This report will be researched based on the request of Dassan Ltd, a well-established South Korean automobiles manufacturer who wishes to penetrate the Australia automobile industry. In response to the request of Dassan Ltd, the Porter's Five Force Model of Australia automobile has been researched and analysed. After analysing the five forces and identify the automobile industry in Australia, a competitive strategy would be recommended to Dassan Ltd. The report would also research on the differences of Hofstede Cultural Framework of Australia and South Korea. Based on the research of Hofstede Framework, the similarities and differences of culture can be identified, and the report would further recommend how Dassan Ltd could bridge the cultural gap between South Korean and Australian culture. This analysis would be conducted with support of tables and graph to provide an in depth understand of the report.

 

Porter's Five Forces Model was named after Michael E. Porter and this model is used to identify and analyse the five competitive forces. The five forces would be threat of new entrants, rivalry among competitors, competition from substitutes, bargaining power of buyer and lastly, bargaining power of supplier. The result from the model will reflect the industry's strengths or weaknesses and then implement suitable corporate strategy (Porter 5 Forces, n.d).

 

新進者的威脅--Threat of New Entrants

 

Foreign automobile manufacturer would have to face several difficulties if they were to penetrate Australia automobile industry. The difficulties can also be defined as high barrier to entry. One of the difficulties that foreign automobile manufacturer would have to face during the penetration would be the high cost required in terms of investing in manufacturing facilities and also developing a decent level of distribution network. Another difficulties that foreign automobile manufacturer would have to face would be the existing automobile manufacturing competitors in Australia. Existing automobile manufacturing competitors in Australia are giants like Toyota, Holden and Ford. Existing automobile manufacturer in Australia would pose threat to new entrants because they already gain an upper hand in term of economies of scale and scope. The upper hand in economies of scales includes decent level of distribution network, for example, wide range of retail outlet across the country and also decent brand image. Even with strong financial injection from foreign automobile manufacturer, it will take time to create a strong brand image and also to set up retail outlets across the country. Brand image plays a very important role in business and poor brand image of a foreign automobile manufacturer will be a very discouraging as new entrants. Reason for the discouragement would be the trust level of customers as one of the major factors in car purchasing would be the safety level of the cars and customers also tend to do purchasing based on the manufacturer previous model performance.#p#分頁標題#e#

 

As for Dassan Ltd, a large amount of capital will be needed to venture into Australia for facilities and distribution. Dassan Ltd will also have to spend a very long time to build a decent brand image. In order to penetrate a foreign automobile industry, significant capital, time, capital and managerial expertise are required as time are also required by potential Chinese automobile manufacturer to penetrate Australia (Grant 2008). As conclusion, the threat of new entrants level can be categorized as low.

 

來自競爭對手的威脅 --Rivalry among Competitors

 

Competition had been an issue for automobile industry since 1990's as the automobile industry were flooded by new vehicles concept and designs (Adam, Brock 2005). As for Australia, there are no automobile industries with significant market share or that can monopoly the automobile industry market. However, the competition level in Australia is still at a very intense level due to the low concentration ratio of market shares among competitors. Aside from the 3 biggest automobile manufacturers, there are also manufacturer like Honda, Nissan, Mazda and others who are in the competitive scene. Toyota, Holden or Ford can categorized as major competitors because of their strong brand imaging and also their stability in terms of facilities or distribution. Figure 1.1 below will show the market shares of the few existing automobile manufacturer in Australia.

 

Figure 1.1: Total Market Share of Automotive Industry in Australia (Key Automotive Statistics 2009, pp17)

 

Figure 1.1 shows that the 3 major automobile manufacturers, Toyota, Holden and Ford took up 44% of the market share which also means that they are very strong competitors and it won't be an easy task to compete with them. Some existing automobile manufacturer can also be very competitive in term of pricing as they are most likely to already been engaged in contracts with suppliers to achieve lower cost of production. Brand image and also loyalty is also one of the major factors in the competitive scene as the manufacturer with the better branding would be the harder competitors to overcome. It's always hard to build brand image and loyalty among customers. Automobile industry can be categorized as a high cost business and this also play a role in automobile manufacturer being competitive. Reason of it being so would be because it's high cost involvement so it will be hard for manufacturer to exit the industry which would eventually force them to be as competitive as possible to continue the business as withdrawal isn't the best choice.

