This website uses cookies to ensure you have the best experience. Learn more

Global Automobile Industry In 2009 Essay

1519 words - 7 pages

A thorough analysis of the external forces that shaped the global automotive industry in 2009 reveals how the rivalry between established car makers set the stage for some to successfully survive the global recession while others were forced to seek Chapter 11 bankruptcy. A closer consideration of the impact of consolidation, demand and supply, fixed costs, product differentiation, and exit barriers on rivalry within the industry reveals how new entrants and weaker competitors were able to take advantage of environmental opportunities during the recession and gain profit shares. These considerations illustrate the critical importance of analyzing the forces that shape competition in an ...view middle of the document...

Consolidation
As it relates to the competitive structure, or the number and size distribution of companies within an industry, the automobile industry is considered a consolidated industry, where a small number of large companies dominate and are able to set prices. Traditionally, in America, these companies were called “The Big Three,” Chrysler, Ford, and GM, but Toyota, was also a major rival during the recession. “In consolidated industries, companies are interdependent, because one company’s competitive actions or moves (with regard to price, quality, and so on) directly affect the market share of its rivals, and thus their profitability” (Hill & Jones, 2012, p. 62). The relative power of consolidation on the automobile industry was high.
Demand and Supply
A second point of consideration relating to the intensity of rivalry within the industry was the level of industry demand. “Demand declines when customers are leaving the marketplace or each customer is buying less” (Hill &Jones, 2012, p. 62). This was the case in 2009 in many developed nations due to the recession, which was marked by job loss, credit problems, and high gas prices that increased the demand for fuel-efficient vehicles or left consumers unable to purchase vehicles altogether. At the same time, growth was expanding in China and some other developing nations, which opened the doors for automobile companies in these countries to expand at home and overseas, taking market share away from and increasing the intensity amongst established rivals. The relative power of this shift in demand on the industry was high.
Fixed Costs
Where fixed costs are high in an industry, as they are in the automobile industry, “profitability tends to be highly leveraged to sales volume, and the desire to grow volume can spark off intense rivalry” (Hill & Jones, 2012, p. 62). For automakers, high fixed costs coupled with low demand and “the fact that between 2004 and 2008, some 19 million units of new productive capacity had been added to the global industry,” meant that some carmakers, especially Chrysler and GM, faced substantial losses that forced them to seek government intercession and, ultimately, bankruptcy. The power of fixed costs has a high relative power in the automobile industry.
Exit Barriers
Exit barriers are economic, strategic, and emotional factors that lock companies into an unprofitable industry where demand is static or declining and results in excess productive capacity that leads to even more intense rivalry as companies attempt to cover fixed costs (Hill & Jones, 2012, p. 63). Exit barriers in the automobile industry include machines, equipment, and operating facilities that are of little or no value in alternative uses or cannot be sold off. Additionally, high fixed costs of exit, such as severance pay, health benefits, and pensions that have to be paid to workers make it difficult to leave the industry. For example, it was estimated that GM had more than $45...

Other Essays Like Global Automobile Industry In 2009

Key Vendors List For Global and Chinese Neomycin Industry Market Research Report 2009-2019

640 words - 3 pages analyzes quantitatively 2009-2014 global and China’s total market of Neomycin by calculation of main economic parameters of each company; The breakdown data of Neomycin market are presented by company, by country, and by application; The report also estimates 2014-2019 market development of Neomycin Industry. The report then analyzes the upstream raw materials, downstream clients, and current market dynamics of Neomycin Industry. In the end

Global and Chinese Corrugated Tube Industry, 2009-2019: Market Analysis, Size, Share Growth, Trends and Forecast

708 words - 3 pages makes some proposals for a new project of Corrugated Tube Industry and a new project of Corrugated Tube Industry before evaluating its feasibility. Overall, the report provides an in-depth insight of 2009-2014 global and China Corrugated Tube industry covering all important parameters. Table of Contents Chapter One Introduction of Chinese Corrugated Tube Industry 1.1 Brief Introduction of Chinese Corrugated Tube Industry 1.2 Development of

Global and Chinese Nifurvidine Industry by Product, Application And Services Analysis Research Report - 2009-2019

666 words - 3 pages and Chinese Nifurvidine Industry, 2009-2019 Market Research Report' is a professional and in-depth study on the current state of the global Nifurvidine industry with a focus on the Chinese market. The report provides key statistics on the market status of the Nifurvidine manufacturers and is a valuable source of guidance and direction for companies and individuals interested in the industry. The report explores the international and Chinese

What Factors Increased The Demand of Global and Chinese Nitazoxanide Industry 2009-2019 ?

