The Car Industry
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The Car Industry December 22, 2014Word Count: 2384Table of ContentsImportance of Global Environment 3Recent Changes in the Global Environment: Social, Technological, Economic, Political & Government 4Social. 4Technological 5Economic 5Political & Government 6Marketing in Today’s Economy 7References 9Importance of Global EnvironmentIn order for Multi National Enterprises (MNE’s) to become and or stay relevant in the twenty first century business managers must be accountable for the ongoing status of markets, investors, locations, partners, and competitors all over the world. This responsibility has increasingly become more important year after year due to the rapid increase of globalization. I will focus throughout this paper on the impact these changes have had on the car industry. According to Punnett (2004) the grounds of globalization has led to the recent changes in the global environment such as the following sequence of events: technological advancements generate continuously increases in speed and convenience of communication and travel, which makes the world appear smaller. A smaller world consequently increases people’s awareness of events outside their home country. Increased awareness and travel leads to a better understanding of foreign opportunities. A better understanding of foreign opportunities develops into increased international trade, investments, and the number of businesses operating outside of their home country. Ultimately these global environment changes (technology, global awareness, communication, etc.) result in an interdependent global economy. For the automobile industry this means that technical standards or safety standards are variation from country to country and there for it is important for them to have an understanding of the local market and cater to its needs.Globalization is a disruptive force in the global economy and increasingly continues to shape the business strategies of already established MNE’s and emerging MNE’s in the twenty-first century. Globalization refers to the integration of economies around the world (Punnett 2004). More specifically the obstacles that once interfered with business manager’s capacity to communicate and interact with people all over the world no longer exist. The fading barriers to trade, investment, and knowledge exchange have been a catalyst for innovation and technological developments resulting in an interdependent global economy characterized by faster communication, transportation, and financial flows (Boundless 2014). This is the same for the auto mobile industry the increased speed of information and use of technology has to be reflected in today’s car. A car is not simply a means of transportation anymore it is a tool. This is why cars nowadays have bored computers, which are directly connected to the Internet, and other such features to stay connected even on the road.
No longer can a firm’s success be determined by traditional economic boundaries, to be successful firm’s must be conscious of the increasingly important outside forces that indirectly effect day-to-day operations at any given firm. However, these forces in the global environment of business vary country-by-country and year-by-year, always challenging firms with new problems that ultimately require the firm to modify their current strategies and corporate governance.Recent Changes in the Global Environment: Social, Technological, Economic, Political & GovernmentGlobalization has rooted itself in all conditions of a global environment including: social, technological, economic, political and government. For decades, advancements in social, technology, economic, politics, and government have continued to landscape the development of MNE’s (Florini, 2003).Social. Now, more than ever, business managers face daily social challenges manifested in ethical codes, Corporate Social Responsibilities (CSR) objectives, migration, and hence a changing demographic profile. Traditionally, managerial decisions were influenced by one objective: shareholder value maximization (Friedman, 1970). More recently, managers face another extreme of philanthropic guidelines based on universal ethics (i.e. human rights). For example, Porter and Kramer (2006), insist that firms should create competitive advantage via CSR strategies. This wide range or perspectives creates a need to analyze and develop action plans in response to growth of social influences we face in the twenty first century. Ideally a MNE should have a globally unified marketing strategy along with established organizational structures. However, this is not the case, due to cultural barriers some social forces will require strategies designed specifically to the local culture may be more effective. For example the recent trend in the automobile industry of highbred or electric cars, it caters to the customers need for being green and helps the environment. These needs are not important to all target customers but throughout the education of the customer there features became more and more important throughout all markets. For the MNE, these matters are related to a variety of multifaceted decisions that require constant responses. Luckily for MNE’s consumers throughout the world are adapting to a set of global norms and values, this could be in part due to people all over the world are now watching the same television, movies, reading the same book, buying internationally branded products, and communicating through the internet. Hofstede and Bond (1988) research on the implications of cross-country cultural differences for management decisions, conclude that each country’s culture can be best evaluated based on the harmony of the following measures: individualism/collectivism, uncertainty avoidance, power distance, masculinity/femininity, and long-term versus short-term orientation. Country-by- country the level of what is expected from basic attributes (quality, service, convenience, consistency, adoption of new services) are likely to vary and thereafter a demand for a country- specific marketing strategy to obtain optimal results. In other words it is important to cater to the local customer; the neglect of such can be fatal for a car. For example when Chevrolet launched its new car the Chevy Nova it experienced difficulties in Spanish speaking markets, because nova in Spanish means “no go” and who wants to buy a car, which is called no go.