SUCCESS IN AUTOMOBILE INDUSTRY

systems. Bus, subway, railway, and rapid transit system are the major types of transportation in cities. This can be a huge impact for automobile industry. Finally, weak global economic can be a factor that makes people buy fuel-efficiency cars, which most are Japanese cars. This factor is another difficulty for American automobile manufacturers.This research paper will discuss the following sections to show the key factors for automobile industry needs to be globally successful. First, the literature review will present the circumstances of global automobile industry, and the new challenge for the industry. Next, the methodology section will introduce two American automobile companies which can be an example for all American global automobile manufacturers. Third, the results section will cover all information in both the literature review section and the methodology section, and analyze the research results to find out both companies’ global strategies. Finally, the conclusion and recommendations section will examine the results based on the results section and summarize the recommendations for American global automobile manufacturers.Literature ReviewAutomobile have changed human beings lifestyle since early 20th century. In the automobile industry, it changes all the time. The fuel changed from diesel and gasoline to hybrid and rechargeable battery. The cars’ interior features changed as well, such as plastic seats became electrically-adjustable leather seats, no air conditioning became automatic circulation control, and clock became Global Positioning System. Not only the fuel and features changed, but also automobile’s type. Nowadays, we have various types of car on the roads, such as convertible, coupe, hatchback, sedan, SUV, truck, van, and wagon. Automobile becomes indispensable.In the United States, automobile well known brands are GM, Ford, and Chrysler. Automobile industry in the United States is highly concentrated, which means the market leaders got the most market share. For example, in the United States, first eight largest companies hold more than 90 percent of revenue in the automobile industry. These large companies manufacture many product lines, and the companies manage and sell their product under several brands. For example, Ford has many brands, such as Lincoln, Mercury, Mazda, Volvo, Jaguar, and Land Rover (Ford Motor Co., 2007). The global automotive manufacturers avenue has grown 5.2% to reach a value of $1,176.9 billion in 2006, and in 2011, the global automotive manufacturers avenue will reach a value of $1,465.5 billion, and increase of 24.5% since 2006 (Global Automobile Manufacturers, 2007). Also, it forecasts the automibile will increased to 78 million units of vehivcles on the planet, and increase of 18.7% since 2006. At the beginning of this decade, all global automobile manufacters suffered the sales of vehicles had decreased because the weak economic environment (2007). As I mentioned above in the introduction section, weak economic environment is not the only problem for American automobile brands, but also oil price keep going up, green environment, public transportation systems, and the giant challenger from Japan. American automobile manufacturers need to figure out the solutions for each problem. Research question: What are appropriate strategies that the automobile industry needs to be globally successful?MethodologyThe purpose of this research paper is to investigate how to use appropriate strategies to be globally successful in automobile industry for two American brands, General Motors (GM) and Ford Motor Corporation (Ford), and how do these two companies regain success under several issues, oil price keep going up, public transportation systems, using environment friendly materials, and weak global economic. General Motors is one of the most famous automobile companies around the world. According to the Global Automobile Manufacturers, its global market share was 17.3% in 2006 and the percentage was the best of all global automobile maunfacturers in 2006 (2007). Ford Motor Corporation is famous as GM because Ford sells its cars around the world for a long time. Global Automobile Manufacturers also pointed out that Ford’s global market share was 15.9% in 2006, just as same as DaimlerChrysler and Toyota, and these three companies were the seconds of global market share in 2006 (2007). ResultsCompanies’ ProfilesGeneral Motors Corp. General Motors Corp (GM) is making effort of the global automobile development, production, and sales. GM is the world’s largest full-line vehicle manufacturer and marketer (Grant, 2003, p.148). GM’s automobile development, production, and marketing are based on six worldwide regions, GM North America, GM South America, GM Europe, GM Africa, GM Mid-East, and GM Asia Pacific (General Motors, 2007). GM has 284,000 employees around the world, and produces its cars and trucks in 33 countries (2007). In 2006, $9.1 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall (2007). GM’s 2006 Annual Report (2007) says the number of GM’s total net sales and revenues was $207,349,000,000, and 9,181,000 GM’s cars and trucks were sold if we are looking for more specific number. GM not only sells its cars and trucks to daily rental car companies, such as Dollar, Enterprise, Hertz, Budget, but also gorvernments. Look at the global market share, Global Automobile Manufacturers pointed out that the global automobile manufactorers market share of GM in 2006 was 17.3% (2007). GM’s three key executives