Rethinking competition in the world auto market: cultural determinants, strategic implications and game rules

Abstract

Purpose

This paper examines how ingrained differences in heritage, social and business culture predispose American, Japanese and European automakers to plan and act in different ways, with long‐range consequences – both successful and unsuccessful – of their strategies and actions. To secure its twenty‐first century competitive position, each automaker must understand its cultural proclivities, strengths and weaknesses – as well as those of its competitors – to develop proactive strategies around a set of common industry game rules.

Design/methodology, approach

The paper distills the author's observations from serving automakers of all nationalities over a 20‐year consulting career. Findings – US original equipment manufacturers' (OEMs') cultures are characterized by the “tyranny of Net Present Value” (NPV), whose manifestations and short‐term focus have eroded once‐commanding industry positions. The primacy of the collective, frugality, resourcefulness and the long‐term perspective are values that predispose the Japanese automakers to continue growing in importance. Volume European automakers' cultures and higher‐cost work practices – mirroring the continent's work‐life balance and socialist principles – make them vulnerable, particularly in China, where they lag behind in comprehending the market, tailoring their products and working along bi‐cultural lines.

Practical implications

The paper presents arguments and context for the US automakers' need for a new culture that better balances NPV considerations and the long‐term strategic view. The volume Europeans will have to make work rule and cultural changes to stay cost‐ and productivity‐competitive, as well as work more effectively in the important China market.

Originality/value

The paper provides unique, holistic but succinct cultural‐based perspectives and insights for struggling automakers to understand and improve their positions.

Citation

Tay, H.K. (2007), "Rethinking competition in the world auto market: cultural determinants, strategic implications and game rules", Strategy & Leadership, Vol. 35 No. 4, pp. 31-37. https://doi.org/10.1108/10878570710761363