Analyzing System

Running head: ANALYZING SYSTEMS THEORY

B7777 – Module 2 – Assignment 1

Presented to

Dr. Strom

The Requirements for the Degree of

Doctor of Business Administration

July 7, 2008

By

LaTasha Huff

There is a rise in delinquencies in America's auto industry there is a lot of trouble in the economy. How hard are the auto makers being hit and what should the Big Three do to stem the damage? Meanwhile, the global auto industry has seen some interesting developments, including the introduction in India of Tata Motors' Nano and the arrival of five Chinese auto manufacturers at the Detroit auto show earlier this month. Will China and India be big players in the global market for cars? And what is the current state of Europe's auto industry?

The U.S. auto industry is predicting a weak year. The U.S. companies have been trying to regain market share after years of losses to the Japanese and the Koreans, and this won't help them. I think the short term looks pretty bad.

The fact that the Fed has lowered interest rates may perhaps help some potential consumers buy automobiles. This is because the rates will go down on automobile loans and it will help some of them avert not bankruptcy but at least from defaulting on their auto loans. I think it's a mixed picture. We need more information, but it doesn't look good. It certainly looks no better than last year, that's for sure.

What can the leaders do to get down to the problem of fixing the automobile industry, they are considering increasing incentives to attract more buyers, even though that caused a lot of problems the last time they did that because consumers got so addicted to them. They would like to break this addiction to big discounts because it has hurt them in lots of ways. They've trained customers to wait for big discounts. They've driven down the residual values of leased vehicles, the used car prices, etc. That has been the problem, along with trying to stop the habit of boosting their sales numbers by pushing vehicles out to rental car companies and the like, which again are not really a true test of what consumers want.

But it's always tough when you have a certain amount of factory capacity that you need to keep occupied. You don't want those finished goods sitting around.

In the last couple of years, a new CEO at Ford and the sale of Chrysler to Cerberus and Nardelli coming in. Then there were these historic new labor agreements this year. There