Case Study: Industry Analysis and the Process of Proving Hypotheses – Japanese Automobile Industry 1. Market life cycle phase is different by region due to different population size, technology development and global economy situation. The implications are the volume of the productions and growth rate. 2. The cost factors of an automobile manufactured are supplier component cost, in-house development cost, advertising cost and etc. The costs of automobiles sold to customer will be marketing cost, storage cost and etc. . To be able to reach the economies of scale, the production volume must be high. The automobile companies that have the major market share will have the advantage in economies scale. For example, they will incur less advertising cost compare to lower volume production’s company. 4. Japanese automobile industry has to consider the export automobile oversea when the domestic market matured in end of 1980s. All of the three markets are important to the Japanese automobile industry. The most important market will be Asia.
The Asia market is growing. Yes. It is said `dumping` in the sense of selling the automobiles oversea is hardly profitable. But it is a must since the domestic market is mature and exporting oversea can cover parts of the fixed cost. It is also an act of Japanese automobile industry to test the oversea market with expected loss in mind. 5. Japanese automobile market is using the market segmentation of product differentiation. They offer different types of cars to satisfied the different needs of customers.
The ways to differentiate are the level of luxury, size of car and etc. 6. No. The relationship between Japanese automobile assembler and components supplier is loosing over the years. It is hard for the automobile assembler to control the cost from the second or third tier of component supplier. The cost only can be lowered when the component supplier reach economies of scale in higher volume and following the steps of automobile assembler to move the plants to oversea for lower labor cost production.