Automotive Industry - Environmental Analysis Research Proposal

Such changes that influence the automotive industry bring a series of opportunities that the company could exploit. Therefore, the company should focus on Asian markets, where Daimler Chrysler's position on the market can be improved. China is one of the growing markets that the company should address in a more aggressive manner. Certain Chinese polls and surveys place Jeep in the top 5 most preferred American brands (Highfill et al., 2004).

One of the threats that are likely to affect Daimler Chrysler is represented by the instable alliance between the company and Mitsubishi. This situation and Mitsubishi's current evolution have damaged Daimler Chrysler's condition, revealing the company's vulnerability. If this situation persists, the company could be severely affected in the future, and it is quite likely to be outrun by lower positioned companies in terms of sales.

Another threat consists in Daimler Chrysler's decision to invest in the hydrogen fuel technology. If most recent trends regarding customers' increased preferences hybrid vehicles will continue to develop, the company's choice for hydrogen fuel might also cause some significant drops in terms of sales. If such a situation should happen, it will be extremely difficult for Daimler Chrysler to recover from such a situation. Replacing a technology with another is a long-term process, which basically means that the company will have to struggle for a medium or long period of time to recover and to change the hydrogen fuel technology with the hybrid technology.

The current situation of the automotive industry environment presents more threats than opportunities. The ascending direction taken by motor vehicles sales registered in the past few years has tempered, and signs are that this situation will continue in the next period of time.

Regarding the inflation rate, if consumer prices keep rising, such a situation will not be beneficial for any car manufacturer.The majority of customers will focus on other goods rather than cars. Therefore, motor vehicles sales might decrease over the next period of time. In order to avoid any financial problems, the company will have to decrease its production costs. In order to achieve such an objective, any car manufacturer should locate its production to cheaper destinations, like Asia.

Regarding wages and the employment and unemployment rate, wages have a direct, rapid, and strong influence on the company. If wages increase, production costs will also increase, and this is exactly what the company should avoid. Therefore, it is recommended that the company moves its production facilities to China, India, or other Asian regions where labor force is significantly cheaper.

Reference List

The Automotive Industry (2004). Business & Economics Research Advisor. Retrieved September 3, 2008 at http://www.loc.gov/rr/business/BERA/issue2/industry.html.

United States (2008). Central Intelligence Agency. The World Factbook. Retrieved September 4, 2008 from https://www.cia.gov/library/publications/the-world-factbook/geos/us.html#Econ.

United States Inflation rate - consumer prices (2008). Index Mundi. Retrieved September 4, 2008 at (http://indexmundi.com/united_states/inflation_rate_(consumer_prices).html.

Carrick, Alex (2008). Motor vehicle sales are driving into some potholes. Journal of Commerce. Retrieved September 4, 2008 at http://www.journalofcommerce.com/article/id29889.

Highfill, D. et al. (2004). Automotive Industry Analysis. AcademicMind. Retrieved September 4, 2008 at http://www.academicmind.com/unpublishedpapers/business/management/2004-11-000aaa-automotive-industry-analysis.html......