Car Industry Australia

Topics: Geert Hofstede, Automotive industry, Volkswagen Group Pages: 11 (3364 words) Published: August 8, 2008
Executive Summary

Eagle Motors Ltd is a well-established Swedish Car Manufacturing Company trying to set up their firm in Australia. In order to compete successfully in the car industry in Australia, Eagle Motors Ltd needs to conduct an analysis of the industry context in which they would like to operate. Using the porters five forces model, this provides a detailed analysis of the competitive nature of the Australian car industry and also it suggests an appropriate competitive strategy for Eagle Motors to gain a sustainable competitive advantage. Eagle Motors Ltd is planning to employ a mixture of Swedish and Australian managers and employees to run there operations in Australia. However, the senior management at Eagle Motors does not have an appropriate understanding of the Australia culture. According to Hofstede’s cultural dimensions though, this report identifies the similarities and differences between Swedish and Australian culture’s and makes recommendations on how the Swedish and Australian managers and employees can bridge the cultural gap.


Eagles Motors is a motor vehicle company based in Sweden, in which it manufactures automobiles for the Swedish market. The well established company is looking to set up in Australia where it would produce cars and sell it to the domestic market. Being a well established company, with strong financial credibility this report analysis’s the Australian car industry and the cultural aspects of both Australia and Sweden which eagle Motors needs to be informed about before entering this market. This report will also focus on discussing and providing recommendations regarding the areas of, organisational structure, organisational changes and managing in a global environment.

Porter’s Five Forces Model

The five forces in porter’s model can be used “to determine the attractiveness and profitability of an industry”(Robbins, Bergman, Stagg & Coulter 2006, p.275-6) These include rivalry, threat of substitutes , bargaining power of buyer, bargaining power of suppliers and barriers to entry/threat to entry. These forces can be used to assess the advantages that Eagle motors has over its competitors


Firms strive for a competitive advantage over their rivals. The intensity of rivalry among competitors varies across industries, though in the Australian car industry it could be said to be rather high as there are many producers and brands available in the car market. The Australian automotive industry consists of three motor vehicle producers – Ford, Holden and Toyota – which produce larger passenger vehicles including light commercial vehicles and sports utility vehicles { ref}. Until 4 weeks ago there used to be four producers in Australia, Mitsubishi though since has stopped production and closed down their Adelaide manufacturing plant, and hence exited the Australian car industry [as producers]. Economist measure the amount of rivalry by indications of industry concentration. In Australia, the car industry could said to have a low concentration ratio, as no car firm has a monopoly or significant market share in sales and there is many rivals. This rivalry in the car industry can inturn be also called competition – The Australian car industry is under high levels of competition which results in rivalry. This competition can be evident in the example mentioned before of Mitsubishi who left the local industry, and inturn will be replaced by other companies, one which may be Eagle motors ltd if they decide to set up shop in Australia. Hence Eagle Motors need to be aware of this level of rivalry and competition in Australia and need to be aware of the fact that if there goods does not have enough demand they will be out of business – like Mitsubishi.

Some of the reasons behind the fact that the Australian Automobile industry remains high in rivalry and competition can be attributed to...
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