Term Paper on "Fiat and GM"

Term Paper 3 pages (1397 words) Sources: 0

[EXCERPT] . . . .

Fiat & GM

Analyzing the world car industry, it can be mentioned that almost all the industry global players have tried to share efforts, investments and risks, taking the opportunities offered by "partnering" - acquisition, mergers and different form of alliances. There are also disadvantages, as the process of making decision is more complicated in an alliance, involving interests of different partners.

Porter's Five Forces Model has identified five forces in order to determine the long-run profitability of a market or a market segment: suppliers, buyers, entry/exit barriers, substitutes, rivalry. Considering the automobile industry in the world, it must be first mentioned that it has passed through a process of globalization with a lot of alliances that have led to the fortification of the small car producers and extension of the big producers in most removed parts of the world. This means a standardization of the products considering the quality factor (most of producers tend to improve their quality) and also a more accurate adjustment to the clients' demands. It must be pointed out that the supplier concentration has diminished, involving numerous suppliers in this industry once the penetration of the big car producers in the emerging markets from the Latin America and Asia or in the East European market. The consequence of this tendency is the reduction of production costs as the workforce in these parts of the world is less expensive and also the transportations cost has decreased (as suppliers are closer to the car producers).

Analyzing the "buyer" factor, it can be observed a tendency of increasing the number of consumers, if it is taken into account only the Eastern European market that has opened in the last decades. This has led to products differences through adjusting the automobiles to the price-quality force that exists in that part of the world. A lot of big car producers have emerged on this market educating the consumers with the brand identity but also borrowing some national substitutes in order to produce less expensive.

The entry barriers" are also an important factor because on the moment on penetrating a lot of strengths and weakness are analyzed: cost advantages (cheap workforce costs in the emerging markets), access to input (a lot of bankruptcy factories in the Eastern Europe have been acquired by the big auto producers and transformed in productive and efficient car producers), government and other binding policy (again the example of the Eastern Europe, where the state has offered less constrain fiscal policy to the car producers that have taken over the national producers in order to modernize them).

In the moment of analyzing the substitute element, it is worth to point out the balance that the car producers must find when deciding to create a new product, switching costs in order to obtain a certain price and quality. It is hard to believe that a considerable number of buyers tend to find an alternative to the car considering its practical advantages.

Rivalry is a constant presence in the car industry that led to a lot of acquisitions and alliances in order to increase the share on the market and the capacity to extend the lines of products. It may be mentioned only the rivalry among the American car producers, West European producers and Asian producers, the buyers taking all the advantages from this tight competition on the market.

General Motors is the world largest automobile producers (12.6% of the world market), whereas Fiat Auto is the world's sixth- largest automobile producer (with 5% of the global market). Through this alliance, the two companies hope to distribute their products on the markets of each other: GM intends to consolidate its position on the European market, competing with the European and Asian producers, whereas Fiat tends to market its luxury marques, Alfa Romeo and Lancia in the United States, where the competition includes almost all the important car producers in the world. Cutting cost is the main objective of this alliance.

4. One of the tangible resources may be the extension of the market for the two companies, as GM may increase its selling on the European market through the Fiat market and the Fiat car can be… READ MORE

How to Reference "Fiat and GM" Term Paper in a Bibliography

Related Term Papers:

Fiat's Fall From Grace Can Fiat Turn Thesis

Fiat Case Study

Fiat, once a global leader in auto manufacturing, is more challenged than the majority of other global manufacturers by the ongoing recession due to several macro and… read more

Thesis 7 pages (2120 words) Sources: 4 Style: Harvard Topic: Business / Corporations / E-commerce

---

Should General Motors Be Saved Reasons for and Against Thesis

GM Bailout?

Introduction to the General Motors Bailout

No sooner had Barack Obama been elected President then House Speaker Nancy Pelosi was on NPR claiming that the most important order… read more

Thesis 10 pages (3295 words) Sources: 11 Style: MLA Topic: Business / Corporations / E-commerce

---

American Automotive Industry and Porter's Five Forces Model Research Paper

American Automotive Industry and Porter's Theory

American Automotive Industry in the light of Porter's Five Forces Model

automotive industry contributes a great deal in global economy. It is huge and… read more

Research Paper 10 pages (3581 words) Sources: 9 Topic: Transportation / Mass Transit

---

Tarp and American Auto Companies Thesis

TARP and American Auto Companies

Of the $1.1 trillion in authorized bailout funds for financial firms and banks ($700 billion Troubled Asset Relief Program (TARP) and $400 billion for Fannie… read more

Thesis 8 pages (2747 words) Sources: 6 Style: Turabian Topic: Economics / Finance / Banking

---

Who Does the Government Bailout? Research Proposal

Bailouts

The issue of bailouts has incited no shortage of controversy in recent months. The first major bailout was the federal government takeover of insurance group AIG in September at… read more

Research Proposal 6 pages (1901 words) Sources: 6 Style: APA Topic: Economics / Finance / Banking

---

View 100+ more related papers  >>