The Australian car manufacturers are constantly introducing novel models of cars and that plays a pivotal role in the entire economy, driving wide scale and of industrial actions, fostering investment, innovation as well as bolstering growth in the economy. This industry incorporates importers, manufacturers, servicing, retailers, transport as well as logistics counting actions by means of Australian ports along with transport hubs. In essence, this industry has contributed nearly for 70 years to the Australian economy and still continues to deliver specific opportunities as well as benefits to Australians across the entire nation (Khaleel et al., 2017).
Fundamentally, the automotive industry employs approximately 400000 individuals both directly as well as indirectly across 100000 businesses with a annual turnover of over and above $160 billion. The automotive industry can be considered to be an important source of taxation revenue of the government incurring several taxes including Stamp Duty, Fringe Benefits, diverse Tariff Duty, Luxury Car Tax together with GST. Vehicle manufacturers as well as repairers have therefore trained as well as developed highly trained and competent workforce, delivering quality products for both domestic as well as international markets.
For example, BMW Australia carries out imports and sells diverse new and at the same time used vehicles, vehicle spare parts, accessories, motor cycles and many others in Australia. In addition to this, the company also delivers servicing as well as services related to body repairs for particularly motor vehicles.
For specifically automotive industry, there are several significant structural trends that play a role to challenge diverse suppositions that underpin existing models of business. However, in case if a history is any kind of guide, then the industry might perhaps be able to postpone, defer or else postpone diverse legislative imperatives for alteration or draw on nation’s government for continued assistance and support in the face of market intricacy. As rightly put forward by Jahanshani et al., (2014), corporate survival is essentially about superior performance, and then in a specific industry as pivotal since the automotive segment the jobs, wealth as well as mobility that the segment provides can be considered to be string political cards to make certain continued assistance. Essentially, this can further be argued that with increasing worldwide reach of the automotive sector correlated to burgeoning new markets and with growing significance of worldwide supply chains, diverse mechanisms have enabled continued survival of the existing automotive industry business model. However, orchestral nature of diverse process challenges domination of existing traditional vehicle manufacturer and concentrate on production as well as marketing of diverse finished vehicles. Consumers including both retail as well as corporate are encountered with novel technological as well as financial risks with uncertain outcomes in case of they wish to buy electric vehicles (Chen et al., 2015).
The implications of specific ecosystem way of comprehending alteration both in and around automotive industry are that previously distinct systems fail to maintain boundaries or else barriers against many other systems. Lieder & Rashid (2016) suggests these types of ecosystems as being automotive, social networks, diverse geographies, government as well as other industries. Particularly, in their structure, e-mobility ecosystem consists of vehicle manufacturers, diverse suppliers to vehicle manufacturers, electric vehicles, IT providers, e-mobility technology supplier, e-mobility provider, public sector, utility, distributor as well as charging operator. It is essentially the merging of intricacy as well as spontaneous eruption of new possibilities both between and across previously distinct ecosystems. This implies that detached business models cannot be really comprehended in isolation any longer. Theoretically then, as a result of the above force, the conditions are probably right for an extended automotive industry with multiple stakeholders to be brought into new as well as altering added-value configurations, counting circular value creation systems, based on new business models.
Indeed there are substantiation as well as evidence of various attempts for creation of innovative business models for example in case of Better Place in particularly Denmark or else Nissan-Sumitomo 4R model to discover “end of life” utilization process for post-consumer automotive packs of battery for example, Nissan Leaf (Pinkse et al., 2014). However, in the sphere of recharging specific infrastructures, there is overabundance of diverse concepts as well as approaches to finding out diverse ways to make provision of electricity to vehicles a feasible business. Till this time, many of these substitutes have strived for market acceptance, and it is relevant to consider why this might be the case. Firstly, at a fundamental level, it might be the case that diverse innovations around electric vehicles are simply inadequate as compared to established technologies. Therefore, the vehicles cannot eagerly appeal to consumers and might perhaps in fact offer rather marginal advantages. Under specific situations, it might be that business model innovation is not capable of sufficiently recompense for such elementary weaknesses. Secondly, instances such as Better Place rely upon mutual intersection of diverse business models by multiple parties, a characteristic that has not been widely regarded in the academic literature. Nevertheless, it might be the case that this kind of intersections that are essential features of an established value creation arrangement, are difficult to orchestrate in the first instance and therefore can become vulnerable. Thirdly, it is important that the successful ventures namely the “Paris- Autolib scheme” involve strong commitment of diverse public authority as an important partner in the system of value creation (Timmer et al., 2015).
