an analysis tool to identify the current position and the future directions of any company. The meaning of the PESTEL analysis is showcased by Political, Economic, Social, Technological and Legal factors which affect the performance and success of any company. Here we use the PESTEL analysis to identify the forces and the significance of these forces on the Australian motor industries (Wheelen & Hunger, 2002).

Political Factors

The political factors affect the company on a high basis as the company has to follow the regulations and trade policies. The company gets its raw materials and parts from outside the country. Thus, as per different trade relations with various countries, the company has immense political factors affecting the growth of the company (Tambunan, 2007). If the relationships of Australia are not good with the countries with which the Australian Motor Industries deal, that can act as a huge disadvantage for the company having the political factors affecting the trade relations of the two companies. The “royal commission” policy was also subjected to having a great impact on the company. Thus the political factors play a vital role in the success and development of the company (Bracks, 2008).

Change Management

Economic factors

The economic factors definitely affect the company’s value. The rate, inflation, the currency exchanges and rates, the macro economic climate of the country, the rate of the taxes, the labor cost etc. all these factors are subjected to have a huge impact on the company. If the company trades with other countries for import and export purposes, the exchange rates may benefit or harm the company’s overall revenue generation (Raman, 2010).

Social factors

The social factors are the huge impact factors which affect the company. The automobile industry is especially concerned with the diving and environmental concerns. The company needs to follow an all the social and political norms when it comes to serving in the automobile industry. Global warming, electric cars, aging population issues everything has an effect on the company. Thus the social factors have a huge impact on the AMI (Zulaikha & Ellya, 2008).

Technological factors

Technological factors also contribute highly on the company as the automobile field is completely driven by the technology. The technological factors such as the development of the product using new technologies and proposing new technologies in the new products the company launches. It is very important to use the latest technology and serve the customers with the technological advances products to sustain the market and to beat the competitors (Bracks, 2008).

Legal Factors

The legal factors like the customer satisfaction acts, the better quality acts etc. works on the company in a large basis. The company has to follow all the legal formalities and regulations which the government has included in the policies. Thus the legal aspect is the highly impactful factors on the company’s growth and success (Raman, 2010).

Porter’s 5 force analysis

The porter’s 5 force analysis is showcases the current position of the company and the several factors affecting the company’s development and success ratios. The analysis consists of the 5 forces which are the supplier’s bargaining power, the customer’s bargain power, the threat of new entrants, the threat of competitors and the threat of the substitute products.

The bargain power of the buyers

The customer’s bargain power acts immensely on the company. The buyers have a lot of choices in the Australian market. The companies are quite rich with the brand image and the market position in Australia. This can lead to a huge threat to the AMI and the company must consider developing a strong base for attracting ad sustaining more customers (Bracks, 2008).

Strategic Business Planning

The supplier’s bargain power

The bargaining power of the suppliers gets heavy when there is more number of companies acting as competition for the company. If the suppliers have huge options, the suppliers would bargain more regarding the costs and the profit shares. The Australian market is full of such automobile companies, thus the bargaining power of the suppliers is high (Raman, 2010).

Threat of competition

The company faces a huge completion in the domestic market as there are several local Australian automobile companies as well the international automobile companies like Toyota which serves as a huge competition to the company. This threat of competition is high for AMI (Political Structure, 2011).

The threat of substitute products.

The substitute products are the various cars and automobiles, which can replace the company’s products. This indicates that the various company products and goods can give a huge competition to the AMI (Zulaikha & Ellya, 2008).

The threat of new entrants

Though the company has a strong and a huge base in the country, there is a risk of the new entrants getting more market share. However, it is not that easy to get in competition with such a well established company with a new and starting phase. Thus the company has a very less threat of new entrants.

Any organization irrespective of its nature, size and scope of work perform several functions such as functions of production, finance, human resource management, marketing etc. For any strategy to be successful, realistic assessment of the organization’s resources and capabilities is must. While formulating the strategies an internal analysis helps to strengthen the strong points and overcome the weaknesses. The internal analysis process includes the resources of the firm, type of business the organization is in, the objectives, plans, policies etc. Australian motor industries were basically an automobile assembly firm in the early history of Australia. In 1926 J.F. Crosby invested in Eclipse Motors Ltd of Melbourne and in 1929 AMI secured the Victorian agency for Standard Motor company’s cars. With this secured agencies AMI had a steady expansion during 1930’s.

The Australian Motor Industries was one of the few popular car manufacturers. It was mainly specialized in redesigning of the popular cars such as Mercedes, Toyota, Rambler etc. Eclipse Motors was established in 1920 with the prime purpose of imported automobile sales in Australia. This business was expanded in 1952 under the name of Standard Motor Company Pty. Ltd.  with the main objective of franchising the building of cars in Australia itself, and thus avoiding the high import tax and providing the employment to the locals. The port of Melbourne plant, thus became the birthplace of Australian Motor Industries. AMI had both the tangible and intangible resources all at a proper place (Zulaikha & Ellya, 2008).

