The Impact of Globalization on the UK Car Manufacturing Sector - Coursework Example

THE IMPACT OF GLOBALIZATION ON THE UK CAR MANUFACTURING SECTOR by Introduction The UK car-manufacturing sector continues being an innovative and vibrant industry, enriching all aspects of human lives through generation of diverse automotive machines for use by people all over the world. The sector’s crucial link to the British economy, in terms of transportation and logistics, aids in the effective transfer of goods/ products in addition to the creation of jobs and earning of. The paper aims at critically evaluating the impact of globalisation on the UK car manufacturing sector, highlighting the presence of both non-trade and trade barriers affecting the sector. Focus will be on the JRL UK success case example, in regard to the process of internationalisation as an impetus of growth. Reference will be drawn from prevailing fundamental global drivers of this success, in relation to the contributing aspect of growing economies such as India and China. This will be in addition to issues concerning regulatory frameworks with particular focus on intellectual property protection. The UK Manufacturing Sector: An Analysis In the contemporary era, there exists an extensive assumption that it is only but a matter of time before the ultimate demise of the UK manufacturing sector is experienced. However, according to the report by PricewaterhousCoopers [PwC] (2013), this assumption holds no ground, as the prevailing situation and accrued facts portray a different story altogether (PwC, 2013:1). This is based on a variety of aspects, all which essentially refute such claims. These include the aspects, which are critical in the overall evaluation of the sector, and hence proving vital towards better understanding of the current contexts under which the nation’s automotive industry operates. The British manufacturing sector’s output reached its all-time high in the year 2007 even when adjusted in consideration of prevailing inflation rates. Secondly, the UK continues being a dominant player in global manufacturing, being the sixth largest global manufacturer possessing strong dominance in specific key industries such as Aerospace, where it has 15% of global market share. Third, is that the overall manufacturing sector between 1997 and 2007 achieved a positive 50% increase, in terms of labour productivity (Cooke, 2011:7). Accordingly, while the nation (UK) is distressed by the presence of the stark cyclical global downturn currently being experienced, PwC is of the view that its manufacturing sector will survive, just as it did during the triple crises of 1973, 1982 and in 1991. While this perception is strongly supported by different foundational aspects, there also exist significant challenges (Boyce, 2014). Daniels, Radebaugh & Sullivan (2014) state that for international business to work properly in the face of globalization, ethical issues must be observed to ensure that organizations do not misuse resources or endanger other businesses through issues such as corruption and unsustainability in the use of resources among other issues (Daniels, Radebaugh & Sullivan, 2014:514). The UK car manufacturing industry has tried as much to ensure that it does not use resources unsustainably or engage in issues of corruption. The British Automotive Manufacturing Sector Fundamental to note is that the UK motor industry still retains its distinctively British heritage having positively re-invented itself as a key manufacturing base to diverse automotive industries. As Sturgeon et al. (2009) present, the presence of increased foreign direct investment has positively boosted the UK manufacturing industry in general (Sturgeon et al., 2009:9). This has resulted in enhanced keenness and quality improvement being key foundations on which management has focused on, especially in relation to the improvement, and maintenance of its high quality production operations. A geographical point of view portrays the global automotive industry as experiencing an intense transition. Like many other manufacturing industries, it has since the mid-1980s been shifting from a succession of distinct national entities to a globally integrated industry. For this to work properly, the law must always be respected irrespective of whether an organization operates outside its countries boundaries (Daniels, Radebaugh & Sullivan, 2014:521) Notably is that global integration embeds different firm-entities into bigger regional- and global-scale production, innovation, consumption, command, control and sourcing systems. The presence of these international ties has been complemented, at the operational level, by strong regional structures (Sturgeon et al., 2009:12). Accordingly, prevailing market differences often necessitate automakers to alter their vehicles’ design, in order to fit specific market characteristics i.e. left vs. right hand drive, larger fuel tanks and more rugged suspension etc. Thus, while a majority of vehicle designs are tailored towards global market diversity, there is increasing development which draws from inputs affiliated with regional design centres. Here, engineers and designers are able to aid in tailoring vehicle specifications to meet existing regional and national market requirements (PwC, 2013:11/ Boyce, 2014). The case of Jaguar-Land Rover (JLR) brands success story As the UK’s largest automotive manufacturer, Jaguar-Land Rover is founded around two globally-recognized, iconic British brands: the Jaguar and Land Rover. The former is a leading global premier luxury sports car, with the latter being known the world-over in terms of assembly of premium all-wheel drive vehicles. As portrayed in its Adobe Customer story publication (2014), at Jaguar-Land Rover, the building of all-wheel drive vehicles and classic automobiles is achieved through significant attention input to detail. Accordingly, both product development and engineering are the foundation on which the business thrives. Prior to 2008, while the two separate brands were still renowned internationally, various factors were responsible for their ‘slowdown.’ Key amongst these concerned the ownership and management aspects of the two under America’s Ford (Cato, 2013). Further compounding the delicate state of the two brands, was the global crisis of (2007-08) whose domino effect negatively impacted all segments of the global manufacturing industry. However as Cooke (2011) portends, the 2008 acquisition of the two brands from Ford by Tata, was to change the brands’ fortune for the better (Cooke, 2011:4-5). During the time, the odds were against such a move, especially due to the then prevailing great recession of (2008-09). After acquisition, the two brands were merged into one, providing a basis on which subsequent success has been achieved. This has been primarily in terms of not only new memorable vehicles auto-fitted with relevant innovative technologies, but also overall consumer satisfaction because of increased quality standards. Fundamental to the success has been Tata’s three-year vision, founded on technological input and innovation. This is in terms of implementing an effective solution vital in the transformation of forms into digital documents possessing electronic signature capabilities. Furthermore as Cato (2013) presents, this is anchored on the aspect of globalisation, the company’s growth and expansion necessitated application of a streamlined e-signature process (Cato, 2013). This was critical concerning aiding in both scaling and supporting ongoing dealer and supplier contracts. Global drivers of Jaguar-Land Rover’s Success Critical to the single-brand success story as earlier mentioned, has been its continuous focus on enhancing its diverse products, through pertinent technology. The aim is to enhance overall consumer satisfaction, through production of top-quality products targeting the different global populations (Sturgeon et al., 2009:14). Towards this achievement, has been the critical use of technology in aspects such as its implementation of a streamlined e-signature process with regard to supporting and scaling dealer and supplier contracts. This is especially critical given that both product development and engineering are the brand’s foundational basis (Cooke, 2011:24). These processes often tend to be both time-consuming and complex necessitating the sign-off of several agreements with its dealers and suppliers globally. The e-signature process has proved effective. An informative aspect is that there are an approximate 40 product development procedures alone, all which previously required paper form details i.e. blueprints, specifications and compliance validation of parts, as well as engineering sign-offs that were then legally enforced. As Boyce (2014) conveys, by implementing the e-signature process, the brand enhanced the overall rate at which obtaining timely, hassle-free sign-offs from senior executives could be achieved (Boyce, 2014). Essence was placed on streamlining of these vital processes, with the positive effects being accrued because of executives either using mobile phones or travelling, could simply sign-off while on the go. Associated with technological input, has been the brand’s utility of new firms with regard to advertisement, advisory, valuation, building consultancy, future transactions and global lease negotiations. Through such linkage, the brand aims at further stretching its arms to newly emerging markets, as well as solidifying its presence in major markets ( PwC, 2013:13). Special focus is placed upon India and China, as well as other states in the Asia-Pacific region as key markets of growth. This is informed by the fact that their growing economies have increased overall levels of economic sustenance, expanding the overall purchasing capacity of their populations. However, as Daniels, Radebaugh & Sullivan (2014) poiny out, countries like India and China have not taken steps in taking stricter measures to avoid issues such as global warming in the face of globalization. The countries have not yet even ratified the Kyoto protocol of 1997 (Daniels, Radebaugh & Sullivan, 2014:521). This is a challenge to international business as the two nations are key markets due to the huge populations present, which are increasingly becoming wealthier and ready to invest in prime luxury items (Sturgeon et al., 2009:15). Furthermore, aspects of production also link the brand to these markets. Mirroring such growth will be the implementation of a joint portfolio business and fleet sales approach. Influential in this regard, is the entity’s improvement of its face-to-face business transactions (Cooke, 2011:54). Conclusion By engaging in investment processes targeting enhancement of corporate sales staff, digital infrastructure development, and overall development and collaboration with retailers, global sales are expected to continue rising. While key challenges are present, the presence of opportunities and supporting factors place the brand at a decisive advantage. This is especially in terms of investment in low-carbon and safety technologies, the opportunity to build globally recognized brands through enhancement of motoring heritage (as well as capacity in specialist and premium segments), as well as the exporting of design and engineering consultancy. Reference List Boyce, L 2014, Booming British car manufacturing helps drive economy and production could break records by 2017 (if there are enough skilled workers). This is MONEY.co.uk (website), retrieved from: http://www.thisismoney.co.uk/money/cars/article-2548149/How-booming-British-car-manufacturing-helped-drive-economy-upwards.html Cato, J, 2013, Brand Development: The critics were wrong. Jaguar Land Rover is alive and well – and profitable. The Globe and Mail – Global Drive: News, retrieved from: http://www.theglobeandmail.com/globe-drive/news/the-critics-were-wrong-jaguar-land-rover-is-alive-and-well---and-profitable/article12948299/ Cooke, P.N.C. 2011, The United Kingdom Automotive Industries: Status, Economic Recovery and Expectations Report. University of Buckingham. Daniels, J. D., Radebaugh, L. H., & Sullivan, D. P. (2014). International business: Environments and operations. 15edn. Boston, Mass.: Pearson. Jaguar Land Rover is driving efficiency – United Kingdom’s largest automotive manufacturer streamlines engineering, product development, and other processes with electronic signatures enabled by Adobe EchoSign. Adobe Customer Story (1-3) 2014, retrieved from: https://www.adobe.com/content/dam/Adobe/en/customer-success/pdfs/jaguar-land-rover-case-study.pdf PricewaterhousCoopers, 2013, The future of UK manufacturing: Reports of its death are greatly exaggerated. PricewaterhousCoopers: Industrial Products Report. (1-28). London: PricewaterhousCoopers. Sturgeon, T J, Olga, M, Johannes, V B & Gary, G 2009, Globalisation of the automotive industry: main features and trends. International Journal of Technological Learning, Innovation and Development, 2(1/2): 7-24. Read More