Strategic Challenges of the Portuguese Automotive Industry: In Search of an Iberian Sourcing Strategy

Strategic Challenges of the Portuguese Automotive Industry: In Search of an Iberian Sourcing Strategy

António Moreira (DEGEI, GOVCOPP, University of Aveiro, Portugal) and Ana Carolina Soares de Carvalho (University of Aveiro, Portugal)
DOI: 10.4018/978-1-4666-8348-8.ch014
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Abstract

The main objective of this chapter is to define a set of strategic lines, from the public policy point of view, so that Portuguese suppliers of the auto industry can deploy a strategic alignment throughout the supply chain in order to position themselves as potential suppliers of the global sourcing strategy of their Iberian Peninsula clients. The characterization of the auto industry in Portugal and Spain is undertaken, framing the perspective of this industry and proposing the strategic guidelines for the Portuguese auto components industry to supply the Iberian market. The study supports a synergistic strategy between the Portuguese auto components industry and the Spanish automotive industry in order to increase the Portuguese incorporation in downstream activities of the supply chain. Portuguese auto components suppliers should adopt international relational strategies throughout the value chain in order to source their Original Equipment Manufacturer (OEM) clients and to reinforce their position as global suppliers. The strategy involves the consolidation of the Portuguese automotive cluster as global suppliers through specialization.
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Global Sourcing

Worldwide competitiveness has significantly increased since the 1990s. Nowadays companies seek new sources of sustainable competitive advantage in an increasingly globalized market. One of the areas where companies search for globalization benefits is global sourcing (Trent & Monczka, 2003).

According to Zenz (1994), sourcing is a strategic philosophy that consists in selecting suppliers, making them a part of the purchasing company strategy for the supply of a particular component. Therefore, sourcing does not refer simply to the act of obtaining materials at a desirable price; it also includes the decision to incorporate sourcing in the operations strategy in order to support or even improve the competitive advantage of such company (Zeng, 2000).

Key Terms in this Chapter

Automotive Industry: The set of companies and activities involved in the production of motor vehicles, which includes their components such as bodies and engines. The industry’s main product is the passenger vehicle, although light trucks, pickups, vans and sport utility vehicles are common. Commercial vehicles are secondary products, but are no less important.

Supply Chain Management (SCM): Although in general terms it involves the management of goods, normally it includes the movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin/manufacturing to end customers. It is very important as it involves the provision of products and services. It might involve a complex competitive infrastructure, complex logistics and the synchronization of the demand and supply. It involves the integration of different organizational areas as operations, logistics, procurement and strategy.

Global Sourcing: Global sourcing occurs when a firm aims to exploit global efficiencies in the delivery of a product or service from the global market for goods and services across worldwide geopolitical boundaries. Normally, it involves exploiting global efficiencies in the delivery of a product or service and is often associated with a centralized procurement strategy for a multinational firm.

Original Equipment Manufacturer (OEM): It is a company that supplies equipment to other companies to resell or incorporate into another product using the reseller’s brand name.

Strategy: A method or plan used to bring about a desired future as a consequence of achieving one goal or solution to an envisaged problem. In this chapter the strategy involved the proposition of four axes: Axis 1 – the development of structural conditions; Axis 2 – alignment of public policies and business strategies; Axis 3 – innovation and diffusion of new technologies; and Axis 4 – Market development.

Innovation: The process of translating an idea or invention into a good or service that creates added value for the customers, who are normally willing to pay for the added value. This innovation must satisfy a new need.

Diffusion of Innovation: A theory that seeks to explain how, why, and at what rate new ideas and/or new technologies spread in the market.

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