The Closure of the MG Motor Manufacturing Company Analysis Paper Example

Paper Type:  Case study
Pages:  7
Wordcount:  1735 Words
Date:  2022-07-08

Introduction

History dates Holden, back to 1856, a time when James Alexander Holden began a saddler enterprise in South Australia's' Adelaide. This saddler business grew over time from simply mending car upholstery, up to the full-scale manufacture of body shells of vehicles. 1924 saw the company advance further to become the exclusive distributor of General Motors as an American, Car Producer. The whole of the 1920s saw Holden also distribute tramcars in Melbourne. 1931 saw the companies merge to be known as General Motors-Holden's limited. The company opened their headquarters and a general assembly point which was located at Fisherman's Bend in Port Melbourne. (OLSHAUSEN, M. 2013. p. 34).

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At the time of warfare in the 1940s, car production for Holden was changed into the manufacture of vehicle body parts, weaponry, engines, and aircraft. After the end of the warfare, Holden went back to its usual production of car bodies, this time it was producing some car brands for Vauxhall, Chevrolet, and Buick. 1948 was a total success for the company as it marked the first time the company built its all-Australian car. In the same year around November 29th, Ben Chifley the Prime Minister announced the very first Holden 48-125, that become widely referred to as the "FX." It was a huge and middle-class sedan family car, manufactured and shaped for the environment in Australia. (ALLEN, et al. 2017. p. 24) It was priced at 733 USD inclusive of tax, which stood for a whopping 94 weeks straight for an average worker in those days. This, however, saw 18000 Australians sign up and already paid the deposit to a vehicle they have not seen yet. Holden could not meet this huge demand as easily as it seemed.

Holden conquered the car industry in Australia in the 1950s by the stable manufacture of the utilities and models related to Sedan. Australian car sales added up to 40 percent by 1958. This saw the introduction of FJ Holden in 1953 which had upgrades to the chrome face-lit and the powerful engine. This later become the iconic car in Australia. Holden exported some of his cars to the New Zealand beginning with Utility. After Holden 15 years of been the highest vehicle seller, Japan's Mazda3 came and took the game. Holden, however, continued to produce vehicles in the form of a subsidiary General Motors. Later Holden general motors made it public that they would cease to produce vehicles. (MOSS, S. W. 2014, p 23).

The sudden closure by Holden in Adelaide set the end of car production in Australia. The announcement brought a lot of emotional responses and was symbolized with a thick reproach. Many citizens saw this an impossible situation for Australia. The country had been producing mass vehicles ever since Holden flagged off his first line of assembly in 1948 in Fisherman Bend. Its closure also put in doubt the remaining viable local industries, although Australia had beaten the world in innovation and also ingenuity. (HAGON, et al. 2017. p. 18)

Manufactures in Australia had become dependent on the government's subsidies, and this had them find it hard to accommodate the maximum Australian dollar from the government. Abbott decision to lower the amount payable by car producers was not well executed and had GM Holden in the spotlight since it was becoming hard for them to tell its plans for the country.

A Five Forces Model and Competitor Analysis Explaining the Industry

The ability of a company to have a competitive advantage over its competitor is one of the greatest tools that have seen a couple of industries grow to become the top leaders in their area of expertise. In the assessment of competitive threats, Porters five forces have proved to be the best. The five forces include the following: (1) Barriers to entry, (2) Bargaining power of buyers, (3) Rivalry between existing competitors, (4) Pressure of prices from Substitutes, (5) Bargaining power of suppliers. (CHALMERS, et al., 2017. p. 9)

Barriers to entry: According to Michael, new entries into your market may mean sharing the market, prices may go down as a result, reduced profitability than it was before, and despite this aspect being a threat, in some cases, these new entries may mean protection of the existing firms. For instance, during the warfare, Holden made a huge profit, and this saw it enlarge its base of operation. Holden being the leader of the market then, this made it hard for other firms or competitors to enter the market, especially the smaller firms. In the early 20s, Holden created self-starters through differentiation from the likes of Ford, as time went by, in 1970s, the European and the Japanese came up with their efficient fuel models in the market. (KURMELOVS, et al. 2016. p. 15)

The rivalry between existing competitors: Rivalry occurs when one firm feels like the other is making more profit than it in the same market. Plans of action of one firm may be more resourceful than the strategies of another firm, and this may create a competitive advantage over the plans of the other firms. During the reign of GM in the motor industry, there was much competition from other manufacturers such as the Toyota, Nissan, and Honda. Though GM at that time was at the top of the industry, the other competing firms came up with some other offers.

