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Internal and External Factors Had an Impact on the Development of the Automotive Industry

In: Other Topics

Submitted By thamaset
Words 860
Pages 4
The case study includes plenty of reasons why internal and external factors had an impact on the development of the automotive industry.
To figure out why that’s the fact we need to have a closer look on the textual information. In the beginning of the 70s American automotive companies had to face challenges. First of all there was the oil shock between 1973 and 1979, which increased the fuel price. Secondly they had to find ways out of internal challenges like troubled labor relations. Accordingly there was a decline in the demand for trucks as well as for minivans, which led to financial problems for the companies.
To help the automotive industry not to get broke the US government exempted truck-based vehicles from fuel-economy regulations and as the oil price decreased again Detroit was making huge profits due to large sales.
Unfortunately that did not last that long. As the oil price increased again in 2001 the fortune of the enterprises shrunk again and in 2007 they had to face an economic slowdown. On the basis, that many automotive companies weren´t able to cut their costs fast enough, there was a shedding of more than 100.000 jobs and the shout down of factories. The entities just couldn’t keep up with the steadily declining market for new cars and trucks. There was no demand for pick-ups, not from private households as well as not from home constructions.
But not only changing requirements on the market stressed the automotive industry. There was also an increase of competition. With having Toyota of Japan as one new competitor, who offered fuel efficient cars, it ended up with having lower margins because of fewer sales of course.
The previous paragraphs focused on the external factors car manufacturers faced, like rising competition and fuel prices and the change of customers’ demands. Most of external factors also involve or lead to internal

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