How the Lexus Was Born-and Continued Its Success in the United States, but will Lexus Succeed in Japan? One of the best examples of global competition is in the car industry
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Principles and Practice of Management
International Case : Global Car
Industry (20 Marks)
How the Lexus Was Born-and Continued
Its Success in the United States, but will Lexus Succeed in Japan? One of the
best examples of global competition is in the car industry. As the Japanese
gained market share in America, U.S. car makers required the Japanese to
self-impose quotas on cars exported to the United States. This encouraged
Japanese firms not only to establish their plants in the United States but also
to build bigger and more luxurious cars to compete against the higher-priced
U.S. cars- and the expensive European cars such as the Mercedes and the BMW.
One such Japanese car is the Lexus, by Toyota. This car is aimed at customers
who would like to buy a Mercedes or BMW but cannot afford either. With a
sticker price of $35,000, the Lexus is substantially less expensive than
comparable European imports. In 1983, Toyota set out to develop the best car in
the world measured against the Mercedes and the BMW. The aim was to produce a
quiet, comfortable, and safe car that could travel at 150 miles per hour and
still avoid the gas guzzler tax imposed on cars getting less than 22.5 miles
per gallon. This seemed to be an idea of conflicting goals: cars being fast
seemed irreconcilable with cars being at the same time fuel-efficient. To meet
these conflicting goals, each subsystem of the car had to be carefully
scrutinized, improved whenever possible, and integrated with the total design. The
first version of the 32-valve V-8 engine did not meet the fuel economy
requirement. The engineers applied a problem-solving technique called
"thoroughgoing countermeasures at the source." This means an attempt
to improve every component until the design objectives are achieved. Not only
the engine but also the transmission and other parts underwent close scrutiny
to make the car meet U.S. fuel requirements. Toyota's approach to achieving
quality is different from that of German car manufacturers. The latter use
relatively labor-intensive production processes. In contrast, Toyota's advanced
manufacturing technology aims at high quality through automation requiring only
a fraction of the work force used by German car makers. Indeed, this strategy,
if successful, may be the secret weapon to gain market share in the luxury car
market.
Answer
the following question.
Q1.
Prepare a profile of the potential buyer of the Lexus.
Q2.
What should Mercedes and BMW do to counteract the Japanese threat in the United
States and Europe?
Q3.
Why has the Lexus model been very successful in the U.S. but has not been
marketed in Japan? (Suggestion: Review the frequency of repair records of
luxury cars. Also talk to Lexus dealers or Lexus owners).
Q4.
Do you think Lexus will succeed in Japan? Why or why not?
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