The Competitive Status of the U.S. Auto Industry A Study of the Influences of Technology in Determining International Industrial Competitive Advantage (1982) / Chapter Skim
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2 An Industry Primer
2 An Industry Primer
Pages 17-34
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From page 17... ...
Reliability, simplicity, and low cost were essential to the development of a true mass market oriented toward basic transportation. In this sense, design changes in the first 20 years of the industry were determined by market demands, and competitive success depended on significant advance in 17
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From page 18... ...
and Buyer Priorities in the 1970s Market Segments Sporting/ Prestige/ Economy Cars Personal Cars Family Cars Luxury Cars Chevette BMW 320i Fairmont Audi 5000 Civic Camaro Impala Jaguar Corolla Celica LeBaron Lincoln Omni Cutlass Coupe LTD Mercedes-Benz Pinto Grand Prix Regal Seville Rabbit Mustang Thunderbird Priorities Price x x x Fuel economy x Interior room x Comfort x x Reliability x x x Acceleration x Handling x Styling x x Interior trim x x Workmanship x SOURCE: Adapted from Arthur D Little, Inc., The Changing World Automotive Industry Through 2000 (1980, pp.
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From page 19... ...
Although not a perfect measure of the diversity of demands in the postwar era, vehicle size has been an important competitive dimension. Larger cars have been associated with luxury, elegance, and prestige, and many important product innovations were first developed for larger cars and then diffused to the rest of the product line.
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From page 20... ...
The figure includes activities in the chain of supply from raw materials to final assembly. Perhaps the dominant characteristic of the automobile production process is the importance of economies of scale.
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From page 21... ...
The net effect of these developments has been to enhance the importance of scale in the determination of profitability and competitive advantage. The Plant Network: An Illustration The basic structure of the overall manufacturing process, and in particular the plant network, can be illustrated by considering the
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From page 22... ...
"Downsizing" involves all new body sheet metal (retool stamping plants) , a shift to V-6 engines (change engine lines)
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From page 25... ...
Ford lost the leadership position to GM in the late 1920s, and GM has retained a dominant market share to the present time. From 1925 to 1970, competition in the auto industry was essentially competition among a few giant domestic firms.
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From page 26... ...
Primary Factor Standardization leads to acceptable levels of performance; price becomes significant factor in purchase decision. Secondary Factor Technology is refined and standardized; new models offer styling changes.
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From page 27... ...
Under new management after World War II, Ford rapidly adopted a new strategy.5 Independent divisions, each having its own product lines and production facilities, were envisioned. Separate engine and assembly plants for Lincoln-Mercury and Ford divisions were introduced, but the market failure of the
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From page 28... ...
In describing competitive policies, Lawrence J White concludes that Ford has been a follower in styling but a leader in seeking out market niches.6 New models like the Mustang, Maverick, Pinto, and a combination car and truck called the Ranchero seem to confirm this characterization.
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From page 29... ...
Unlike G M, production for all product lines was centralized, and Chrysler apparently did not integrate vertically backward as extensively as either G M or Ford. Because Chrysler produced fewer of its own components, it was less constrained in adopting advanced innovative components.
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From page 30... ...
Whether in terms of size, performance, or quality, foreign firms have sought an advantage by creating products that were different from the standard or traditional domestic products. Furthermore, the more successful firms have built strong sales and service networks.
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From page 31... ...
The decade of the 1970s witnessed a trend toward erosion of the profitability of the domestic producers and marked cyclical swings in the recessions of 1970, 1974-1975, and most recently in the 1979-1980 period. The downward trend in profitability may reflect declines in real income, rapid shifts in relative prices, an inappropriate product mix, and effects of increased price competition from imported products.
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From page 32... ...
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From page 34... ...
firms' response to the crisis and the likely character of the industry's evolution in the next decade have been and will be strongly influenced by the specific pattern of industry development up to 1973. Several facets of that development might be examined fruitfully; we have chosen to emphasize three: the ~v~=l';~C u1 'produce ana process technology, the internationalization of markets, and the growth of government regulation.
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