Internationalization and the UK Automotive Industry - Case Study Example

Internationalization and the UK automotive industry Author’s name Institutional affiliation Internationalization and the UK automotive industry Introduction/Executive summary of the car manufacturing industry in the UK The Car manufacturing sector in the UK has gone through transformational phases over the past decades. Additionally, the automobile industry entered into an agreement in the year 2009 resulting into the establishment of the automotive council (BIS, 2010). Furthermore, the Car manufacturing industry ranks third in the total GDP contributors in the UK with an average of eleven percent total revenue (Mike,2011).Moreover, the car manufacturing industry contributes to around 2/3 of the eleven percent revenue with an annual turnover estimated to be around sixty billion euros (BIS,2010). In other words, The UK car sector has undergone notable changes as a result of the continuous global changes in the international automobile industry (Lord, 2013). As a result, there has been notable expansion and improvement of the communication and information technology, developments in the transport infrastructure as well as abolitions of non-tariff and tariff barriers (Great Britain, 2007, 17). One of the driving efforts over the past decades is in one way or the other similar to the reasons behind the success of Global automotive industries like China and other Western-Multi-National Companies. By so saying, it means that, securing easy access to international automotive industry as well as securing their products markets, gaining easy access to advanced automotive technology, and securing appropriate management brands and knowledge are the primary motivations behind the recent rise of the UK manufacturing industry over the past decade (Piyush, 2015). Reason behind JLR success in the UK since 2008 After purchasing JLR from Ford in 2008, TATA had to make crucial decisions bearing the fact that the change of ownership represented movement across two countries that possessed different cultural and ethical values (Trefis, 2014). In other words, the change in management would have represented a tremendous collision in religion and culture (Ben, 2012). Therefore, the Indian management allowed the existing leadership and management style of JLR to continue. Therefore, as a result, JLR witnessed the tremendous boost in terms of the positive influence of cultural diversity and globalization (TATA, 2014). The high growth rate in the economy of India and Britain as well as the increasing buying power because of the wealthy social groups plays a critical role in attracting major automakers in the UK (Dan, 2015). By so doing, this attraction not only plays a vital role in expanding the local market share, it also motivates them to search for global expansion in the automotive industry. Additionally, The UK’s growth in the car manufacturing industry since the year 2008 became part of the motivational factor towards internationalization. Some of the global driving forces include Market competition, technological factors and environmental regulations in terms of co-competencies as explained below. Market competition factors in international marketing strategy involve balancing the consumer needs and wants by establishing opportunities through giving attention to international clients. By so saying, it means that TATA has a well-established brand name that enables it to engage easily in transferable marketing internationally. Instead of relying solely on its brand name, TATA should encourage the art of extensive testing that guarantees the quality of JLR before the commencement of the manufacturing process (BIS, 2010). By so doing, TATA will be able to fill the existing gaps in the global automotive industry. In simple terms, JLR will continue to grow due to the realization of the existing gaps in the market through appropriate production knowledge, experience and management skills that are able to help TATA fill gaps in the global automotive sector. JLR in the international market possesses a comparative advantage since they do not at any point have a direct competitor in terms of the global automobile companies. Additionally, the competitive advantage comes in terms of after sales service; consistent prices and the global marketing of their brand name. For instance, over eighty percent product sales of JLR are sold in international markets with China ranking as the best JLR market in 2012.Additionally, JLR sales in China increased by seventy –one percent that is approximately 72,000 automobiles (Jim, 2014). Due to constant marketing and advertising, the sales increased to 90,000 cars in the year 2013. By so doing, it makes it possible for customers to associate more with JLR products hence increasing the sales of JLR globally (Trefis, 2014). Technological advancement in terms of advanced design, technological adjustments, and engineering played a vital role in the high sales turnover since the year 2008.Fo instance, JLR is well-known for using lightweight metal such as aluminum instead of steal. However, with the new SUVs, it has modified the traditional steel structured body parts and replaced them with an aluminum monocoque structure making it lighter by forty percent as compared to the previous Desert Kingdom SUV (Piyush, 2015). As a result, the sales grew by around 9 percent annually which is approximately 12,000 cars more especially in the Middle East (Mike, 2011). Furthermore, these advancements in technological research and development have made it possible to manufacture better performing and advanced cars that motivate the customers to purchase more hence increasing the sales. The influence of the growing markets such as India and China on JLR sales JLR has witnessed a tremendous rise in its sales as a result of engaging in the global trade with countries like China and India. Additionally, the fifty percent ownership foreign limit by the