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Business & Marketing
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Engineering, Design, Distribution & Aftermarket of Automotive Industry (Essay Sample)

Instructions:

EC521 – International Business Analysis 2021-2022
Assignment 1: Economics Assignment Brief
Submission Date: Tuesday November 23, 2021 10am
This individual report of 1750 words is worth 50% of the module mark.
The task:
The task is to apply what you have learnt about international business to a common situation you may face as a researcher in business or as a consultant. You will apply key skills you may have to use in employment such as researching industries, sourcing and analysing data, and reaching conclusions.
The task will assess the following Learning Outcomes:
- LO1: Demonstrate an understanding of key issues, concepts and theories relating to cross border business and gain an appreciation of the business environment in other industrial nations through comparative analysis
- LO2: Apply this knowledge to analysis of real-world international business problems
- LO5: Build on skills of financial and economic analysis, acquired at Level 4, and use them to understand macro and microeconomic data
The problem:
Your employer is a UK-based multinational enterprise (MNE) looking to invest overseas. Your employer has assigned you the task of researching a global industry for a potential investment. You are required to report on the state and structure of a global industry, and on the macroeconomic health of one key economy (by comparing the 3 biggest consumer markets for the industry). You then need to report on two key aspects representing critical success factors for a potential overseas investment: Mode of Entry and the Political, Legal and Cultural situation as it pertains to your industry in your chosen country.
Instructions:
1. Select a global industry: either one from the list below or one approved by your seminar tutor
2. Conduct an industry analysis,
3. Find the 3 biggest consumer markets in your selected industry and carry out an assessment of their macroeconomic performance (time series 2010-2020 plus five-years of forecasted data). You should select either the largest market or the fastest growing market. It is recommended you make use of the key macroeconomic variables used in Topic 5 on Differences in Economic Development.: Macroeconomic Assessment and make use of benchmarking and comparisons (with the other consumer markets of the chosen industry).
4. Report on the two aspects of an international investment into your chosen industry and focus on the country you have selected to invest:
o Mode of entry
What is the most appropriate mode of entry for an international investment into your chosen industry? Why is it the most appropriate mode? Discuss advantages and disadvantages. What investments risk will your employer be exposed to? (Topic 6)
• Political, Legal and Cultural Situation
What political obstacles lie in your way? How can they be effectively dealt with? Is corruption an issue to contend with? What is the situation with red tape issues in the country? What cultural factors are important to consider? Do we have, or do we need, inside contacts? Are their any legal obstacles for the type of investment you propose? Is there a threat of war or expropriation of assets in the country? (Topic 7)
Pre-approved Global industries (whole industry or subsection thereof)
• Automobiles
• Consumer Electronics
• Smartphones
• Travel
• Retailing
• Consumers Health
• Apparel and Footwear
Further information
5. You must deliver a 1750 word written report consisting of the following:
• Global industry analysis 40% of marks;
• Comparable macroeconomic analysis of 3 countries (consumer markets) 30% of marks
• Report on two key areas/critical success factors – mode of entry, political-legal and cultural aspects- for international investments 30% of marks
• A diagram of the process to follow is at the end of this brief
• You absolutely must justify- and back-up your arguments using credible and reliable sources.
• Examples of credible and reliable sources can be found in all your EC521 lectures and on EC521 MyStudies pages.
• Full marking criteria is provided on MyStudies
• YOU CAN INCLUDE ALL YOUR DATA TABLES AND GRAPHS IN AN APPENDIX (not included in the word limit)
• Submission is via Turnitin and must be in the form of a word document or pdf.
• Any extension requests must be made through your course leader
• If there are technical issues with submission please contact either the module leader or the Undergraduate Office
• Submission must be made by 10am on Tuesday November 23, 2021
• The assignment will be discussed further in seminars and an assessment briefing video is available on MyStudies in the Assignment Help folder. A help video on sourcing information from the library is also available in the same folder.
• An opportunity to discuss the assignment and criteria with your seminar tutor will be given in the seminars in Week 1.
• An assignment help lecture and seminars will be held in Week 5, beginning November 1, with additional support sessions in Week 6 beginning November 15.
• All questions on the assignment should be directed to your seminar tutor
• Feedback and marks will be given on Turnitin and be available 20 working days following submission by Friday December 17, 2021.
• Help sessions on the second assignment in January 2022 will give an opportunity for aspects of the feedback to be built into Assignment 2.
• Harvard referencing must be used – please see your business school referencing guide
• Information on extensions is available in the Assessment and Marks folder on MyStudies.

