Competitive automobile industry and the client’s requirements

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

The automotive companies need to implement, and maintain high standards of Total Quality Management practices to match up to the competitive automobile industry and the client's requirements, this has been considered as infrastructural strategy in the operations management research fields.

Due to the competition, the clients demand for quality, hence making it one of the biggest factors of consideration for company's survival in the always expanding global market, quality is then important in the future economic benefits of any company. This strategy has been applied by many worlds' leading automobile manufacturers to gain competitive advantage over their business rivals.

In Malaysia, since the inception of the ASEAN Free Trade Area in 2005, there has been impact in their car manufacturing industry, prior to this agreement; the car industry was protected by the central government through such systems as refunds schemes, tariffs and investment controls giving the local companies a competitive advantage over the other over- seas rivals. According to Thomas (2010), this has been observed by critics to be a positive move in driving the regional assembly and manufacturing integration and cost competitiveness in the larger ASEAN countries. By 2010 Malaysia car industry was far behind the Thailand's.

The government adopted policies to develop local automotive industry and encourage vehicles to be assembled locally: These include manufacturing vehicle parts locally imposing imports taxes and attracting a tariff system on imports. Another was that, all the dealers and distributors to get import licenses that had to be re-newed in every six months, (Song Y, et al) Though others companies assembled other brands of automobiles, there was an upward surge in the production of many makes and models, leading to lower prices of some parts, hence a challenge to the manufacturers to achieve their economies of scale. Imports were very high due to the inputs in the assembly of plants, this leads to lower technology transfer and human resources development in automotive industry, (Gupta, & Srikanth, 2004).

The next move was the launch of the National car project, the PROTON in 1984 increasing the levels of technology and development of local property rights. It was a joint venture between Mitsubishi Motors of Japan, by 1985 PROTON Saga was in production, and it was given preferential tax and duty rate due to its national brand. The Malaysian automotive industry is controlled by national cars: PROTON and PEREDUA, accounting for close to 90 percent of cars traded locally annually.

The adoption of international standards, for instance ISO certification was mearnt to enhance the competitiveness in the local and international market place, with the government assisting the small and medium companies in setting up of Industrial technical Assistance Fund to aid in their certification.

According to Economy Watch, Korea has in the past developed many complicated procedures and policies regarding the transfer of technology, leading to the high economic growth and development rate of their country in the recent past, (Arunee, 2003). The government has put a lot of effort in the stimulating technology associated to business and promoting favorable climate to technology development. The government established technology transfer center to facilitate these processes.

The technology transfer coupled with assimilation, forms the competitive infrastructure in the use of technology, the institution has helped the country (Korea) in channeling the a little capital into specific sectors, promoting the idea of risk taking, the protection of the local markets to enhance or encourage the entry of other firms, and building of efficient facilities. It has also helped in the stimulation and influencing the acquisition of foreinghn innovations and technologies and giving incentives the exporters.

Korean Technology Transfer Center places a high priority in the development of local technological abilities for the creation of industrial infrastructure. This is driven by the idea that economies of with strong domestric infrastructure - in the form of technological assets and abilities have the global advantage in competition, while those without must use other advantages to make incentives for technology. Korea is still in the process of gathering and using outside knowledge in building their technology strength - making them more of processor than innovator country.

Korean Technology Transfer Center gets the foreign technology from more developed countries directly and indirectly, it is making a slower change from the investment oriented focus to the innovation approach, though this has been met with challenges for instance generation of sophisticated technological innovations, the larger companies are competing in technological innovations making Korea to under - go structural changes, which generally favors high value added industries.

As per the United Nations report, Korea's has a bureaucratic approach in the management of foreign investment, this not compatible to the policies of other global firms, most of which do not agree with its approach to business practices and the respect of intellectual property rights, its restrictions on market access for goods and services, and labor and wages. It still maintains the restriction of foreign ownership - through individual approval of foreign investment. The government has adopted the strategic cooperation in identifying the gaps in indigenous innovations, this is mearnt to help engaging the owners of technologies with others thereby, leading to transfer of technology. The government provides incentives to technology transfer through the funding of technology projects and facilitating of the foreign technology trade access.

In 2006, Thailand was the world's 14th greatest producer of automobiles, with 1.296 million units of cars manufactured, accounting for an increase e of 15.44 percent from the previous years, and the leading automobile producer in ASEAN.It is as well the largest world producer of one tonnne pickup tracks. With the five year plan of producing not less than 1.8 million automobiles per annum; and an export of at least 800,000 motor-vehicles per year.

Norhayati (2010) argues that direct foreign investment in Thailand has increased in the recent times, due to the investment by many larger international companies in the South East Asian country.Though, these companies are still wary of the business practices of Thailand; some of these companies are Tata Motors. But, the Thailand government is not ready to change the regulations that govern the foreign investment. The prime minister stated that the government was looking into the procedures of doing a way with the restrictions placed on the capital inflow from the overseas countries.

The restrictions came into place in 2006, hindering the growth of Thai economy due to the lack of confidence by other countries to trade with them. Though, the government has increased the lease given to Chevron to produce natural gas up to 2022. This begs the question why Thailand has become the best destination for automotive manufacture? Thailand still commands a competitive manufacturing market with cheap labor and raw material costs.Besides, the country is strategically placed, being close to key regions such as Malaysia, Singapore and China, (Enright, James & Elyssa, 2001). The government has also invested heavily in attracting the foreign investors especially the vehicle manufacturers; this comes with an incentive to companies to produce eco-friendly cars. In sharp contrast, unlike in other countries like Malaysia that have their own "national cars", promoting their national brands; Thailand has no "national car" in their name.


Thailand has lesser stringent trade restrictions compared to other boundering nations; this seems to have played against the development of local manufacturing industry and the development of technology. The Thailand government needs to invest in technology transfer just as in Korea; this would boost the expertise of the local industries. The government also needs adopt policies to develop local automotive industry and encourage vehicles to be assembled locally: these include manufacturing vehicle parts locally, imposing imports taxes and attracting a tariff system on imports. Dealers and distributors should be made to get import licenses and renew them after a certain period of time. The automotive industry being the third largest industry in the country, has supported the country's GDP to remain afloat in times of economic downturn, when the tourism sector is affected