Industries Respond To Globalization - Free Samples for Students

Question: How To Industries Respond To Globalization? Answer: Introducation: The manner in which industries respond to globalization is demonstrated adequately by the car industry with its developments about the above mentioned traced back to the 1950s (Herrigel, 2015). This gradual globalization has however affected consumers differently. Firstly, car production on a larger scale leading to international expansion due to globalization has significantly outstripped demand (Dunning, 2014). As a result, fewer vehicles are being sold thus reducing production levels thereby contributing negatively to the rate of employment (Doucet, 2010; Herrigel, 2015). Secondly, gradual globalization has ensured consumers get efficient and quality products as a consequence exchange of production methods for instance just-in-time' and kaizen (continuous improvement) originating from Japan (Dunning, 2014). Third, gradual globalization has enabled consumers to have access to a wide range of car choices as per their needs. Lastly, overcapacity has resulted in downward pressure on c ar prices, which has materially adversely affected consumer businesses unfavorable financial conditions and cash flows (Dunning, 2014). Apart from affecting consumers, gradual globalization also opened the door for the formation of alliances between competing companies. There are various reasons above named. Alliances are formed to ensure the survival of companies going through a rough patch. A case example is Nissan that not indebted heavily by the turn of 1990 leading to its alliance with Renault. Further, alliances are formed to enable restructuring of a company's business and its finances. Even more, these are established to ensure that companies increase their sales revenue, a phenomenon referred to as synergy, as is the case with the Renault-Nissan alliance whose combination of sales income for the year 2012 could make top three. Also, Provision of synergy to companies facilitates a faster restructuring of the car manufacturing industry internationally. Ultimately, the effect of a combination of businesses is more significant than that of a single company. Last but not least efforts to improve fuel efficiency o r search for sources of fuel sources that could serve as an alternative furthered by alliances based on sharing physical and intellectual resources (Dunning, 2014). Joint venture brought certain benefits to each of the involved companies like Renault and Nissan. Park Kang (2013) agree with this fact. Nissan has a few benefits. Currently, 15% of Renault's shares are under the ownership of Nissan. Again, the venture ensured that Nissan had the opportunity to restructure after plunging into substantial debt at the turn of 1990 (Dunning, 2014). Renault relatively benefited the most from the venture considering that 44.4% of Nissan's shares are under its ownership on top of the fact that Renault's management controls Nissan. Moreover, the joint venture has brought a mutual benefit to both companies. It provides synergy to both companies such that the combined effect of both companies is much greater in comparison to the impact the individual companies would have had (Park Kang, 2013). According to rankings of 2012's sales revenue, a combination of Renault and Nissan's revenue could make the top three (Dunning, 2014). The Renault-Nissan alliance was a significant effect for Nissan to take because it has plunged into heavy debt by the 1990s due to the massive loans it had taken out- approved by the Keiretsu system- for financing the company's international expansion (Dunning, 2014). References Doucet, J. (2010). The automotive Industry (Macroeconomic Analysis). Short Essays (Economics, Politics, Law and Business). Retrieved 6 May 2017, from https://jennadoucet.wordpress.com/2010/03/14/21/ Dunning, J. H. (2014). The Globalization of Business (Routledge Revivals): The Challenge of the 1990s. Routledge. Herrigel, G. (2015). Globalization and the German industrial production model. Journal for Labour Market Research, 48(2), 133-149. Park, G., Kang, J. (2013). Alliance addiction: Do alliances create real benefits?. Creativity and Innovation Management, 22(1), 53-66.