source..
Content:


Title Page
total word count 1970
TOC \h \u \z 1. Introduction PAGEREF _jpqqng6oendq \h 32. Industry Analysis PAGEREF _fzbzooozecv3 \h 32.1. Consumers PAGEREF _dqxzk93hp6sr \h 4Table 1. Top Ten Automobile Markets 2016 PAGEREF _upeyktal20p4 \h 42.2. Producers PAGEREF _w9zsw4eok8sa \h 52.3. Structure PAGEREF _5hnh7g8tqt8p \h 52.4. Trends and issues PAGEREF _pas2pcj3n76q \h 53. Macro PAGEREF _h90a1q9b9zg5 \h 64. Politics PAGEREF _osf9f0n1j1we \h 65. Mode of entry PAGEREF _gszcrmltnlkj \h 76. Conclusion PAGEREF _bm3d1yruzmkt \h 8Reference list PAGEREF _va3erimmp8bw \h 10
1. Introduction
Engineering, design, distribution, and aftermarket are just a few of the segments that make up the automotive industry. Automobile manufacturers are concentrating on cutting costs, increased efficiency, and the adoption of renewable power engines. Gasoline, diesel, electric, and other alternative fuel automobiles such as ethanol and hybrid electrical motor­ heat engine drives fall into various distinct groups depending on the fuel consumption.
Electric vehicles are by far the most efficient engines as compared to the currently used internal combustion engines (ICEs), with reduced pollution, lower emissions, and better fuel economy than conventional automobiles. This makes them more expensive than standard automobiles (Marketresearch.com, 2009).
2. Industry Analysis
Whether traveling alone to the office or bringing the whole family to the beach, customers today employ multi-purpose cars all around the world. The automobile sector, which is critical to the economy, is on the edge of new technological advances. In recent times, customers' need for novel and expensive features is the driving force behind the car sector. Variables, such as the access to low trained labor, and low-cost steel plants, assist the car industry globally.
Furthermore, the market's expansion is fueled by increased manufacturing of passenger automobiles, trucks, buses, and other commercial vehicles. The market performance was highly influenced by improved road quality as well as increased infrastructural development.
Partnerships, mergers and acquisitions, globalization, and technology debuts are all common strategic tactics in the automobile business. Industry leaders invest deliberately on research and development as well as growth strategies.
The COVID-19 epidemic had a massive effect on the automobile industries. Acquiring raw supplies, luring labor from quarantines, and delivering finished goods were all issues that manufacturers faced. Additionally, severe lockdown restrictions put a halt to car manufacturing and prompted numerous businesses to reduce their output.
Due to travel restrictions and an aggregate drop in business activity owing to the COVID-19 pandemic, global automobile manufacturing declined drastically in 2020, falling 15.4 percent from the previous year. Passenger cars and commercial vehicles both saw considerable decline in output, with 16.9% and 11.6% declines, respectively. This would be the third year in a row that international motor vehicle production has declined. Worldwide electric vehicle sales, on the other hand, surged by 39% to 3.2 million units in 2020, bringing the entire global stock to 11.3 million units (Knoema, 2021.).
Nonetheless, with continuously growing demand, the automobile sector is quickly returning to normal. In addition, when the lockdown in many regions eases up, market revenues will increase.
2.1. Consumers
China, the United States, and Japan are the three largest markets that lead worldwide demand for automotive. From 2009, China has led as the largest market, even over the United States, in terms of passenger vehicle sales (Economic Outlook, 2014). China and the USA account for 41.89 percent and 34.75 percent of global GDP in 2021, respectively. Both nations have bigger GDPs than Japan, which is rated third. According to IMF forecasts for 2021, the United States will be ahead by $6,033 billion, or 1.36 times, in terms of exchange rates. Per the World Bank report, China's GDP was around 11% of that of the United States in 1960, but is now 67% in 2019 (IMF, 2019). Owing to China's enormous population, which is over four times that of the United States, the gap in income per capita between the two nations is enormous which puts China in the lead.
The automobile sector in the United States has contributed 3–3.5% of the entire Gross Domestic Product (GDP). Over 1.7 million people work directly in the industry. These workers earn a total of more than $500 billion per year in salary and produce more than $70 billion in tax income (Hill, Cooper and Menk, 2017).
Globally, new vehicle sales were estimated at 20.44 million units during the first quarter of 2016. The Chinese market, which has managed to demonstrate strong macroeconomic patterns, has been a contributing factor to this rise. However, the US auto market stagnated, while Japan had the worst declines (JATO, 2016). JATO Dynamic Limited has compiled a list of nations with a significant impact on the global vehicle market (Table 1).
Table 1. Top Five Automobile Markets 2016
Countries

