THE INFLUENCE OF GLOBALISATION ON AUTOMOBILE MANUFACTURERS IN SOUTH AFRICA

Authors

  • K. Ishaq Senior Lecturer in Commerce, Head, Department of Accountancy and Finance, Faculty of Management and Commerce, South Eastern University of Sri Lanka, Oluvil

Abstract

The South African automobile manufacturing industry has grown since 1920 from an import assembly industry to an import-substitute industry. By 1961, the South African Government had introduced local content programs to stop reduce importations in order to save foreign currency and develop the industry into a self sufficient manufacturing industry. The countries automobile manufacturers were growing and during this period reported profits. By 1990 the globalization process had accelerated more than ever before. South Africa had to reduce its tariff on imported goods and vehicles according to the Uruguay Round Agreement, as the country is one of the signatories to this agreement. According to World Trade Organization (WTO) obligations, a comprehensive tariff reduction was introduced on the automobile manufacturing industry through the implementation of the Motor Industry Development Program (MIDP) in 1995. A large number of global companies are entering the domestic and regional markets with highly innovated, quality and low-priced vehicles without any barriers. The trade liberalization process has increased competition and imports, creating high pressure and influence on the performance of automobile manufacturers in South Africa in terms of production volume, marketing, employment level and profits. The domestic market share has eroded by the global companies. Based on a comprehensive literature review and empirical analysis, the following conclusions were reached: The majority of automobile manufacturers have sufficient internal strengths and resources to face global competitors. But they unable offer low priced vehicles to customers compared with global competitors in the liberated marketplace. From the empirical study, a competitive advantage umbrella model was formulated consisting of the most important aspects where the automobile manufacturers have to concentrate intensively and immediately on improving their competitive position to overcome the negative influence of globalization in future.

Key words: Globalization, Multinational Corporation, Transnational Corporation, Lean Production, Strategic Marketing

 

For full Paper: fmscresearch@sjp.ac.lk

Author Biography

K. Ishaq, Senior Lecturer in Commerce, Head, Department of Accountancy and Finance, Faculty of Management and Commerce, South Eastern University of Sri Lanka, Oluvil

Senior Lecturer in Commerce, Head, Department of Accountancy and Finance, Faculty of Management and Commerce, South Eastern University of Sri Lanka, Oluvil

Published

2012-12-27

Issue

Vol. 3 (2006): Proceedings of the Third International Conference on Business Management

Section

Articles