April 11th blog post

This article talks about how Toyota is finally starting to feel the aftermath of the Japanese earthquake and tsunami. Toyota send out a letter to all of its dealerships saying that there will be a shortage of vehicles that will be supplied over the summer. Toyota will be regulating the vehicles' models, colors and inventory parts that it will be making. It will try to produce the most wanted model and color in order to squash the shortage as much as possible. I think what Toyota is doing is a good idea and it might actually help them limit the amount of losses they will have. It is definitely worth the try. I am interested what other companies are thinking about doing and if they will follow in Toyota's steps or come up with their own plan of dealing with the supply problem.

http://www.autonews.com/apps/pbcs.dll/article?AID=/20110411/OEM01/110419979/1117

April 11th, Securities Market

In general terms, what do the industry analysts say about this industry?


In general terms, the analysts are saying the current automobiles today resemble ‘computers on wheels’. More and more, the automotive companies will try to produce their products with new advanced technology. Diverse functions concerning Safety, Convenience Vehicle controls, Driving assistance and Communication devices will have a bigger role on their products. You can now barely find cars without GPS, Airbags, and collision warning signs for vehicles produced today. As for the recent technology, vehicles with ‘blackbox technology’ is gaining attention since it is very helpful when trying to retrieve information on causes of damages, just like the ones attached on the aircraft. Moreover, the companies are in their ‘economy mode’ as for their new trend, and hybrid cars are good example for this and it is predicted that it will grow more in the future as well.
The analysts also assume that there would be a expansion in the future markets particularly in India and China. Recent two years was a recession in the automotive industry due to the downfall of the economic crisis, however, since now the economic conditions in U.S and Europe is improving, growth in the market can be expected in the coming up future.



references :

http://cyberinvestmentguide.com/alternative-investment/market-trends/Market-Trends-In-The-Automotive-Industry.html
http://www.altera.com/end-markets/auto/industry/aut-industry.html
http://www.sjnorcalgroup.com/2011/02/06/future-trends-in-automotive-technology/

April 11th, Securities Market

Which industry individual stocks have some analysts identified as "buys" in the current market? Why?

In the meanwhile and during the unstable situations throughout the whole world, each analysis depends on the price of oil because of the correlation between oil and auto industry. In the Asian market, there is a big concern with the severe damages that happened in Japan because of the magnitude earthquakes. These damages impacted one of the major countries in the Asian market, Japan.

Analysts are not comfortable with the Japanese's auto companies because of two reasons: first, the issues that are impacting some factories and centers of Toyota and Subaru; second, the massive recalls that Toyota suffered from. Therefore, buying Toyota's or Subaru's stocks is not a good decision, especially in the meantime.

However, they added that Hyundai is thriving now while the automotive industry in Japan is suffering. This would let the brokers think of the Korean auto companies and buying their stocks, especially Kia. Because Kia proved that its cars are efficient in consuming gasoline. This an important factor for customers because of the issues that are going in the Middle East which affected the oil’s prices. So, people are likely to buy small or efficient cars which Kia already provides these choices.

I think that the market for big cars, such as trucks and big SUVs is not profitable that much because of the gasoline prices. Now, the price per gallon is almost $4 which is very high. To fill up the tank for big cars, it costs at least $70. This is really a critical issue, especially for those who have big cars and drive long destinations. Because they sometimes need to fill up their tanks twice a week which costs a lot. This might affect the market for inefficient cars that consume a lot of gasoline.

References from two analysts:

1- Sung Moon Suh (Korean Investment & Securities Co., Ltd)

2- David Silver (Wall Street Strategies, Inc)

April 11th, Securities Market

What have been the industry trends in the financial markets over the past 5 years?

There have many industry trends in the automotive industry. Well there has definitely been a switch of roles. Cars used to mainly focus on luxury. So they put their money into manufacturing vehicles that were luxurious. Cars that looked good and made the driver feel powerful, were the cars that were being produced. Today, manufacturers are more focused on saving the earth. Money is being invested more so in cars that are fuel efficient and also cars that are more safe. The auto industry is an industry that has to meet the needs of the consumers. Consumers want to feel safe when driving. They also don't want to have to spend a lot of money on gas.

Recently we have seen poor judgement in the US auto industry with the government having to bailout Ford, Chrysler and GM. I feel like sometimes these companies do not make smart decisions or good judgement when predicting future sales.

April 4th

April 4th– Accounting and Financial Statements
Comment on revenue, profit, and loss of key industry players?
How has the recession (2008-2009) affected companies’ balance sheets?

During the 2008-2009 recession, the companies that were hit the hardest were the American car makers (GM & Ford). Although it was unclear before if these companies were going to survive this recession, they have proven many analysts wrong and have seen a rise in revenue since then. Currently the most profitable car company is Toyota followed closely by Honda. Although the Japanese earthquake stopped production for these Japanese car makers, they are back and running at full production once again.

April 4th, Accounting and Financial Statements

The earthquake in Japan is soon to have an effect on the auto industry. According to the article I found, about 600,000 vehicles will be lost by the time everything calms down. A lot of auto part assemblies are shut down in Japan, which means that as soon as auto makers around the world run out of supplies they will be forced to shut down or slow production down. Even though that will not have any lasting affects on the industry, it will cause it to loose a substantial amount of money.

http://www.businessweek.com/news/2011-03-26/automakers-may-lose-600-000-vehicles-as-quake-hits-parts.html

http://www.huffingtonpost.com/2011/03/26/japan-earthquake-cars_n_840981.html

April 4, Accounting & Financial Statements

What I have found here is the stats of State Auto Financial Corp. I am unsure of what these numbers mean, but if you guys want to check it out and explain to me that would be helpful.

