Business Analysis and Decision Making essay

Productivity refers to the ratio of what is actually produced to that of what is the desired or the required output by a given organization or individual. Most of the car manufacturing industries are struggling to answer the question whether the rapid growth of the car market is of advantage to their productivity or it has a negative impact on their companies’ productivity. It can be argued that the rapid growth of the car market means higher demand for the products which in turn provide a ready market for the automobile products. No company will be willing to produce goods that have no market and yet expect to survive economically. It is very crucial that the goods you produce have a consumer for your business to enhance its productivity. The increased car market growth guarantees that the car manufacturing industries have a sound and ready market for their products which enhances their morale to engage in production and ultimately increase their productivity. However, a growing car market is not necessarily a precondition for productivity improvement.

To most people, it appears obviously that a growing car market is a necessary prerequisite for increased productivity in the car industry. They tend to think that, an increase in the car market will definitely translate into increased productivity for the automobile industries. This is not entirely true because there are adverse consequences for the rapid growth of the industry. Increased and rapid growth of the industry has led to a stiff competition by various car manufacturing companies as they compete for the raw materials for their production process. This has had a negative effect on the industry since the prices of raw materials have escalated. As a result the variable costs for the companies have tremendously increased. This has had a negative implication on their profitability and productivity at large. The profitability has been declining in some of the companies due to increase of the operation costs involved in the production process. As a result some companies that did not have a sound financial system had no option but to drop out of the race or to bear massive losses leading to a decline in their productivity.  It is, therefore, true that, there are various factors that may have a great influence on productivity of a car manufacturing company. Some of the key factors that have a serious impact on the productivity of the car industry are: improved labor productivity, improved technology and innovation, cost minimization and improved efficiency in operations, diversification, differentiation of products.

Improved Labor Productivity

One of the major key factors that have been very instrumental in increasing productivity in the car industry is improved output per individual. In the recent past the automobile industry has experienced a major boost in terms of the improved productivity of its workers. The human resource is the single most important part of the manufacturing process an organization can utilize optimally for it to achieve its best possible productivity in its environment. Proper human capital management is of crucial importance and all other factors of production in the organization will largely depend on the efficiency of the human capital.

It is therefore imperative for any company to ensure that it has the right people placed in their specialized fields.  Owing to this factor, most companies have embarked on thorough training of their employees which has in turn resulted in major improvements in their output. In addition, they have provided a conducive working environment and improved living standards for the employees, which have boosted the morale of the employees in the industry resulting in massive productivity. In the recent past most of car manufacturing industries have been having underutilized labor force that hindered their productivity. This has greatly changed in the recent past where the companies use fewer employees to produce large quantities of goods owing to the improved infrastructure and technology that have increased productivity per individual in the current economy. Proper human resource development has been a key success factor for the automobile industry which has improved the individual productivity and the productivity of the companies in general.

Improved Technology and Innovation

Productivity in the car manufacturing industries has been boosted by rapid technological advancement in the industry. Increased innovation and inventions in the automobile industry has changed the way the operations of any organization are conducted. One of the key challenges in the industry was a low productivity of the manual labor. When the industry relied almost entirely on the human labor productivity was generally poor. In the modern economy the manual way of production has proved futile and has been replaced by modern technology that has made productivity in the industry much higher. The development of manufacturing intelligence by such companies as Toyota has been a source of strength for the company due to the resulting enhanced productivity. 

The invention and use of the programmable machines or robots has greatly increased productivity in the industry. What used to be done by thousands of individuals is now done by a simple technology and at a much lower cost compared to the previous costs. This has promoted productivity and increased profitability in the car manufacturing industry. In addition, technology has greatly improved communication in the automobile industry. It is much easier to pass information across the organization and in the shortest time possible when needed to do so. Provision of real time data especially for quick decision making is enhanced, enabling the management to make accurate and précised decisions whenever they are faced with an urgent situation. This has enhanced coordination of employees and activities in the industry leading to increased productivity. Technological advancement has also enabled the industry to develop more durable and complex products which have been sensational in the world. Such products as electric powered cars have generated a lot of interest across the globe and opened new opportunities for the car manufacturing industries. 

Cost Minimization and Improved Efficiency in Operations

Another major factor that used to improve productivity is the minimization of cost in the production process and in general operations. Efficiency in production is very crucial for any company to optimize its output. Minimization of cost in the automobile industry has seen the productivity of the industry grow tremendously in the recent times. This has been achieved through proper inventory management and elimination of the non value added activities. Quality inspection of the production process has also been used to check out any loopholes in the process and arrest the situation in time before any further damages arise. Unnecessary processes have to be eliminated since they consume resources and add no value to the product being manufactured. For effective cost minimization, the management must play a crucial role of ensuring no wastage or unnecessary expenses are incurred. It ensures that, sound policies are instituted to enhance its control role and make sure it acts on time to correct where deviations are experienced.  Adoption of effective production techniques is also paramount in reducing the cost incurred in production process. Cost minimization has therefore been used as a method of operations cost and therefore increasing productivity of the car manufacturing industries across the globe.


Another method that is used by the car manufacturing companies to improve on their productivity is diversification of their operations and products. Most of the highly successful companies have diversified their products and areas of operations. They produce a wide range of products that capture various clienteles in the demographic spectrum. They also have their operations based in various parts of the world as a means of increasing their productivity. By coming up with a wide range of products they are assured of a wider market for their products since different potential customers have different needs that they must meet. Also to enhance productivity the automobile industries have casted their nets wide and beyond their domicile regions. This is done to ensure that the companies remain strong in the event that one of the key markets it depends on happens to fail or face economic challenges such as economic depression.

Differentiation of Company’s Products

Another method used to promote productivity of the car manufacturing companies is to differentiate their new products from the already existing products in the market. Consumers are usually fascinated by new products that have new and unique features in comparison to the ones that are already in the market. Owing to this reason, most of the automobile companies go a long way in ensuring that the products they launch into the market have new and friendlier features to the customer that will make the customer more willing to buy the new products instead of the existing ones. This method has been used by various companies to come up with unique products. This has ensured a ready market for the new products once they are introduced in the market.

In conclusion, growing car market is a very important factor that enhances productivity of the car manufacturing industries across the world, but it is not the only precondition. It is only one of the preconditions that have a great impact on the productivity of the car manufacturing industry.

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