Direction of business strategy and future trends,

Abstract

To make profits in such a world, unit costs must be reduced to the minimum possible and consistent with acceptable quality. To do this firms are endeavouring to combine lean production with the maximisation of economies of scale, that is, to achieve the lowest possible long run average cost curve and the lowest point on that curve. The process of consolidation and globalisation can be seen as driven by the latter whilst initiatives such as internet procurement, tendering, and production systems, the former. The automotive industry of the early 21st century, barely one hundred years old, reaches into the lives of almost everybody on the planet. The business of making these vehicles is the largest manufacturing sector in the world, a core part of the leading industrial nations and of growing significance elsewhere. The automotive industry is huge by almost any measure, complex, and always rapidly changing. In recent years the environmental consequences of auto mobility have thrust the industry into the heart of the debate over wealth generation and sustainability. "An industry's key success factors are those things that most affect the industry members ability to prosper in the marketplace - the particular strategy elements, product attributes, resources, competencies, competitive capabilities, and business outcomes that spell the difference between profit and loss, and ultimately between competitiveness and failure" (Thompson and Strickland:2003). This paper examines the future strategic focus that a local South African automotive firm ought to adopt to ensure competitive success in the harsh global auto industry. Smiths Manufacturing is on its way to becoming a world class company, limited in terms of local market size and firm infrastructure, yet astute in terms of systems, products and technology. Although Smiths is currently experiencing success and plans for short term growth, indications are that the whole strategic focus is being diminished in retaining its competitiveness in lieu of expansion and operations. Throughout this research thesis it will be observed that Smiths is competitive, but its competitive advantage is not increasing relatively. Smiths has to do something unique, and this unique competitive differential advantage can be induced on the soft side, i.e. Smith's social capital-people.