are G. Richard Wagoner, Jr., GM Chairman and Chief Executive Officer, Frederick A. Henderson, GM President and Chief Operating Officer, and Robert A. Lutz, GM Vice Chairman and Global Product Development. Ford Motor Co. Ford Motor Co. (Ford) is a global automobile maker as well. Ford is the second-largest automobile company in the world, and Ford represents a $164 billion multinational business empire (Grant, 2003, p.128). Ford also operates Ford Credit, which generates more than $3 billion in income, and owns The Hertz Corporation, the largest automobile rental company in the world (2003). Ford operates in 7 global regions, North America, Europe, Asia Pacific, Latin America, Middle East, Africa, and Caribbean (Ford Motor Co., 2008). In 2006, Ford had more than 280,000 employees around the world, and it sold $6.8 million vehicles in 200 markets globally(Ford Motor Co., 2007). Ford offers variety of cars, trucks, SUVs, and many other products and services to the automotive customers. Ford Motor Company family not only has Ford, but also Lincoln, Mercury, Mazda, Volvo, Jaguar, and Land Rover. Ford’s 2006-07 Annual Report (Ford Motor Co., 2007) wrote that the Ford’s total revenue in 2006 was $172,455,000,000. Datamonitor also said that the Global automobile manufactorers market share of Ford in 2006 was 15.9% (2007). Ford’s two key executives are William Clay Ford Jr., Ford’s Chairman, and Alan Mulally, Ford’s Chief Executive Officer and President. Global Competitive StrategiesGeneral Motors Corp. Nowadays, GM is trying to enhance its global growth. Rick Wagoner, GM’s Chief Executive Officer, said GM is researching a plug-in hybrid car, although the battery technology is the key point that GM is working on (GM wants global growth and U.S. profits, 2007). If GM successfully developed this technology, the fuel-efficiency would be a great advantage for GM to occupy other competitors’ market share. Furthermore, the technology also can protect green environment because hybrid car can reduce the usage of gasoline; then, the carbon dioxide will be reduced as well.GM is not just only focus on automobile development, but also working on increase its profits in many developing countries. Wagoner said “All the major developing countries – they are not all hugely profitable, but when you add it all up, it is made a huge difference (2007)”. GM has deployed its manufactories in many developing countries, such as Egypt and South Africa in Africa. GM has sold 1,035,000 cars and trucks in Africa, and the number of its total sales and revenues was $14,600 million. If we take a look at Asia-Pacific, there are four major developing countries, China, Indonesia, Thailand, and India that GM has focused on. In China, the biggest economic force in Asia, GM’s sales rose 35.2 percent on an anural basis to a record 665,390 units in 2005, and GM’s sales rose 31.8 percent on an anural basis to a record 876,747 units in 2006. GM also is developing very low-cost small cars, which cost only $2,500 to $3,000 to catch the low-income consumer in Brazil (2007). GM is trying to put its Cadillac automobile into a successful brand of the world. Clay Dean, Cadillac’s new global design director pointed out that China’s market has been grown quick and fast, and luxury market is going to be big in China, especially in the first and second tier cities (Kranz, 2008). GM is developing a rear-drive large sedan around 2011 or 2012, and the sedan is going to replace the STS and DTS and compete with the Mercedes Benz E class and BMW 5 series globally. If we focus on Europe, GM is going to replace the BLS, by add a small sedan and be targeted at the BMW 3 series (2008). Nowadays, pollution and Global Warming are the main green issues around the world, and GM did not omit. In 2001, according to its 2005-2006 Corporate Responsibility Report, GM set an energy reduction target for 2005 of 10 percent. The company plans to reduce its energy use by another 10 percent by 2010 (Brandt, 2007). GM also installed the energy management control systems for lighting, heating, ventilation, and air conditioning, improved air compression systems, reduced compressed air pressure, and instituted equipment shutdowns during nonproduction time (2007). Like I mentioned above, GM is researching a plug-in hybrid car, which uses less gasoline and reduces the carbon dioxide, made GM as a green brand. Ford Motor Co. Ford is working on restructuring under its Chief Executive Officer, Alan Mulally’s commands to advantage of global resources and products. Ford wants to create more types of vehicles by using its $7 billion (about €5.1 billion) annual product investment budget, and cement a brand image as a provider of stylish, fun-to-drive vehicles to customers around the world (Wilson, 2007B). Since Ford has lost its $-2,700 million in 2007, Ford’s executives are trying to solve the financial difficulties of Ford. Wilson pointed out that Ford borrowed $23.4 billion in 2006 to finance its restructuring, which forced Ford mortgaged most of its assets including its Blue Oval trademark (2007B).Since I mentioned Ford’s Blue Oval trademark, Ford hopes it can nourish its namesake brand with money saved by leveraging global platforms and vehicle design in product development (Wilson, 2007A). After years of changing plans, Ford is trying to introduce one subcompact, a sedan based on the new global B-segment platform in North America. B-segment concept car designed to combine the small size and engine of European vehicles with a bold American appearance and flexible interior