Strategy Development In The Global Automotive Industry Essay

Strategy Development In The Global Automotive Industry - Essay Example Modern technology has made it easier to manage and expand businesses, without even moving out of your office. As the world is getting smaller, markets are getting bigger! Every industry is witnessing mergers, acquisitions, a foray into new and emerging markets and a boost in sales and profits. The customer has never had it so good! Competition on a global basis has resulted in reduced costs, better quality, improved responsiveness and excellent customer service for any product. The automobile industry is a classic example to demonstrate this phenomenon. Let us take the examples of two automobile companies: Daimler Chrysler and Honda and examine how globalization has affected the operations of these two companies. In 1998, US-based Chrysler Corp. merged with German automaker Daimler-Benz (1926-1998) of Stuttgart, Germany in a deal that was expected to reshape the auto industry. The deal created a new entity, DaimlerChrysler, which was the highest revenue earner in Germany. The best of technology, safety and comfort in automobiles came together to create the world's best known car company. With the merger, it was thought that Chrysler would have a better access to the European market, while Mercedes parent Daimler-Benz would gain a bigger foothold in the American market. This also gave a chance to both companies to reduce costs. Against globalization According to the article "The DaimlerChrysler Merger" submitted at Tuck School of Business, Dartmouth, http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf , accessed 5th May,2008, "In 2001, three years after a "merger of equals" with Daimler-Benz, the outlook is much bleaker. The financial data is sobering: Chrysler Group is on track to hemorrhage $3 billion this year, its U.S. market share has sunk to 14%, earnings have slid by 20%, and the once independent company has been fully subordinated to Stuttgart4. Its key revenue generators - the minivan, the Jeep SUV, and the supercharged pickup truck - have all come under heavy competition from Toyota, Honda, General Motors and Ford. Chrysler continues to make few passenger cars of note, save the Neon and limited-release Viper and Prowler." Competition from Toyota According to Premium Brand Analysis http://www.pwc.com/extweb/industry.nsf/docid/ccd6ae64aad8ea31802570d90035614e/$file/wylie_stbildagen07.pdf,accessed on 5th May,2008, "In the EU, European Premium brands have attained - and maintained - a position of dominance in the Premium market space. European Premium leads the way, in the USA, but others maybe catching up fast. In the USA, European Premium brands have also grown, but have also faced competition from Asian brands. US Premium segment is also targeted by Japanese Premium brands (Lexus, Infinti and Acura), which collectively held 3.8% of the market in 2005" Competition from Asian bigwigs like Toyota is definitely eating into Daimler Chrysler's profit margins across the globe. People today have a choice between a pricier, classy Mercedes and an equally efficient, dependable, but much more economical Toyota! Company : Honda For Globalization Through globalization, even small and mid-sized