cost optimization in auto.industry

Topics: Costs, Supply chain management, Cost Pages: 85 (16085 words) Published: April 21, 2014
Cost Reduction in the Automobile Industry—Case Studies

of the Chinese

Market

University of Halmstad
School of Business and Engineering
Master ’s Programme
Master’

Cost Reduction in the Automobile Industry
—— Case Studies of the Chinese market
Studies

October 25, 2012
Authors: Xu Zhiran ------ 890212-T253
Zhou Mengxiao------ 890315-T432
Supervisor: Nataliya Galan
Examiner: Jonas.Gabrielsson
i

Cost Reduction in the Automobile Industry—Case Studies

of the Chinese

Market

Acknowledgements
This dissertation was written during the spring of 2012 at the Strategic Management and Leadership Program of Halmstad University.
We would like to express our gratitude towards our supervisor Nataliya Galan, for her essential guidelines and patient help. A special thanks also to the respondents of the companies who have helped us and offered us information that is necessary for completing this dissertation.

Halmstad, 2012
Zhou Mengxiao and Xu Zhiran

ii

Cost Reduction in the Automobile Industry—Case Studies

of the Chinese

Market

Abstract
Due to the global financial crisis, the European and US automobile market was confronted with a depression. At the same time, the Chinese automobile market maintained a good momentum of development, which attracted more attention and investment of overseas automobile enterprises. However, the competitive pressure has increased gradually with the growing number of overseas automobile companies in the Chinese market. There is a lot of research about how to increase the competitiveness of the automobile industry in China. This dissertation will focus on the reduction costs of automobile enterprises in the Chinese automobile market. Based on prior research we developed a tentative cost reduction model for automobile companies in the literature review, which includes entry strategies, manufacturing sectors and logistics. The tentative model provides a coherent framework and offers some theoretical ideas to reduce costs to scholars and practitioners. A case study was conducted to further develop and refine the tentative model. The data was collected from case studies at Shanghai Volkswagen and GAC Toyota. The primary data was collected through two video-interviews with the top managers of Shanghai Volkswagen and GAC Toyota, and secondary data was collected from the enterprise's annual report and official website.

Based on our analysis, we provide some general conclusions for cost reduction in the Chinese automobile market. Our results indicate that transfer factories with cheap labor can help companies reduce labor costs. Moreover, our findings suggest that standardization of materials can help companies to directly reduce material costs. The most interesting findings from our study, however, are that joint ventures and agents cannot help companies reduce entry costs. Additionally, the logistics management and supply chain management play vital roles in cost reduction in automobile companies via professional outsourcing of logistics and effective information systems. Key words: Reduction costs, Automobile companies, Chinese automobile market.

iii

Cost Reduction in the Automobile Industry—Case Studies

of the Chinese

Market

Table of Contents
Acknowledgements..................................................................................................... ii Abstract........................................................................................................................ iii Table of Contents........................................................................................................ iv List of figures............................................................................................................. viii List of tables................................................................................................................. ix List of...

References: Articles:
Bruce A, M, (1992), Aspects of Cost Control, Cost Engineering, 34(6), 19-23
Bob, M (1998). Demonstrated Labor Efficiency: An Effective Labor Cost Control and
Analytical Tool
Beheshti, H. (2004) “Gaining and sustaining competitive advantage with activity
based cost management system”, Industrial Management + Data Systems, 104:
Bisset, R. (1960), Installing a standard material cost program, National association
accountants, Dec 1960, 42, 2, pp79-83
Ciccarelli, John J, (2003), Cost Control System: Benefits Provided to Claims Analysis,
AACE international transactions, pp CD, 121-129.
Compton, J & Brinker, Thomas M, Jr, (2005), How do we Define "Cost", Journal of
Financial Service Professional, 59(5), 16-17
Cavinato, J. L. (1992), A Total Cost/Value Model for Supply Chain Competitiveness,
Journal of Business Logistics, Vol
Carter, J.R & Ferrin, B.G. (1995). The Impact of Transportation Costs on Supply
Chain Management
Chun, S C (2010). Study on inventory and transportation integration of auto parts
based on supply chain
Davis, G (2008). Insurance insider secrets: How to save money. Contractor55. 1 Jan:
18, 58.
GENG, J. C., & Guo, A. Y. (2004). Modern Logistics: The Third Source of Enterprise.
Kiesling, T (2010). Reduce your Material Handling Costs. Multichannel Merchant ,
26, 12
Kraus. S, Craig. J.B, Dibrell.C and Mark. S (2012). Family Firms and
Entrepreneurship Contradiction or Synonym
Entrepreneurship
Lawrence, W, R (2009) "Competition: Encouraging excellence in the marketplace",
Lalonde, B. J., & Pohlen, T, L. (1996). Issues in Supply Chain Costing. The
international Journal of Logistics Management, 17(1):1-12
Lee, H, L., & Billington, C (1992). Managing Supply Chain Inventory: Pitfalls and
opportunities
Lisa, M. E. & Martha C. C. (1993). Characteristics of Supply Chain Management and
the Implications for Purchasing and Logistics Strategy
of Logistics Management, 4(2):13~2
Li, B,X and Xu, L (2005)
Contemporary Finance & Economics, 2005,(2):126-129
63
Engineering, 2001, 16(4): 254-260
Ma, X
Technology and Enterprise Update. (2010) vol.6: 66-69
Manunen, O
Manufacturers and Wholesalers. International Journal of Logistics: Research
and Application, 2000, 3(1): 53-65.
May, B, R (1994), "How to cut your company 's costs" Supervision, Oct 1994; 55, 10,
ABI/INFORM Global, pp
Maida, N. (2002), How to hold the line on labor costs, Logistics Management, 45.8,
pp
Martin, B, A (1992) "Aspects of Cost Control", Cost Engineering , Jun 1992; 34, 6,
p19-23
Maximov, J & Gottschlich, H (1993). “Time-cost-quality leadership: New ways to
gain a sustainable competitive advantage in retailing”, International Journal of
Retail & Distribution Management, 21. 4 (1993): 3.
Mintcloud, B (1995). Money-making ideas for the profit-minded supervisor.
McCormick, T, (2010), Strategic Cost Reduction Steps to Success, Accountancy
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Cost Optimization for Workforce Scheduling Iet4405 Essay
  • Costs Essay
  • Cost Essay
  • Cost Optimization for Line Haul Transportation of 3pl Players Essay
  • Essay on Cost
  • Cost Research Paper
  • Optimization Essay
  • Essay about cost reduction and cost avoidance

Become a StudyMode Member

Sign Up - It's Free