space. The new B-segment cars will be modified version of the next-generation Ford Fiesta, which goes on sale in Europe in 2008 (2007A). Ford hopes this new type of car can help Ford to shine its Blue Oval trademark.Ford also is trying to trim its platforms around the world because Ford wants focus on more specific needs of customers and cut the costs. However, as I mentioned above, B-car platform is not include. Ford is reducing its number of platforms by 40 percent during the next five years, Ford’s Global Product Chief, Derrick Kuzak said (Wilson, 2007C). Moreover, Ford is trying to reduce complexity in subsections of the vehicles, too. For example, the number of six-cylinder engine factories will be cut from eight to two during the next five year, and Ford already cutted its four-cylinder engine factories from ten to three. All these movements are for cut the costs and fit the customer’s spectifc needs.Ford has a promotion strategy for one brand under its brand system, Lincoln. Ford’s Global Product Chief Derrick Kuzak (Wilson, 2007D) said that Lincoln aims to improve its lineup every year, and he cited the Lincoln MKZ sedan and MKX crossover as two vehicles that are helping Lincoln rebuild. Lincoln also is introducing the MKS, which it calls its flagship sedan, on Wednesday, November 14th, 2007, at the Los Angeles auto show (2007D). The car will go on sale in 2008. Ford is going to push Lincoln up to luxury cars’ stage, and make the brand into luxury level. Conclusion and RecommendationsIn sum, global automobile industry is a highly competitive battlefield, and every company in the industry needs to develop appropriate strategies to survive in the battlefield. For the two American automobile manufacturers GM and Ford, they have their own strategies to keep their competitive. According to the result section, it is obvious that both of the companies have differentiated their global competitive strategies. GM has four major global strategies, research a plug-in hybrid car, open the developing countries’ markets, put Cadillac into luxury car level in China, and using energy management control systems. First of all, most of automobile manufacturers are working on diesel-unleaded gasoline hybrid cars, but GM is researching on a plug-in hybrid. A plug-in car is more fuel efficient than a diesel-unleaded gasoline hybrid car. A plug-in car can help GM’s brand image become an environment friendly brand, and this is a right direction moving forward to green environment issue. Next, developing countries have great opportunities for automobile manufacturers, and GM is trying to promote its automobile in to Africa and Asia-Pacific countries. Then, GM is trying to promote its Cadillac as a luxury brand in China because China’s major cities have potential luxury car markets for automobile manufacturers. Finally, GM also installed the energy management control systems for their factories, and the systems helped GM reduces the cost of energy and reduces the carbon dioxide. These efforts make GM as a green brand.Ford also has four primary global strategies for its global operation. These strategies are reorganizing its brand by using $23.4 billion, introducing a new subcompact sedan to regain the global market share, trim its platforms to cut the costs and fit the customers’ needs, and promote its Lincoln MKS as a luxury flagship sedan. First, Ford borrowed $23.4 billion in 2006 to finance its restructuring, and using $7 billion from $23.4 billion to present a brand image as a provider of stylish, fun-to-drive vehicles to customers around the world. Further, Ford has lost its $-2,700 million in 2007, it is not an appropriate strategy to use more money to solve the financial shortage. Second, a new subcompact sedan probably is a next-generation car, but other competitors also have compact cars in the markets, especially from Japanese giant manufacturer, Toyota. Third, cut the costs and fit the needs of customers are good ways to solve the problems; however, it also means Ford is narrowing down its market share. Finally, Ford promotes its Lincoln MKS as a luxury flagship sedan is a good way to promote Lincoln’s brand as a luxury brand. On the other hand, Ford should find a target market for Lincoln. For example, GM promotes its Cadillac as a luxury brand in China. In the end, it is obvious that GM has better global competitive strategies than Ford because GM has long-term strategies for its operation, and these strategies fit the customers’ need for now and the future. The strategies also considered the global environment, future energy, and target markets. On the other hand, Ford only thinking about use more money to solve its financial shortage, but not thinking about how to use the money in efficient ways. Ford also has no target market for its future sales. It likes a merchant has merchandise, but he or she does not know where to sell it. Ford should examine its markets, and figure out which market can fit Ford’s automobile. Furthermore, Ford should try to figure out in which way can use the money efficiently. Finally, Ford should follow the global green trends because the whole planet is thinking of the green environment issue more serious, especially Global Warming. ReferencesBrandt, D. (2007, September). No vroom for pollution. Industrial Engineer: IE, 39(9) , pp. 34-35.Ford Motor Co. (2007). 2006-07 Annual Report. Retrieved March 16, 2008, from Ford Motor Co.: http://www.ford.com/doc/2006-07_sustainability_report_web.pdfFord Motor Co. 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