Summary of the Subject

Australia is among merely a couple of countries using the abilities to create cars on your own and manufacture in significant volumes. Vehicle sales around australia will also be a key point from the Australian Automotive Industry and also the Australian Economy as a whole.

The Australian Auto Industry (A.A.I. in a nutshell) could be split into two interrelated sectors, the development ( Manufacturing) sector and also the Vehicle Sales (or Import-Sales) sector, either essential for the entire performance from the A.A.I. On a single hands, the Manufacturing sector refers back to the market conditions to which Australian Manufacturing companies compete, by producing vehicles and related products, using the primary purpose of maximizing profits. However, the Sales sector refers back to the market conditions to which vehicle representative purchase companies compete, through the purchase of cars and related products, getting exactly the same aim with companies within sector one.

It is crucial to condition the excellence between both of these sectors inside the A.A.I., as we are speaking about two different market structures, business strategies, competition conditions, e.t.c. To be able to analyse these market structures it might be appropriate to build up two economic models, one for every A.A.I. sector.

1.1-Analyzing the Manufacturing Sector

There’s just one market structure that may best describe the marketplace conditions within the Manufacturing sector if your.A.I., this really is Oligopoly. Because there are 3 organizations that leave cars around australia, which are Ford and Holden, your competition methods and prices strategies are based between both of these organizations. The next economic model shall help define your competition and economic conditions for that Australian Automotive Manufacturing market.

The very first important sign of Oligopoly that should be mentioned is the fact that prices between competitors are usually “sticky”, meaning they alter less often than every other market structure. This statement is going to be described in greater detail afterwards, when we are developing the sport-Theory model, because it is an essential idea of competition. The 2nd most significant characteristic is the fact that when prices do change, firms will probably change their prices policies together. Both of these characteristics can increase competition inside the market. Firms will either attempt to match rivals’ cost changes or ignore them. This really is relied on the sport-Theory that’s described bellow.