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Automobile Industry 01

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  • 8/2/2019 Automobile Industry 01



    An industry is the manufacturing of a good orservice within a category. Although

    industry is a broad term for any kind of economic production, in economics andurban planning, industry is a synonym for the secondary sector, which is a type of

    economic activity involved in the manufacturing of raw materials into goods and


    Industry means any systematic activity carried on by co-operation between an

    employer and his workmen for the production, supply or distribution of goods or

    services with a view to satisfy human wants or wishes (not being wants or wishes

    which are merely spiritual or religious in nature), whether or not any capital has

    been invested for the purpose of carrying on such activity; or such activity is

    carried on with a motive to make any gain or profit.


    There are four key industrial economic sectors: the primary sector,

    the secondary sector, the tertiary sector, the quaternary sector, and the quinary

    sector. The economy is also broadly separated into public sector andprivate

    sector, with industry generally categorized as private. Industries are also any

    business or manufacturing.

    Primary sector: These industries are involved in the extraction or production of

    raw materials such as mining, farming, fishing, forestry, coal mining, oil drilling,

    gold mining etc.

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    Secondary sector: The secondary sector of the economy includes those economic

    sectors that create a finished, usable product. These industries are involved in the

    processing of raw materials such as refining, construction, and manufacturing. This

    sector generally takes the output of the primary sector and manufactures finished

    goods for export, or sale to domestic consumers.

    Tertiary sector: These are the service industries, e.g. Transport, dentists, doctors,

    and so on. The capital required for a manufacturing business (secondary sector) is

    usually prohibitively large.

    Quaternary sector: A relatively new type of knowledge industry focusing on

    technological research, design and development such as computer programming,

    and biochemistry. It focuses on the latest technology. Examples of Quaternary

    Industries are designing new computers/writing computer software, Researching

    new medicines and medical equipment.

    Quinary sector: The sector comprises of health, education, culture, research,

    police, fire service, and othergovernment industries not intended to make aprofit.

    The quinary sector also includes domestic activities such as those performed by

    stay-at-home parents or homemakers. These activities are not measured by

    monetary amounts but make a considerable contribution to the economy.


    The stages of evolution through which an industry progresses as it moves from

    conception to stabilization and stagnation represent an industry lifecycle. An

    industry has a beginning, with technological innovation; a period of rapid growth;

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    maturity and consolidation; and finally decline and possibly death. The stages of

    industry lifecycle include fragmentation, shake-out, maturity and decline.

    Developmental Stage: The first stage of the industry life cycle is developmental or

    formative stage. This is the stage when the new industry develops the business. At

    this stage, the new industry normally arises when an entrepreneur works out how

    to bring the new products or services into the

    market. The growth prospects are usually high.

    Competition is likely to enhance during the

    development of this stage as other entrepreneurs

    become acquainted with the market potential. High

    risks can be seen in this phase given that there is

    insecurity as to whether or not consumers will

    generally acknowledge the product, and which firms will continue to exist.

    Shake-out or growth stage: Shake-out is the second stage at which a new industry

    emerges. Consumer recognition extends the market as the leaders develop the

    product more. The risk in this stage reduces because of increased consumer

    acceptance and customer loyalty starts to come about. Competitors start to realize

    business opportunities in the emerging industry.

    Maturity: Maturity is the third stage in the industry lifecycle. This is by and large

    the most extended stage in the life cycle and can last for a good number of years.

    The competition in the industry is rather aggressive because there are manycompetitors and product substitutes. The growth rate slows down and becomes

    stable at a level that is sustainable over a long period of time, as a result of

    competition and shrinking profit margins. Some companies may shift some of the

    production overseas in order to gain competitive advantage.

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    Decline: Decline is the final stage of the industry lifecycle during which a war of

    slow destruction between businesses may develop and those with heavy

    bureaucracies may fail. In addition, the demand in the market may be fully

    satisfied or suppliers may be running out. Some companies may leave the industry

    if there is no demand for the products or services they provide, or they may

    develop new products or services that meet the demand in the market. In such

    cases, this will create a new industry.


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    The automobile industry inIndia is the ninth largest in the world with an annual

    production of over 2.3 million units in 2008. In 2009, India emerged as Asia's

    fourth largest exporter of automobiles, behind Japan, South Korea and Thailand.

    Following economic liberalization in India in 1991, the Indian automotive industry

    has demonstrated sustained growth as a result of increased competitiveness and

    relaxed restrictions. Several Indian automobile manufacturers such as Tata Motors,

    Maruti Suzuki and Mahindra and Mahindra, expanded their domestic and

    international operations.

    Since the first car rolled out on the streets of Mumbai (then Bombay) in 1898, the

    Automobile Industry of India has come a long way. During its early stages the auto

    industry was overlooked by the then Government and the policies were also not

    favorable. The liberalization policy and various tax relief by the Govt. of India in

    recent years has made remarkable impacts on Indian Automobile Industry. Indian

    auto industry, which is currently growing at the pace of around 18 % per annum,

    has become a hot destination for global auto players like Volvo, General Motors

    and Ford.

    A well developed transportation system plays a key role in the development of an

    economy, and India is no exception to it. With the growth of transportation system

    the Auto