Individual Learning Case Study. The World Automotive Industry

THE WORLD AUTOMOTIVE INDUSTRY
Student’s Name
Course
Professor’s Name
University
City (State)
Date
The World Automotive Industry
Introduction
The history of the world automotive industry can be traced in a little over a century ago and has since grown into an industry capable of producing over seventy million vehicles every year. The evolution of the industry has been impacted by numerous innovations, including fuel, growth of transport infrastructure, new manufacturing practices, availability of vehicle components, and changing markets and business structures. Automakers engage in intensive competition in their bid to develop new technological innovations that will ensure that they have a strategic advantage over their competitors. Technological innovation in the automobile industry is critical and has maintained the industry in a state of transition, with the emergence of hybrid and electric vehicles, vigorous technological production frameworks, and new fuel efficiency innovations.
A Brief History
The development of the global automotive industry can classified in different phases. The first phase is the era of invention, recorded between 17th and 18th century. Setright (2004) notes that Ferdinard Verbiest, a member of the Jesuit missionary in China, developed the first steam-powered vehicle toy in 1672 for the Chinese Emperor. The second phase was the 19th-century era of production that saw production of vehicles. According to Ashamalla et al. (2011), Siegfried Marcus designed a liquid-fuelled internal combustion engine vehicle in 1870, and subsequently in 1885, Karl Benz built a gasoline-powered internal combustion engine. Both Nikolaus Otto and Rudolf Diesel pioneered the creation of four-stroke petrol and diesel combustion engines respectively (Reif 2014). The innovations made in this era helped in the design efforts that were critical in the subsequent phases in the automobile industry.
The Veteran Era followed and lasted between 1888 and 1903. This era was marked with intense competition between steam, electrical, and gas engine vehicles, with gasoline engines dominating the industry from the 1910s. Karl Benz dominated the early production of automobiles in 1888, initiating a series of rampant innovation between various competitive investors. While no much progress was made in regards to vehicle architecture, body style, or controls, there were remarkable innovations marked with advancements of the existing vehicle parts, including the production of high level internal combustion and overhead cam engines, as well as V8, V12, and V16 engines (Ashamalla et al. 2011). Inventions made during this era were critical to the success of the automobile industry in the subsequent phases.
Increase in technological innovations and competitions among investors saw gasoline engines dominate the industry in the 1910s. Massive technological innovations brought forth the mass production phase between 1904 and 1929. Henry Ford introduced the ‘mass-production’ and ‘assembly line’ technologies in the production of automobiles (Ashamalla et al. 2011). Subsequent technological innovations in the automobile industry brought phone new and improved breed of vehicles, marked with computer-aided design and standardization of vehicles in a bid to reduce production costs and time used, as well as the incorporation of electronics for entertainment purposes (Zoepf 2011). Automobile companies continue to apply new technological innovations that ensure that the companies remain competitive.
Porter’s Five Forces: The Worldwide New Car Motor Vehicle Industry
Rivalry among Existing Competitors
Competition among existing competitors in the automotive industry is high. According to Brock (2015), intense competition from new global players in the automobile industry in the 1970s and 1980s saw the companies increase their competitiveness in both their pricing and non-pricing strategies. Additionally, the 90s saw fierce competition in the industry, thanks to the production of new vehicle models that had both innovative concepts and designs.
Threat of New Entrants
The threat of new entrants in the automobile industry is low owing to the high barriers to entry in the industry. For example, Brock (2015) notes that in 1989, Honda spent $ 1.2 billion to build its East Liberty assembly plant in Ohio, Toyota spent $2.2 billion to build its pick-up truck assembly plant in Texas and a cumulative amount of $6.6 billion in its assembly plant in Georgetown. In addition to high entry barriers, new entrants require substantive investments in the marketing and promotion of new vehicles. For instance, General motors spend in excess of $5 billion annually on marketing and advertising (Brock 2015). Anot...