Module 3 M3A Please place answers only on this question sheet after the question in the appropriate place where noted and follow directions carefully and fully. Please list when asked without using complete sentences. Do not submit copy of the Case with this sheet. Part A From the Case provided with an icon above M3A assignment questions, The Rise of the Indian Automobile Industry 1. List the 3 advantages highlighted in the article that India has in the manufacture of Automobiles: a. b. c. 2. Referring to the Case in question #1 above and using Porters- National Competitive Advantage: Porters Diamond from Chapter 6 of textbook, provide the following: Place the attribute/factor from the written material about the theory in the space provided below, and then indicate whether the theorys attribute/factor fits Indias automobile industry or not by placing a YES for fits and a NO for does not fit. Following that, in ONE clear sentence explain why it fits or does not fit the Porters theory. Factor #1 _______________ Yes or no __________ Why: Factor #2 _____________ Yes or no __________ Why: Factor #3______________ Yes or no __________ Why: Factor #4 _____________ Yes or no __________ Why:

Case below

India is well on its way to becoming a small car manufacturing hub for some of the worlds largest automobile companies. Between 2004 and 20011, automobile exports from India jumped from 50,000 to 450,000 per year. Despite a global economic slowdown during the period, exports are predicted to increase, reaching 720,000 vehicles a year by the end of 2016. The leading Indian exporter is a Korean company Hyundai, which committed early to the Indian market. Hyundai began production in India in 1998, when consumers were only purchasing 300K cars a year, despite a countrys population of almost 1 billion people. (Over 2 million sold in 2015). Hyundai invested in a plant in the southern city of Chennai with the capacity to turn out 100K cheap small cars a year. It had to train most of the workers from scratch, often giving them two years of on-the-job training before hiring them full time. Soon, Hyundais early investments were paying off as Indias emerging middle class snapped up its cars. Still, the company had excess capacity, so it turned its attention to exports. By 2004, Hyundai was the countrys largest automobile exporter, shipping 70K cars a year overseas. By 2008, Hyundai was making 500K cars a year in India and exporting a third of them. Its smallest cars, the i10 are now produced only in India and are shipped mainly to Europe. In 20015, Hyundai decided to invest around a billion dollars in a second Chennai plant. The plant, which opened in 2010, boosted its Indian output to 650,000 vehicles. Some 250K were exported in 2010, making Hyundai the largest exporter of manufactured goods in India. In addition to Europe, Hyundai is now considering selling its Indian-made care in the United States. Hyundai/s success has not gone unnoticed. Among other automakers, and they have been investing aggressively in Indian factories. Suzuki raised exports from 50K in 2007 to 200K in 2010. Nissan invested some $1.1 billion in a new factory in Chennai. Completed in 2010, the factory has the capacity to make some 400K cars a year, about half will be exported. Ford, BMW, GM, and Toyota are also building, or planning to build in India. A notable local competitor, Tata Motors, launched a low-cost peoples car, priced at $2500 for the Indian market in 2009. For all these companies, India has several attractions. For one thing, the rapidly developing country has a potentially large domestic market. Also, labor costs are low compared to many other nations. Nissan notes that wage rates in India will be 1/10th of those in its Japanese factories. As Hyundai has shown, productivity is high and Indian workers can produce quality automobiles. Hyundais executives claim that its Indian cars are comparable in quality to those produced in South Korea. Nissans goal is to use the same highly efficient flexible manufacturing process in India as it uses in Japan. Nissan plans to send Indian worker to its Japanese factories for training on manufacturing process and quality control. India produces a large number of engineers every year, providing the professional skill base for designing cares and managing complex manufacturing facilities. Nissan intends to draw on this talent to design a low-cost small car to compete with Tatas peoples car. According to Nissan executives, the great advantage of Indias engineers is that they are less likely to have the preconceptions of automobile engineers in developed countries, are more likely to think outside the box, and thus may be better equipped to handle the challenges of designing an ultra-low cost small car. Establishing manufacturing facilities in India does have problems. Nissan executives note that basic infrastructure is still lacking ---roads are poor and often clogged with everything from taxis and motorbikes to bullocks and carts---making the Japanese practice of just-in-time delivery/inventory hard to implement. It is also proving challenging to find local parts suppliers that can attain the same high-quality standards as those Nissan is used to elsewhere in the world. Nissans strategy has been to work with promising local companies, helping them raise their standards. For example, under the guidance of teams of engineers from Nissan, the Indian parts supplier Capro, which makes body panels, has built a new factory, using the latest Japanese equipment, near Nissans Chennai facility. Workers there have also been trained in Japanese practice of kaizen or continuous process improvement. Observers see the potential for Chennai to develop into a major auto manufacturing hub, with a cluster of automobile companies and parts suppliers working in the region producing high-quality, low-cost small cars that will not only sell well in the rapidly expanding Indian market but could also sell well worldwide.