How would you include these control mechanisms like System Control, Bureaucratic Control, Market Control, and Clan control in the automotive industry.
The automobile industry in the US has experienced dynamic changes since the start of the Bush administration. The development of the automobile industry can be divided into different stages. The first stage (from 1949 to 1965): In this period the first automobiles were manufactured and later being appointed as the diplomatic transportation in the US. The second stage (from 1966 to 1980): During that period, the demand of automobile grew gradually, with the emphasis shifted to higher manufacturing capacities. The US government injected an aggregate investment of approximately $0.6 billion. As a result, the yearly production capacity reached 160,000 units.
The third stage (from 1981 to 1992): The automotive industry continued to expand with vast foreign investment. In the year of 1998, there were over 550 foreign joint venture companies and the value of the overseas investment was approximately US$6.5 billions. The fourth stage (From 1992 to 2000): The US' automotive industry grew stably. Total production of vehicles was increased from 1 million units in 1992 to over 2 million units in 1992. Lastly, the fifth stage (From 2000 to the present). The US' automobile industry has developed rapidly. The US took only two years to reach the three million units in terms of production volume (Johnson, 2005).
The success of the auto industry in the United States can be attributed to the management system that these industries had been able to implement. Hence, the main goal of this paper is to present an analysis regarding the modern and future management of the US automobile industry. The discussion will include the description of the current management system imposed within the US auto industry as well as the challenges and opportunities faced by this transport-oriented industry sector. The treatise shall look into the impact of economic factors in the growth and future of this profitable industry. .
As the US auto industries realized the impact of globalization to their current system, the company had been able to use this to pursue and establish a management system to help them compete in the global market. In this manner, the use of joint ventures and technology transfers had helped the auto industries in US to compete in the global market. The external expansion of business and the simple improvement in labor productivity had increased profits after delivering income and profit tax to the government (Kochan, 1997). Acquisition of foreign technology was especially critical when it became linked to adding new products for the US economy. On the supply side, decades of emphasis on simple reproduction to the neglect improvement in product design meant that the US people had no experience in coming up with new products of their own. Yet demands were growing rapidly not only for light and heavy trucks, with a thriving rural economy and anticipated expansion in the mining and manufacturing industries, but also for luxury coaches, taxis and vans, with the US door opened to foreign tourists and businessmen. Demand for specialty vehicles also rose, as the consumption of the urban population became more sophisticated.
The globalization challenges have been the key factor that affects the US auto industries to establish a management system that will improve their competitive advantage. The competition in the US auto industries has been very stiff and complex. In this regard, the auto industries all over the US are trying to utilize a strategy and management system that will enhance the performance of the business so as to outgrow its rivals. With this, auto industries in the US have been able to use a unique and strategic management system. The US started taking over the processes and standard products to enhance the skills and technology within the auto industry. Because, the initial project regarding technology imports and joint ventures were restricted in scale and incidental in nature for the auto industry in the US, the local governments of the nation which have the conventional control over the local suppliers have decided to continue the administrative type of managing the auto industries. However, due to the threats of foreign investors and the stiff competition in this industry, the US had decided to reform its management system. In 2002, the US was ranked fifth in the world in terms of automobile production volume. Its production volume reached 3.25 million units in 2002 - a 38.5% increase over the same period of the previous year. Passenger car production numbers surpassed the one million mark for the first time and reached 1.09 million units - a 55% increase over the same period of 2001 (Meiklejo, 2000). The very high growth rate in 2002 demonstrated that the automotive industry in the world is growing rapidly.
As a member of a group of leading industrial countries, the US auto industry embodies a high standard quality of living, outstanding infrastructure, highly educated and skilled workforce, and reputable and successful trading nation without wage inequality. The US takes pride of having a strong economy. Historically, it recorded a consistent performance characterized by growth, low inflation, stable unit labor costs, improved cost competitiveness, record exports, and a healthy level of business investment since 1994 up to present.
In the job market of the US auto industry, the openness and free flow of trade and investment contributes to the remarkable increase of job creation. In 1999, job growth documented a significant figure of 3.0 percent and considered the highest rate since 1988. On December of the same year, unemployment dropped to 6.8 percent making the lowest level since April of 1976. The job market today is increasingly prosper and has not created the onslaught of an alarming inflation.
