Japan’s Automakers Face Endaka Case Study Help
What lessons, if any, can other firms take from the response of Japan’s automakers toEndaka
A number of lessons could be taken by the other firms from the response of the automobile manufacturers of Japan to Endaka. The appreciation of the domestic currency could affect the companies heavily depends on the exports to generate enormous amount of revenues over the period of time. However, the companies could take certain measures to protect the business such sort of changes in the market. The currency hedging is considered the optimal way of avoiding the exposure of risk. Furthermore, the companies could diversify the production facilities from home country to international market arena on account of the fact that the over dependence on one production facility could bring the company more supply and demand issues as compared to one with diversified manufacturing facilities. It is pertinent to note that the diversified production facilities help companies in effective management of the levels of price – one of the considerable factor of the supply and demand fluctuation in the different regions. Not only this, the companies could diversify the market segments as a means of hedging the supply and demand risk. Furthermore, the diversification of the market segments helps organizations to reduce its dependence over the specific segment for revenue generation.
Along with the operational ways to hedge the supply and demand risks, the companies could hedge the exchange rate risk by purchasing the future contracts. The implication of purchasing the future contracts for the purpose of hedging the risk of exchange rate includes risk hedging, high liquidity and easy pricing. Through purchasing the future contract, the companies would be able to maintain the substantial amount of production level in the local markets and could easily avoid the risk of loss that could incur from the exchange rate. Additionally, the companies could utilize the appreciation of local currency in reducing their operational cost by importing several inputs and supplies from the international markets and reduce their reliance on the domestic markets. Furthermore, the companies could reduce the prices of their productscompensate the increase in price due to the appreciation of local currency. Additionally, the companiescould utilize the appreciation of local currency in reducing their cost of operation by importing several inputs and supplies from the international markets and reduce their reliance on the domestic markets. In doing so, the companies would be able to better cope with the situation of appreciating home currency.
Conclusion
Since the World War II end, the economic strategy of the Japan for growth was entirely based on the exports that have allowed the country to develop the powerful industrial sector. During the 1980s when high yen hit, the automakers in Japan, in particular has been enjoying the largely unexpected as well as unprecedented period of the growth and the prosperity.The big four automakers had to expand their market by shifting from low end market to the high end market, while making the effective use of the marketing at the same time.
The effective stakeholders includes government of Japan whereas the stakeholders who were not effective includes US government, suppliers and the dealers of the companies. The big four companies stressed the significance of reducing the overall prices of the cars and compensate the increase in price due to the appreciation of Yen. Additionally, they intended to utilize the appreciation of Japanese currency in reducing their cost of operation by importing several inputs and supplies from the international markets and reduce their reliance on the Japanese markets........................................
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