Manufacturing of Cars

It is interesting to see how cars revolutionised the way we live but what is more interesting is that the cars these days are not just considered a device for transportation but much more than that. When you go deeper into the dynamics of the consumer behaviour towards cars it is fascinating to see how a brand of a car has a great impact on its consumer. Lots of research has been done on measuring the impact of the brand on the customer and buyer behaviour and my research aim is to add a drop of information into the existing ocean of knowledge.
There has been a lot of research done on the consumer’s perception towards a car’s brand and the country of the brand. The research has been characterised by the notion that a customer’s willingness to buy a car is influenced by factors like, where the car is produced and the nationality of the car brand. The research done in a couple of articles was primarily focussed on the consumer and the fluctuations in their purchase behaviour due to the perception of the car’s brand.
In an article by Fetscherin & Toncar, 2009, the concept of brand personality was explored and used in the research to measure the impact of the Country of the Brand and Country of Manufacture on the consumer. The research was done in USA and the respondents were all students. The study consisted of a survey measuring the consumer’s perceptions towards a car’s brand and the country of its manufacture. This was done by classifying the countries into two different types, developing nation (China) and developed nation (USA). The research aimed at measuring the impact of the country of production of a car on the consumers demand towards the same car. The study involved in developing a hypothesis and an experimental design was used where hypothetical cars were created and used in the survey to report the findings. The central findings of the research paper included the observation that “For a developed country automotive companies, shifting their production (Country of Manufacture) to developing countries and importing the cars back into their own country may have a negative effect on their brand” (Fetscherin & Toncar, 2009).
Similar research was done in Thailand by Thanasuta, Patoomsuwan, Chaimahawong, & Chiaravutthi, 2009 and a similar research style was used where a hypothesis was developed and later a survey was carried out. The focus of the paper was to measure the significance of a brand and consumer’s willingness to pay a premium for a niche brand. The paper undertook a study on 20 existing brands from 7 countries of origin. The study involved both passenger cars and pick-up trucks. The research paper brought into light that German car brands were preferred more than Japanese or American brands even though Japanese brands have been dominating the Thai market for long time. There was also an interesting finding that the “countries with a lower GDP per capita show lower price premiums and vice versa” (Thanasuta, Patoomsuwan, Chaimahawong, & Chiaravutthi, 2009).
There is another article “American Design Redefined” which brings out the importance of being American while producing the cars. The essence of that article was to signify the importance of an image of a country and their way of doing things. The article says “by accepting sloppiness, we (Americans) have been paying for the precision seen in Japanese and European vehicles. The main theme of the article was based on Chrysler and how it lost its “American” nature over the years.
All the three articles above set a direction for my research proposal from different aspects. My research question “What are the underlying factors for a car manufacturer to establish a production facility offshore?” is primarily focussed on the producers of cars and all the research above is based on consumer’s perceptions. The first article suggests that there will be an impact on the demand for the car based on the country of manufacture and the second journal article tells us that if a company has a good brand reputation there are consumers willing to pay the premium. This brings up a question which asks the producers if they believe in these findings and would they consider producing in a developed country in spite of higher production costs and pass these costs on to the consumer in the form of a premium price?
The other two articles reviewed were focused on aftermaths of mergers and acquisitions of luxury car brands and localization of strategies. The research paper by Strach and Everett, 2006 was primarily focussed on brands and acquisitions and mergers. The paper examines three case studies of Jaguar, Mercedes-Benz and Saab for coming up with conclusions. The case studies indicate that none of the three mergers (Jaguar- Ford, Daimler-Chrysler and Saab-GM) were successful due to various reasons. There were several strategic differences between these companies and none of the partnerships were sustained due to the strategic mismatch. There was an interesting observation which was not specifically stressed by the authors, which was the differences in the nationalities of the merging companies, for example, Daimler-Benz being a well-known German brand took over Chrysler, an American company and Jaguar, a British company was acquired by Ford which another American company. This aspect has been ignored by the authors. A different article stated about the Daimler-Chrysler partnership was that “One thing Mercedes couldn’t be - didn’t want to be – was American” (American Design Redefined).
The other article reviewed was called “Value-based localization strategies of automobile subsidiaries in Thailand”, it mainly focussed on localization of strategies. This was also a case research based article and Thailand was the chosen market to do the research. The main purpose of this article was to see if the companies benefited from localizing the strategies and the same was done by observing seven automobile companies. This research found out that companies not only benefit from adapting local strategies but also increase the employee morale by doing so. The study also brings into light that localization of the company could increase the brand equity and brand acceptance among the employees.
There has been extensive research done on the consumer’s perception of several aspects of a car like its brand, country of production and country of origin but relatively small amounts of research has been done focussing on the producer’s end. Hence the question “What are the underlying factors for a car manufacturer to establish a production facility offshore?”. It will be interesting to look at the factors a producer takes into consideration to establish a production facility overseas. The readings from above have suggested that the country of production of a car definitely has an impact on the consumer’s willingness to buy (Fetscherin & Toncar, 2009) but that article was looking at producing cars in a developing country and shipping it back to a developed country but my research hopes to discover the attitude of the producer without any constraints (developing countries and developed countries). The research focuses on the producer’s decision making process and what the producer will consider as the key factors to making the production decision. The exploration will aim at assessing the producer’s hierarchy of these factors.
The article by Johri and Petison, 2007 indicates advantages of adapting strategies to regional market and the value added to the brand by localization of the company. This research will also focus on verifying this from the producer’s point of view. The research aims at discovering the strategic opinion of the manufacturer on this aspect. Research will be done to discover the motivations of a car manufacturer, are driven by costs or are they motivated by the benefits arising from the localization of strategies?
The information necessary to do the research will be collected from 6 different car companies BMW, Mercedes Benz, Honda Motor Company Ltd, Toyota Motor Corporation, Ford Motor Company and GM Holden Ltd (in New Zealand). These six brands were chosen because they represent different parts of the world (Europe, North America and Asia) and it will be important for this research to understand the manufacturer’s motives from different corners of the world.
The methods used in the research process will include a mix of document analysis, surveying and interviewing. The research process will be done in three phases.
Phase 1:
This initial phase will involve in collection of secondary data through reviewing documents of all the six companies where the decision making processes of several car manufacturers will be reviewed over the past years. The company archives will be a valuable source of such information but the availability is doubtful. An alternative to the archives would be Victoria University library databases and other online resources. The document analysis will help the paper compare the change of pattern in the decisions over the past years. The data collected through this analysis will be used to prepare the questionnaire for the survey and questions for the interview. The limitations during this phase include availability of enough data, access to various company archives and validity of the data found to the present day context.
Phase 2:
The data collected in the previous phase will now be used to create a questionnaire and a survey will be conducted. The sole purpose of this survey is to collect primary data. This questionnaire will be targeted at the managers of the three departments (Marketing, Finance and Operations) of all the companies. The questionnaire will be designed in a way that it can be answered in less than 15 minutes. Two questionnaires per department and a total of six questionnaires will be posted to the mailing address of the company (obtained from the company’s website). The reason behind posting an extra questionnaire is that if a manager is too busy to respond to the survey the additional questionnaire addressed to the person below the manager may respond to it. The survey aims to find out the key factors these mangers take into account before making decisions at a managerial level. It is important to understand the decision making processes at this level because it is at this level that a majority of key ideas are generated. The only limitation about this is phase is the promptness in the responses from the managers of the companies. There may not be an exact date by which the survey maybe completed. This may increase the duration of the research process.
Phase 3:
This phase would involve interviewing the regional heads of all the six companies. Appointments will be taken in prior and interviews will be conducted in person or phone based on the location of the person within New Zealand. The data collected from the previous phases is now used as an instrument to develop the questions to ask the executives of the companies. The aim of these interviews will be to capture the top management’s opinion on the central issue and what will the top management consider strategically important for establishing a production facility overseas. The interview will be short and will try to get the most out of the executives within 10 minutes. The greatest challenge during this phase would be to get the appointments of the top executives and frame questions in a way that the key information is obtained without the executive person feeling that the researcher is asking for some confidential information.
After all the three phases are successfully completed, a thorough analysis will be done to transform the data into valid information and that information into publishable knowledge. The key thing to be kept in mind is all the information collected should be integrated in a proper sequence and to not let personal bias influence any piece of information.
However sound the proposal may seem the real task of pooling the information, analysing it and presenting it is going to be the hardest part. The main theme of the research is to ensure the central has not been deviated and the quality of the information is not compromised. This research also hopes to provide a base for people looking into doing further study on the subject. In the words of Thorstein Veblen “The outcome of any serious research can only be to make two questions grow where only one grew before.”

