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Read the case below and answer all the questions that follow.The German Automotive Industry Germany is the largest manufacturerof automobiles in the European Union with market reaching a valueof $54.02 billion (Data monitor, 2004). It is home to the BMW,Audi, Mercedes-Benz and Volkswagen cars which are world famous fortheir innovation and quality. The automobile industry is thelargest contributor to the German economy. According to the figuresof VDA (2010), the production of German vehicles was 6.0 million in2008 and 5.2 million in 2009, which puts it at the top among otherEuropean countries. The German automobile industry is also animportant employment sector. According to the data from ACEA(2010), around 1.4 million people work in the automotive sectors orrelated sectors in Germany. While lacking in natural resources,Germany holds other advantages to maintain its competitiveness inthe automobile industry in Europe. Highly educated, qualified andmotivated employees are the crucial part of its factor conditions.Germany overcame its lack of natural resources by developingadvanced factors conditions. Education in Germany is relevant tolocal industry requirements, particularly in science andhightechnology. German workers are better educated in theoreticaland technical knowledge, which enhances their skills in practice inspecific technical fields. The German automotive industry is wellknown for its related and supporting industries. For example, theregion around the city of Stuttgart is the core of Mercedes-Benzand its suppliers. The other related industries near BMW’s facilityin Regensburg and similarly for Volkswagen are good examples. Allthese leading brands in automobile manufacturing have benefitedfrom their industrial clusters. The suppliers around automakers’areas are supported by smaller components providers, such as metal,plastic, iron and steel producers. Buyers and suppliers reinforceeach other to enhance their respective industries. Therefore, thereare various opportunities for buyers and suppliers to cooperateregarding new productions and improving them, which improves thecompetitiveness of the particular industry. The availability ofcars of high quality, innovative products and excellent service ofthe German automobile industry has earned its customer’s loyalty.German automakers pay attention to the international market andtheir dominance is embodied in dealing with the relationships amongindustry, strategy and firm performance. Furthermore, in a recentInternational Motor Show, among 100 automotive manufacturers, therewere 55 companies from Germany, which proves its competitiveness inthe automobile industry. Germany’s automotive industry is facedwith a challenging and demanding domestic market. The number ofconsumers in the German market is the highest in the European 3Union. German consumers are willing to buy larger, better equippedand higher valued automobiles. As a result, Germany focuses onhigher value, high quality automobiles that are globally renowned.The German automobile firms are required to face internationalcompetition independently, while the government plays a vital rolein industrial advancement. The automobile manufacturing requirestechnicians and scientists to continuously improve product qualityand the German government supports the industry in terms ofeducation system and policies to develop industry-relevantworkforce and research investment funding. Germany sufferedhardships and great losses due to the two world wars. Yet thepositive effects outweighed the negative as Germany made greatachievements in postwar industrial competition. Porter (1998.p.179) mentioned that the wars created opportunities for Germany inproducing high technology products and complex components. Hofstede(1983) holds that national and regional cultures influencemanagement, involving multinational, multicultural organisations inboth public and private sectors. The German automobile companiesare very efficiently managed. The competitive advantages liketechnology can be duplicated by other companies, whereas culture isthe unique characteristic of a nation or a company. Therefore, theculture also can be a factor of competitiveness. (Source: https:www.grin.com, accessed 11 Apr 2021)
Question 1 Explain using general examples (exclude the Germanautomotive industry) Michael Porter’s National CompetitiveAdvantage Theory. (50 marks)