The Global Automobile Firms
Global Automobile firms that operate in the USA include Mercedes, Nissan, General Motors (GM), Ford, and Volvo. However, these are a few of a long list of other automobile companies that operate in the US. These firms have generic competitive strategies that uniquely identify and differentiate their products in a fiercely competitive market for positioning their firms for strategic market advantages (Stoner, 1987).
Generic Competitive strategies
In theory and practice, Porter’s generic competitive strategies include cost leadership, product differentiation, differentiation focus, and cost focus. However, with regard to the US market, these global automobile firms have generic competitive strategy that uniquely characterizes each of them. These strategies are specifically tailored to target specific market segments, demographic distributions, income levels, and consumer behavior (Stoner, 1987) and (Humphrey & Memedovic, 2003).
Mercedes’s competitive generic strategy of product differentiation targets buyer behavior. In its generic strategy, higher premium costs of the Mercedes model reflect value added features and product quality. It is clear that Mercedes prices its vehicles higher than other models due to additional value integrated into its Automobile units. However, the firm clearly makes customers understand and appreciate the higher product prices (Stoner, 1987).
On the other hand, Nissan’s generic competitive strategy is based on cost leadership. That is particularly the case in the current global economic environment, where consumer income and spending have significantly dropped. The strategy is based on the argument that being the producer of low cost vehicles, the selling price of their units can be accommodated in a market characterized by reduced income levels. However, the firm does not significantly differentiate its product though it is projected to enjoy a large market share (Stoner, 1987).
General Motors’s generic differentiation strategy is tailored to suit its operational macro and micro environment. The employs a combination of cost focus and differentiation focus as its competitive strategy in its rivalry against competing firms (Stoner, 1987).
Ford differentiates its products along the value chain by combining different product specifics specific to market needs in a flexible manufacturing strategy in each of its plants. These include repairs in real time, tracking the flow of spare parts and other components. On the other hand, Volvo focuses on a combination of product differentiation and cost focus strategies (Cavusgil, Knight & Riesenberger, 2008).
Differentiating strategies
Mercedes uses a differentiation strategy in which the firm overly differentiated from other brands in the market by value added features. On the other hand, Nissan’s point of differentiation is in the supply chain of raw materials and assembly points, while for Ford, it is in flexible manufacturing of a variety of models which are standardized in the market.
GM’s point of differentiation is at the manufacturing and supply chain of raw materials and products for its vehicles. On the other hand, Volvo differentiates itself on the perceptions about its vehicles tailored to target high income groups and human behavior (Bonney, Clark, Collins & Fearne, 2007).
Points of value differentiation or cost differentiation
These points help the automobile firms recognize points where resources are misallocated, identification of non-value adding activities, and other corporate social responsibility activities. For GM and Mercedes, it is important for fuel guzzling vehicles to be pulled from the manufacturing line.
On the other hand, Nissan should integrate the concept of product differentiation to provide brands that are similar to those provided by competitors, while Ford should flexibly reduce the manufacture of components like cylinder heads by outsourcing them. On the other hand, Volvo should minimize cost wastes like transporting components to be assembled at different plants, minimizing on transportation costs (Rappaport, 1987).
References
Bonney, L., Clark, R., Collins, R. & Fearne, A. (2007). From serendipity to Sustainable competitive advantage, Insights from Houston is Farm and their journey of co-innovation. Supply Chain Management: An International Journal, 12(6). 395–399.
Cavusgil, S., Knight, G., & Riesenberger, R., (2008). International Business, Strategy, Management, and the New Realities, New Jersey, Pearson Prentice Hall.
Humphrey, J, & Memedovic, O. (2003). The Global Automotive Industry Value Chain. Web.
Rappaport, A. (1987). Linking Competitive Strategy and Shareholder Value Analysis, Journal of Business Strategy. 58-67.
Stoner, C.R. (1987). Distinctive Competence and Competitive Advantage. Journal of Small Business Management. 33-39.