Evaluation of the strategies of Smiths Manufacturing, a South African automotive component manufacturer.
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This research evaluates the strategies being pursued by Smiths Manufacturing a South African automotive component manufacturer in order to determine their appropriateness given the changing external environment. World economies are becoming more integrated and the increasing trend of globalization has elevated the markets into a hyper-competitive era. Consequently, the competitive landscapes are constantly changing and manufacturing firms need to monitor this environment continuously to be able to adapt to the changes. The research commences with a brief outline and defines the objectives of the study. This is followed by theoretical discussions that are centred on strategic models and concepts which are applicable to this research. The case study is based on Smiths Manufacturing. Global automotive trends are identified. The main trends being that Original Equipment Manufacturers (OEMs) are looking to outsource for modularity rather than componentry with a 'follow design' 'follow source' strategy being prevalent amongst automotive vehicle giants and their worldwide subsidiaries. Major OEMs are also looking to forge closer collaborations with their suppliers. In framing Smiths' strong domestic competitive position locally, the research also identifies the imminent threats from global excess capacity. Smiths' competitive position stems from factors such as product license agreements, internationally accredited quality agreements, Smiths' experience in supplying of modules to Toyota, Ford and BMW and Japanese firm Denso's 25% stake in Smiths. In applying the strategy theory to these findings highlights that aggressive strategies can be pursued successfully to enhance Smiths' position. In view of other global trends, some of the identified threats and weaknesses need to be neutralised. Moreover, opportunities arising through Africa's Growth Opportunity Act (AGOA), the redefinition of after market parts in Europe and other trade agreements are recommended to be pursued aggressively by Smiths. The research concludes with suggested strategies for Smiths to pursue for future growth. Smiths' growth has been above average and to sustain this level of growth will not be easy, but, in keeping with the global trends, it is recommended that Smiths also pursue closer collaboration with other major global first tier suppliers.