Source: http://quotes.wsj.com/STFC#

April 4th, Accounting and Financial Statements:

The recession's (2008-2009) effects on companies' balance sheets.

Well, the economy is a connected piece as a whole. So anything that affects a part of it, might affect another part. When the recession happened, it affects everything in the economy. The financial crisis affects the auto industry dramatically and by observing the balance sheets for some companies, we can see the effects. Almost each car company has been affected from the recession and that the liabilities in their balance sheets are higher than the total assets. Although those companies are recovering now, they still have more liabilities and obligations.

For example:

Ford's balance sheet:

2007: the total assets are more than the liabilities

Assets: 279, 264, 000 - Liabilities: 273, 636, 000

2008: the total assets are less than the liabilities

Assets: 218, 328, 000 - Liabilities: 235, 639, 000

From 2008 to 2010, the total assets for each year is less than the liabilities. This means that there is an obstacle in the financials that need to be solved.

References:

http://finapps.forbes.com/finapps/jsp/finance/compinfo/FinancialIndustrial.jsp?tkr=F

Marketing March 21st

What are some recent consumer behavior trends that are influencing the industry?
-Since the economic downturn in the United States as well as the growing green movement, consumers have been buying more affordable and fuel efficient cars. There has been a recent trend in buying mid-sized sedans because they are the most affordable for the size.

What is the competitive landscape in the USA?
-The main domestic car companies in the United States are Ford and Chrysler. However, these companies are no longer competing solely with each other. They are now competing with a global market that includes companies like Toyota and Volkswagon.

How do companies in this industry differentiate themselves from one another?
-Companies differentiate themselves by have different mission statements as well as different models. Although most cars have the same overall purpose, they vary in accessories and efficiency.

Nissan to Resume Production in Japan

The article talks about what Nissan and all other Japanese based motor-vehicle companies are struggling to reopen their factories and to start sales again.

I think that the Japanese natural disaster will affect the industry a lot more than we would expect. Once we pic which company we want to advertise in our final paper we should consider how the natural disaster affected its sales too.

http://online.wsj.com/article/SB10001424052748704433904576212341267269496.html?mod=WSJ_auto_LeadStoryCollection#articleTabs%3Darticle

Maketing: March 21, 2011

What are some recent consumer behavior trends that are influencing the industry?

It is quite obvious that when a consumer is looking for a product, they want something that in today's economy is fuel efficient, safe, reliable and is of good quality. It should also be stated that people also look into prices. You cannot buy an Aston Martin with $50,000. More recently people have switched to hybrids and cars that are very fuel efficient. The cost of gas is rising so many people are investing in smaller cars, because they take less gas and still get the job done. People have needs when buying cars. Like I said in a previous post people purchase cars based on needs and affordability.

I personally want all the characteristics mentioned above in my car. Design and style are a huge deal for me. Yes I want something as fuel efficient as a hybrid, but I want the style of a mustang. It can often be difficult trying to construct a car like that. For me the most important piece that a car must have is style. I want to look good in my ride.

Sources: http://blogs.chron.com/carsandtrucks/2009/05/what_do_consumers_want.html

http://cars.lovetoknow.com/Worldwide_Automotive_Statistics

March 21st– Marketing

• How do companies in this industry differentiate themselves from one another?


Hyundai motor is currently trying to increase their luxury cars sales in the U.S market. Due to the company image that Hyundai has in the U.S market, which is generally known as a company producing quality cars which is cheap, they have tried to create a new luxury brand(Vehicle of price more than $60,000). Hyundai have evaluated that it would be difficult for them to enter the luxury brand model in the U.S market with their current image. Just like the Lexus of Toyota, it would be the best way for Hyundai to launch a new luxury brand. If Hyundai is likely to produce luxury cars, they would have to compete with other vehicle models from different companies such as, BMW 3series, Benz C-class, Lexus, and Audi A4. In order to survive to from the market, Hyundai would have to differentiate themselves with own unique marketing strategy, and their solution was creating a new luxury brand called Equus. Hyundai is expecting to sell between 2500 and 3000 units this year.

As we can see, Hyundai is focusing very much on their marketing strategy for the market in the U.S. Besides creating a luxury brand, they are also changing their name of the vehicles from its origin name from Korea. Naming marketing seems to control a lot for company’s sales in the market. Moreover, it would be interesting to see whether Equus can stabilize in the market with their expected image as the luxury brand in near future.



http://www.ridelust.com/2011-hyundai-equus-is-a-serious-luxury-sedan-contender/
http://www.aiada.org/news-and-events/first-up-daily-news/1236-hyundais-equus-loaded-for-us
http://www.ohmynews.com/NWS_Web/View/at_pg.aspx?CNTN_CD=A0001136145

Informational interview

sorry for the late post :)


Informational Interview
While searching for an appropriate candidate for my informational interview, I found out that my father has some connections through Hyundai motors. Thanks to his help, it wasn’t difficult for me to find somebody to interview with.

