4.8.2010 Lappeenranta University of Technology Faculty of Technology Management Department of Industrial Management an Overview
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4.8.2010 LAPPEENRANTA UNIVERSITY OF TECHNOLOGY FACULTY OF TECHNOLOGY MANAGEMENT DEPARTMENT OF INDUSTRIAL MANAGEMENT AN OVERVIEW OF BRITISH AUTOMOTIVE INDUSTRY: IMPLICATIONS FROM HISTORY AND RECOMMENDATIONS FOR FUTURE Master’s Thesis Marko Tiitinen ABSTRACT Writer: Marko Tiitinen Name of the thesis: An Overview of British Automotive Industry: Implications from History and Recommendations for Future Department: Industrial Management Year: 2010 Location: Leeds, England Master’s Thesis. Lappeenranta Technology University. 86 pages, 27 figures and 6 tables. Auditor: Professor Tuomo Kässi Keywords: Innovation, performance, british automotive industry, change, management, productivity, decision making, bmw, tata, rover, jaguar, land rover, mini, rolls-royce This thesis is a literary research, which aims to uncover reasons for the downfall of automotive industry in the United Kingdom in the late 20th century. First, there is a short review on the history of the industry in the UK and then there are more present cases presented in the form of BMW-Rover and Tata-Jaguar Land Rover. Finally, the thesis suggests some ideas to which the UK should work towards in order to ensure future competitiveness. The automotive industry in the United Kingdom is one of the oldest in the world, but as the end of last millennium was approaching it was not doing too well. Industry that was still flourishing in the mid-century was soon heading down river and by the end of the century all large English car manufacturers had either closed down or were forced under foreign ownership. The thesis suggests possible targets for future prospects from the literary review and from the conclusions made. These are to ensure the continuity of the industry and the competitiveness on an international level. The suggestions are for long term and are mainly focused around research and development of renewable energy forms. TIIVISTELMÄ Tekijä: Marko Tiitinen Työn nimi: Yleiskatsaus Britannian autoteollisuuteen: historian vaikutukset ja suositukset tulevaisuuteen. Osasto: Tuotantotalous Vuosi: 2010 Paikka: Leeds, Englanti Diplomityö. Lappeenrannan Teknillinen Yliopisto. 86 sivua, 27 kuvaa ja 6 taulukkoa. Tarkastaja: Professori Tuomo Kässi Hakusanat: Innovaatio, suorituskyky, autoteollisuus, muutos, johtaminen, tuottavuus, päätöksenteko bmw, tata, rover, jaguar, land rover, mini, rolls-royce Tämä diplomityö on kirjallisuustutkimus, jonka tavoitteena on löytää syitä Englannin autoteollisuuden heikkoon tilanteeseen 1900-luvun loppupuolella. Aluksi on esitelty Englannin autoteollisuuden historiaa ja sitten tutkittu kahta tuoreempaa tapausta BMW-Rover:n ja Tata-Jaguar Land Roverin kauppojen muodossa. Tämän lisäksi on pohdittu toimia joihin Englannin tulisi pyrkiä jatkossa varmistaakseen menestys tulevaisuudessa. Englannin autoteollisuus on yksi vanhimmista lajissaan maailmassa, mutta viime vuosituhannen loppupuolella sillä ei mennyt kovinkaan hyvin. Teollisuuden ala, joka kukoisti vielä 1950-luvun alkupuolella, kääntyi nopeasti laskusuuntaan ja vuosisadan vaihteessa kaikki Englantilaiset suuret autonvalmistajat olivat joko sulkeneet ovensa tai siirtyneet ulkomaiseen omistukseen. Kirjallisuustutkimuksen ja johtopäätöksien pohjalta työssä esitetään ideoita tulevaisuudelle, jotka mahdollistavat kyseisen toimialan jatkuvuuden ja kilpailukyvyn kansainvälisellä tasolla. Ehdotukset ovat pitkälle aikavälille, ja keskittyvät pääasiassa uusiutuvien energiamuotojen tutkimisen ja kehittämisen ympärille. TABLE OF CONTENTS 1 INTRODUCTION .............................................................................................. 1 1.1 Background ............................................................................................. 1 1.2 Research questions and targets ............................................................... 2 1.3 Limitations .............................................................................................. 3 1.4 Structure of the thesis ............................................................................. 3 2 INNOVATION ................................................................................................... 4 2.1 Definition of Innovation ......................................................................... 4 2.1.1 Categories of Innovation ............................................................. 5 2.1.2 Open and Closed Innovation ....................................................... 6 2.2 The innovation process ........................................................................... 9 2.3 Innovation management ........................................................................ 11 2.4 Innovation management systems .......................................................... 13 2.5 Objectives for Innovation Systems ....................................................... 13 2.6 The dilemma of innovation management ............................................. 15 3 PRODUCTIVITY ............................................................................................. 17 3.1 Reasons for productivity improvement ................................................ 17 3.2 Some challenges to productivity ........................................................... 20 3.2.1 Lack of leadership ..................................................................... 20 3.2.2 Personal barriers ........................................................................ 21 4 DECISION MAKING ...................................................................................... 22 4.1 Decision making styles ......................................................................... 24 4.2 Limitations to making decisions in groups ........................................... 26 5 ORGANIZATIONAL CHANGE ..................................................................... 29 5.1 Process of change ................................................................................. 30 5.2 Types of change .................................................................................... 33 5.2.1 Non-paradigmatic change: adaptation and reconstruction ........ 33 5.2.2 Paradigmatic change: evolution and revolution ........................ 34 5.3 Paths of change ..................................................................................... 34 5.4 The driving force of change within an organization ............................. 36 5.5 Predicting change .................................................................................. 37 6 ORGANIZATIONAL PERFORMANCE ........................................................ 40 6.1 Definition of performance .................................................................... 40 6.2 Performance categories ......................................................................... 40 6.3 Analyzing performance ........................................................................ 45 6.3.1 Analyzing internal performance ................................................ 46 6.3.2 Analyzing external performance ............................................... 46 6.3.3 Selecting metrics for performance measurement ...................... 47 6.4 Reasons for possible failures ................................................................ 49 7 BRITISH AUTOMOTIVE INDUSTRY .......................................................... 51 7.1 History of the industry .......................................................................... 51 7.1.1 1900-1950 ................................................................................. 51 7.1.2 1951-1980 ................................................................................. 52 7.2 Present state of the industry .................................................................. 53 7.2.1 Development in production ....................................................... 54 7.2.2 Strengths of the automotive industry in the UK ....................... 57 7.2.3 Opportunities for BAI as recognized by NAIGT ...................... 59 8 CASE 1: BMW ................................................................................................. 62 8.1 The acquisition of Rover and Rolls-Royce ........................................... 62 8.1.1 BMW buys Rover ..................................................................... 63 8.1.2 BMW buys Rolls-Royce ........................................................... 66 8.2 The Implications ................................................................................... 67 9 CASE 2: TATA MOTORS LIMITED ............................................................. 69 9.1 The acquisition of Jaguar and Land Rover ........................................... 69 9.2 The implications ................................................................................... 70 10 CONCLUSIONS .............................................................................................. 72 10.1 Theory combined together .................................................................... 72 10.2 The automotive industry in the UK ...................................................... 74 10.3 Future prospects .................................................................................... 78 11 SUMMARY ..................................................................................................... 84 REFERENCES APPENDICES LIST OF ACCRONYMS BAI - British Automotive Industry BAe - British Aerospace BLMC - British Leyland Motor Corporation BMC - British Motor Corporation BMH - British Motor Holdings BMW AG - Bayerische Motoren