Automotive Industry Assessing the Social  Business Plan

  • Length: 4 pages
  • Sources: 5
  • Subject: Transportation
  • Type: Business Plan
  • Paper: #41391246

Excerpt from Business Plan :

While the political climate is not nearly as turbulent and disruptive as the auto industry, the fact remains that this industry that thrives on disposable income and the availability of easy credit, both of which are constrained by current economic conditions.

Opportunity and Threat Analysis

The greatest opportunity for the industry today is in creating more energy-efficient, highly customizable cars that also meet the needs of car buyers who want eco-friendly engines that have very small carbon footprints (Oliver, Lee, 2010). The broader trend of mass customization, where consumers are dictating their own brands or personas by their purchases, has invaded auto marketing and car buying. To make this selling strategy effective however, the supply chains of auto manufacturers must be synchronized to build-to-order requirements. The entire value chain of the industry is going through a shift due to this requirement today.

The greatest threat to the industry is consumer confidence coupled with too much dependence on foreign oil by westernized nations. The lack of consumer confidence is hurting sales today and has begun to change long-term behavior with regard to auto purchases. The threat of oil prices however is a much longer-term threat that is estimated to reach its apex in another 70 -- 80 years. Forward-thinking auto companies are using these facts as a catalyst for innovation and the creation of entirely new vehicle and engine designs. The threats of gasoline prices over the long-term are real, and it is very fortuitous for the industry that consumers are now more focused on the environment than on driving a huge vehicle that guzzles gas for the sake of status.

Recommendations

The auto industry needs to re-think its role in consumers' lives and redesign its entire value chain accordingly. The focus on smaller, more easily custom-configured cars through the build-to-order process needs to become a priority as is the need to invent entirely new engines and technologies to minimize environmental impact of their operation. Cars are very much of a status symbol; it is the second largest purchase many people make with the exception of their homes. The focus on making the car more of a statement of environmental awareness is already happening, as many celebrities only drive the popular hybrid models, with the Toyota Prius being their favorite.

The marketing of cars will go through a massive shift over the next five as consumer behavior and purchasing patterns continue to solidify. No longer will cars be sold based on the technical merits alone or just their aesthetics; cars will be increasingly sold for the environmental contribution they make will giving customers the chance to make a statement of what their values are. If the auto industry can redesign itself and in so doing architect its direction on these factors, it will continue to grow. The need for massive change to the value chain, from supplier enablement and knowledge sharing to the customization process and selling all are changing at a very rapid pace today and will into the future.

References

Bernoff, J., & Li, C.. (2008). Harnessing the Power of the Oh-So-Social Web. MIT Sloan Management Review, 49(3), 36-42.

Bilek, G. (2010). The Value of Information Sharing in a Build-to-Order Supply Chain. The Business Review, Cambridge, 15(1), 131-136.

Jeffrey H. Dyer, & Nile W. Hatch. (2004). Using Supplier Networks to Learn Faster. MIT Sloan Management Review, 45(3), 57-63.

Jeffrey H. Dyer, & Kentaro Nobeoka. (2000). Creating and managing a high-performance knowledge-sharing network: The Toyota case. Strategic Management Journal: Special Issue: Strategic Networks, 21(3), 345-367.

Gaylord, S.. (2010). From Windfall to Curse? Oil and Industrialization in Venezuela, 1920 to the Present, Latin American Politics and Society, 52(3), 176-179.

Henriksen, B., & Rolstadas, A.. (2010). Knowledge and manufacturing strategy-how different manufacturing paradigms have different requirements to knowledge. Examples from the automotive industry. International Journal of Production Research, 48(8), 2413.

Herrmann, A., Henneberg, S., & Landwehr, J.. (2010). Squaring customer demands, brand strength, and production requirements: A case example of an integrated product and branding strategy. Total Quality Management & Business Excellence, 21(10), 1017.

Ili, S., Albers, A., & Miller, S. (2010). Open innovation in the automotive industry. R & D. Management, 40(3), 246.

Joongsan Oh, & Seung-Kyu Rhee. (2010). Influences of supplier capabilities and collaboration in new car development on competitive advantage of carmakers. Management Decision, 48(5), 756-774.

Jason D. Oliver, & Seung-Hee Lee. (2010). Hybrid car purchase intentions: a cross-cultural…

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