Example research essay topic: Issues In Today’s Global Automotive Industry – 1,171 words

… ring are beginning to affect automaker
decisions. (LePree 34) While opportunities abound,
the costs of moving beyond current industry
product architecture and infrastructure are huge
and the technological uncertainties are high. If
hybrid drive trains win widespread acceptance, the
commercial prospects for more radical technologies
like fuel cells may be impaired. New materials
pose their own dilemmas with respect to cost and
product performance. Planning for end-of-life
recycling of vehicles often conflicts with other
trends in vehicle design and technological
innovation.

Finally, the outlines of a mobility
business model are still unclear. Figuring out how
best preserve the bottom line and still go green
will be the major strategic battleground in auto’s
New Economy. Even as bold new plans are formulated
for cars of the future the industry has to
determine who these vehicles will be designed and
marketed to. Any automaker will admit that they
would like to have the next world car. A world car
is loosely defined as a model that has universal
appeal if most if not all markets and a high
profit margin. A world car takes advantage of
globalization of resources within a firm,
modularization of parts and manufacturing
techniques, and it also utilizes outsourcing in
component and vehicle manufacturing.

On the other
hand automakers still have to consider how much of
their resources should they devote to the needs of
specific geographic markets. North American
buyers, although appreciative of an inexpensive
and highly fuel efficient vehicle, tend to shy
away from the generic look and smaller size that
is traditionally associated with a world car.
While some may argue that the American market is
saturated (and in some ways it is compared to most
Asiatic countries, for example), it still
obviously has a huge market of buyers as evinced
by our sustained market of new car buyers. As new
drive trains are developed, each automaker will
have to make a decision. They will need to
consider whether or not to launch these power
plants in smaller (and easier to develop)
platforms, or should they try and make them work
in larger utility vehicles and sedans? As
important as product and market development is,
manufacturing is also very important. The two most
important elements of manufacturing are (1) the
OEM-supplier interface, where suppliers get the
goods needed to the OEM for vehicle manufacturing
and (2) the internal manufacturing operations of
the OEM, where the primary focus is on the design
and assembly of vehicles. As the industry enters
the 21st century, the traditional automotive
business model will be constantly challenged and
revamped as components are modularized and
manufacturing techniques undergo changes to make
them both more efficient and worker friendly.

The
auto industry now faces the same pressures to
reconfigure the supply chain that has transformed
the faster-clock speed high technology industries.
Automakers are increasingly reliant upon large and
sophisticated Tier One suppliers (suppliers that
deal directly with the manufacturer) that take on
design and logistics responsibilities and make
investments in capital equipment and advanced
technology development. Alliances among automakers
and with firms outside the industry are
increasingly common too (i.e. NUMMI,
Mistubishi/Daimler Chrysler, etc.) as the costs of
developing new technologies and of serving global
markets strain the resources of even the largest
firms. It is readily becoming a reality that
manufacturers have to place a constant demand on
their suppliers to continually cut costs. This is
a very difficult situation, as manufacturers
simultaneously must outsource more and more of the
production process. If they continue to pressure
suppliers to cut costs, they stand a chance of
loosing them.

Some manufacturers, such as Honda
and Toyota realize the reality of the situation,
and have made efforts maintain relationships with
their suppliers. In a recent article in Wards Auto
World this unique approach was discussed. It is
the OEM-supplier interface component of the
business model, however, that demonstrates the
greatest differences between the domestics and
Honda and Toyota. At no time during the past 15
years, except for the Tom Stallkamp era at
Chrysler, has any domestic OEM acted with as much
concern for maintaining good supplier relations as
have Honda and Toyota. The way this approach is
carried out was detailed as follows, The initial
emphasis on quality when selecting suppliers
carries over to the manner by which Honda and
Toyota work with their suppliers . .

. Honda and
Toyota expect their suppliers to be around
long-term. And if the supplier is not performing
as expected, Honda and Toyota will work with the
company to get its costs down or improve quality –
whatever it takes to make the supplier’s goods
competitive. On the suppliers end this may seem
like the ideal situation in which your only client
is just as interested in your profit margin as you
are. This relationship does not come with a price
though, more often than not it actually allows the
automaker to exert more cost-cutting pressures.
Still, our studies found that Honda and Toyota
carry out all of their supplier interface
activities while applying considerable price
reduction pressure on parts makers. (Henke 48) On
a manufacturing level, collaboration is the key to
survival in the next economy.

Automakers must be
prepared to leverage relationships with suppliers,
distributors, technology alliance partners, and
customers more intensively. Only those firms that
skillfully develop and manage the capabilities of
this extended enterprise will thrive. Each company
is on its own quest for a unique advantage in the
industry’s new economic geography. Economic
geography is really what will determine the paths
taken by automakers in the years to come. Oil
shortages and price raises can force an early hand
on hybrid/fuel cell/electric development and
implementation. If an automaker is not ready, then
they could suffer, as competitors who started
their R&D earlier, will have faster product
delivery.

Again, economics will determine success
and failure as automakers address such questions
as, Will the car market continue to erode in favor
of segment-blurring hybrids (hybrid hydrogen
fuel-cell vehicles such as the Ford Focus FCV)?
(Birch) and What happens to all existing models if
and when fuel cell power trains break into the
market? The answers to these questions, and other
similar questions, involve massive manufacturing
and financial commitments. To understand why
economics so crucial, one must simply refer to the
bottom line. Where are the customers? Where will
they be next year? What do they want? What do we
have to overcome to deliver that product before
our competitors? How can we deliver it with the
highest profit margin possible? The first company
that can provide all the right answers to those
questions is the winner. Works Cited Birch,
Stuart. Ford’s Focus on the Fuel Cell.
http://www.sae.org/automag/features/fordfc/
Christenza, John. Can GM Save an Icon? Business
Week.

April 8, 2002: 60. Goisher, Steven.
Administration Shifts Strategy On Auto Fuels. The
New York Times. 9 Jan. 2002: pA1(N) col 2. Henke,
John.

It’s Not the Business Model. Ward’s Auto
World. March 2002: 48. LePree, Joy. A Greener
Ride. Product Design & Development.

Sept.
2001: 34. Wolkomir, Richard. Yo-ho-ho! The
Economist. 21 Feb. 2002: 42..

Research essay sample on Issues In Todays Global Automotive Industry