The paper "The Government-Business Relationship in the Car Manufacturing Industry in Australia " is a perfect example of a business case study. It is of importance to understand the car industry in Australia, why it is struggling and the consequences of its failure. This essay will focus on analysing the government-business relationship in the car manufacturing industry in Australia and as well, it will argue that it was not right for the government to no longer provide financial support to the struggling industry. It begins with a general understanding of the car industry in Australia and then it explains the relationship between the government and the car industry in Australia.
The essay later explains why it was not right for the government to stop providing financial support and finally a conclusion is given on the way forward for the car industry. The car industry in Australia has relied on financial programs by the government since its beginning. However, the government of Australia has made the decision not to provide financial support to the car manufacturing industry in order to make the industry to get new customers as well as to diversify their operations (Automotive Manufacturing in Austria, 2016).
Because of the government’ s decision to stop offering financial assistance to the car industry, Australia car industry is threatening to come to an end after 90 years of existence (AUSTRALIA AUTOS REPORT, 2013). The automotive manufacturing industry in Australia consists of the production of motorcycles, trucks and passengers cars. It was created in the 20th century when the international manufacturers opened Australian plants (Automotive Manufacturing in Austria, 2016)s. According to Moore (2007), cars can be defined as vehicles with four wheels at least and about eight seats or less in addition to the driver’ s seat which is used to transport passengers.
The Car manufacturing sector is considered the largest sector of Austria’ s automotive manufacturing industry and it accounts for 47.6% of the total volume of the industry (Automotive Manufacturing in Austria, 2016). The car manufacturing industry in Austria is faced with volatile conditions because of the limiting number of production plants in Austria which most of the times operates through contracts. It is expected that the industry will continue fluctuating through to 2020.
Toyota, Ford and Holden are stopping the local production of their cars (Zubrzycki, 2013). Because the government has withdrawn its support of the industry, the producers of motor vehicles have cited a highly fragmented and competitive domestic market, a changing preference for the consumer and a higher cost for manufacturing as the causes for stopping local production of vehicles in the country (Cassin, 2014). So what is the role of the government to the car manufacturing industry in Australia? Firstly, the government assistance towards the auto manufacturing industry just as to other industries in Australia is both specific and general in its nature.
Such assistance is provided through self-interest claims and much lobbying. In addition to this, when selective assistance is provided to the car manufacturing industry, such assistance is never without a cost whether directly or indirectly (Klier, 2015). Secondly, according to Cassin (2014), the government of Australia in assessing whether to provide assistance to the automotive manufacturing industry of Australia relies on whether there is some type of market failure or not.
If there is some type of market failure in the business, the government would, therefore, decide if intervening would generate some net benefits to the overall community. If so, assistance is then accorded.
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