Interdependence In The Automobile Industry

After producing and distributing the “Model A,” Ford Motor Company became the first firm to mass-produced automobiles, with a focus on affordability for the average consumer. Since then, other companies decided to follow their lead and enjoy the success that coincides with a market composed of a large number of potential buyers. Today, automotive companies handle the various aspects that deal with the production and distribution of an automobile. For example, design, development, manufacturing, marketing, and selling of motor vehicles are all relevant to this economic sector that happens to be one of the most important to our economy, with a generated annual revenue of over $2 trillion. The Automobile Industry is undeniably an example of an

The leading firms are closely interdependent on each other through advertising, marketing schemes, and through the introduction of new models. The major financial crisis in 2009 depicts this interdependence perfectly with the fall of what was then the three leading U.S. manufacturers, General Motors, Ford Motor Company, and Chrysler Automobiles. The small number of sizeable firms means that the actions of one plays a large role in the resulting decisions of the other competing firms. Today, technology is playing a major factor in this form of interdependence considering the innovative designs that continue to emerge on a daily basis. In the past few years, top manufacturers designated ample resources towards hybridizing vehicles in hopes of cutting down on the gasoline usage. All big firms have made a point to introduce some form of environmentally friendly vehicle to take advantage of the emerging market. Although still focused on the eco-friendly aspect, automotive companies have taken their technological resources a step further with the introduction of self-driving cars. Both examples of technological advancement accurately depict the role interdependence has amongst the major automotive

Within this market, there is relatively low threat of new companies entering. There are many reasons that make it quite difficult to enter, starting with the great amount of capital necessary to manufacture and continue innovating. Considering that large volumes of cars must be sold in order to achieve the necessary means of competing with major existing firms, the ambition of potential entrants will be not only be halted but completely discouraged by the incredibly difficult barriers to enter into the