Motor Vehicle Manufacturing in Australia
Motor Vehicle Manufacturing in Australia
INDUSTRY ANALYSIS
Overview
Thomson (2003) explains that the manufacturing of motor vehicles is a global game. Thomson (2003) argues that Australia does not really have domestic businesses that manufacture motor vehicles as the three major car makers (GM Holden, Ford and Toyota) are all subsidiaries of foreign companies. However, this is not the case, GM Holden for example produces many cars a year in Australia for Australian consumers as well as engines for export.
Industry Attractiveness
The Ibis report (retrieved 1 August 2010) shows that the motor vehicle manufacturing industry in Australia is a $11.8 billion industry where 19,025 are employed. The industry is said to grow annually by 3.1% with just over 100 businesses working under the motor vehicle manufacturing banner. The industry in Australia exports $3 billion to overseas customers and manufacturing plants, this number is only said to expand because of globalization factors such as international trade.
Porters Five Forces Model
Porters Five Forces – Extended
1. Threat of new entrants
According to Wright (2008) the motor vehicle industry is volatile in Australia as there is an ever present threat of other international and domestic car companies entering the market, however form a standpoint of a totally new company entering the market this would be extremely hard. Wright (2008) explains that there is very high barriers of entry including;
• High fixed costs
• Excessive number of participants within the industry
• Small size of domestic market
• Competition with some of the largest multinationals
As the passenger motor vehicle production has dropped over the years, seen through the -3.6% decline, (comparable to last year) the results have suggested that new entrants are simply from overseas manufacturers because; as Thomson (2003) puts it economies of production variation are lower overseas.
2. Bargaining power of buyers –
INDUSTRY ANALYSIS
Overview
Thomson (2003) explains that the manufacturing of motor vehicles is a global game. Thomson (2003) argues that Australia does not really have domestic businesses that manufacture motor vehicles as the three major car makers (GM Holden, Ford and Toyota) are all subsidiaries of foreign companies. However, this is not the case, GM Holden for example produces many cars a year in Australia for Australian consumers as well as engines for export.
Industry Attractiveness
The Ibis report (retrieved 1 August 2010) shows that the motor vehicle manufacturing industry in Australia is a $11.8 billion industry where 19,025 are employed. The industry is said to grow annually by 3.1% with just over 100 businesses working under the motor vehicle manufacturing banner. The industry in Australia exports $3 billion to overseas customers and manufacturing plants, this number is only said to expand because of globalization factors such as international trade.
Porters Five Forces Model
Porters Five Forces – Extended
1. Threat of new entrants
According to Wright (2008) the motor vehicle industry is volatile in Australia as there is an ever present threat of other international and domestic car companies entering the market, however form a standpoint of a totally new company entering the market this would be extremely hard. Wright (2008) explains that there is very high barriers of entry including;
• High fixed costs
• Excessive number of participants within the industry
• Small size of domestic market
• Competition with some of the largest multinationals
As the passenger motor vehicle production has dropped over the years, seen through the -3.6% decline, (comparable to last year) the results have suggested that new entrants are simply from overseas manufacturers because; as Thomson (2003) puts it economies of production variation are lower overseas.
2. Bargaining power of buyers –