Chinese company prompted JLR British manufacturer to establish a joint venture with China. By so doing, it increased the market foothold in China hence making it possible for JLR to increase its dealer network in China (Shally, 2015). By so saying, it means that the growing market and economy in China plays a critical role in improving the population of individuals who have a growing taste and preference for JLR vehicles thus increasing the volume sales The increasing wealth and economy in the local markets in India provides a notable opportunity to increase the volume of sales (Great Britain, 2007, 33). In simple terms, the overall bridge the existing gaps between the developed and the underdeveloped areas in India has reduced tremendously prompting the fact that the purchase of JLR vehicles is increasing in rural areas as well (Telegraph, 2015). Furthermore, the increasing demand by the locals for JLR vehicles has moved TATA motors to deal with this issues in a latent cost effective way In other words, the overall demand for JLR in India is basically determined by the easy credit availability, growths of the economy as well as the growth in disposable income as far as Indian citizens are concerned (Jim, 2014). Cultural and ethical issues associated with overseas production and overreliance on the international market. Most organizations always define their goals using a common culture and ethical values (Dlabay &Scott, 2011,97-98). In the case of a global market, most organizations find themselves interacting with clients who have different cultural values as well as religion. JLR, being a Global brand, it is more likely to find itself in such a dilemma. Additionally, it must also make a decision regarding the management, staffing and the extent they plan to engage in international dealings without compromising the core ethical and cultural values locally. For instance, when TATA purchased JLR from Ford in the year 2008, it maintained its executive leadership and the staffing of the company to avoid the dangers associated with ethical and cultural issues as a result of the change in ownership (TATA, 2014). There can also be dangers associated with communication and advertisement issues. For instance, the high costs of advertisement and difference s in cultural meaning, or communication context may make the comprehension of the facts in the advertisement conceptualized differently by different customers (Lord, 2013). Additionally, being in a joint venture with China in an effort to increase its foothold in China market, JLR must make sure that, its communication and level of expression lies within the freedom of expression values as stipulated by the China constitution (Guy, 2011). Moreover, the conservative nature of the Indian community may make the advertisement of JLR limited due to the fears of tax evasion by the TATA Company since it is operating overseas. The company might also incur extra costs as a result of the imposition of extra costs, barriers and other costs by the government to the foreign company. For instance, China imposes a fifty percent limit of ownership on any international company that engages in a joint venture with it making JLR a no exception (Dan, 2015). Conclusion Internationalization plays a critical role in improving the car manufacturing sector in the UK. By so saying, it means that TATA as a company has experienced a major boost in the automotive industry since adopting the JLR merger. Additionally, the global success of JLR can be heavily attributed to cultural and ethical issues as well as technological advancements in terms of design and engineering (Salil, 2015). Therefore, it will be highly recommended that the UK manufacturing sector should engage more in research and development activities as far as automotive is concerned and work on ways of improving their relationship with high rising economies such as India and China. References Ben O. (2012). Made in Britain. Saved in India. 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GREAT BRITAIN. (2007). Success and failure in the UK car manufacturing industry. London, the Stationery Office. Guy D. D., (2011). Chinas relentless growth continues. Retrieved from: http://www2.warwick.ac.uk/fac/sci/wmg/people/chairman/editorial/cbi_west_midlands_i nbusiness_summer_2011.pdf Jim R. (2014). Jaguar Land Rover’s Strategy for Growth in China. Retrieved from: http://beta.tutor2u.net/business/blog/jaguar-land-rovers-strategy-for-growth-in-china Lord B. (2013).Challenges and threats of globalization. Retrieved from: http://www2.warwick.ac.uk/fac/sci/wmg/people/chairman/editorial/cbi_west_midlands_i nbusiness_summer_2011.pdf Mike w. (2011). JLR on the move and in a hurry. Retrieved from: http://www2.warwick.ac.uk/fac/sci/wmg/people/chairman/editorial/cbi_west_midlands_i nbusiness_summer_2011.pdf Piyush J. (2015).Tata is well-positioned to gain from the growth of luxury vehicles in emerging economies. Retrieved from: http://analysisreport.morningstar.com/stock/research?t=TTM®ion=USA&culture=en- US&productcode=MLE Salil P., (2015).Indian, Luxury cars: JLR takes on the Germans. Retrieved from: http://forbesindia.com/printcontent/39371 Shally Seth Mohile, (2015). High base, slowing economy may halve JLR’s China sales growth. Retrieved from: http://www.livemint.com/Companies/VHtVcAKEeH4owqPwRrQlGP/MadeinChina- Range-Rover-seen-cutting-94000-price.html TATA, (2014).Annual report 2013-2014. Retrieved from: http://www.tatamotors.com/investors/financials/69-ar-html/mda8.html The Telegraph, (2015).Jaguar Rover Mulls full Production in India. Retrieved from: http://www.telegraph.co.uk/finance/newsbysector/industry/9906785/Jaguar-Land-Rover- mulls-full-production-in-India.html Trefis Team, (2014). Jaguar Land Rover drives Top Line Growth as India Sales Decline for Tata Motors. Retrieved from: http://www.forbes.com/sites/greatspeculations/2014/05/30/jaguar-land- rover-drives- top-line-growth-as-India-sales-decline-for-Tata-motors/ Read More