A significant outgrowth of global forces that take shape can be considered to be an increased concentration within the industry on the research as well as development. In particular, this enhanced stress can appear in all the industries as substantiated by a current survey. The hypercompetitive environment of business has rekindled the glow at research and development in automotive sectors. In response to business as well as technology requirements, the research and development centre plays a vital role in the innovation processes of car manufacturers. Essentially, these corporation wide procedures of designing models can help in stepping up the company’s innovation and regaining product excitement of the earlier period (Bergek et al., 2014).
The car manufacturing industry can be observed to be in a influx, as new models as well as designs change the shape as well as performance of automobiles. Nevertheless, there are few periods in automotive history that match pace of change in today’s world.
Achieving and maintaining coherent stratagem takes discipline and an eagerness to chart an unconventional path. The companies such as BMW Australia discover creative solutions for functioning within specific regulatory boundaries and are capable to deliver in any particular region proper admittance to dependence, well-designed as well as superior quality products (Townsend & Calantone, 2014). The introductions of new models can help in incorporating regulatory trends as per reliable predictions and assimilation of predictions into the research and development process.
The car manufacturer acts as innovators and consistently introduce new and at the same time creative products namely electric as well as autonomous cars otherwise mobility as well as connectivity services. Requisite capabilities comprise of appropriate recognition of new needs of the customers along with market trends and making out ways of swiftly transforming innovation into saleable products as well as services (Levidow et al., 2016). Requisite capacities include responding swiftly to demands of consumers for innovation by taking potential users into process of development and assimilating disparate technologies and exercises.
The companies function and at the same time oversee diverse shared resources. Requisite capacities comprise of having high quality infrastructure with huge availability and outstanding user interfaces, defining as well as instituting standards, and building associations with consumers on new channels. Thus, introduction of new models by car manufacturers can help in managing research and development process for gaining competitive edge and growth in business, assist in accelerating innovation and assimilating planning of technological developments along with business strategy. Introduction of core innovation in new models by car manufacturers therefore help in dynamic manufacturing scene (Atalay et al., 2013). This helped in launching new style competition to finance various projects.
Business stratagems to introduce new models by car manufacturers also calls for the innovation in the system of manufacturing, technological advancements, procedures along with business models counting supply chain management, product introduction procedures as well as remanufacture. Therefore, this requires large changes involving considerable amount of investment. Emergence of innovation agenda that is an essential criterion for introduction of new models by car manufacturers also require thorough base of research. This too involves allocation of huge costs for this purpose. In addition to this, target customers of automotive industry also fail to understand improvements of the prior models so quickly (Hsu et al., 2014). The anticipation of consumer design preferences, management of complexity, management of pricing and threats posed by new designs also create complex business environment. The car manufacturing companies also face the necessity to understand distinctive potential that can permit in delivering value proposition better than others. This can help in changing competitive landscape as per requirement and this requires allotment of huge cost. Therefore, the companies operating in the manufacturing sector also need to bear cost for the introduction of the new models.
Thorough analysis of the annual report of the firm BMW Australia reflects the fact that research and development expends of the company increased throughout the period 2010 to 2014. However although research and development expenses increased, the net profit of the company BMW Australia also enhanced (Kale, 2017).
Car industry in Australia necessarily has a monopolistically competitive market structure. This is because there are several corporations in the car market as well as there are numerous automakers throughout the entire world. Again, car makers also differentiate diverse products from others by utilizing an amalgamation of quality along with reputation of brand. Essentially, the corporations also exert control over the level of price and brands of cars have differences other than particularly price. In particular, there are also not many barriers to both entry as well as exit in the market, thus, diverse automakers also appear time and again and old companies also go away also. In this case, no one car company essentially has the entire control over the entire car market (Jahanshani et al., 2014).
In monopolistic competition market structure, purchasers do not necessarily know everything, but they also have comparatively complete information regarding alternative options of price. In essence, they have comparatively complete information regarding differences in product, names of brand and many others. Each seller also has reasonably absolute information regarding production systems and the prices charged by competitors of automakers. In the automobile industry primarily, both the buyers as well as sellers also contain considerable information regarding the names of the brand, differences in product as well as product prices. As rightly put forward by Jahanshani et al., (2014), in monopolistic competition, corporations are somewhat free to enter as well as exit a specific industry. However, there might be few constraints, but not too many restrictions. In actual fact, these corporations are necessarily not perfectly mobile like it is the case with the perfectively competitive market, but these markets are largely unobstructed by regulations of the government, cost of start up or else other significant entry barriers. In effect, in the automobile market, the overall mobility of firm’s resources can be considered to be easy during the period of operation, however, there are certain specific rules and authorization is required by the corporation for operating the business. Jahanshani et al., (2014) suggest that each firm operating in the automotive industry with a monopolistic competitive market structure sells an analogous, but not totally indistinguishable product. The goods marketed by the corporation are necessarily close substitutes of each other, but not perfect substitutes. In this case, each good meets the basic want or else need. Essentially, in the automotive market all the cars are essentially not the same and they are delivering diverse features or else advantages to the users. Thus, automotive market does not essentially deliver the perfect substitutes but they offer close substitute products. This is why automakers constantly innovate their products to present models that are similar, but not totally identical products.