 

The competition in the automobile industry will only grow over time and with the existing fierce rivalry among competitors, it can be concluded that the rivalry among competitors for automobile industry in Australia are high.#p#分頁標題#e#

 

來自替代品的競爭--Competition from Substitutes

 

The third force of Australia automobile manufacturing industry is competition/threats from substitutions. The main substitution of automobile or private vehicle in Australia is busses and trains (Australia Infrastructure Report 2010). The percentage of total public transport infrastructure forecasted in Australia would drop according to the Australia transport Infrastructure report 2010, which will drop from 48.17% in year 2010 to 41.90% in year 2014. This shows that the effort of improving public transportation would not be prioritized by the government of Australia. It is fair to say that busses and trains would not be a realistic substitution to motor vehicles as the government plan of providing bus stop accessibility program would only initiated in year 2013 (Australia tender Notice 2010).

 

The global issue of increasing fuel price does affect the reliance of automobiles owner on motor vehicles. As the petrol pricing has hit the high point, which is the highest pricing in 29 months (Asia Pulse 2011). Therefore some portion of the population in Australia may opt for public transport due to the hiking price of oil fuels. But the factors like fixed routines and arrival timing of busses and public trains does influence the decision of automobiles owner to continue the reliance on private motor vehicle. Private motor vehicles provide more comfort ability and also door to door services that public transport could not provide. In response to the fuel price increasing issue, people would still continue their reliance on private motor vehicles due to the comfort level that automobiles bring, but if the issue of oil price increasing, leading to further expenses for households, the threat of substitution would raise to a different level.

 

購買者的議價能力--Bargaining Power of Buyers

 

Dassan Ltd should consider the relative bargaining power of the different players in Australia Car manufacturing industry (Market Competition). This is because the automotive industry in Australia is a matured industry and therefore consumers have a wide range of brands to select from. On Australia automobile industry; the industry was previously monopolised by European Automotive manufacturers; however there was a shift in the economics of the automotive industry, when Japanese manufacturers over the years developed reliable cost efficient vehicles. European manufacturers have now lost its competition edge against Japanese, and were force to diversify production towards different types of automobiles, Such as, trucks and continentals. (John Jay, 1994)

 

Dassan as a similar cost efficient automobile company as the Japanese manufacturers, indirectly increases the bargaining power of buyers in Australia. It was theorized by Porter (1998) that the more products that become standardized or undifferentiated, the switching cost would turn lower and therefore more power is yielded to buyers.#p#分頁標題#e#

 

Similarly in the automotive aftermarket industry in Australia, there is already present strong competition among Original Equipment Manufacturers (OEMs) and independent manufacturers. (Joe, 2010) The more new comers expected to enter the industry; Automobile customers are facing more alternatives that increase their bargaining power. As such, it usually creates price wars and consequently the industry is likely to end up competing in service. Dassan will encounter consumer's power, often demand for higher quality or improved service at a better price or at market price. In general terms, if Australia consumers have more bargaining power, it would be more difficult for Dassan Ltd to profit from the industry. It could be concluded that the bargaining power buyers are high.

 

供應商的議價能力--Bargaining Power of Suppliers

 

Automobile industry has previously acted as suppliers. The big auto manufacturers do produce some of their own parts, however to be able to focus on more car-related services and sales features, they can't possibly cope producing every part and component required for vehicle assembly. In this new world of automobile manufacturing venture, the business model has changed dramatically. Automobile manufacturers pass the responsibility of development, assembly and manufacturing to their suppliers. (Kisiel, Ralph, 2004)

 

Companies such as OEMs are direct suppliers that major in pure production industry which directly supplies manufactured Automobile parts or assembly service to Automobile companies. There are many other new direct suppliers emerging in the market such as Borsh and ZF, due to the growing demand of Automobile manufacturers for specialist in complex system, and integrators of simpler subsystem. In this new supplier market, it is very competitive for many suppliers as they depend on one or two automakers to purchase the majority of their productions. (Galvin, John, 2001)

 

To produce an automobile there are many sections of parts that are required to produce an automobile. It takes more than 1 or 2 suppliers to accomplish the production. They are expected to have a substantial amount of design and engineering in order to coordinate the supply chain needed for their manufacturing and assembly. (Francisco Veloso, 2002) Due to this fragmentation of the automobile production, there are a majority of suppliers in this industry that manufactures could easily switch to another supplier if it is necessary. As a result, suppliers hold very little power and are extremely susceptible because of the growing demands and requirements of automobile manufacturing.

