Surfing the Global Tide : Automotive Giants and How to Survive Them

Car manufacturing epitomizes modern industry, yet the overall perspective has been lost in speculation and self-promotion. Based on six years of research, this book is the first in years to reassess the industry. The result is a paradigm that quantifies the fundamental economies of scale and firm organizational structure. Although the automotive industry is one that, for many, represents a defining feature of the twentieth and twenty-first centuries, it is also an industry that is poorly understood. Despite the plethora of literary material dedicated to the subject, the overall perspective of the industry has been lost in speculation and self-promotion. The result of six years of research at Cardiff Business School, 'Surfing the Global Tide' is the first book in years to reassess the structuring forces that shape the industry. The result is a new paradigm for the industry that sets out how firms should be integrated and quantifies the economies of scale necessary for long-term survival. The book explains why the global giants have grown bloated beyond economic necessity, and suggests the vertical joint venture as a strategy for small firms to punch above their weight Palgrave Macmillan Contents 6 List of tables 8 List of figures 9 List of abbreviations 11 Acknowledgements 13 Chapter 1 Raising the leviathan 14 1.1 Growth of a global industry 15 1.2 The Budd Paradigm lays the foundation 17 1.3 Defining the automobile industry paradigm 20 1.4 The automobile paradigm and the full-function model 21 Chapter 2 Fundamentals of scale 33 2.1 Economies of size 33 2.2 Production costs 40 2.3 Survivor analysis 49 Chapter 3 Economies of scale in the automobile industry 54 3.1 Survivor analysis of the automobile industry 55 3.2 From plant size to economies of scale 62 3.3 Conclusion 84 Chapter 4 Structuring the firm 85 4.1 Company structure 85 4.2 Unitary and multidivisional governance structures 101 Chapter 5 Constructing the automobile industry paradigm 113 5.1 Paradigm revolutions 114 5.2 Constructing the automobile industry paradigm 115 5.3 Vertical integration of the automobile paradigm 121 5.4 Resultant size and shape 134 5.5 Conclusion 141 Chapter 6 Approximating to the automobile industry paradigm 144 6.1 Introduction 145 6.2 Subscale production 147 6.3 Internal approximations to the automobile paradigm 149 6.4 External approximations to the automobile paradigm 154 6.5 Opportunities raised by globalization 165 6.6 Reassessing the full-function structure 186 6.7 Conclusion 195 Chapter 7 Opening the door to China 196 7.1 The rise and fall of British Leyland/Rover Group 197 7.2 MG Rover: autonomy and sustainability 213 7.3 MG Rover assets: reconstructing the international vertical joint venture 222 7.4 Conclusion 227 Chapter 8 The paradigm in the automobile industry of the future 230 8.1 Current state of the industry 231 8.2 Reaching beyond the automobile industry paradigm 240 8.3 Paradigmatic views of other industries 245 8.4 Closing remarks 250 Epilog 2009: the battle for the United States 252 Bibliography 257 Index 279 A 279 B 279 C 279 D 280 E 280 F 280 G 281 H 281 I 281 J 282 K 282 L 282 M 282 N 282 O 282 P 283 R 283 S 283 T 284 U 284 V 284 W 284 ISBN-13:,9780230579248

Car manufacturing epitomizes modern industry, yet the overall perspective has been lost in speculation and self-promotion. Based on six years of research, this book is the first in years to reassess the industry. The result is a paradigm that quantifies the fundamental economies of scale and firm organizational structure.