Research Proposal on "Automotive Industry - Environmental Analysis"

Research Proposal 4 pages (1037 words) Sources: 4 Style: APA

[EXCERPT] . . . .

Automotive Industry - Environmental Analysis

The following pages focus on analyzing the external environment of Daimler Chrysler. The company includes brands like: Dodge, Chrysler, Mercedes Benz, and Jeep. Daimler Chrysler is one of the most prolific manufacturers in the global automotive industry, along Ford, General Motors, Toyota, Honda, and Volkswagen. Over the past decades, the global automotive industry has reported significant growth. This expansion process is considered to have been influenced by the following aspects:

Global market dynamics

Establishment of Global Alliances

Industry consolidation

Regarding the global market dynamics, the most important car manufacturers have directed their production facilities to regions like Latin America, China, Malaysia, and Southeast Asia in order to diminish production costs. Regarding the establishment of global alliances, it is worth mentioning that General Motors, Ford, and Daimler Chrysler have merged or formed commercial strategic partnership with smaller, but more strategically placed automakers in Europe and Japan. Industry consolidation consists in the increased global competition that can be observed between the world's greatest car manufacturers (BERA, 2004).

The automotive industry is influenced by a series of macroeconomic variables. The most significant impact is given by variables like: inflation, interest rates, productivity, employment and unemployment, consumer expenditures, public debt, personal disposable income, medium wages. In 2007, the following values were reported for most important macroeconomic variables: GDP - $13.84 trillion, GDP real growth rate - 2.2%, labor force - 153.1 million, unemployment rate - 4.6%, inflation rate - 2.9%, public debt - 60.8% of GDP (CIA, 2008).

The macroeconomic variables selected for the analysis are inflation and unemployment. The corresponding industry variable for inflation is represented by sales. The corresponding industry variable for unemployment is represented by wages.

Table 1 - Inflation rate and motor vehicle sales

Inflation rate

Motor vehicle sales (annual percentage change)

Source: Index Mundi, 2008, and the Journal of Commerce, 2008.

Table 2 - Unemployment and wages

Unemployment rate

Automotive industry wages (mean annual wage)

Source: Bureau of Labor Statistics, 2008.

In order to identify and analyze the opportunities and threats of Daimler Chrysler, one must determine the company's strengths and weaknesses, since the opportunities and threats derive from them, mixed with the influence of the external environment of the company.

One of Daimler Chrysler's strong points resides in the fact that the company is one of the industry leaders and the number two car manufacturers regarding total sales. Also, the company provides well-known, strong brands that are quite famous across the world, which makes it easier for Daimler Chrysler to promote its products worldwide and to build a strong and resistant image in the mind of p existing customers and of potential customers.

Another strong point for Daimler Chrysler consists in the variety of price ranges and model types, ranging from economy cars to luxury models. This creates great opportunities for the company, because this way it is better represented, and recognized. Customers cannot buy something that does not stand out. From this point-of-view, Daimler Chrysler receives plenty of attention, which leads to increased sales.

The worldwide automotive industry is characterized by an environment that is in continuous change and development… READ MORE

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