My interviewee was Harry Eum from Hyundai motor company in Washington office. He is a deputy director of strategic department. I have asked him some questions and very gently he has answered me back with sincerity.

I started off with the first question asking him that how he had first entered to this industry.
He replied me back that he has entered Hyundai motor not because he had great interest on automotive industry, but on a very casual incidence. He told me when he was looking for a job, there was a recruiting booth installed at school when he was a senior. He achieved lots of information from the recruiting booth and he also added he felt the company was attracting because they told him he could have a chance to study in the U.S for the MBA programme by the support from the company when being employed. “Hyundai motor encourages employees who want to study more especially abroad like the MBA programmes in the U.S. They support you well enough when you actually decide to continue study, and well of course they expect from you more when returning back to their company” said Eum.

Moreover, I also asked some questions about which I had been curious about. I wanted to hear how Hyundai actually thinks of their brand image here in the U.S. Frankly saying, I have heard that Hyundai motor’s image here in the U.S is relatively cheap and low rated car compared to other foreign vehicles such as vehicles from Japan or Germany. He partially agreed with this opinion however he added some comments contrast to this statement as well. He said that in the past days, around 4-5 years ago, it was true that Hyundai had such an image of the company. However, selling vehicles in low prices compared to the other companies was part of their strategy to enter the market, and nowadays the perception from the market is changing compared to the olden days. It is now beginning to accept the Hyundai product with a fine quality, design and especially great with mileage. He also remarked that there is still a huge potent lying here in the U.S for Hyundai motors which they will try to focus more with new strategy and products to the market.

After his interview, I really felt proud of the company since my hometown company seemed to be doing great in the foreign market. Also I have felt that it would be interesting to see how Hyundai motors would try to input their new full luxury car models into the U.S markets. Overall, it was a pleasure interview and great experience for me as well and I would just hope this informational interview would help me and my teammates for the final paper as well.


Info of the interviewee
HARRY EUM
Deputy Director
Hyundai Motor Company Washington Office
1660 L Street, NW, Suite620, Washington, DC 20036
Phone)202 296 5550
email : hseum@hyundai.com

Marketing: March 21, 2011

The ways that auto companies differentiate themselves from one to another.

There are several ways that some auto industry groups follow to be unique. First, the price of the products as we learned from our book. The person whom I interviewed mentioned that for me. He says that being aggressive and easy to negotiate about prices increase the saling process. This what KIA is dong and it gives them a good market. Second, the use of promotions is really important for automotive customers. Companies provide buyers with free maintenance programs or sometimes even 200, 000 miles like Toyota. Sometimes there are discounts like the discounts on special days. For example, some companies made discounts on Labor day, Thanksgiving, and Independence day. Finally, engineering stimulation is a new method that has many benefits. For example, new devices that are environmentally-friendly to reduce the amount of CO2 in the air.

In my opinion, I think that there is another way auto companies can differentiate from one to another. The way of being timed with technological enhancements. In other words, auto companies should be up to date with any new technological developments. For example, when the iPod was created, some companies, such as BMW, Mercedes, and Infiniti introduced the iPod's cable. This cable connects the iPod with the car's computer. This allows drivers to play their iPods without touching it, just from the screen of the car or from the audio buttons. It also charges the iPod; in addition to that, Infiniti's cars can show pictures of singers in the car's screen if the iPod already has those pictures.

References:

http://www.simutechgroup.com/images/Brochures/Industry/automotive-pdf7792.pdf

Personal experience (informational interview)

Informational Interview

Basher El-fiky

8527 Leesburg Pike, Vienna, VA, 22182 • basher.el-fiky@infinitioftysonscorner.com • 703-663-7021

Director of Financial Services at Infiniti of Tysons Corner

I chose to interview Mr. Basher El-fiky at Infiniti of Tysons Corner. We met at his showroom office on Saturday the 26^th of February, a day on which 11 cars had already been sold. While this number may seem high, it is typical of a small, luxury store at month-end. Also, the pressure to meet quotas is high and aggressive pricing ensues.

I asked Mr. El-fiky about his thoughts about different auto companies which have the potential growth. Although he works at Infiniti, he has a high level of experience in the auto market. He answered my question by saying that Hyundai Company is growing too fast for three reasons.

• First, Hyundai has a great strategy for advertising their products whether on TV or in the internet. They also successfully target the middle class.
• Second, Hyundai is competing with everyone; they have SUVs, economic cars, small vehicles, and luxury ones.
• Third, the price point strategy is interesting. Hyundai provides affordable cars and allows customers to negotiate their prices.

During our conversation, I asked Mr. El-fiky about his job and his responsibilities. He has to complete and organize the bank and DMV paperwork as well as financing for customers, so he said he does a lot of paperwork.

He mentioned that Infiniti provides training programs for new employees. I asked him about the types of training programs Infiniti assigns specifically and how long they take. He replied that Infiniti trains new sales people on greeting customers, negotiating with them, paperwork completion and learning more about Infiniti’s products. He added that two perfect weeks without interruptions would be enough time for initial training. Furthermore, Mr. El-fiky said that the most important skill sets that he would like to find in new candidates are that they are well spoken and outgoing.

