Germany is the largest manufacturer of automobiles in the European Union with market reaching a…

Germany is the largest manufacturer of automobiles in the European Union with market reaching a value of $54.02 billion (Data monitor, 2004). It is home to the BMW, Audi, Mercedes-Benz and Volkswagen cars which are world famous for their innovation and quality.

The automobile industry is the largest contributor to the German economy. According to the figures of VDA (2010), the production of German vehicles was 6.0 million in 2008 and 5.2 million in 2009, which puts it at the top among other European countries. The German automobile industry is also an important employment sector. According to the data from ACEA (2010), around 1.4 million people work in the automotive sectors or related sectors in Germany.
While lacking in natural resources, Germany holds other advantages to maintain its competitiveness in the automobile industry in Europe. Highly educated, qualified and motivated employees are the crucial part of its factor conditions. Germany overcame its lack of natural resources by developing advanced factors conditions. Education in Germany is relevant to local industry requirements, particularly in science and high- technology. German workers are better educated in theoretical and technical knowledge, which enhances their skills in practice in specific technical fields.

The German automotive industry is well known for its related and supporting industries. For example, the region around the city of Stuttgart is the core of Mercedes- Benz and its suppliers. The other related industries near BMW’s facility in Regensburg and similarly for Volkswagen are good examples. All these leading brands in automobile manufacturing have benefited from their industrial clusters. The suppliers around automakers’ areas are supported by smaller components providers, such as metal, plastic, iron and steel producers. Buyers and suppliers reinforce each other to enhance their respective industries. Therefore, there are various opportunities for buyers and suppliers to cooperate regarding new productions and improving them, which improves the competitiveness of the particular industry.

The availability of cars of high quality, innovative products and excellent service of the German automobile industry has earned its customer’s loyalty. German automakers pay attention to the international market and their dominance is embodied in dealing with the relationships among industry, strategy and firm performance. Furthermore, in a recent International Motor Show, among 100 automotive manufacturers, there were 55 companies from Germany, which proves its competitiveness in the automobile industry

Germany’s automotive industry is faced with a challenging and demanding domestic market. The number of consumers in the German market is the highest in the European Union. German consumers are willing to buy larger, better equipped and higher valued automobiles. As a result, Germany focuses on higher value, high quality automobiles that are globally renowned.

Based on the National Competitive Advantage Theory, analyse the German automotive industry.
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