Executive Summary

Sometimes, the dynamics of external market imply the need for a gradual shift in an
organizations strategy. This can be linked to the changing customer perception,
economic turbulence and evolution of competitors for the fierce battle of market
share. In Australia, one of the premier car manufacturer saw a downfall in their
business in Australia if they continued with the flawed strategy, despite seeing the
signs of a change in market dynamics and ignoring them.
In this study, we understand the factors influencing one of the major Australian car
manufacturer, Holden, to move its production units outside of Australia. The factors
include issues that cater to external market as well as companys strategy which led
to its ouster from Australia. We will also briefly touch upon the impact this move had
on the company as well as Australian market.

Contents
Executive Summary.................................................................................................... 1
Introduction................................................................................................................ 2
Body........................................................................................................................... 3
External factors:...................................................................................................... 3
Internal Factors:....................................................................................................... 3
Stakeholders:.......................................................................................................... 4
Conclusion.................................................................................................................. 4
References:................................................................................................................. 4

Introduction
The automotive industry in Australia has been self-sustained for years, and has
contributed immensely in the countrys economic growth. Locally manufactured
cars have the entire value chain established inside Australia, thus creating a huge
number of employment opportunities in manufacturing and production sector. For
close to 5 decades, companies like Holden and Ford retained their high market
shares. Government of Australia played a very important part in boosting the sale of
local cars by its policies of high tariff barrier for import, and subsidizing the
manufacturing industry. Car makers enjoyed these privileges without having to
worry much about improving their offerings to survive in the market. This resulted in
a lack of competition, which combined with high labor ensured that Australian cars
were always much costlier than the cars made in other countries. (Productivity
Commission 2014).
In 1980s, the new government regulated the tariff barriers which led to an increase
in car imports. This was the first sign for Holden and co. to reevaluate their
performance and improve their strategies, so as to be able to counter the

competition and thrive. But their ignorance of these signs led to a loss of market
shares, owing to the fact that now the people of Australia had many better options
of cars to choose from. The decreasing demand resulted in loss of jobs and
destabilization of the automotive ecosystem in Australia. This loss of market share
started affecting the entire manufacturing sector as the decline in demand was
followed by global financial crisis which reduced the exports to a minimal level. This
left the industry with a huge number of job cuts and unemployment issues, as the
imports have gone up. Cars made in other countries with cheap labor and
strategically and technologically enhanced companies started to flourish in the
Australian market. (Brain, 2013).
For a number of years, the government then in power assisted the manufacturing
sector with direct financial benefits. But With time, the new government started
realizing that privileges given to Auto manufacturing sector were a hindrance in the
path of development of other sectors. This led to some harsh decisions. And now,
major players like Holden and Ford have already announced their exit form
Australian market, and thus tough times looms ahead for the entire car
manufacturing supply chain and all the people associated with it.

Body
There are various aspects of the situation which saw Holden announce their exit
from Australian market and causing a huge destabilization in terms of jobs in
manufacturing sector. Let us understand the scenario from different perspectives.

External factors:

Changing market dynamics: The car market outside Australia has been
rapidly changing with the evolution of technology and changing customer
needs. The external made cars had more features for lesser price than the
Australian made cars. With the rise of imports, Holden and co. found it
difficult to compete with these external players, and thus lost their market
share.
Government Aid: The governments and political aspects of the market had
much to do with the entire situation. The manufacturing sector was heavily
dependent on the government facilities and subsidies. Over the years
government supported the manufacturing sector as it had provided a large
number of jobs. Once the aid was stopped, Holden and co. were no longer
capable of surviving in tough competitive market conditions in Australia.
Import/Export tariffs: For decades, the high import barriers ensured that
there was no threat of any new entrant to Holden and co. Which allowed
them to monopolize the market and sell cars at high price. But with import
barriers reduced, competition increased. Also export barriers increased which
further dented the prospects of monetizing.

Internal Factors:

Non Responsive Strategy: For a long time, Holden did not keep track of the
developments in the external markets and thus took no efforts in revamping
their strategy to match with the market standards. High cost and less
features could not hold their position in the competition once import tariffs
were lowered.
Lack of critical reflection: Critical reflection is a continuous assessment of
ones own performance, and involves analysis and taking corrective
measures. Holden did not realize the importance of reflection, and thus could
never improve.
Over dependence on government aid: Government of Australia provided
support to the manufacturing industry for a long time. But the players like
Holden and ford took this help for granted and never prepared for the time
when the help will be withdrawn. A clear lack of long sightedness resulted in
their ouster from Australian market and loss oj employment opportunities.

Stakeholders:
There are a number of stakeholders involved in the entire value chain. All of these
stakeholders are affected by the movement of manufacturing activities of Holden
out of Australia. Let us discuss these stakeholders one by one.

Workers and suppliers: The fate of Small and medium scale Auto suppliers
and the workers associated with the manufacturing units, has always
depended on the mercy of government policies and multinational company
strategies. Loss of employment and reduced wages will impact their living.
People of Australia: Deprived of choices in car segment for many years,
people of Australia now have many imported cars in market which give more
features for a lesser price.
Car Manufacturers: Holden, Ford and other manufacturers, having already
lost the market position and share, will be greatly impacted by this decision
of moving their manufacturing units out of Australia.
Australian economy: The crash of manufacturing sector is eminent after
the ouster of holden and co. This will have a great impact on the revenues
and GDP, thus destabliazing the economy to a great extent.

Despite all these factors, there are a number of suppliers and manufacturing
workers who had foreseen the fate of companies like Holden. Their market
awareness allowed them to enhance their skillset and look for alternative
employment opportunities, which helped them to survive through this debacle.
Thus, proper strategy and critical reflection helped these workers to retain their
employment.

Conclusion
With the rapidly changing dynamics of the market and increasing globalization, it
becomes imperative for an organization to act according to the Political,
Economical, Social and sometimes even technological and competitive factors in the
country it has been operating in and the countries it plans to expand its operations.
Holden required a farsightedness and preparedness to battle the odds and thus
owing to the changing political scenarios and the market it had to decide moving its
operations outside Australia.
I it still wants to resume its operations in Australia and not depend on the
Governments funding, Holden needs to clearly find out the exact factors
responsible to provide a competitive and sustainable advantage to the company as
well as positively retain the employment of its labor force in Australia.

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