I also asked him about Infiniti’s future hiring plans and potential employees. He said that IT people are the market now, and they are important. These jobs are most likely back office jobs. The reason is that customers do not have enough time to visit four or five showrooms to compare different cars; they search online. Therefore, the creation of a virtual store on the website is extremely beneficial because it shows each feature in the car and it makes comparisons with different cars. He said that all of this can be done at home. We also talked about the jobs that his Infiniti office offers, and he said they may be seeking sales people.

Finally, we talked about how auto companies differentiate themselves. Mr. El-fiky said there is no specific way; however, price, inventory and incentives can differentiate companies. An example of incentives would be long maintenance programs or sometimes electronic devices like an iPod. At the end he said, “Customers’ satisfaction is the most important thing for us.”

Informational Interview

For my informational interview I talked with Eve Muldoon, the Sales Manager from Chevy Chase Acura Dealership in Bethesda, Maryland. The interview was very interesting and educational. I learned a lot about her job as a Sales Manager. Ms. Muldoon talked about what her job requirements were. I learned that she is the middleman between the owners of the dealership and the general staff that makes most of the sales. As a Sales Manager, Ms. Muldoon has to make sure that the staff is properly trained to execute a sale and she also has to keep them up to date on their quotas and sales goals. She also mentioned that in order to be successful in her job she has to be very organized due to the fact that there are different appointments and deadlines that need to be followed.
When I asked her about what kind of people she is looking to hire she said that the most important characteristics she is looking for are: being outgoing and able to talk to customers, having a background experience in the sales department, and being very hardworking with good work ethics. She also said that she looks in favor upon the staff that makes their quotas for every deadline.
Overall I had a great experience talking with Eve Muldoon. The lady was really nice and helped me better understand the mechanics behind working in the Automotive Industry. The most important takeaways that I found she emphasized the most were being a hardworking person and having good ethics.

Eve Muldoon
Chevy Chase Acura
7725 Wisconsin Ave

Bethesda, MD 20814
Email: eve.muldoon@chevychasecars.com
Website: http://www.chevychaseacura.com/
Telephone #: 301-657-4000

Informational Interview With The General Manager of DARCARS Chrysler-Jeep-Dodge

For my interview I talked to Paul Tibolla, the general manager of DARCARS Chrysler, Jeep and Dodge of Marlow Heights, MD. His job was interesting because he oversees the whole dealership in that area. He was very nice, but seemed to convey to me that as long as the products sells and it was what the people wanted he wasn't too concerned about what really went into the products. Although he said that he also made a point that the auto industry is a unique industry to work in and that there is so much room for change and innovation. One thing that he did make note of is that it is the people in the industry that make it different. He looks for people to employ that have a strong work ethic. He likes to look for salespeople that have worked in restaurants because it shows that they know how to serve others. He was an extremely nice guy and loves his job and serving people, but it was clear that money is also in important factor in his life and that he enjoyed making it.

Contact:

Paul Tibolla

DARCARS:

Chrysler-Jeep-Dodge

5060 Auth Way

Marlow Heights, MD

Email: ptibolla@DARCARS.com

Website: chryslermh.DARCARS.com

Telephone: 301.423.5111

Fax: 301.541.2386

Human Resources and Leadership- Feb 28

Who have been some influential leaders (Founders, CEOs) in the industry over the past 20 years?
-In the past twenty years the focus of the auto-industry was to make safer but especially more efficient cars. However, there have been a few CEO's that stand out from the others for their focus and innovation on green technology within the auto industry. CEO's like Carlos Ghosn of Nissan have shifted their companies long range futures on green technology.



What workforce trends is the industry experiencing? For example, manufacturing jobs in this industry are moving to Mexico and China at a very fast rate. Or, companies are investing heavily in engineering in order to remain competitive through innovation.

-Many of the auto companies today are shifting their market focus from the United States to developing countries such as Brazil, India, and China. In fact, in a recent survey taken by PwC AutoFacts showed that 64% of the CEO's surveyed that China is the new key market.

Citation: http://www.reuters.com/article/2010/12/22/idUS277994617220101222
http://www.aftermarketnews.com/Item/84754/global_automotive_ceos_show_increasing_confidence_according_to_pwc_survey.aspx

Human Resources and Leadership: Feb. 28

Just like Dennis has mentioned in one of his previous blog, electric cars are on the rising and will someday be the future standard cars. The article that I picked talks about the German auto industry and how it is falling behind on resources and research on electric engines. Unlike the USA and China's governments, the German government is not as generous when it comes to funding the car industry research and innovations. The article predicts that if Germany does not step up to the levels of the USA and China it will fall off the market or at least experience some decrease in customers that are interested in their cars.

The industry is trying to advertise German produced electric cars in order to stimulate the buyers to buy those kind of cars. If that works out they will have more money to fund further research on those kinds of cars.

I think that for our final project we should definitely focus on auto companies that are producing electric cars because that seems to be where the money will be in the future.

http://online.wsj.com/article/SB10001424052748704430304576170661630927704.html?mod=googlenews_wsj

Human Resources and Leaderships: 28 Feb 2011

- What workforce trends is the industry experiencing?

I would like to introduce an intersting story that is happening in Korea nowadays about
labour workforce for Hyundai automobile.

Nowadays in Korea, Hyundai automobile is facing a big issue concerning
strike from the labour force. This is an issue happening along from many many years ago till now on. No clear solutions have been made yet, and trouble seems to be raised more and more.

The basic problem with Hyundai's workforce trend is the temporary workers.
There are currently estimated 19,000 of temporary workers for Hyundai automobile.

