Running Head: BUSINESS AND MANAGEMENT 1

Auto Edge

Student Name

Institutional Affiliation
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Background Information

Auto Edge is an American company that specializes in the manufacturing of engine and

transmission parts. It has been a core supplier of these products to the three largest automakers in

the United States. It is prominent for quality, dependability and reliability. The firm moved its

manufacturing to South Korea in 2005 due to high costs of labor, fierce competition and

unfavorable legal regulations from the American government (Auto Edge, 2020). However, their

success in the country was short-lived when they received recalled products that failed the

quality control test. This devastating news profoundly impacted the market shares of the

company as well as its reputation. In response to this, the board of directors in charge of the firm

opted to relocate manufacturing back to the United States. The company stands a good chance in

success there because of various strengths that it has possessed for years unending.

Strength

The first most outstanding quality of Auto Edge is its ability to supply products that are

of high quality. This feature has attracted loyalty from customers for generations. Its reputation

of dependability and reliability has been a great strength that has made the firm stand out in the

face of competition. Customer loyalty is another competitive edge that has put the company at an

advantage. Its relocation to the United States will all the more serve to retain and attract higher

market force in the proceeding years. Auto Edge operates under a top-talent staff that provides

guidance based on a thorough review of the market. The workforce in the firm has received

training in excellent customer service that adds icing to the cake. Furthermore, the firm operates

under excellent supervision and management of its portfolio.

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Opportunities

Moving operations to the United States is a significant step for Auto Edge considering the

high level of unemployment, low inflation and low-interest rates in the country. These

opportunities provide a good chance for attaining lower cost of labor, and low cost of

investment. Investment and interest rates are inversely related; hence low-interest rates imply

higher investment. This opportunity is a good chance for Auto Edge to expand and serve its

customers with the most sophisticated technology and skill set (Cadle, Eva, & Hindle,

2014). Additionally, low inflation is a confidence boost for future returns of investment.

Weaknesses

Auto Edge, just like any other firm, has inevitable hiccups that have led to severe damage

to its reputation. The disunity of the leadership in the firm led to the loss of its market share

earlier. The decision of the board to outsource its manufacturing to South Korea, and fail to

monitor its operation, led to an appalling hit on the company. Economist argues that this issue

surfaced due to the termination of Auto Edge’s Chief Executive Officer, Fred McFadden. Poor

quality from the production of automobile parts together with the recall of its products

significantly affected Auto Edge’s reputation.

Threats

The threats that the company faces in relocation include fierce competition from giant

companies that may not take kindly new entrant into the market. Competition is the very thing

that motivated the company to move its operations somewhere else. However, it will have to

come up with a strategy to deal effectively with this threat (Jacob, 2012). Secondly, the

American market is highly regulated, which may make operation too strenuous. The firm needs
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to abide by the laws of the land but at the same time work towards attaining larger volumes of

sales and profit. Furthermore, the high cost of labor in the country often leads to an increased

cost of production, which is not suitable for business.

References

Auto Edge (2020). Auto Edge.

Cadle, J., Eva, M., & Hindle, K. (2014). Business Analysis. Swindon: BCS Learning &

Development Limited.

Jacob, V. (2012). Strategy (1st ed.). Bloomington: AuthorHouseTM.