![Page 1: The crisis spiral Dr Peter Wells Centre for Automotive Industry Research](https://reader036.vdocuments.net/reader036/viewer/2022071807/56649eca5503460f94bd8dca/html5/thumbnails/1.jpg)
The crisis spiral
Dr Peter Wells
Centre for Automotive Industry Research
![Page 2: The crisis spiral Dr Peter Wells Centre for Automotive Industry Research](https://reader036.vdocuments.net/reader036/viewer/2022071807/56649eca5503460f94bd8dca/html5/thumbnails/2.jpg)
ContentsThe crisis spiral concept
Interconnectedness Time
Automotive examples MG Rover & Mitsubishi
Wider considerations
![Page 3: The crisis spiral Dr Peter Wells Centre for Automotive Industry Research](https://reader036.vdocuments.net/reader036/viewer/2022071807/56649eca5503460f94bd8dca/html5/thumbnails/3.jpg)
Sources of crisis Economic / business
Internal e.g. Failed new model, labour unrest, major supplier fails
External e.g. general demand slump, material supply crisis
Environmental / social Not including ‘disaster recovery’ External source (usually) Unpredictable…major role for corporate
communications
![Page 4: The crisis spiral Dr Peter Wells Centre for Automotive Industry Research](https://reader036.vdocuments.net/reader036/viewer/2022071807/56649eca5503460f94bd8dca/html5/thumbnails/4.jpg)
The Crisis Spiral
Demand Falls
Revenue Falls /
Costs Rise
Output / Sales Fall
Brand Status Falls
![Page 5: The crisis spiral Dr Peter Wells Centre for Automotive Industry Research](https://reader036.vdocuments.net/reader036/viewer/2022071807/56649eca5503460f94bd8dca/html5/thumbnails/5.jpg)
The Crisis Spiral
FINANCE
SUPPLIERSDEALERS
STAFF
![Page 6: The crisis spiral Dr Peter Wells Centre for Automotive Industry Research](https://reader036.vdocuments.net/reader036/viewer/2022071807/56649eca5503460f94bd8dca/html5/thumbnails/6.jpg)
Revenues Fall / Costs Rise
Shares Sold
Secondary Sales
Value Falls
£ Shortage
Assets Sold
Debt Rating Falls
Interest Rates Up
Plant Investment
Falls
R&D Investment
Falls
Vulnerable
FINANCE LOOP
![Page 7: The crisis spiral Dr Peter Wells Centre for Automotive Industry Research](https://reader036.vdocuments.net/reader036/viewer/2022071807/56649eca5503460f94bd8dca/html5/thumbnails/7.jpg)
Revenues Fall / Costs
Rise
SUPPLIER LOOP
Supplier Volumes
Fall
No Supplier Parks
No Component
R&D
Advance Payment
Time To Market
Increases
Product Uncompetitive
Quality Falls
Need Alliances
Less To Contribute
Weak Partners
Benefits of Alliances Reduced
![Page 8: The crisis spiral Dr Peter Wells Centre for Automotive Industry Research](https://reader036.vdocuments.net/reader036/viewer/2022071807/56649eca5503460f94bd8dca/html5/thumbnails/8.jpg)
DEALER LOOP
Revenues Fall / Costs
Rise
Sales / Dealer
Fall
Confidence Falls
Multi Franchises
Dealers Leave
Adopt Other
Brands
Territory Lost
Dealer Investment
Falls
Property Declines
Training Declines
Customer Service
Falls
![Page 9: The crisis spiral Dr Peter Wells Centre for Automotive Industry Research](https://reader036.vdocuments.net/reader036/viewer/2022071807/56649eca5503460f94bd8dca/html5/thumbnails/9.jpg)
PERSONNEL LOOP
Revenues Fall / Costs
Rise
People Laid Off
Plants Closed Down
Pay Limited
Morale Falls
Absenteeism Rises
Productivity Falls
Best People Leave
Recruitment Difficult
Competencies Decline
Contract Staff Hired
![Page 10: The crisis spiral Dr Peter Wells Centre for Automotive Industry Research](https://reader036.vdocuments.net/reader036/viewer/2022071807/56649eca5503460f94bd8dca/html5/thumbnails/10.jpg)
Some Brief ExamplesMG Rover
The forty year crisis From the impossible to the inevitable Losing control over destiny
Car design integration ability lost Key decision moments e.g. move to BMW Key intervention moments?
![Page 11: The crisis spiral Dr Peter Wells Centre for Automotive Industry Research](https://reader036.vdocuments.net/reader036/viewer/2022071807/56649eca5503460f94bd8dca/html5/thumbnails/11.jpg)
Some Brief Examples Mitsubishi
Initial problem with detaching wheel Main problem came with cover ups and denials Been through successive rescue plans Now trying CSR-lead revival Major reengineering of corporate culture Additional problems in the US Still spiralling downward
![Page 12: The crisis spiral Dr Peter Wells Centre for Automotive Industry Research](https://reader036.vdocuments.net/reader036/viewer/2022071807/56649eca5503460f94bd8dca/html5/thumbnails/12.jpg)
Crisis and TimeDifferent elements of entire value
system respond at different rates: Finance…immediate Link between reputation risk and finance
risk Run on the bank problem…drawing the line
in the sand Other elements work through more slowly Government (non) intervention critical
![Page 13: The crisis spiral Dr Peter Wells Centre for Automotive Industry Research](https://reader036.vdocuments.net/reader036/viewer/2022071807/56649eca5503460f94bd8dca/html5/thumbnails/13.jpg)
Crisis and declineCan the spiral be reversed or even pre-
empted?Does the crisis accelerate the rate of
decline?Are corporations more vulnerable now
than they used to be?
![Page 14: The crisis spiral Dr Peter Wells Centre for Automotive Industry Research](https://reader036.vdocuments.net/reader036/viewer/2022071807/56649eca5503460f94bd8dca/html5/thumbnails/14.jpg)
Conclusions
More research needed!