From last Friday(Feb 25th), around 200 temp workers of Hyundai automobile gathered
in front of the Hyundai automobile head office in Seoul. They were on strike for more
than 4days without stopping. Their main objective was to guarantee their basic wage and rights
as well as to turn them into a regular.

Being a temp-worker, you will always have to live with a fear that you might loose your job
in one single day. As a matter of a fact, hundreds of people actually loose their job in a day without being pre-noticed. Since there is no regulations set for the temp-workers, Hyundai automobile has no responsibility towards them. This is why temp-workers of Hyundai auto strikes often and also some serious incidents has also happened on this strikes(such as committing suicide).


Like this, the workforce trend in Korea automobile is somewhat serious.
Hyundai company is a very successful and also a global company for sure, however they surely
must settle down the noise inside the company in order to grow further.




http://www.pressian.com/article/article.asp?article_num=60090120104608
http://www.pressian.com/article/article.asp?article_num=30110226194627
http://www.vop.co.kr/A00000367240.html
http://www.nocutnews.co.kr/show.asp?idx=1673112

Human Resources & Leadership Feb. 28th

There are many CEOs in the auto industry. Many CEOs have been taking crucial steps to save their companies from going under and to promote sales. Some of them make a lot of money and others may not. CEO of chrysler, Sergio Marchionne decided not to receive a salary last year. He felt that since Chrysler wasn't doing to well he would save them some money. Other CEOS are promoting new cars and a new lifestyle. CEO of Lotus Dany Bahar has decided to design a car and a lifestyle similar to that of James Bond with his new car Lotus Esprit S1. He claims that he wants to be like Porsche and hopes to sell 8,000 models year 2013. This CEO is setting goals for his company so that they can make more profit. CEO Stefan Jacoby of Volvo has made a huge prediction for his company. He has stated that "Volvo's plan aims to more than double its world-wide sales to 800,000 cars a year by 2020, from 373,000 last year." They think Volvo may achieve this goal by as early as 2016. Volvo could run into a potential problem. If their sales do not match their predictions they may over spend on building these cars and not make a real profit. This demonstrates that CEOs are real risk takers and every decision they make is crucial.

Sources: http://online.wsj.com/article/SB10001424052748704150604576166691907588126.html?mod=WSJ_auto_IndustryCollection

http://online.wsj.com/article/SB10001424052748704364004576132232439237242.html?KEYWORDS=auto+CEO

http://online.wsj.com/article/SB10001424052748704288304576171393995312726.html?mod=WSJ_auto_IndustryCollection

Human Resources and Leaderships: 28 Feb 2011

Who have been some influential leaders or CEOs in the industry over the past 20 years? How did they influence the industry? What made them leaders?

There have been a couple of CEOs and leaders in the auto industry who contributed a lot to their companies or firms. An example of this is the CEO of Hyundai-Kia Automotive Group Chairman Chung Mong-koo. He was chosen as the best CEO in Asia. The sales for Hyundai went up dramatically under his control. Because of Chung's management, he improved many segments and sections inside the company. Also, he increased the quality for Kia's cars. These improvements led to $71 billion in revenue and $ 2.3 billion in profits. He also thought about establishing a firm in Alabama in 2005. A new way to think more in the global, especially the US.

I believe that the reasons behind Chung's success is the way he sees the auto market and his desire to compete. The auto market is very competitive and needs innovations. Chung thought that a concrete management will help a lot, and it did. He is focusing on how to hit the targets and to find what attract customers the most. We can see the combination of luxury and affordable prices in Kia's cars. Chung put into his consideration the importance of marketing strategies because they are the keys to the market.

References:

http://www.koreatimes.co.kr/www/news/biz/2010/12/123_69292.html

Entrepreneurship: Feb. 21st

How has the competitive landscape changed as a result of leading entrepreneurs in the industry?

Although the economy is tough and people are cutting back on their expenses the auto industry is becoming more and more competitive as its leaders and entrepreneurs crank out new ideas. There are so many ways to change an automobile to make it much more of a hot product. There is an automobile for everyone. If you are a person who wants to save the earth and go green there are hybrid or fuel efficient cars. If you are a construction worker and carry large materials, there are all kinds of trucks out there. If you are a soccer mom there is a mini van with your family name stamped on it. There are vehicles for everyone and for everyone's needs there are entrepreneurs thinking of new and innovative ideas to get your attention and to get you to purchase their product. GM and Ford fought over who had the better muscle car. A lot of people love muscle cars and want the best. GM won with its new Chevy Camaro; "Camaro outsold the Ford Mustang for the first time since 1985." I am sure that GM worked hard to accomplish this. Now Ford must try and win their title back for having the best muscle car. In order to stay on top the leaders in this industry are always trying to think of something bigger and better.

Sources:

http://blogs.wsj.com/drivers-seat/2011/02/10/chevy-camaro-seeks-more-ground-in-muscle-car-war/?KEYWORDS=auto+competition

http://online.wsj.com/article/SB10001424052748704858404576133461380779324.html?KEYWORDS=auto+competition

http://hubpages.com/hub/weknowcars

Entrepreneurship: Feb. 21, 2011

Who are the emerging companies?

Emerging entrepreneurship could be very risky since the companies are actually
entering to the field where it is very unknown. However, once successfuly
entered to the new field, it can introduce to other companies the new way as well.

