The CEO of a major U.S. automotive Manufacturer has asked you (a global marketing manager) to write about the causes and effects of importing most of its materials from foreign manufacturers. The paper will be provided to the board of directors and stockholders.

Why U.S. Automobiles are not So American Anymore Name: Course: Professor name: (December, 2012) Table of content  TOC \o "1-3" \h \z \u  HYPERLINK \l "_Toc342460177"
Introduction  PAGEREF _Toc342460177 \h
3  HYPERLINK \l "_Toc342460178"
Motivation to import from foreign firms  PAGEREF _Toc342460178 \h
4  HYPERLINK \l "_Toc342460179"
i. Cost of the materials at home verse outside border  PAGEREF _Toc342460179 \h
4  HYPERLINK \l "_Toc342460180"
ii. The living standards of the citizens  PAGEREF _Toc342460180 \h
4  HYPERLINK \l "_Toc342460181"
iii. Foreign exchange  PAGEREF _Toc342460181 \h
5  HYPERLINK \l "_Toc342460182"
iv. Global efficiency  PAGEREF _Toc342460182 \h
5  HYPERLINK \l "_Toc342460183"
Its effects to the economy and the American people  PAGEREF _Toc342460183 \h
6  HYPERLINK \l "_Toc342460184"
i. Competitiveness and Productivity  PAGEREF _Toc342460184 \h
6  HYPERLINK \l "_Toc342460185"
ii. The importance of bilateral trade balances  PAGEREF _Toc342460185 \h
6  HYPERLINK \l "_Toc342460186"
iii. The cost of protection is higher  PAGEREF _Toc342460186 \h
7  HYPERLINK \l "_Toc342460187"
i. Loss of jobs  PAGEREF _Toc342460187 \h
7  HYPERLINK \l "_Toc342460188"
ii. Crime increase  PAGEREF _Toc342460188 \h
7  HYPERLINK \l "_Toc342460189"
iii. Instability of homes  PAGEREF _Toc342460189 \h
8  HYPERLINK \l "_Toc342460190"
Two visual illustrations of intermediate products coming into the US Market  PAGEREF _Toc342460190 \h
8  HYPERLINK \l "_Toc342460191"
Conclusion  PAGEREF _Toc342460191 \h
9  HYPERLINK \l "_Toc342460192"
References  PAGEREF _Toc342460192 \h
10  Introduction The automobile industry is a complex one; it involves many different parts and different makers of these parts. Think of the interior (Car stereo, Airbags, Gear shift, Accelerator, Head rest, Glove), the external (Trunk, Tail lights, Blinkers, Wheels, Tires, License plates) and even the engine (Radiator, Battery, Pistons, Spark plugs, Distributor) of a car, it involves a lot of things. These parts from foreign firms contribute over 70% of the value to the manufacturing of the motors vehicles. Due to globalization, the outsourcing of the many parts has been necessary for any company that needs to remain relevant to the trends of international trade (Barrar & Gervais, 2006). For any company to remain competitive it has to look for all ways possible to minimize the cost of production in order to maximize the gains. This has forced the US automobiles to thinks of ways of ensuring the companies are relevant and competitive in the global market. On the other hand, the shareholders who are earning yarning for high dividends and security of their assets will benefit has the companies gains more market shares in the international market. The import of these parts has been necessitated by different factors which as a result have impacted the economy of the country and the people (Barrar & Gervais, 2006). This paper analysis the different factors that have made the US automobile companies to shift from in-house to the importation of intermediate products. It goes further to explain the impact of this decision towards the US economy and to the American people individually. The following are the main reasons for the shift from the in-house to imports of the materials from foreign firms (Feenstra, 2004). Motivation to import from foreign firms The motivation of any country in the globe to import materials from outside its borders is quite obvious. The reason has been it trying to reduce the cost of production in order to maximize the profits. However, one might wonder how the most developed countries like the United States can import anything from another country with the massive extraordinarily and massive diverse economy. Therefore, the cause of that has made the automobile companies to think of importing materials from outside the US is mainly to reduce the cost of production. Cost of the materials at home verse outside border The United States is able to mine, produce, make, or even grow anything the citizens require to better their lives. However, no single country today in this world, including the United States, can 100% be sufficient without suffering a high cost. Today, most of the cheap materials and products are found in Asia mostly in India and China. The reason been the cost of production in those countries are quite cheap compared to the United States. The United States not only the automobile sector alone have shifted to foreign materials and intermediate products because of competitive efficiency. This is to say companies in the developing countries are in a position to product products much easier, cheaply, faster and of better quality than the United States. With cheap labor, availability of raw materials and technology these companies are able to utilize large scale production at a very low cost hence their prices been very low than the US companies. When this factor is utilized for the best of the US companies then they will be in a better position to remain very competitive in the global market (Feenstra, 2004). The living standards of the citizens When the United States buys products which are cheap but quality from other countries, then both citizens of these countries benefits; their living standards increases. The united states is one of the exports of goods and products to many others nations. Imagine goods like military machinery, any country will be crying to have something from the states, and then what will be wrong by supporting the others through buying their products that are cheap but of the desired quality. Ethically, American will gain a lot in this way. For instance, America buying cheap intermediate products from India to boost the US automobile industry and on the other hand India buying Military equipments from US. Both countries will benefit hence lifting the standard of its citizen. Additionally, those mutual relationships in business trigger other interests which will be advantageous to both countries; the relationship is very vital (Feenstra, 2004). Foreign exchange In any case, the local companies also benefits in doing business with foreign companies by earning foreign exchange (currency) that can be used by itself or others in the country to purchase foreign-made products. Ideally, the US dollar is the standard measure of all other currencies in the world but this does not m...