NETWORK STRUCTURES IN THE AUTOMOTIVE INDUSTRY

The article examines network structures of two leaders of the global automotive industry: Volkswagen AG (Germany) and Ford Motors Company (USA). The author compares such features of the networks as principles of including the participants, stages of value creation, methods of coordinating the activities of network participants, fundamentals of the power of the focal participant, methods of extracting value and sustainability of the network. For each of the networks the author determines its type and lists the participants of the first tier. The general features of value networks in the automotive industry are revealed. These include: a significant size (number of participants at all levels), the use of standardization as a leading method of coordinating activities, a significant market share of the integrator and partners’ investment in specific assets as the basis of the integrator’s power, use of network members for entering new markets, localization of production in countries with relatively cheap labor, high requirements for suppliers and subcontractors, performing research and development within a focal company while outsourcing a significant part of logistics, marketing and distribution functions. Significant differences in the principles of network formation have also been identified. These include: the number of first-tier participants (differs by 2 orders), stability of participation (high for Ford Motors and relatively low for Volkswagen AG), reliance on government assistance (not possible for Ford and high for Volkswagen AG), a significant market share with low profitability (Volkswagen AG) or a lower market share with high profitability (Ford Motors Company).

value networks, automotive industry, sustainability of the network, standardization, specific assets, market network, partner network, hierarchical network, clan network, outsourcing, cost minimization.

Ustyuzhanin V. L. Network structures in the automotive industry. Business. Education. Law, 2020, no. 4, pp. 191–197. DOI: 10.25683/VOLBI.2020.53.445.