University of Surrey

Test tubes in the lab Research in the ATI Dance Research

Profitability in the car industry: New measures for estimating targets and target directions

Van Der Heijden, H and Garn, W (2013) Profitability in the car industry: New measures for estimating targets and target directions European Journal of Operational Research, 225 (3). pp. 420-428.

Preprint-EJOR2013-Profitability in the car industry.pdf
Available under License : See the attached licence file.

Download (2MB)
Text (licence)

Download (33kB)


In this paper we study the profitability of car manufacturers in relation to industry-wide profitability targets such as industry averages. Specifically we are interested in whether firms adjust their profitability in the direction of these targets, whether it is possible to detect any such change, and, if so, what the precise nature is of these changes. This paper introduces several novel methods to assess the trajectory of profitability over time. In doing so we make two contributions to the current body of knowledge regarding the dynamics of profitability. First, we develop a method to identify multiple profitability targets. We define these targets in addition to the commonly used industry average target. Second, we develop new methods to express movements in the profitability space from t to t + j, and define a notion of agreement between one movement and another. We use empirical data from the car industry to study the extent to which actual movements are in alignment with these targets. Here we calculate the three targets that we have previously identified, and contrast them with the actual profitability movements using our new agreement measure. We find that firms tend to move more towards to the new targets we have identified than to the common industry average. © 2012 Elsevier B.V. All rights reserved.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > Surrey Business School
Authors :
Van Der Heijden, H
Garn, W
Date : 16 March 2013
DOI : 10.1016/j.ejor.2012.09.046
Additional Information : NOTICE: this is the author’s version of a work that was accepted for publication in European Journal of Operational Research. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in European Journal of Operational Research, 225(3), March 2013, DOI 10.1016/j.ejor.2012.09.046.
Depositing User : Symplectic Elements
Date Deposited : 04 Feb 2013 10:05
Last Modified : 31 Oct 2017 14:57

Actions (login required)

View Item View Item


Downloads per month over past year

Information about this web site

© The University of Surrey, Guildford, Surrey, GU2 7XH, United Kingdom.
+44 (0)1483 300800