Bibliography

American Design Redefined. (n.d.).
Fetscherin, M., & Toncar, M. (2009). The effects of the country of brand and the country of manufacturing of automobiles. International Marketing review, 164-178.
Johri, M. L., & Petison, P. (2001). Value-based localization strategies of automobile subsidiaries in Thailand. International Journal of Emerging Markets, 140-162.
O 'Leary, Z. (2010). THE ESSENTIAL GUIDE TO DOING YOUR RESEARCH PROJECT. London: SAGE.
Strach, P., & Everett, A. M. (2006). Brand corrosion: mass-marketing 's threat to luxury automobile brands after merger and acquisition. Journal of Product & Brand Management, 106-120.
Thanasuta, K., Patoomsuwan, T., Chaimahawong, V., & Chiaravutthi, Y. (2009). Brand and country of origin valuations of automobiles. Asia Pacific Journal of Marketing and Logistics, 355-375.

Bibliography: American Design Redefined. (n.d.). Fetscherin, M., & Toncar, M. (2009). The effects of the country of brand and the country of manufacturing of automobiles. International Marketing review, 164-178. Johri, M. L., & Petison, P. (2001). Value-based localization strategies of automobile subsidiaries in Thailand. International Journal of Emerging Markets, 140-162. O 'Leary, Z. (2010). THE ESSENTIAL GUIDE TO DOING YOUR RESEARCH PROJECT. London: SAGE. Strach, P., & Everett, A. M. (2006). Brand corrosion: mass-marketing 's threat to luxury automobile brands after merger and acquisition. Journal of Product & Brand Management, 106-120. Thanasuta, K., Patoomsuwan, T., Chaimahawong, V., & Chiaravutthi, Y. (2009). Brand and country of origin valuations of automobiles. Asia Pacific Journal of Marketing and Logistics, 355-375.