¶ … globalization increased and standards of living around the world went up and with the expansion of industrialization in many less developed countries around the world, the demands of the automotive industry around the world increased significantly. This resulted in a worldwide boom in the international automotive sector with many individual countries entering the global automotive market as potential producers. As a result, the international competition in the automotive sector grew more aggressive over a period of time.
The sharp increase in international competition in the automotive industry during the recent years and the fact that automotives are not a 'Fast Moving Consumer Good' made, the countries involve in automotive production realized the growing need to stay competitive. The need to maintain an absolute competitive advantage and constant innovation, research and development was inevitable. Moreover, the international automotive industry was dominated by a handful of big players of the likes of Ford and Toyota and therefore newer entrants and smaller players had to be careful in their short-term and long-term strategies in order to stay competitive and face the competitive pressures of the bigger and established market players. The main competitive advantage not only lied on strong brand positioning, quality management and innovation, but also on earning enough economies of scale so that the pricing strategies could made competitive in international market. The need to maintain increasing returns to scale and economies of scale became much more needed when the international automotive sector saw a sudden plunge in the consumer demands given the recent economic crunch that started in 2007 and is continuing to have its effects around the world.
While in the pre-recession time, the international automotive market was dominated by western players and Japan remained the only major player from the Asian side of the globe. However, the dynamics of the international automotive market evolved greatly especially during the post recession era with many other Asian markets emerging as strong competitive forces. The opportunities of low cost of production and lucrative consumer markets also attracted other western players to invest in Asian markets and many western players shifted their supplier base and in some cases even production plants in Asian region. According to the Asia Automotive Industry Yearbook, the year 2009 laid the foundation of a flourishing automotive industry in Asia with South Korea, Indonesia, China, India, Pakistan, Malaysia, Thailand and Vietnam being the key players in the market. As stated earlier, Japan has only been a major dominant Asian force in the west dominated automotive market (Abott, 2003). However, in the recent times, the researchers and industrial economists have seen South Asian countries as major emerging players, particularly eyeing China and South Korea. There are two primary reasons behind this paradigm shift in the automotive industry's focus from West to South Asia. The first reason is the fact that United States of America has lost its competitive advantage a great deal especially in post-2007. The increasing inflationary cost pressures triggered by sky rocketing oil and steel prices, and along with higher labor wage rates have taken the cake away from the United States of America as far as hi-tech industries and the automotive industry in particular is concerned. The European markets have also seen a similar trend line. On the other hand, not only the Asian markets, and South Asian countries in particular, enjoyed the edge of cheaper labor and lower raw material costs which resulted in an overall lower cost of production, but also enjoyed a strong government support at the policy making levels, with the respective governments giving special attention to assisting regional automotive industries and providing them exposure to the international markets.
While all the above mentioned South Asian countries enjoyed a booming trend in their respective automotive industries, what differentiated them with one another was their goals, objectives, strategies and the overall roadmap and approach taken towards the growth of their respective automotive industries. What was common and an important readon that enabled them to pose competitive threats to established bigger players. Despite of being newer and smaller in size, was the fact that their approach focused on specializing in specific types of automotives rather than going for massive diversification. Each of these countries carefully selected the market segment they wanted to play around by analyzing where they could have an absolute competitive advantage over other players. This paper aims at carrying out a comparative study of three Asian countries namely Malaysia, Korea and Thailand, which are being seen as emerging players in the international automotive industry in the recent times.
The Automotive Industry in Korea
International industrial economists and researchers have viewed Korea as having the potential of the second largest player in the international automotive market after Japan. According to the Asian Automotive Industry...
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