Mazda Case Analysis Paper

Published: 2021-08-02
935 words
4 pages
8 min to read
University of Richmond
Type of paper: 
Case study
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Mazda Motor Corporation is an automobile production company based in Hiroshima, Japan, that started its production in 1931. Mazda is renown for the manufacture of high-quality cars sold in both local and international markets throughout the world. It was successful in the early production of automobiles, but the demand dwindled as the World War II started. It has since faced many ups and downs in the production, but with marketing strategies, Mazda has production facilities in Japan and few others outside Japan. In 2003, it produced over one million commercial vehicles and passenger cars, which makes it one of the most advanced automotive manufacturing companies with excellent products and services.

Despite this, Mazda has had problems in the fight for markets for its products. For instance, it has struggled independently, and as a result, it has lagged behind competitor firms that have implemented consolidation strategies to reduce the cost of production per unit, increase shares in foreign markets, and innovation. Mazda entered the United States market and was affected by the rising fuel costs in 1970. It experienced a massive financial turmoil as customers in this market swayed from Mazda because its vehicles had inefficient rotary engines. This struggle led to Ford bailing out Mazda by acquiring 7 percent of the company. Despite the partnership, both Mazda and Ford faced limited financial strength and hence could not expand their international markets. Mazda struggled financially as the Asian economy began shifting, which resulted in Ford increasing its stake to 33 percent majority share.

The global economic crisis of 2008 significantly altered the automotive industry and further worsened Mazdas success. This crisis led to Ford dissolving its internship with Mazda, which faced increased fuel prices and raw materials as well as the decline in automotive sales all over the world. The recession led to companies selling inefficient assets, and Ford divested from Mazda, which bought back its stake from Ford. Mazdas business activity declined as a result of the recession because of plummeting vehicle demand and the gradual strength of the Japanese yen. It assembled its products in Japan and exported them hence was sensitive to exchanges rates than its competitors. Mazda also ended its vehicle production in the United States and further added problems as profits dropped significantly because of poor sales and macroeconomic conditions. Furthermore, Mazda continued to lag behind in the integration of technology in the manufacture of cars, unlike the rivals which introduced cars and vehicles using the new energy vehicles (NEV).

Because of the Mazdas decline in profits, vehicle sales, and loss of foreign markets, it developed alternatives to address these problems. For instance, it changed its famous identity as the manufacturer of its high power to weight ratio rotary engine which had excess emissions and poor in fuel efficiency. Because of this, Mazda integrated SKYACTIV technology in its operations. For instance, in 2010, Mazda used SKYACTIV technology in its vehicles which were fuel efficient, high balanced precision handling, and excellent crash safety. Several companies integrated this technology, and Mazda was forced to adapt to the changes in the motor vehicle market. Another alternative that Mazda incorporated into its operations is the new energy vehicles (NEV), despite initially lagging behind on this technology. It also came up with a Structural Reform Plan in 2012 in a struggle to increase its competitiveness in the global automotive market as well as entering a long-term tactical partnership with Toyota.

Furthermore, after the 2008 economic slump, major global automotive companies merged and acquired smaller firms as they could no longer survive alone, but Mazda avoided this alternative and chose to remain at the sole controller of the decisions and operations. Mazda also spent a smaller amount of money on research and development as compared to its rivals and risked lagging further behind. An alternative taken by many vehicle manufacturing companies is the strategic automotive alliances which were an alternative to merger and acquisition. As firms shared knowledge and to develop competitive advantage, Mazda had a stony perception towards pacts because the management worried about terminations of partnerships, unintended changes, and that joint ventures could affect the companys financial position and business results.

SKYACTIV and Structural Reform Plan were the best alternatives incorporated by Mazda into its operations. When Mazda introduced SKYACTIV technology, vehicles that were launched after 2010 such as Mazda 6 and CX-5 gained purchase, with global sales and exports rising steadily which gave the company record profits as well as skyrocketing of Mazdas stock price. It remained competitive locally and recorded success in the international market. The Structural Reform Plan introduced by Mazda worked well as the financial position of the company rose. Mazda has gone ahead with a second Structural Reform Plan because the first plan coupled with the partnership with Toyota realized increased growth. The partnership with Toyota has enabled Mazda to be in front in the competitive automotive environment by collaborating in future products and sharing developments.

Even with the SKYACTIV technology success, Mazda has revised, changed, and implemented business strategies and goals to keep pace with other firms in the manufacture of vehicles. For instance, it has distanced itself from the firms which formed strategic alliances, concentrating on new energy research as well as increasing their focus on economies of scale. Mazda should use the lessons learned in its dissolved partnership with Ford to be more successful in implementing its collaboration with Toyota because such partnerships may not last forever. Because of its initial success, Mazda has implemented the Structural Reform Plan 2 which covers March 2017 to March 2019 period. The implementation should enhance the evolution of SKYACTIV products, drive reforms for sales strategy penetration, maximization of plant utilization, and raise dividend ratio.

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