 

The threat of substitution is classified at a moderate level as the in Australia; the effort of improving transport infrastructure is yet been initiated and the reliance level on private motor vehicles is rather high.#p#分頁標題#e#

 

波特的五力模型的整體評估--Overall Assessment for Porter's Five Forces Model

 

Based on the studies done for the Porter's Five Forces, the result clearly shows that they don't favour Dassan Ltd on the idea of penetrating Australia automobile industry. Upon entering Australia, threats of new entrant force indicated that Dassan will have to overcome the huge capital injection difficulty. Rivalry among competitors also indicated that existing automobile manufacturers are already competing at a very intense level and the competition isn't limited to competitors alone, public transportation would also be a problem that Dassan would have to consider according to the competition from substitutes force. Bargaining power of buyer force shows that the buying power of consumer in Australia is high and this wouldn't benefit Dassan Ltd as well as switching between brands would be easy as the pricing of cars are generally low and quality plays a very important role here to maintain brand loyalty. Lastly, bargaining power of supplier force is showing that it is at a moderate level as there are plenty of suppliers in Australia for the materials needed in automobile manufacturing. Moderate bargaining power of suppliers can be beneficial to any automobile industry as it's easier to gain access to materials needed but this reason alone isn't strong enough. Based on the findings mentioned above on the Porter's Five Force Model, we wouldn't recommend Dassan Ltd to venture into Australia automobile industry.

 

競爭策略--Competitive Strategies

 

The competitive strategies that we would recommend would be focus differentiation strategy. Dassan Ltd should venture into manufacturing luxury car model to penetrate Australia automobile manufacturing industry. This is due to factors like growing Growth Domestic Product (GDP) trend of Australia. Figure 1.2 below shows that Australia is experiencing a decent growth in GDP since 2005 to 2010.

 

Figure 1.2: Australia Gross Domestic Product (GDP) per Capita from 2005 to 2010 (Trading Economy, 2011)

 

Aside from the decent level of increment in GDP per capita, the unemployment rate of Australia also contributed to the recommendation of using focus differentiation strategy. The unemployment rate of Australia is decreasing for the past decade. Figure 1.3 below will show the unemployment rate of Australia from 2000 to 2010.

 

Figure 1.3: Australia Unemployment Rate from 2000 to 2010 (Trading Economy, 2011)

 

Gross Domestic Product (GDP) and unemployment rate were taken into account in making the decision to recommend Dassan Ltd to venture into luxury line in Australia was because the GDP per capita for Australia is growing and unemployment rate is decreasing which will reflect that the purchasing power of Australian are higher now. Figure 1.1 also shows that most of the automobile manufacturers in Australia are into affordable and sporty car manufacturing line. Therefore, venturing into luxury car line would differentiate Dassan Ltd and other competitors in Australia.#p#分頁標題#e#

 

Hofstede的文化緯度-- HOFSTEDE'S CULTURAL DIMENSIONS

 

Geert Hofstede has identified the culture of an organization can be categorized into power distance, individualism, uncertainty avoidance, masculinity and long-term orientation (Brooks, 2004, 85).

 

權力差距--Power Distance

 

Power distance is the extent to which the less powerful expect and accept that power is distributed unequally (Yates, 2005, 265). Based on the research, Australia has score of 36 score that considered low power distance while South Korea has a high power distance score of 60.

 

From the both country score we can say that, there is gap difference between two countries organization culture. South Korea's managers' appearances will be different than Australia's managers. South Korea's managers' will walk in front of the subordinates and when meeting the managers' is only expect to give opinion. The subordinates is required to greet the managers when meet them. Employees in South Korea do not have the autonomy to make decisions and solve unexpected problems without asking superiors for permission.

 

In Australia, there is less centralization and smaller proportion of supervisory personnel. Managers in Australia often socialize with subordinates and personal status is not important. Managers rarely give signals of their own status and employees normally do not feel inferior to them.

 

個人主義和集體主義--Individualism vs Collectivism

 

Individualism and collectivism dimension addresses whether the individual or the group is a focus (Lere and Portz, 2005, 47). Based on the research, Australia has a score of 90 while South Korea's score is 18.

 

According to the score, Australia is interpreted as individualism country; on the other hand South Korea is interpreted as collectivism country. Australia are individualist societies, people are valued in terms of their own achievements and status. People are responsible for themselves only and do not depend emotionally on organizations. While in collectivism societies like South Korea, employees extend their relationship outside work. Australians are very direct in the way they communicate (Brooks, 2004, 93). There is often an element of humor, and self-deprecating in their speech. On the other hand, South Korean are indirect in terms of communicate. They do not like being reject directly, it is better to reject someone idea indirectly. Punctuality is very important in both countries. Punctuality is important not only in working life but also in social gatherings.

