Australian Automotive Industry in Decline
(6 pages of text)
Case (Pub Mat)
The 2013/14 exit announcement by Australian car manufacturers poses a threat to the survival of the country’s automotive industry, and the pull-out is expected to have a significant and adverse impact on the Australian economy as a whole. The case highlights the dilemma that government decision-makers often face: Should they provide protection to loss-making industries in order to support domestic employment and economic output, or should they let struggling industries die out to make room for more prosperous economic activities? The case also highlights the dilemma faced by firms within a supply chain when original equipment manufacturers (OEMs) exit: Should the firm follow the OEMs or adopt survival strategies?
The case aims to:
- Demonstrate the interdependence between company, industry and economy.
- Depict the impact of government protectionist policies, as well as that of liberalization and globalization policies.
- Explain the application of various protectionist arguments, such as employment arguments and terms-of-trade arguments.
- Illustrate the impact of free trade agreements.
- Illustrate the impact of exchange-rate fluctuations.
- Explore the survival strategies in an uncertain, dynamic business and economic environment.
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