PESTEL Analysis

 The tangible resources include assembly plant for passenger cars, assembly unit for tractors and other assembly lines for different other segments.

Australian Motor Industries imported knock down kits with the help of which it had the capacity of assembling about 100 cars per day taking over the Australian automobile market. Import taxes on vehicles ultimately led to the significant growth in the Australian vehicle body building industry (Commission, 2014). These changes led to the demise of the small body builders and consolidating Australian Motor Industries with the assembly port of Melbourne was one of the newest facilities introduced in order to meet the postwar demand for cars. By the 1955 assembly lines and units were expanded to huge limits of 33 acres of land and the new engine assembly unit was able to assemble 100 engines per shift i.e. 8 hours. This advancement in the assembly lines and imported kits and with development with Standard Motor Products there were very few to compete. In 1958 the company had a negotiation with Diamler-Benz and in reference to the agreement; the company was given the name as Australian Motor Industries (Zulaikha & Ellya, 2008).

Toyota Tiara was the first Toyota car which was assembled outside Japan by Australian Motor Industries. Toyota Motor Corporation took all the outstanding shares of Australian Motor Industries in 1968 and took over the control. The Japanese company, thus amalgamated the company into two arms, namely Toyota Motor Corporation Australia for passenger cars and Toyota Motor sales for Toyota commercial vehicles and trucks.

The industry involved in the designing, developing and manufacturing, marketing and selling of motor vehicles is termed as automobile industry. The automobile industry is highly contended in social marketing as well online communities (Rego et al, 2009). People are quite passionate about the product either as an ambitious purchase or as it accomplishing a significant and purposeful part in their lives. People have a strong inclination towards particular brands that they always prefer. Any organization affects majorly due to its internal and external factors. The macro and micro environment is a part of any industry, and as such it is likely to affect its functioning and the overall market (Varadarajan, 2010).

The industry is affected by various economic, political, technological, legal and cultural as well as geographical and international factors, which consists of macro environment. Whereas, an organization is duly affected by competitors, new entrants, suppliers and buyers and substitutes this comprises of the internal environment (Mizik & Jacobson, 2007).

Porter’s Five Force Model

Various issues affecting the Australian automobile industry are variable economic growth, increase in disposable income in Australia, emerging of various lower cost competitors, more and better application of marketing concepts, improving quality control. Other factors also majorly affect the organization and industries are changes in government policies in alliance with the customer satisfaction and the economic growth. Hence forth, the organization needs to strive and cope up with all the factors that hinder the strategic possibilities of the organization (The Senate of Australia, 2015).

Recommendations in the automobile industry to mainly concentrate on maintain its high standards for the product development and also give high quality deliverance at its best value. The internal factors such as resources and capabilities need to be used optimum, intelligence and financial resources to be applied to its greatest extent (Mizik & Jacobson, 2007). Technological advances take over the industry with its maximum impact and such one should adopt it as quick as possible. Social, legal, political and environmental factors are part of any industry, so to coping with it, making best use of it in the production process only will help the industry to prosper. Making changes in the government policies can be a due source to make surviving the automobile industry (Vorhies et al, 2009). However, the economic risk analysis is an important factor to consider and also to make an evident impact on the industry. Just ensuring the best deliverance through its services and providing the best market product would enhance and industry as well as the company to survive and also make its mark (Wright et al, 2011).

Conclusion

Australian Motor Industries is the production of Toyota Motors that has an expansion in Melbourne. The company stretches its production and assembly of cars and is renamed to Toyota Ltd in the year 1985. The pestle analysis and the porter’s five forces model is analyzed and examined in detail to find results that relate to the growth and development of the company. The business plan is formulated as per the business strategies that creates an effectiveness while analyzing the companies strengths and opportunities (Mizik & Jacobson, 2007). The macro environment factors and the micro environment factors are the internal and external factors that has an impact over the strategic management in the company. the external environment of the company is analyzed by Porter’s five forces model and the PESTLE analysis that is undertaken for the business purpose while identifying the key factors when the key opportunities and the business threats are examined. The competitive advantage is felt when the market position is not stable and sustainability is a major driving force that Australian Motor Industries considers in the business plan. Whereas, Porter’s forces model has a connectedness towards the aspects that consider the competitive forces and these driving forces that attract the business opportunities are selected when competitive environment is considered (Wright et al, 2011).

References

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Commission, P. (2014), Australia’s Automotive Manufacturing Industry. Commonwealth of Australia, Melbourne.

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Workplace Express (2014), ‘Thousands of Toyota Workers to Lose Jobs, as Local Car Manufacturing Ends,’ 10 February.

Wright, C.F., Clibborn, S. and Lansbury, R.D. (2011), ‘Becoming an Endangered Species? The Future Viability of Australian Automotive Manufacturing’, International Journal of Automotive Technology and Management, 11, 172–88.

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