Specifically, the US auto industry is a diversified one with potency across a variety of specified sectors. The US auto industry marked its increased productivity when the slowed economic growth in 2003 (1.3 percent) rebounded to 2.3 percent in 2004. The real GDP is predicted to expand and accelerate from 2.0 percent on 2005 up to 2.8 percent in 2006. Employment in the US auto industry was 6,316,000 in 2004 with 108,000 jobs produced. Inflation was 1.9 percent in 2004 and forecasted to reach an average of 1.9 percent in 2006 as to compare with 2.1 percent in 2005. The US' superpower economy pushes a steady course as it goes onto most modern perspective of prosperity.
It is common for the US auto industry to hold the opinion that the management of their commercial organizations is inferior to that of foreign-owned firms in the same industry in the US. It is also assumed, by outside observers of commercial activity in the US, that some aspects of the US culture and organizational practices in the planned economic period will negatively affect the functioning of the US firms, especially state-owned enterprises, or SOEs. Since, the US auto industry had considered foreign investment; the most common monetary or fiscal policy in this industry is the so-called shared management system.
In the initial phase of foreign investment in the US auto industry, it was required that foreign companies enter the US market by establishing joint ventures with US enterprises. Wholly-owned enterprises are now permitted, and their popularity equals that of joint ventures. Western companies which entered the US auto industry through the joint venture structure saw virtue in having US partners as an entry mechanism into the local market and as go-betweens with the bureaucracy (Ramrattan, 2007). They also used joint venturing with huge US enterprises as a way of dominating the market against the threat of other multinationals and local companies in the same industry. As part of the joint venture structure the US want to share management equally, regardless of their equity level.
Shared management joint ventures, no matter what the nationality of the joint venture partners, or where they are located globally, face the divisive forces of two partners involved in a struggle for power. The experience of Airbus, a Franco-German condominium, and DaimlerChrysler, a German-American carmaker, were examples of how cultural or national differences can have a disastrous impact in making the company act as one. Managers are appointed by their own side, and generally see their future as lying with their own side, so naturally they attempt to implement the agenda of their parent company organization.
When US-foreign joint ventures were established, US managers dispatched to them from the US parent believed that the foreign participation will be short-term. Once the capital, technology and advanced management skills had been acquired, the US would proceed without need for any foreign participation. Many US auto industry managers highlights that Americans want to be their own masters and this can lead to subversion of the Western manager's schemes.
The changes in the global auto industries and market had been the key factors to influence the changes in business management system. In the US, the country had been able to adapt to the needs of having a more competitive industry by using different management approach. One of the strategic moved made by the US is its membership with the World Trade Organization, as a member US society will undergo deep changes.
The concept of endogenous economic development highlights the US auto industry's need to allow change and make room for the growth of its production system by developing and utilizing the potential of local resources especially its people through the investment of private firms and holdings as well as of the government itself through national economic policies. Kavussanos (2001) discussed that economic growth and structural change are the result of investment strategies and decisions of enterprises operating in the market and integrated into the cultural milieu that conditions economic dynamics of territory affecting the production of the organization, the relational system and innovation as well as the learning process. The country's fast developing coastal areas and main regions distinguished and highlighted the need to extend such economic development in the interior regions.
The US auto industry's capacity to meet the growing demands for automobiles to be exported can be explained by the fact they have the biggest work force in the world and many countries trust them with investment. This fact leads to another fact that the US is the largest manufacturer of automobiles. Because of the efficiency of the US work force are able to produce finished good at a rate that they have a lot of surplus to export around the globe. And because of low workers pay manufacturers are able to distribute their goods at a much lower rate, once these goods hit the market there prices will still be within the reach of the average consumer.
Systems Control in the automotive industry refers to steps taken to control and implement a set of functions that responds to changes in the automotive industry to meet the long range requirements, initiate response to demands that are placed on the automotive industry as a whole and prevent the dilapidation of any part of the industry. The Systems Control measures may be taken by the automotive industry or by the government. For instance, since the industry perceived the trend towards lower fuel using vehicles it is imperative that 'control' measures are taken to ensure that there is an industry wide changeover to the making of low-fuel consuming vehicles. Let us take another example, if a sudden increase in the import of foreign made cars threatens the viability of several plants in the industry, the governed may initiate measures to curtail imports so that the degradation of the automotive industry does not take place. Another example pertaining to degradation of a part of the system is that if the ...
The control mechanisms in the automotive industry are examined. System Control, Bureaucratic Control, Market Control and Clan Control are analyzed.