Analyze Various Aspects Of Entry Barriers In The US Car Market

Question: Discuss about the Analyze Various Aspects Of Entry Barriers In The US Car Market. Answer: Introduction Car manufacturing industry is one of the major industries in the market of United States (US). Three of the major companies dominate the car industry of US are GM, Ford and Chrysler. However, it can be seen in the recent years that major companies all over the world are entering into the car industry of US. Thus, the main aim of this report is to analyze various aspects of entry barriers in the US car market. Analysis According to the provided case study, many renowned car makers all over the world have been showing interest in doing business in US car market. Some of them even have established plants in US so that they can avoid the import and political instructions. Still, it can be seen that the US car market has been exposed to few new entrants. There are two specific reasons behind this. First, the manufacturing process of cars is very complex. The internal combustion engines of cars are mad out of thousands of precisely engineered parts. For this reason, it is difficult for outside US carmakers to bring all the parts of combustion engines from their own countrys plants (Lofstrom, Bates and Parker 2014). In this context, it needs to be mentioned that most of the companies outside US have their plants established in their own countries. Thus, it is an expensive process for the outside companies to bring the parts in the US market. Second, in order to be cost competitive, the companies are requ ired to make production on large-scale basis. The main reason is that large-scale production helps the car companies to be cost competitive. Most of the outside car companies are not able to maintain these two aspects (Wells and Nieuwenhuis 2012). For this reason, the US car industry has not been exposed to a few carmakers. The provided statement states that the car companies are required to produce in large scale to be cost competitive. Large-scale production refers to the specific production process that helps the companies to make the production process in large numbers or large scales. The main advantage of large-scale production is that it helps the companies to produce more units with the reduction in cost per unit (Hendrick and Kleiner 2016). In the US car industry, the earlier mentioned major three companies manufacture cars in the large-scale basis. For this reason, they are able to acquire the majority portion of the car market. In this situation, in order to manufacture more units and to save cost, the outside car companies are required to manufacture in large-scale basis so that they can compete with the three companies. For this reason, the major strategy is to establish large manufacturing plants in US so that they can manufacture large number of cars in fewer costs (Rothaermel 2015). In a ddition, the outside car manufacturers can manufacture electric vehicles as they take less costs to be produced. They can adopt these two strategies. Conclusion The above discussion shows that the outside US car companies have to bear large expenses as they are have to bring thousands of parts of car engine in US. In addition, due to lack of large-scale production, they fail to get cost benefits. These reasons contribute to the entry of outside car companies in US. The above discussion also shows that the outside car companies are required to set up large-scale manufacturing units so that they can be cost effective. References Hendrick, H.W. and Kleiner, B. eds., 2016.Macroergonomics: theory, methods, and applications. CRC Press.Management Lofstrom, M., Bates, T. and Parker, S.C., 2014. Why are some people more likely to become small-businesses owners than others: Entrepreneurship entry and industry-specific barriers.Journal of Business Venturing,29(2), pp.232-251. Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education. Wells, P. and Nieuwenhuis, P., 2012. Transition failure: Understanding continuity in the automotive industry.Technological Forecasting and Social Change,79(9), pp.1681-1692.