Which means that automobile companies must simultaneously focus on producing efficient vehicles, but also provide all the new commodities that make the driving experience safer and more entertaining at the same time?
Finally, legal aspects of the worldwide landscape have molded the automotive industry primarily through the breakdown of barriers. The greater globalization seen in contemporary world politics means that standards across countries are becoming the same, which makes it much easier for competitors to enter foreign markets. Emission standards, gasoline standards, and general safety standards have all become much more uniform from country to country, and this helps automobile companies to manveur on the global stage. Traditional methods of import/export laws to protect domestic corporations are much a thing of the past and the inter-dependence between nations is largely why current develops still work within the established legal framework.
Marketplace:
Current strategic management of the automotive industry focuses on how to breakdown a company's core strengths to focus on specific target markets. Traditional strategic management decisions have focused on diversifying portfolios so that a company is entrenched in as many markets as possible and thus reaping revenue in every target market. However, this has changed in the current landscape, primarily because small and nimble companies that target specific segments of the industry are outclassing the giants of the industry. GM is an excellent example in this case, a corporate giant who has vehicles from high end luxury brands such as Cadillac and Buick as well as very low end economy cars such as Pontiac and Saab. Since its past strategic management decision was to diversify it has lost its brand integrity in many of these markets. Sales of Cadillac's have decreased almost 65% since 1990, largely because the brand has been associated with old-school redesigns rather than new innovations. Smaller brands within the market such as BMW, Ferrari and other high end luxury car companies have largely stolen this market share. The new era of strategic management entails that companies decentralize each division within their company into independent and largely autonomous units that can be agile within their particular market. Honda for instance, complete separates its Skyline and RSX division from its Accord brands in order to allow them to market, produce and develop their own innovations to stay competitive with top tier specialty companies.
Branding within this market is extremely difficult, because product differentiation becomes harder and harder with the number of new offerings in the market today. However, brand recognition and association has become the number one indicator of consumer purchases, outpacing quality and cost significantly. Today automobile companies brand themselves through a two tier system of both general corporate recognition and specific car recognition. The general branding of a company such as Toyota is a focus in innovation and efficiency, with a reputation for providing reliable long-term usage cars. Within this corporate branding however, there is a sub-layer of specific car branding such as the new Yaris chain, which has branded itself as fun and sporty cars that are both cheap, energy efficient and fun. The diversified approach to branding is a general practice within the industry; however it has often backfired on many companies. The association of luxury brands within Korean manufacturer Hondai, and its branding as a generally breakdown prone vehicles have caused their luxury brands to falter. The need to delicately balance the corporate brand and specific car brands is one of the strategic challenges of the new era.
In general an analysis of the marketplace shows that it is becoming more and more overcrowded with many different product lines and companies vying for an established client base. However on a global level the shift from emphasizing developed nations to developing nations has made the possibility towards increasing market share a reality for many struggling companies. The greatest challenge of the current marketplace is how to balance branding within established markets and create new branding techniques within developing markets.
Specific Companies analysis: General Motors and Toyota
The goal of all corporations is to understand its unique place within the Value system and its specific place within the value chain. In the case of GM, the automobile giant has gained dominance within the value chain system by taking on all aspects of design, production, and sales. The value chain within GM focuses on a central approach towards developing a cohesive and formidable value system. GM's chief strategy within the past five years has been consolidation. Its need...
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