Units (000)

China

6.073

USA

4.081

Japan

1.449

UK

0.871

Germany

0.849

2.2. Producers
The world's largest automakers have an extremely extensive global presence, supplying automobiles to individuals and companies all over the globe. These large corporations are mostly based in only a few nations that dominate the industry: Japan, Germany, and the United States.
Volkswagen, a global automotive manufacturing business located in Germany, is the industry's leading manufacturer. Porsche and Audi are two of the most well-known premium brands in the country. In addition to manufacturing parts, the firm provides client finance and fleet management services.
It is followed by Toyota, a Japanese multinational corporation. It was the first foreign automobile to gain a significant market share in the United States by raising quality standards for efficiency and quality. The Corolla, Tacoma, Prius, a hybrid electric car are just a few of the vehicle models available. The company's luxury automobile branch is known as Lexus. Toyota also manufactures parts and accessories, as well as offering dealer and customer financing.
Coming in third is Daimler, a global vehicle manufacturer located in Germany. It produces cars for a range of brands, such as Daimler, Mercedes-Benz, Western Star, and others. Customers and dealers may also take advantage of Daimler's finance and leasing options.
Other global automotive producers include Ford Motors based in the United States, Honda from Japan and General Motors also based in the United States among others.
2.3. Structure
2.4. Trends and issues
With an increasing trend toward global sourcing, decentralized production and assembly processes, the automobile industry is driven by severe rivalry, a keen emphasis on cost, and regulatory control. Consumer tastes, changing technology, and sustainability issues are all significant aspects.
The automobile industry is changing how users utilize their vehicles by introducing more functionality, complexity, and dependence on model designs. As they go through the testing process, autonomous cars are becoming more popular (rsmus.com, n.d.).
The internal combustion engine's (ICE) days may soon be over after more than a century. General Motors declared in January 2021 that by 2035, it will solely offer zero-emission vehicles. Shortly afterwards, Jaguar made the exact pledge, albeit with a far more ambitious goal date of 2025 (Inspirage.com, 2021). The expanding attractiveness of electric cars has far-reaching ramifications for manufacturers' supply chains and operations, even if they haven't expressly committed to an electric-only aim (TechSci Research, https://www.techsciresearch.com, 2020).
3. Macro
Between 2011 and 2018, China's rise in automotive manufacture and distribution, mainly in the field of electric and hybrid vehicles (New Energy Vehicles or NEVs), was nothing if not phenomenal, with a roughly 1,000-fold jump. Foreign investors have expressed keen interest in the sector, which currently manufactures a large number of these cars yearly (Lewis, 2020).
At this time, while the rest of the continent is undergoing significant losses as a result of lockdowns, the Chinese automobile sector has been thriving after a brief period of inactivity at the start of 2020. China is expected to lead the automobile sector in the future years.. It produces 48.9 automobiles per minute, whereas Toyota only makes 20 vehicles per minute (www.spglobal.com, 2021). As per the China Association of Automobile Manufacturers, electric car sales are anticipated to rise by 400,000 units by 2021, in comparison to 2020.
The Chinese government started granting incentives on sustainable energy cars in 2009 to encourage the growth of ecological automobiles. Incentives that were set to expire at the end of 2020 were also continued for a further 2 years.China plans to reduce subsidies by 10%, 20%, and 30% annually until they are phased out by the close of 2022. Prolonging the subsidies will help mitigate the effects of the pandemic all while increasing automobile sales, strengthening the industry's competitiveness, and supporting robust growth, ac...

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