Supply Network Globally Of Automotive Industry

1115 Words Dec 6th, 2014 5 Pages
4.1. Overview of Supply Network Globally of Automotive Industry

Sturgeon et al proposed the nested “Geographic and Organizational structure of the Automotive” supply network, which analyses from the production to design process in global, regional, national and local perspective. The main reasons of the worldwide spreading final assembly plants are described as follows (Sturgeon et al., 2009):
a) Market saturation
b) High level of motorization
c) Political pressures
d) Higher revenues from emerging markets
e) Regions or countries with lower operational cost (e.g. Mexico or Spain and Eastern Europe Figure 3 - “The Nested Geographic and Organizational Structure of the Automotive Industry” (Sturgeon, Memedovic, Van Biesebroeck, & Gereffi, 2009)

Due to the wide spread of final assembly plants and the delegation of design process to suppliers, automakers push suppliers in order to establish their design centres closer to each market that can alter designs due to its special characteristics or needs, which require to adapt production process. Additionally, the design centres where the conceptual idea is developed are in cluster near the lead firm’s headquarters, which simplify cooperation. However, the global presence of suppliers is a precondition to be taken into account for new projects, and this presence increases the relationship between suppliers and the lead firm in multiple regions (Sturgeon et al. 2009).

In other words, bargain power and delegation of production…
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