Automobile production chain Essay Example | Topics and Well Written Essays - 750 words

Automobile production chain - Essay Example This paper aims to discuss how globalization exactly impacted this process. First, in the automobile production process, the component which has the greatest impact on whether the automobile will became a success in the marketplace is the deign stage of the production chain. In here engineers, suppliers, marketers, distributors, and even customers collaborate to create a new automobile. After the specifications of the new car, a prototype is created to validate the assumptions made by the design team. After the prototype, the parts for the new automobile product will be sourced. In sourcing out the necessary components, close coordination between and among the third-, second-, and first-tier suppliers, company, production staff, and the design team is necessary to pave the way for an efficient assembly line for the product. After the final assembly, the company coordinates with its distribution networks to create an effective and efficient distribution programs for the car to reach the end consumers or the consumers to be able to reach the car. In the above production chain, almost all its stages are affected by globalization; however such impacts were driven by different factors for each of the production chin stages. For example, "major auto assemblers invested heavily in the emerging markets, building new capacity and modernizing existing plants" (Humprey 2003, p. 121) because of cost reduction possibilities (for the final assembly chain), for the long-term growth prospects (for the distribution chain), and many more. On the other hand, the assembly and component manufacturing portion of chain is the most global process. In the assembly and component manufacture, the economic activities of organizations across national boundaries are well coordinated. Never have we seen a single economic activity so global it is now impossible to create an automobile just from the economic resources of a single nation (Liu, Sui & Gu 2008, p. 11). As Sturgeon, van Biesebroeck and Gereffi said, "the world automotive industry, like many others, is in the midst of a profound transition. Since the mid-1980s, it has been shifting from a series of discrete national industries to a more integrated global industry" (2008, p. 302). An impact of the increasing globalization of the automobile industry on the production chain is the creation of affiliated design centers and centralization of the heavy engineering work of vehicle development (Sturgeon, van Biesebroeck & Gereffi 2008, p. 302). In terms of the usual distant relationship of the automobile manufacturer with its suppliers, this is no longer the case now. In Thailand for example, the foreign manufacturers spend constant effort in developing the local suppliers by offering resources, training, feedback and solutions (Petison & Johri 2008, p. 76). Such support had enabled some local automobile parts suppliers to become global as in the case of Brazil (Grisis & Ribeiro 2004, p. 415). In some places, this close coordination had resulted in the creation of supplier parks either as a modular consortium or industrial condominium (Morris, Donnelly & Donnelly 2004, p. 129; Howard & Squire 2007, p. 1192). As the business environment of the automotive industry becomes more and more global, so as does the complexity of this environment (Li & Chandra 2007). Geffen and Rothenberg observed that "[a]utomobile assembly plants worldwide face increasing pressures in the environmental arena"