The pressure of price from substitutes: Every company or set of firms in the competition are mainly competing as a result of the production of substitute products or complementary products. In the competitive business of car manufacturing, a slight change in prices by one company may result to pressure from the other firms to do so. Also in the case of substitutes such as tires, and gas, any change in their prices would translate to a change in the total demand and thus affect the demand for the vehicles. Looking at GM, any rise in the gas will increase the demand of the company's products highly.

Bargaining power of buyers: Buyers have considerable influence in any industry by demanding lower prices, forcing higher quality products and also demand of more service. Buyers have the power to play competitors any demanding all that. This situation, however, falls back to the benefit of the firms. Due to globalization and the introduction of new technology, buyers, like the GM knew what they were paying for and at what price. Also, buyers having the chance to sneak into the information of the GM competitors gave them a more significant chance to demand prices that they would see as optimal. (MICHAUX, et al. 2015. p.3)

Bargaining power of suppliers: Suppliers are an essential player in the market they are in. They may lead to better quality products or reverse that of poor products. This aspect affects the general pricing of products. With GM, the threat imposed by suppliers is significantly low as input materials, and suppliers of machine parts are many in the industry. However, there is still a potential threat by the labor unions which is a significant threat to GM's stability in the economy and its perseverance.

Situational Impact Analysis Explaining the Political, Economic, Social and Technological Effects of the Withdrawal of Passenger Motor Vehicle Manufacturing From Australia

Economic impacts: the sudden closure of GM motors in Australia saw a negative annual shock of 92 billion USD by 2017; this explains how vital the industry was to the Australian government. This amount was estimated to be equal to two percent of the national gross domestic product. Also regional centers, great capital cities will also be at risk economically as they were on a particular wavelength dependent on the industry. This analysis of economic impacts was derived from the local governments.

Technological impact: The actual effects on the closure of the motor manufacturing industry will be felt across some factors technologically, this includes the capacity of the remaining firms to adapt to the technology that was being used earlier. The capacities of the remaining companies to adapt to the changing technological environment. (ROBBINS, et al. 2014. p. 9)

Social impacts: The major impact of the closure of the GM motor company is the vast loss of jobs across the country. The workers that had jobs in these industries were rendered jobless leading to substantial unemployed persons in the population. It was estimated that Sydney's job forecast would go down by around 5000 jobs. Melbourne was the other city estimated to experience the highest number of unemployment as a result of the closure. The number of people estimated to lose their jobs was at 15000.

Political impact: The leaders of the nation had a hard time trying to curb the increased unemployment created by the closure of the industry. Many citizens being rendered jobless is a factor that matters in the political arena. Also in order to shape the economic view of the country as it was before the closure of the industry, is a factor that will need the leaders to look at. The nation will demand new policies and measures to aid in bringing back the glory of their economic outlook to its citizens. (BEDWELL, S. 2012, p 9).

Conclusion

The closure of the MG motor manufacturing company came as a shock to many, despite the company being the leader in the vehicle industry. Many effects resulted afterward which saw a drop in the economy of the country and also citizens being rendered jobless.

References

ALLEN, M. G., FILER, C., & MCDONNELL, S. (2017). Kastom, property, and ideology: land transformations in Melanesia. http://proxy.cm.umoncton.ca/login?url=http://www.jstor.org/stable/10.2307/j.ctt1pwtd1p.

BAIL, M. (2016). Holden's performance: a novel. New York, Picador. http://rbdigital.oneclickdigital.com.

BEDWELL, S. (2012). Holden vs Ford: the cars, the culture, the competition. [Sydney], Read How You Want/Accessible.

CHALMERS, J., & QUIGLEY, M. (2017). Changing Jobs.

HAGON, T., & HAGON, W. (2016). Holden: our car 1856-2017. https://www.overdrive.com/search?q=34FB12A8-00C2-4CFF-8957-F9C1DE0F107B.

KURMELOVS, R. (2016). The death of Holden: the end of an Australian dream.

MICHAUX, S., CADIAT, A.-C., & PROBERT, C. (2015). Porter's five forces: Stay ahead of the competition. [Place of publication not identified], 50Minutes. http://public.eblib.com/choice/publicfullrecord.aspx?p=4005662.

MOSS, S. W. (2014). Edgar Holden, M.D., of Newark, New Jersey: provincial physician on a national stage.

OLSHAUSEN, M. (2013). From Company Town to Company Town: Holden and Holden Village, Washington, 1937-1980 & Today. http://archives.pdx.edu/ds/psu/9493.

ROBBINS, S., BERGMAN, R., & STAGG, I. (2014). Management eBook. Pearson Australia Pty Ltd. http://public.eblib.com/choice/PublicFullRecord.aspx?p=5244161.

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The Closure of the MG Motor Manufacturing Company Analysis Paper Example. (2022, Jul 08). Retrieved from https://proessays.net/essays/the-closure-of-the-mg-motor-manufacturing-company-analysis-paper-example

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