While searching for an article, I have found an interesting article about
Electric cars. As mentioned in previous blog, once again the importance of
electric cars seem to be emerging.

It should be somewhat a new trend and a new market for the automobile industry.
Actually we can see more and more hybrid cars or electric cars on streets now.
I think this is the actual evidence of the emerging market for the automobile
industries.

Check the article below for more infomation. Electric cars are actually
ranked top 10 of the emerging market!

http://businessjournalism.org/2010/12/28/electric-cars-the-top-trends-in-an-emerging-market/

February 21st Josh Schwartz

• What venture capital firms invest in this industry? What have been some of their successes?
• Venture capital firms are often used in the automotive industry to save and rebuild a failing automotive industry. For instance, recently the Swedish government formed a venture capital firm in order to attempt to save their countries failing automotive industry. (http://www.businessweek.com/news/2010-02-26/sweden-tries-venture-capital-approach-to-salvage-auto-industry.html). Typically, venture capital firms either get involved at the beginning of the business or when the business is in serious need of help.

• In what areas of the industry are there opportunities for innovation?
• Areas for innovation are huge within the automotive industry. Every day, car companies are trying to find more fuel efficient, safer, and faster cars in order to keep up with their tough competitors. However, today the main focal point for innovation is green energy and green cars. Each company is looking to find the energy of the future in order to beat their competitors to the punch. Surely, we can see through our society how important green technology is to us and the automotive industry is no different. Green cars is the future of the automotive industry

Entrepreneurship Feb. 21

In what areas of the industry are there opportunities for innovation?

Since today’s world is crazy about saving energy and cutting down on emissions, most car industries are trying to develop Hybrid models or fully electric cars that will attract customers. Every car company is working on developing a power saving car that is both affordable and luxurious. One big example is Toyota’s Prius starting at $23,050. Another example is Honda Insight with starting price of $18,200. According to http://www.hybridcenter.org/hybrid-timeline.html, in 2010 there were 18 hybrid cars on the market and 14 companies that manufacture them. Compared to any previous year, 2010 has produced the most Hybrid cars because of the trend of customers seeking echo friendly ways to live.

There is also other ways that car companies are trying to innovate their vehicles and to attract more customers. One very important way is censors that can cense cars hitting their breaks in front of the car; they can also monitor facial expressions in order to tell if the driver is sleepy and warn them to pull over. The technology has gotten as far as having cars being able to detect objects that are not moving and react before the driver does. Other types of sensors include: windshield wipers that can detect the amount of rain and adjust to the right speed without the driver’s interaction, there are also smell sensors that will close the outside intake of air when there is a bad smell and so on.

Overall car companies are trying to attract people to their cars by making driving very easy and luxurious.

Sources:

http://auto.ihs.com/news/newsletters/auto-nov04-automotive-innovation.htm

http://www.toyota.com/prius-hybrid/trims-prices.html

http://automobiles.honda.com/insight-hybrid/

http://www.hybridcenter.org/hybrid-timeline.html

Entrepreneurship: Feb. 21, 2011

What have been entrepreneurial companies in the past and how have they affected the competitive landscape in the industry? Were they acquired by larger companies? Did they grow to become market leaders?

Most of the major car companies nowadays have been started by intelligent entrepreneurs. Furthermore, those brands are controlling the auto market locally and globally. For example, let's talk about Henry Ford who created his first vehicle in 1896. Ford became an engineer in 1891 in Detroit. Then, he was promoted to be a Chief Engineer in 1893 in which this position provided Ford with time and money to explore and testify his own experiments. According to our book "Better Business," Ford is a combination of a lifestyle and a growth entrepreneur. The first one because he wanted to test his experiments rather than gaining profits. The existence of Ford brand in six continents and more than 164, 000 employes who serve those branches are clear signs of Ford's growth.

The auto market is divided to three levels of competition: high, medium, and low. Those entrepreneurs, such as Henry Ford, Karl Benz (who invented Mercedes), and others are the people who created those levels. The reason why is because they set high values, inspirations, and innovations under their brand. Undoubtedly, Ford and Benz are in the high level competition. However, those grand companies did not achieve this success in a short time. Ford created his first car 115 years ago.

References:

http://www.hfmgv.org/exhibits/hf/

http://corporate.ford.com/about-ford

Economics of the Industry- Feb 7th

Economics of the Industry

Discuss the Supply and Demand of the Automotive Industry.

In the early years of the automotive industry, the demand for these vehicles was very small seeing that only the wealthiest could afford to own one. However, once it became easier for manufactures to put together the cars (I.E. Henry Ford's assembly line), these cars became more accessible to the general public although not nearly as accessible as they are now. Supply was also very small because there were not many manufacturers at the beginning of the automotive industry. Further into the 20th century, cars became more and more of a necessity as villages became towns and towns became cities. As the demand heightened, so too did the supply. More and more manufacturers began to pop up and there was even a city (Detroit) completely devoted to the automotive industry.

Today, the automotive industry is at its peak as cars have become a necessity rather than a luxury. The demand however has shifted recently from huge, gas-guzzling cars, to eco-friendly, efficient cars. The demand for cars overall is fairly inelastic because a car is a necessity. However, if we are looking at car companies as individuals, there products are typically very elastic because most people (aside from those who can afford it) will not pay $60,000 for a mercedes benz when they can get a more efficient, cheaper car that shares the same purpose.

