Final answer:
The micro environment of a car manufacturing industry includes internal company elements, suppliers, intermediaries, customers, and competitors that can affect a firm's ability to serve customers. These elements are influenced by the macroeconomic conditions and market forces such as economies of scale, which can dictate firm survival and market structure. Both positive and negative impacts stem from these micro and macro influences on the operational dynamics of car manufacturers.
Step-by-step explanation:
The micro environment of a car manufacturing industry includes various forces such as company's internal factors, suppliers, marketing intermediaries, customers, competitors, and the public, which can all affect the firm's ability to serve its customers.
The micro environment can exert both positive and negative influence on a car manufacturing firm. Economies of scale, market structure, and health of the macroeconomy play a crucial role in these forces.
For example, the company's relationships with its suppliers of raw materials and parts, the effectiveness of its marketing channels, and competition among other car manufacturers can lead to advantages such as cost leadership or pose challenges like price wars and innovation races.
Furthermore, these factors are influenced by the broader economic conditions, and firms are more likely to expand and hire if the overall economy is growing. On the flip side, if the economy is struggling, even with efficient micro-level decision-making, a firm might face decreased demand, leading to lower production and potentially reducing workforce.
If the industry is subject to economies of scale and the demand does not suffice to minimize costs across competitors, some firms may be forced out of the market, leading to a more monopolistic market structure.
This can lead to less competitive prices for consumers but potentially higher profitability for the surviving firms.