 

不確定性規避--Uncertainty Avoidance

 

Uncertainty avoidance focuses on the level of tolerance for uncertainty within the society (Lere and Portz, 2005, 49). Australia has a moderate uncertainty avoidance score of 51 while South Korea has a high score of 85 (Schein, 2005, 213).#p#分頁標題#e#

 

Australian and South Korean employees will prefer relax working environment at the same time follow the clear rules and procedures. Follow the rules and procedures make them feel comfortable and safety. In high uncertainty avoidance society such as South Korea, actual work performance tends to be of greater importance. As a result, South Korean and Australian young men and women are often holding leading position in an organization. Besides that managers in both countries are more likely to choose risky strategies for organizations.

 

男性化程度--Masculinity vs Femininity

 

Masculinity-femininity is the extent to which gender roles are expected and clearly defined (Schein, 2005, 218). Hofstede research on masculinity identified Australia has a score of 61 which is high masculinity while South Korea has moderate masculinity with a score of 39 (Blank, 2003, 124). In both countries, men are expected to be the leader and do the tough jobs Men usually choose jobs that are connected with long-term careers (Parker, 2000, 168).

 

For South Korean and Australian achievement on the job is important as measure of success of life. Thus the counties people will tend to work longer hours in order to gain recognition from the company. Recognition is considered a main motivator for these two countries people work longer. Both Australia and South Korea employees emphasize their work to a great extent as they live in order to work

 

短期/長期取向--Short/Long-term Orientation

 

According to Hofstede, Australia has a score of 31 belong to short-term oriented country while South Korea has a high score of 75 that category to long term oriented country.

 

Managers in Australia are highly value on capability instead of education level. Australians prefer to invest in something than get return in short and fast such as mutual fund. Organizations in Australia want instant financial returns on their projects as they emphasis on quick results.

 

While in South Korea a long term oriented country, managers are elected based on education level and capability as well. The managers are also chosen based on the relationship to the company too. South Korea's organization has long term view and will work hard for future as a commitment to the shareholder and stakeholder.

 

總體評估Hofstede's文化維度--Overall Assessment for Hofstede's Cultural Dimensions

 

South Korean and Australian managers and employees should make an effort to bridge the cultural gap in order to operate business smoothly in Australia. It is recommended appointing a male manager to lead the team and have strong male contingent in the team in Australia as it is a high masculinity country. South Korean managers and employees are expected to work longer hours in Australia as they live in order to work. Besides that, Australian and South Korean managers and employees should organize gatherings event every month such as sports and entertainment in order to know each other's culture and break the ice.#p#分頁標題#e#

 

As a conclusion, according to the analysis based on Hofstede, it shows that Dassan Ltd should enter into the Australian Car Industry due to the similarity and differences between the two country organization cultures. As for Hofstede's Cultural Dimensions, there were differences between Australian and South Korea. Managers in South Korea and Australia have to identify ways to reduce their cultural gap in order to run the business operate smoothly in Australia. Besides that, South Korean needs to adapt to the high masculinity condition and individualism society in Australia. Organizing an outdoor activity for Australians and South Koreans to build up their relationship and it will also help to closer the cultural gap for example orientation day.

 

建議--Recommendation

 

After the study done on Porter's Five Forces and also Hofstede's Cultural Dimension, we would recommend Dassan Ltd not to penetrate Australia automobile industry. Porter's Five Forces result shows that Dassan Ltd might struggle in order to compete in Australia automobile industry. On the other hand, Hofstede's Cultural Dimension shows that Dassan Ltd might be able to eliminate the cultural gap by taking several steps to smoothen their operating process at Australia. However, the disadvantages from Porter's Five Forces results still overshadows the benefit from smooth operating process as stated by Hofstede's Cultural Dimension. There is absolutely no point in having a smooth operating business which generates low level of profit.

 

However, Dassan Ltd can use the competitive strategy mentioned above on luxury car manufacturing if the firm insist on venturing into Australia automobile industry.

 

結論--Conclusion

As a conclusion, it is not recommended for Dassan Ltd to penetrate the Australia automobile industry. The competitive strategy can be used if Dassan Ltd insists on venturing into Australia automobile industry but the risk involved still remains at a very high level; hence, it will still be best that Dassan Ltd select another option for penetration.