Web Source

Economics of the Industry - Feb. 7th

What are their costs?

There are three major costs associated with the making of an automobile:

Labor - most of the assembling of a vehicle is done by machines and robot, but the biggest portion of the labor costs goes towards designing and engineering automobiles.

Materials - "Everything from steel, aluminum, dashboards, seats, tires, etc. are purchased from suppliers." (Industry, 1).

Advertising - car manufacturers spend billions on dollars to advertise each year. They also spend large amounts of money on consumer research in order to predict what the consumers will want in the future. Here are the money that some of the major companies spend on advertising in 2008:

1. General Motors (GM) - $535 million for
2. Toyota - $291million
3. Ford - $292 million
4. Chrysler - $186 million

That is a part of the article "The Industry Handbook: Automobiles":

The auto market is thought to be made primarily of automakers, but auto parts makes up another lucrative sector of the market. The major areas of auto parts manufacturing are:

• Original Equipment Manufacturers (OEMs) - The big auto manufacturers do produce some of their own parts, but they can't produce every part and component that goes into a new vehicle. Companies in this industry manufacture everything from door handles to seats.
• Replacement Parts Production and Distribution - These are the parts that are replaced after the purchase of a vehicle. Air filters, oil filers and replacement lights are examples of products from this area of the sector.
• Rubber Fabrication - This includes everything from tires, hoses, belts, etc.

http://www.investopedia.com/features/industryhandbook/automobile.asp

http://webcache.googleusercontent.com/search?q=cache:uc76ups9UzgJ:www.leftlanenews.com/ford-chrysler-cut-advertising-costs-while-toyota-and-gm-boost-it.html+toyota+advertising+cost&cd=1&hl=en&ct=clnk&gl=us&source=www.google.com

Feb 7th, Economics of the Industry

Q) What drives revenue growth in this industry (i.e. more units sold, expanding geographic reach, lower costs for manufacturing, etc.)?

Well first of all, almost all of the companies(not just only the automobile companies) gain their profits by selling more of their products to customers.
This also applies for the automobile companies as well. They tend to sell more
and in order to do so, they would have to meet customer's demands for it.

Revenues for car industries can be sorted out in many different categories.
The interesting part is that the revenues can differ from its many different
environment factors. Therefore, companies will try to follow the trend of the
changing demands for consumers.

As we know, nowadays we can see a lot of electric automobiles being produced since consumers and the society concerns significantly on environment factors. To meet the current trend, automobile companies would try to maximise their revenues by considering the today's trend as well.

There was an interesting article about the German automotive company 'Mercedez-Benz'
is shifting its trend to produce batteries. Regarding how important the automobile companies affect towards German economy, it is surely interesting to see how and why
the Mercedez company is changing their traditions towards electricity rather than their own gas based engine.

It would be interesting to see the result, within 10-15years from now and to see
whether it was a correct decision to step into the electric industry or not!

http://www.asiatoday.co.kr/news/view.asp?seq=443177

Economics of the industry: Feb. 7, 2011

How do companies make their money?

In the automobile industry, there are several ways that cars' companies can generate profits. However, I found three different ways that auto companies depend on to make money. They are increase in production, international trade, and industrial sites investments.

First, production which is the most important factor for auto companies to earn profits. If production increases, auto companies will earn more money. To increase their production in the market, they attempt to rise up the number of cars to their dealers. According to the article "Ford to Boost Car Output in U.S. Market," Ford wants to increase its supply to dealers by 13% this quarter. Ford might also increase the cars' production in the coming year. Furthermore, GM claimed that 90% of its dealers have announced profits last year. Also, GM's profits increased to 23% in January, 2011 comparing with January, 2010.

Second, some companies tend to have different ways to generate money like trading globally. For example, one of Chrysler's goals is to increase the international trade of its cars. In addition, there is a plan to let Chrysler's cars consume a 40-mile of a gallon in one hour which makes their cars more in demand locally and internationally. Chrysler believes that by reaching these two steps, they would increase the profits 5% more to reach 35% of its final ownership

Finally, several auto companies invest in their own sites of industry. For instance, Renault is planning to invest $7.9 billion in their industrial places from 2010 to 2013. It will invest 40% of that amount in France because it has the highest number of market share of Renault between European countries. Renault also wants to invest in hybrid cars and to be one of the biggest companies that produce hybrid cars in the next decades. Because it thinks that hybrid cars would be the future market.

In my own experience, I believe that there are several more methods to make money for auto companies. Additional features is one of these methods. Cars companies, such as BMW, Audi, and others offer heated seats, navigation, or sport packages which increase the price of the vehicle. Those companies benefit from these features by earning more money because they make the pieces by themselves and in their own factories. The second point is the service maintenance that auto companies offer, such as the usual service and advanced servicing for major issues. These companies know that their customers need service to maintain their cars, so these companies charge for service programs after certain time or creation milage. Again, the costs for services are very small comparing with their profits.

References

http://online.wsj.com/article/SB10001424052748703439504576115732631840502.html

http://online.wsj.com/article/SB10001424052748703445904576118072489186028.html?mod=WSJ_auto_MiddleSecondHighlights

http://online.wsj.com/article/SB10001424052748704858404576128603352890980.html?mod=WSJ_auto_IndustryCollection

http://online.wsj.com/article/SB10001424052748703960804576119970736042258.html?mod=WSJ_auto_IndustryCollection

http://online.wsj.com/article/SB10001424052748704843304576126491545116416.html?mod=WSJ_auto_IndustryCollection

Economics of the Industry: Feb. 7, 2011

Discuss supply and demand in the industry.

