http://www.latimes.com/business/autos/la-fi-hy-0419-tesla-germany-20160419-story
ID: 459689 • Letter: H
Question
http://www.latimes.com/business/autos/la-fi-hy-0419-tesla-germany-20160419-story.html Read the attached article and reread the article on "Does Deutschland do digital" from your assigned readings. Then respond to one or more of the following: 1. Why do you think that German automakers might underestimate Tesla as a credible threat? 2. Using Porter's diamond, what aspects of factors, demand, supporting and related industries, and industry strategy/structure/rivalry favor the German auto cluster. In what respects could their cluster be weakened? 3. Do you think that Tesla is a serious threat to German automakers? Does the article overstate Tesla's capabilities as a credible threat?
Explanation / Answer
1. Why do you think that German automakers might underestimate Tesla as a credible threat?
Ans.German automakers are now, rather belatedly, seeing Tesla as a long-term threat to the pride and joy of the country's economy: the car industry that employs 750,000 workers and indirectly accounts for 1 in 8 jobs.
"Germans have an enormous amount of pride in their engineering skills and believe they know everything that needs to be known about cars," he said. "They used to think there was no way that anyone could possibly build cars as well as they do. And then along comes this young punk in California. They thought he didn't have a clue about cars and treated him like a joke. And now they're seeing that he's leading the revolution."
2. Using Porter's diamond, what aspects of factors, demand, supporting and related industries, and industry strategy/structure/rivalry favor the German auto cluster. In what respects could their cluster be weakened?
Ans.The diamond model of Michael Porter for the competetive advantage of nations offers a model that can help understand the competetive position of the nation in global competition.
Interlinked advanced factors for competitive advantage for countries or regions in Porters diamond framework are:
1.Firm Strategy,structure and rivalry.The world is dominated by the dynamic conditions and it is direct competition that impels firms to work for increases in productivity and innovation.
2.Demand conditions:The more demanding the customers in an economy,the greater the pressure facing firms to constanly improve their competitiveness.
3.Related supporting industries:Spatial proximity of upstreams and downstreams facilitates the exchange of information and promotes a continous exchange of ideas and innovations.
4.factor conditions:Specialised factors of production are skilled labor ,capital and infrastructure.Non key factors or general use factors such as unskilled labor and raw material can be obtained by any company and hence do not generate sustained competitive advantage.
In case of Firm strategy,structure and rivalry The german automakers clusters could be weakend....
3. Do you think that Tesla is a serious threat to German automakers? Does the article overstate Tesla's capabilities as a credible threat?
Ans.Yes,Tesla is a serious threat to German automakers.
Several of the 5,500 german automakers employees stood up to critically ask managers why they had been asleep as Tesla aggressively pushed forward into the all-electric market, and some wondered aloud if this was the beginning of the end of the German car industry.
Claudia Kemfert, head of energy, transport and environment at the German Institute for Economic Research in Berlin, said German carmakers have been arrogantly negligent to Tesla's challenge. German companies had been similarly careless in discarding German inventions such as the fax machine and the MP3 player, which helped make others rich outside Germany with a better understanding of consumers.
Tesla is at the same time both a danger for German manufacturers, but it's also a wake-up call.The German carmakers are taking Tesla more seriously every day now.
The article doesnt overstate Tesla's capabilities as a credible threat because all the above points suggests that Tesla was a big and tough competitor to the German automakers and all other big industies.
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