Competitive positioning in the automotive manufacturing industry
Week 3
Diana Rodríguez Herrán
Where do I stand in the competitive landscape?
Results
Analyzing the Profit vs Cost graph, it is observed that General Motors is the most profitable company, with the highest operating income and lower expenses than Ford, which is below the trend line, with very high costs and a small operating income. The situation is the same, to a lesser extent, for Tesla, which has low costs and low income.
Compared to Japan, the difference in profitability is obvious. It is observed that US companies have a phasing problem and that as their costs increased, operating income increased very little, as shown by the slope of the graph. In other words, Japanese companies outnumber US companies in size, revenue, and economy of scale.
Results
Ford has the highest level of revenue but also costs, followed by GM and then Tesla but by far.
Comparing with the Japanese automobile industry, it is observed that American companies are slightly smaller and generate less income with the same expenses as Japanese companies.
From an operating income versus total assets angle, we can see that Ford has the largest assets but far less operating income than General Motors which has asset utilization above the industry average.
Finally, it is observed that with the same assets, American companies get less profit than Japanese companies.
Profit Frontier and Risk vs Return
Results
It is observed that, for most companies, the operating margin tends to zero, but by drawing the profit frontier we could conclude that the operating margin decreases as revenues increase. Ford being the company with the highest income but also with the lowest operating margin.
Likewise, it is concluded that in the US automobile industry, General Motors presents the highest return on assets with a lower proportion of liabilities. On the other hand, Ford has a percentage of liabilities very close to 0.9 and a small return on assets. In the case of Tesla, the return on its assets was negative which means that the company is investing a large amount of capital in production and at the same time receives little income.
Ranking and Profit Distribution
Results
It is observed that in total revenues, Ford ranks first followed by General Motors
In the case of operating income, it is General Motors that ranks first with a value more than five times that of Ford and ten times that of Tesla.
Operating income for almost all companies is very low, with General Motors ranking first with a value of 0.04.
In terms of return on assets, General Motors ranks third with 3% and Ford fifth with a return tending to zero.
Finally, it is observed that 5 of the 7 automotive industries had a high return on assets so Ford has a lot of potential for improvement.