The automotive industry also creates barriers that in turn can prevent corporations to make entry into this specific industry. The barriers generated by constant innovation primarily include economies of scale, differentiation of products, need for investment, costs of switching, admittance to different channels of distribution and many others. However, all these facets can essentially reduce the competition within the industry since it prevents other corporations from entering the market.
Reliability is an important factor for cars and no consumer wants a car that can suffer a breakdown after a month of operation. Therefore, constant innovation through improved research and development can help in augmenting reliabilities of the products. Innovation can also improve the style that in turn can be considered to be an appealing factor to consumers cosmetically. Innovation in this division can make the car look better than the rivals and provide a competitive edge to the automakers (Jahanshani et al., 2014). Again, innovation for enhancement of fuel efficiency can make the car more efficient than that of the rivals and appeal to the consumers who are interested in saving money. Finally, innovation for making cost effective products can obviously make a better price for the similar car and help in attracting more number of customers.
Short run equilibrium of corporation under monopolistic competition essentially maximizes firm’s profits and produces a specific quantity in which the corporation’s marginal revenue (MR) is equal to marginal cost (MC). The corporation can collect a price founded on average revenue (AR) curve. The variances between corporation’s average revenue and average cost, multiplied by the total quantity sold provide the total profit (Jahanshani et al., 2014).
The car manufacturing industry comprises of several corporations that necessarily manufactures specific vehicles in Australia, starting from worldwide volume car manufacturers, buds builders to niche players (Lin et al., 2013). Particularly, the car manufacturer depends on a complicated, tiered network for suppliers.
The vehicle manufacturer faces trade off between vehicle level integration and attain expertise in process of integration, fleeing from diverse component expertise. Different tiers help in integration across different component boundaries and assimilation of vehicle system. This industry is also supported by tough platform of associated capability as well as intellectual property (Joshi et al., 2013).
As per annual report of the corporation BMW Australia, in the automotive division, the total number of vehicles that were sold, and therefore revenues, enhanced considerably, essentially owing to the introduction of novel models along with dynamic business environment. The structure of the manufacturers also helps in development of technology and research base. The philosophy of the research and development therefore shows that industrial research managers are assuming balanced portfolio that essentially emphasizes innovation. The development due to innovation helps the industry to change drastically in terms of both products as well as structure of the business (Dodourova & Bevis, 2014). The rejuvenating innovation in the new models helps in ensuring that a steady stream of both product as well as options of technology can be developed based on the senses of the company. The alternatives are potential responses that the company BMW can use for the purpose of capitalizing swiftly on diverse new opportunities. The procedures are necessarily designed and developed with the aim to be dynamic, with absolutely new information as well as ideas that move continuously all through the system. The thorough evaluation of the innovation initiatives reveals creation of corporate innovation procedures, novel organizational framework and concentration on the research and development centre. The management of portfolio of R&D work and combined research partnering make certain that company is well positioned to deliver critically required technologies. Essentially, these developments might help company such as BMW Australia in supporting the company’s trust toward diverse innovative products, procedures along with services that can satisfy the needs as well as delights of the customers.
Conclusion
In conclusion it can be said that level of competition in the industry also explains the situation in the market. Essentially, it is reasonably easy to acquire a competitive advantage in an automotive industry by carrying out constant innovation in a market with comparatively few large corporations in it. However, the firms such as BMW Australia operating in car manufacturing industry in Australia identify and customize the products by innovative strategy for a specific niche and as per the requirements of target customers. Thus, it can be hereby mentioned that constant innovation by the car manufacturing firms in Australia can help them to deliver an analogous, but not totally indistinguishable products to firms and earn competitive advantage.
References
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Australian Industry Overview 2011Welcome to the 2011 Deloitte. (2017). Retrieved 29 December 2017, from https://www.pickles.com.au/idc/groups/public/documents/webcontent/live-001379.pdf
Bergek, A., Berggren, C., & KITE Research Group. (2014). The impact of environmental policy instruments on innovation: A review of energy and automotive industry studies. Ecological economics, 106, 112-123.
Bmwgroup.com (2017) Bmwgroup.com. Retrieved 29 December 2017, from https://www.bmwgroup.com/content/dam/bmw-group-websites/bmwgroup_com/ir/downloads/en/2016/BMW_GB16_en_Finanzbericht.pdf
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