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Business Management Essay

3172 words - 13 pages

MetalEx is a large corporation that deals in a wide range of specialist parts for the automobile industry. It is found In three states. It has its headquarters located at Aldelaide. This company has an employee body of around 3650 employees. MetalEx deals in a wide range of products. These include, break lining, gearboxes, steering systems and many other automobile accessory parts. MetalEx has a long history dating back to the first world war. It was founded by two brothers, Harold and Ronald MacAlpine. They provided maintenance services for bus services and the company considerably grew over the years. By 1997, this company had grown to be the largest in the Australian market for ...view middle of the document...

This greatly hurt companies in Australia.
Pestel analysis shows that there are many issues that might affect MetalEx. Globally, the price of automobile parts is dropping as the quality keeps moving up. This caused many companies to seek external markets that have cheaper labor so that they cut down on their production costs as much as possible. The cost of labor in Australia has greatly increased almost by double. They are completely non-concurrent to the rest of the world. Over the past decade, unit labor costs rose by 37% in Australia, compared to 29% in Canada, 21% in Korea and the United States, 6% in Germany and minus 16% in Japan. metalEx company is placed in a competitive market with companies that have good business networks both within and without the Australian market. Some of Its employees are members of unions that fight for the rights of employees. MetalEx is strategically placed for extensive growth into the Asian markets.
MetalEx has strong relationship with some large companies in the automobile industry globally for example Toyota. This could aid them in the shifting into international markets, and production to other countries. However, the cost of production is the biggest problem facing MetalEx. This is greatly contributed by the high costs of labor in Australia. It is this labor costs that forced Ford out of Australia. This causes Australian-based companies to compete unfavorably with other global companies based in places with cheaper labor costs. Another challenge of MetalEx is strengthening of the Australian dollar. This makes exportation from Australia is cumbersome. In addition, the low quality of products that results from the already identified problems of lack of skills and knowledge among the employees puts MetalEx at a ‘near extinction’ position. metalEx should therefore sot solutions for this problems to safeguard its position and existence. it therefore considered outsourcing labor and taking production to developing economies where labor is cheaper like in India.
metalEx has a few goals which revolve around production of cheap but quality accessory parts. The company seeks to cut down on its production costs so that the final products are not so expensive. They also sot to produce the most popular and best accessories all around the world. Some strategies have been proposed to try reduce the labor costs and the overall production costs. The strategies are meant to help the company develop by going global. The strategy states that metalEx should shift its production to countries that offer cheaper labor. This move is meant to reduce the cost of production and consequently reducing the price of final products. This will be made possible by making of partnerships with offshore companies. The existing partnership with Toyota should be used as a chance to access the global market. metalEx should also take to advantage the German manufacturing conglomerate, Groathe industries. This is because the costs of labor are...

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