This topic contains a solution. Click here to go to the answer

Author Question: How has the production of cars changed in the last 50 years? What will be an ideal ... (Read 41 times)

kodithompson

  • Hero Member
  • *****
  • Posts: 566
How has the production of cars changed in the last 50 years?
 
  What will be an ideal response?

Question 2

What factors would influence a firm to locate closer to its inputs rather than closer to its market?
 
  What will be an ideal response?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

diana chang

  • Sr. Member
  • ****
  • Posts: 288
Answer to Question 1

Answer: Carmakers put together vehicles at final assembly plants, using thousands of parts supplied by independent companies. Sixty percent of the world's final assembly plants are controlled by ten carmakers in a handful of countries:

- 2 U.S.-based: Ford and GM.

- 4 Europe-based: Germany's Volkswagen, Italy's Fiat (which controls Chrysler), and France's Renault (which controls Nissan) and Peugeot.

- 4 Asia-based: Japan's Toyota, Honda, and Suzuki, and South Korea's Hyundai.

These companies operate assembly and parts plants in many countries. Nationality matters in terms of location of corporate headquarters, top managers, research facilities, and shareholders. The world's three major industrial regions house 80 percent of the world's final assembly plants, including 40 percent in East Asia, 25 percent in Europe, and 15 percent in North America. Three-fourths of vehicles sold in North America are assembled in North America. Similarly, most vehicles sold in Europe are assembled in Europe, most vehicles sold in Japan are assembled in Japan, and most vehicles sold in China are assembled in China.

Carmakers' assembly plants account for only around 30 percent of the value of the vehicles that bear their names. As a result of outsourcing, independent parts makers supply the other 70 percent of the value. Many of these parts are also made near their marketsthe final assembly plantsespecially the steel parts, which comprise more than half of the weight of vehicles.

On the other hand, many parts do not need to be manufactured close to the customer. For them, changing site factors are more important. Some locate in countries that have relatively low labor costs, such as Mexico, China, and the Czech Republic.

Answer to Question 2

Answer: Every industry uses some inputs and sells to customers. The farther something is transported, the higher the cost, so manufacturers try to locate factories close to both suppliers and sellers.

If inputs are more expensive to transport than products, the optimal location for a factory is near the source of inputs. Conversely, if the cost of transporting the product to customers exceeds the cost of transporting inputs, then the optimal plant location is as close as possible to the customer.

Every manufacturer uses some inputs. These may be resources from the physical environment, like minerals, wood, or animals, or they may be parts or materials made by other companies. An industry in which the inputs weigh more than the final products is a bulk-reducing industry. To minimize transport costs, a bulk-reducing industry, like copper production, locates near the source of its inputs.




kodithompson

  • Member
  • Posts: 566
Reply 2 on: Jul 14, 2018
Excellent


aruss1303

  • Member
  • Posts: 314
Reply 3 on: Yesterday
Gracias!

 

Did you know?

About 80% of major fungal systemic infections are due to Candida albicans. Another form, Candida peritonitis, occurs most often in postoperative patients. A rare disease, Candida meningitis, may follow leukemia, kidney transplant, other immunosuppressed factors, or when suffering from Candida septicemia.

Did you know?

Bacteria have flourished on the earth for over three billion years. They were the first life forms on the planet.

Did you know?

When Gabriel Fahrenheit invented the first mercury thermometer, he called "zero degrees" the lowest temperature he was able to attain with a mixture of ice and salt. For the upper point of his scale, he used 96°, which he measured as normal human body temperature (we know it to be 98.6° today because of more accurate thermometers).

Did you know?

Eat fiber! A diet high in fiber can help lower cholesterol levels by as much as 10%.

Did you know?

People who have myopia, or nearsightedness, are not able to see objects at a distance but only up close. It occurs when the cornea is either curved too steeply, the eye is too long, or both. This condition is progressive and worsens with time. More than 100 million people in the United States are nearsighted, but only 20% of those are born with the condition. Diet, eye exercise, drug therapy, and corrective lenses can all help manage nearsightedness.

For a complete list of videos, visit our video library