649 words - 3 pages . Global and Chinese Nitazoxanide Industry, 2009-2019 Market Research Report' is a professional and in-depth study on the current state of the global Nitazoxanide industry with a focus on the Chinese market. The report provides key statistics on the market status of the Nitazoxanide manufacturers and is a valuable source of guidance and direction for companies and individuals interested in the industry. Firstly, the report provides a basic

Global and Chinese Polyterpene Resin Industry, Forecasts And Competitive Strategies Development Analysis Research Report 2009-2019

687 words - 3 pages -2019. Prof Research Reports has announced the addition of a new insight report based on the titled “Global and Chinese Polyterpene Resin Industry, 20092019”, to its vast range of Market Forecast and Development research reports. Global and Chinese Polyterpene Resin Industry, 2009-2019 Market Research Report' is a professional and in-depth study on the current state of the global Polyterpene Resin industry with a focus on the Chinese

Global and Chinese 4,4'-diiodobiphenyl Industry, Segmentation, Future Growth And Outlook Development Research Report 2009-2019

722 words - 3 pages , 2009-2019 Market Research Report' is a professional and in-depth study on the current state of the global 4,4'diiodobiphenyl industry with a focus on the Chinese market. The report provides key statistics on the market status of the 4,4'-diiodobiphenyl manufacturers and is a valuable source of guidance and direction for companies and individuals interested in the industry. Firstly, the report provides a basic overview of the industry including

Future Trend of Global and Chinese Difenzoquat methylsulfate Industry Development Research Report 2009-2019

677 words - 3 pages methylsulfate Industry, 2009-2019 Market Research Report' is a professional and in-depth study on the current state of the global Difenzoquat methylsulfate industry with a focus on the Chinese market. The report provides key statistics on the market status of the Difenzoquat methylsulfate manufacturers and is a valuable source of guidance and direction for companies and individuals interested in the industry. Firstly, the report provides a basic

Future Trend of Global and Chinese Methoxyrfenoxide Industry Development Research Report 2009-2019

641 words - 3 pages definition, applications and manufacturing technology. Then, the report explores the international and Chinese major industry players in detail. In this part, the report presents the company profile, product specifications, capacity, production value, and 2009-2014 market shares for each company. Through the statistical analysis, the report depicts the global and Chinese total market of Methoxyrfenoxide industry including capacity, production

Market Study: Global and Chinese Paclitaxel Industry, Competitive Strategies And Forecasts Analysis Research Report 2009-2019

579 words - 3 pages in-depth market survey on Global and Chinese Paclitaxel industry. The report firstly reviews the basic information of Paclitaxel including its classification, application and manufacturing technology; The report then explores global and China’s top manufacturers of Paclitaxel listing their product specification, capacity, Production value, and market share etc. The report further analyzes quantitatively 2009-2014 global and China’s

Global and Chinese Propetamphos Industry, Future Growth And Outlook Development Research Report 2009-2019

635 words - 3 pages . Global and Chinese Propetamphos Industry, 2009-2019 Market Research Report is a professional and in-depth study on the current state of the global Propetamphos Industry with a focus on the Chinese market. The report provides key statistics on the market status of the Mixing Station manufacturers and is a valuable source of guidance and direction for companies and individuals interested in the industry. In this part, the report presents the

Global and Chinese Disposable diaper Industry, 2009-2019: Market Analysis, Opportunities, Segmentation and Forecast Research, Report

669 words - 3 pages Global and Chinese Disposable diaper Industry: Market Analysis Research Report, Trends and Forecast 2009-2019 Number of Pages: 150 Published Date: Jan - 2016 According to a new market report published by Prof Research Reports Market Research Report on Global and Chinese Disposable diaper Industry: Market Analysis, Size, Share, Growth, Trends and Forecast Report 2009-2019. Global and Chinese Disposable diaper Industry, 2009-2019

Related Papers

Automobile Electronic Sensor Industry For Global And Chinese 2009 2019 Market Research Report

877 words - 4 pages Global and Chinese Electronic Sensor (Automobile) Industry, 2009-2019 Market Research Report Delivery of the Report will take 2-3 working days once order is placed. The ‘Global and Chinese Electronic Sensor (Automobile) Industry, 2009-2019 Market Research Report’ is a professional and in-depth study on the current state of the global Electronic Sensor (Automobile) industry with a focus on the Chinese market. The report provides key statistics

Global And Chinese Metamitron Industry Landscape And Its Growth Prospects In The Coming Years 2009 2019

635 words - 3 pages and Chinese Metamitron Industry, 2009-2019 Market Research Report is a professional and in-depth study on the current state of the global Metamitron Industry with a focus on the Chinese market. The report provides key statistics on the market status of the Mixing Station manufacturers and is a valuable source of guidance and direction for companies and individuals interested in the industry. In this part, the report presents the company

Global And Chinese Disodium Tetraphthalate Industry Landscape And Its Growth Prospects In The Coming Years 2009 2019

680 words - 3 pages Report 2009-2019. Global and Chinese Disodium Tetraphthalate Industry, 2009-2019 Market Research Report' is a professional and in-depth study on the current state of the global Disodium Tetraphthalate industry with a focus on the Chinese market. The report provides key statistics on the market status of the Disodium Tetraphthalate manufacturers and is a valuable source of guidance and direction for companies and individuals interested in the

Global And Chinese N Cyclohexyl 2 Pyrrolidone Industry Landscape And Its Growth Prospects In The Coming Years 2009 2019

744 words - 3 pages Forecast Report 2009-2019. Global and Chinese N-Cyclohexyl-2-Pyrrolidone Industry, 2009-2019 Market Research Report' is a professional and in-depth study on the current state of the global N-Cyclohexyl-2-Pyrrolidone industry with a focus on the Chinese market. The report provides key statistics on the market status of the N-Cyclohexyl-2Pyrrolidone manufacturers and is a valuable source of guidance and direction for companies and individuals