To me there is never an equilibrium of supply and demand. It seems as if there is always too much of something or not enough. In the recent years the supply of vehicles in the auto industry was at a surplus where as the demand for them was very low. In the new year we have seen a rise in sales for some of the major car companies. Every year there is an auto show which showcases many of the hot new cars out. I decided to watch it for sometime. I noticed some of the things these companies were doing to promote their automobiles. One is powered by electricity, another is a hybrid and this one here has some ridiculous top speed and can also park itself. Auto companies are trying to make their products attractive both to the consumers eye and wallet to promote sales which in turn encourages an increase in both demand and supply.

A recent article, Swedish Truck Makers Suffer Production Woes shows how supply and demand can affect a company. Supply and demand affect production. When production is down due to a decrease in demand auto companies may let go some of their workers. When the demand goes up again in the new year these companies have to hire people again and have them go through training to be able to work in production. The suppliers are also heavily affected; they have to crank out as much supplies as the industry demands. It is only ideal that the price of a product increase as the demand increases. In order for the suppliers to get their product out in a timely manner especially if they are out of stock, it will take more money and time. This is a huge part of how everyone who puts in work to the manufacturing process of these automobiles makes profit. Another thing mentioned in this article was how an easy mistake or miscommunication can mess up the whole "production chain." In order for things to be successful everyone has to be on the same page. Supply and demand are tough things to work with in the auto industry.

Sources: http://online.wsj.com/article/SB10001424052748704709304576123994201733916.html?mod=WSJ_auto_IndustryCollection

Post #2 by Josh Schwartz

Corporate Social Responsibility

1. Which companies in the industry stand out in regards to their view and actions in CSR?

In the search for rankings of automotive companies in regards to the CSR, there is little to no consistency in the rankings. Some rankings have companies such as Volkswagon and Toyota at the top while some have them near the bottom. No one ranking is completely correct, as it has been said that no rankings are extremely credible. However, despite not being able to find consistent rankings, Toyota has been rated highly by most rankings because of their green technology.
Web Source

2. What are some interesting missions statements or values statements of some of the companies in your industry? What does this represent about them

Toyota has a full page dedicated to a mission statement. However, there is no single paragraph that sums up their mission. They have multiple links to separate pages such as one devoted to the environment and one devoted to their philanthropy. Their main focus seems to be on green technology though (Web Source)

Other companies such as Lexus and BMW are focused on being environmentally friendly too, but are more focused on customer service and the quality of their luxury cars.

31 Jan, Post #2

Which companies in the industry stand out in regards to their view and actions in CSR?

Actually, most of the cars' companies are concerning about the social responsibility. Those companies have different values and beliefs about environmental duties. According to the European business network for CSR,

the financial crisis increases the need for the CSR in automotive companies to mitigate the impact of crises on people and environment. For example, Toyota's view in CSR is that the company tries to improve its cars technologically, socially, economically, and, most important, environmentally.

Another example is Infiniti. Since most of Infiniti's cars are sport or at least they have a powerful engines, Infiniti produces sport and hybrid cars at the same time. Infiniti did not want to produce cars without their distinction feature. So, they invented the "M35h" . This car fits for the environment and it has a very powerful engine. Infiniti kept their special feature and they mixed it with their CSR or their vision toward environment.

Note: after my brief research, I found that most companies are taking into their consideration that environment is the most important view or action toward their CSRs.

What are some interesting mission statements of values statements of some of the companies in your industry? What does this represent about them?

Toyota

"Based on The Toyota Way, our environmental commitment is a way of life, extending across all of our operations and through the full life cycle of our products".

In this quote, we can see that Toyota's most important concern is about environment. This quote also represents that the company is trying to achieve its goal by being friendly to environment and by inventing products that are well suited for that goal.

Infiniti

"The way of Infiniti has inspired us to achieve what others thought impossible - delivering the power of a V8 with the efficiency and fuel economy of a four-cylinder".

Infiniti achieved its plan by inventing a powerful car with four-cylinder only. This is a suited vehicle for the environment because it consumes a little amount of fuel. Now, we can ensure that Infiniti is one of the automotive companies that helped the environment and still helping it.

Mercedes Benz

"[I]t's crucial that Mercedes-Benz optimize vehicles to deliver fuel-efficient power. Currently, this effort is best seen in our growing number of Blue TEC Clean Diesel models."

Mercedes is trying to save the environment because of their special tactic in consuming fuel. They are showing us that Blue TEC Clean Diesel cars are well suited to the environment because they consume a little amount of fuel. This indicates that Mercedes is focusing on environment's needs and that Mercedes is applying these concerns on their cars.

References

http://www.csreurope.org/pages/en/focus_toyota.html

http://www.toyota.com/about/environment/

http://www.infinitiusa.com/about/future-vehicles

http://www.mbusa.com/whatdrivesus/#/story/drive-The+foresight%252bto+take+responsibility/story-Three+Roads+to+Zero_Emission+Mobility/dId-0c6d482744e71210VgnVCM1000007c184339____/sId-story_11/