The German automobile industry

Résumé du document

Traditional economic theories say that there are a lot of factors for comparative advantage of a country such as the land, the location, the natural resources, the labor and the local population size.

In the opinion of Michael E. Porter, a nation can create new advanced factors endowments. It is why, he created a model determining national advantages, he called this model, the "Porter's diamond".

Porter explains by this model how a country or a region can have a competitive advantage over others. He explains us with six variable keys.

His model includes 4 interlinked factors and also 2 other determinants: government and chance, which are represented below.

Extraits

[...] It is why, he created a model determining national advantages, and he called this model, the “Porter's diamond”. Porter explains by this model how a country or a region can have a competitive advantage over others. He explains us with six variable keys. His model includes 4 interlinked factors and also 2 other determinants: government and chance, which are represented below. (The competitive advantage of Nations, Porter Michael 1998) Factor conditions: The country must have capital like technology to be more competitive. A nation needs for e.g. [...]

[...] It is useful to stimulate demand, and rivalry. Government policies can be in favour of an industry and indeed, it will permit to establish national advantage. It's why German government helps in giving grants at some automobile manufacturer to develop some new motors (which work with GPL, electricity). Moreover, recently carmakers BMW, Audi, Daimler Chrysler, Volkswagen, have won a German government grant to help develop the basis for a standard method for car-to-car wireless data (L'expansion 2004). Chance As an element of chance, there was the discovery of the diesel motor, which revolutionised the world. [...]

[...] It's why German cars are so famous in the entire world. But its labour costs are the most expensive in all Europe. But it's normal because in Germany the life cost is higher than in other countries like France, Belgium We can take the example of Mercedes cars; these cars are very famous because everybody knows that they are solid. The raw materials are more expensive than, e.g. Fiat, because Mercedes cars are built for more security and durability. Demand conditions This second determinant of competitiveness describes the state of home demand for products and services. [...]

[...] But most of the time they are German. For example, German subcontractors build the BMW dashboards Mercedes have a lot partnership. They build the smart in corporation of Swatch (company of switch watch) (Smart, 2005). Volkswagen and Porsche work together for cars motor. In this way, we can see that Germany is competitive because they have a lot of related and supported industries what reduces the production costs. But don't forget that German cars keep their notoriety because they use their one's raw materials and their staffs are mainly residents of the country. [...]

[...] But we can see also that American automobile cars are the leader in this market (General Motors and Ford). It's usually of a historic point of view because it was the American who invented cars (Comité des constructeurs français d'automobiles, 2004). Moreover it was more easily for them to extend their companies because before the beginning of the exchange with all countries, America profited of his big potential market. It is thanks to this, that they can re- purchase a lot of companies principally European companies. [...]