Historical Background of Holden Company
Holden is an Australian based automobile importer, its headquarters is located in Port Melbourne, Victoria (Malihi, & Shee, 2017).
Holden Company was founded by James Alexander Holden in 1856 in South Australia which was started as a saddler manufacturer. It later moved into automobile field, around 1920s it became the inclusive supplier of an American based car manufacturer called General Motors.
Later, early 1930s General Motors and Holden merged and the name changed to General Motors- Holden’s Limited (GM-H). During the Second World War, Holden Industry paused its primary business and started to the manufacture weapons, aircraft, and engines which were on a high demand at that time.
Holden Company manufactured their first all-Australian motor vehicle in 1948, which was a great achievement. The company started to dominate the Australian car market which lead them to exporting vehicles to New Zealand in which later they expanded to other countries e.g. Africa in 1960s.
Holden’s’ mission is to assist sellers and Industries reach their maximum sales potential, by transforming their processes.
The vision statement of Holden Car Company is to be the most successful automobile Company in Australia with a desire for excellence and undivided commitment to the consumers.
The core values of Holden industry which are vital for fulfillment of their mission and vision are:
- Innovation,
- Quality
- Integrity
- Dedication
This is mainly concerned with factors that are external to the company such as potential new entrants to the industry, competition from existing firms, market share of the company, and the threat of substitute’s products. The purpose of the audit is to conduct analysis that ensures the company is better placed so that it can compete favorably (Appelbaum, Kogan, & Vasarhelyi, 2018). This may be illustrated using Porter’s five forces model that tries to give a framework on how Holden Company can blend itself in order to sustain and maintain its position in the automobile industry.
Being an Automobile industry, Holden car company requires powerful and skilled man power as well as high capital investment. This type of business can be affected by many different forces since it involves many industries in it which makes it complex (Dobbs, 2014).
The purpose of Porter’s five forces model is to analyze the position and situation of a company, it’s of great assistance in assessing the financial position of a business at a given period of time (Fleisher, & Bensoussan, 2015). Five forces puts into consideration the interactions and relationship among the competitors of the industry, available new entrants to the industry, substitutes of the company’s products, suppliers, and the buyers (Porter, 2008).
Mission statement of Holden Car Company
The figure below represents porter’s five forces model
Below is a brief introduction and application of Porter’s five forces on the Holden Car Company
The Bargaining Power of Suppliers
The bargaining power of suppliers is determined by total number of suppliers a business have, they affect the prices by bargaining for the prices of raw materials. Automobile industry has many suppliers who manufacture original equipment, seats, and tires. These suppliers are dependent on the automakers which makes them to have less power.
Bargaining Power of Buyers
The reason why buyers bargain is to get products and services at a low price, the determinant of the level of the bargaining power of buyers is the number of buyers i.e. less the number of buyers the higher the bargaining power. In this model, business evaluates its strength through facing the bargaining power of buyers (Moatti, Ren, Anand, & Dussauge, 2015).
Rivalry among the Competitors
The ability and capability of competitors deciphers the position and strength of a company in a given industry. High number of competitors is not good to a business since buyers and suppliers can choose the competitors over them. Therefore, Holden Company should strive to offer good quality products so as to gain a competitive advantage over its rivals (Rothaermel, 2016).
Threat of new Entrants
The position of a business may be greatly affected by the capability of entrance by new companies into the market. The business of existing ventures is greatly affected if new companies can easily enter into the market. The automobile industry is complex and therefore requires huge capital investment in terms of money, skilled labor force and appropriate forms of technology which may be a hindrance to a new entrants who might be willing to enter the automobile industry. Also, globalization has made it possible for foreign investors with huge capital capabilities to penetrate domestic markets which makes it difficult for local entrants with inferior capital bases to enter into the industry.
Threat of Substitutes
In a market where there is availability of substitutes, buyers can move to products in which they feel satisfied which in turn weakens the performance of a business (Baumgartner, 2014). Holden Company should develop cars with cheaper operation costs since consumers will not only shift to other models but can also look for alternative means of transportation such as buses, trains, and airplanes. Efforts should be made to ensure that costs associated with operation and maintenance of the models offered are not higher than the alternative means of transportation available to the consumers.
Vision statement
Key success factors can be defined as the correction of significant facts that are required in order to achieve the set business goals. In our case, the automobile industry has the following success factors:
Marketing and Distribution
This is concerned with a company’s marketing and distribution network that helps the company in reaching a wider market. An analysis is carried out on company’s ability, policies, and commitment in advertising and creating awareness of the product among the consumers and ensuring that products are made available to the targeted market.
The strength of a company should be seen in its marketing and distribution channels by way of having several numbers of distribution branches, dealers, workshops, and also in terms of the support that comes from financial institutions.
Flexibility
The company should be in a position to remain as flexible as possible since there are high chances of buyers changing their buying habits as a result of certain factors that affect the economy such as the price of fuel and new automotive technologies. This makes it essential for the company to be attentive incase such trends are witnessed and also come up with a plan that will help it adapt quickly to the changes in terms of introducing new products that suit the needs of the customers.
Cash Flow Protection
The company should be in a position to control costs including items that are subject to fluctuations e.g. the price of raw materials and other components which are outsourced. By so doing the company may offer incentives or lower prices which in turn may lead to high sales volume but without any effect to the profit margin. Having a sustainable cash flow will also help the company in reducing conflicts between it and employee unions since it will not experience difficulties in paying its employees as required by the unions.
References
Appelbaum, D. A., Kogan, A., & Vasarhelyi, M. A. (2018). Analytical procedures in external auditing: A comprehensive literature survey and framework for external audit analytics. Journal of Accounting Literature, 40, 83-101.
Baumgartner, R. J. (2014). Managing corporate sustainability and CSR: A conceptual framework combining values, strategies and instruments contributing to sustainable development. Corporate Social Responsibility and Environmental Management, 21(5), 258-271.
Dobbs, M. (2014). Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45.
Fabbri, D., & Klapper, L. F. (2016). Bargaining power and trade credit. Journal of corporate finance, 41, 66-80.
Fleisher, C. S., & Bensoussan, B. E. (2015). Business and competitive analysis: effective application of new and classic methods. FT Press.
Malihi, K., & Shee, H. (2017). STRATEGIC VEHICLES IMPORT SUPPLY CHAIN: A PARADIGM SHIFT IN AUSTRALIAN AUTOMOTIVE INDUSTRY. Asian Academy of Management Journal, 22(1).
Moatti, V., Ren, C. R., Anand, J., & Dussauge, P. (2015). Disentangling the performance effects of efficiency and bargaining power in horizontal growth strategies: An empirical investigation in the global retail industry. Strategic Management Journal, 36(5), 745-757.
Pathak, V. K., Hazarika, B., & Pandey, K. M. (2015, August). A Study of Supply Chain Management in Some Selected Cement Companies of North-East India. In Conference Proceedings of 6th International Conference on Recent trends in Applied Physical, Chemical Sciences, Mathematical/Statistical and Environmental Dynamics (PCME-2015), Krishi Sanskriti Publications, JNU, New Delhi(pp. 89-94).
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 78-93.
Rothaermel, F. T. (2016). Competitive advantage in technology intensive industries. In Technological innovation: Generating economic results (pp. 233-256). Emerald Group Publishing Limited
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