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Competitive Strategies Case Study

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Case Title:

The US Automobile Industry's New Platform for Competition, The 'American': What's 'American' Anyway?

Publication Year : 2006

Authors: Kalyani Muppidi, Nusrath Jahan Maldar

Industry: Automobiles

Region:USA

Case Code: COM0123

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:
For almost a century, the US was proud of its three largest automobile companies - General Motors, Ford and Chrysler, (collectively called the Big Three). Ford was the first to introduce the concepts of mass production, moving assembly line and '$5-day', which became the industry norm. GM, one of the biggest companies in the world, had to its credit the first US company to generate $1 billion a year. Chrysler, on the other hand, was known for its innovative capabilities. The automobile industry was itself one of the most important industries in the US. Receiving more than the average salary and with generous healthcare and pension benefits, employees considered it a privilege to work for the Big Three. However, the Big Three's demesne was gradually invaded by foreign competition, especially from Japan. Initially establishing a base by exporting to the US, the Japanese carmakers gradually setup their own production facilities, employed Americans and responded to the changing tastes and preferences of the consumers in a better and faster way. Over a period of time, the US consumers no longer considered these foreign companies as 'foreign'. With falling market shares, increasing legacy costs, the significance of the Big Three declined significantly in the eyes of consumers, investors and the government alike. Amidst these conditions, Ford came up with a promotional campaign emphasising on its American legacy. Toyota also launched a campaign striving to showcase its 'Americanism'. In addition, the retirees of the Big Three formed a grassroots association in order to persuade the US consumers to buy only 'American' to save the jobs of millions of Americans working at the Big Three. In the light of this new platform of competition, the question arises as to whether it is possible to define what is 'American' at all.

Pedagogical Objectives:

  • To identify and discuss the strategic inflection points in the US automobile industry
  • To discuss how the once dominant Big Three lost to their Japanese counterparts
  • To understand the advantages built and sustained by the Japanese companies over the Big Three
  • To explore the relevance of 'patriotism' as a platform for competition
  • To analyse what 'Americanism' means in one of the most globalised industries.

Keywords : US automobile industry; Detroit’s Big Three; General Motors Ford Daimler Chrysler; Toyota Honda Nissan; Keep America Rolling Legacy costs Healthcare; Competitive Advantage; Bold Moves campaign; Competitive Strategies Case Study; Segmentation Targeting and Positioning (STP); Brand Image; Industry Life Cycle; Lean Production Total Quality Management; William Edwards Deming and Joseph M. Juran; Downsizing operations Layoffs; UAW (United Auto Workers); Emotional Branding

Contents : 
Detroit’s Big Three vs Japanese Carmakers
Sloan’s Revamped Price Ranges
Rates of Auto Quality Improvement
Global Revenues and Income of Toyota and GM
Separated at Birth: Twin Products Meet Separate Fates
Average Profit per North American-made Vehicle
‘Americanism’: The New Platform for Competition
Contributions of the Big Three
Big 3 Buyers Lag in Income, Education

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