The world automobile industry has experienced a downward trend in profitability since the 1960s. (Table 4. A2 shows this trend since the 1980s. ) What changes in the structure of the world auto industry have caused competition to intensify and profitability to decline? The reason why the world automobile industry experienced a downward trend in profitability is because the competition among automobiles which cause the surplus to decrease gradually. The other reason why they lost profit is due to an increase in outsourcing of materials components and services which has lowered the cost and increased the flexibility.
The greater the competition, the more likely the automobile industry will fall. Unfortunately many automobile had to adjust their prices of their automobile to be able to survive. 2. How is the structure of the world automobile industry likely to change over the next five years (2010? 14)? What effect will these changes have on competition and profitability in the industry? More auto industry each day are creating low-energy vehicle that would say consumer hundreds of dollars in fuel cost.
Ford introduced its hybrid vehicle earlier this decade. Before the hybrid many automobiles company was categorized by uncertainty over design and technology. Today, technology and design have been the main focus of competition of this industry. The progress in hybrid vehicle, innovated technological and luxury affordable vehicles has structure a new generation in the automobile industry. Over the next five years, the competition in the automobile industry will increase with these new design and eco friendly vehicles.
The profit will follow with the increase for the next five years because more companies are designing hybrid to progress and compete in this industry; the greater the competition in the automobile industry, the greater the profit 3. What will be the Key Success Factors in the world automobile during the next five years? The key success factors in the world automobile in the next five years will be increase in hybrid vehicles and outsourcing most of their materials. They most continue to invest in new technology and think of new innovated ideas to attract the demand of the consumers.
New technology will reduce cost and increase profit. 4. Are there any segments of the world automobile market that you think will offer superior profitability over the next five years? By continuing to outsource their materials and components, the automobile industry will create a segment that would eventually offer a superior profitability over the next five years. By outsourcing, a company will be able to achieve lower costs and increased flexibility. Hybrid cars are the most important product for a automobile company, because every consumer is try to get more miles for their dollar.