corrections
Running head: GROUP 1 AUTOMOTIVE INC 1
GROUP 1 AUTOMOTIVE INC 9
Group 1 Automotive Inc.
Name
Institution
Group 1 Automotive Inc.
4.4. PART III: Strategic Fit Analysis
C. Strategic Opportunities and Threats
Strategic opportunities;
Group 1 Automotive, Inc. is among the prominent and leading companies in the given industry. The company has many years maintained its position as a prominent firm through the consistent review of the SWOT analysis. There are several analytical tools that can be used by organizations to identify opportunities and threats as well as the strengths and weaknesses involved. The competition is evaluated through tools such as Michael Porters analysis of 5 factors and we have SWOT which examines the strengths and weaknesses (Rastogi and Trivedi, 2016). Changing technology demands that firms invest in new innovations that increase the ability to reach consumers and other stakeholders such as the ever growing social sites.
There are various strategic opportunities that the Group 1 Automotive, Inc. can exploit in its quest to increase its profitability, sustainability and the consistent maintenance of its position as one of the leading company in the industry. Firstly, the emergence of some new environmental laws and policies provides an excellent opportunity for the group 1 Automotive to effectively take advantage of their new technology and propel it in gaining some substantial market share in the given new category of products (Rothaermel, 2013). The existence of low rates of inflation also presents a strategic opportunity for the company since it enables access to credit to the company and its customers at some more moderate rates. This has an impact on the volume of company products sold and the entire productivity hence increasing its profitability and competitive advantage in the high competitive automotive industry.
Additionally, development and adoption of the new policy on taxation present a new strategic opportunity for the Group 1 Automotive since it significantly impacts on the nature of doing business and has the potential of opening and giving a competitive advantage to some established firms like Group 1 Automotive thus contributing to the profitability. The green drive by the government also presents an excellent opportunity for the purchase of the products of the company by the states and even contractors of the Federal Government (Jones, & Hill, 2010). The company has also integrated some new technology that presents an opportunity for the given firm to undertake the strategy of differentiated pricing in some new markets. This will help the company to maintain loyal clients and at the same time achieve in luring some new customers through some other propositions that are value oriented. The highlighted green drive and integration of some new technology is a strategic opportunity since it gives it a competitive advantage against established and new entrants in the highly competitive industry.
Strategic Threats
The company also faces various strategic threats that if not addresses can derail the achievement of the strategic goals and mission of the given firm. The company is faced with a severe risk of the imitation of low quality and counterfeit products specifically in the low income and emerging markets. The low quality and counterfeit products have an impact on the profitability of the company since it reduces the sales revenue generated (Johnson, Whittington, Scholes, Angwin & Regnér, 2011). The ever-changing buying behaviors and preferences from the online channel by the consumers is also a threat to the firm's physical infrastructure that supports their supply chain model. The changing consumer preferences and behavior if not checked could derail the profitability of the company due to the reduction in the sales volume.
Additionally, the adoption of the new Paris agreement environmental regulations could also be a threat to some existing products of the company that still have not met the requirements for new environmental laws. The existence of liability laws in different countries presents a potential threat to the Group 1 Automotive since it may expose the company to multiple liability claims due to the change or differences in the policies of the given markets. Additionally, the increased trend towards the isolationism in American Economy might lead to some similar reactions from other countries such as the UK and China which may hurt the company's international sales (Rothaermel, 2013). The rise in the raw materials and the shortage of the skilled workforce in some given global markets may pose a severe threat to the consistent growth of the profitability of the firm in the given markets. All these threats if not carefully addressed may have severe consequences or implications on the sustainability, and profitability of the Group 1 Automotive Inc.
D. Core competencies
Strengths
Group 1 Automotive, Inc. enjoys various strengths that boost its sustainability and profitability. Among the key strengths is the presence of a stronger brand portfolio. The company has strongly invested in its brand reputation by having a stronger brand portfolio. The presence of a stronger brand portfolio is essential since the company can leverage on it whenever they are introducing any new product in the market (Johnson, Whittington, Scholes, Angwin & Regnér, 2011).Another key strength is the availability of highly skilled labor that drives the operations of the company. The company has heavily invested in its labor force through consistent learning programs and training. The presence of a highly skilled labor force presents an advantage to the company since the employees become more motivated hence impacting on the rate of production (Johnson, Whittington, Scholes, Angwin & Regnér, 2011). The company also has a reliable supplier base and an integrated supply chain which has for many years helped in propelling its accessibility to raw materials and the selling of their products. The presence of a reliable supplier base helps the Group 1 Automotive in avoiding some supply chain bottlenecks that can derail the adequate supply and distribution of the products and raw materials.
The given firm also a key strength in the successful integration of some complimentary companies through acquisition and mergers. The company integrated some technology firms which have contributed to the streamlining of the operations and building of a highly reliable supply chain network (Rothaermel, 2013). The integration of the new technology companies has also facilitated the company to have a critical competency in the product innovation through the application of some new technology. The consistent product innovation is a crucial strength since it has enabled the company to have diverse products in the market hence increasing their competitive advantage against the other industry rivals.
Weaknesses
Group 1 Automotive Inc. has some core weaknesses that threatens to derail the success of the company if not well addressed or checked. Among the fundamental weaknesses in the presence of a weak or underdeveloped marketing strategy for the products. The product positing and selling proposition is still underdeveloped due to the unclear definition of the objectives that might lead to the reduction in the sales volume as a result of the marketing aggressiveness of the other competitors in the industry. The company also has a weakness in the demand forecasting which is critical in the maintenance of a sustainable day inventory (Jones, & Hill, 2010). The poor demand forecasting of the products results in missed opportunities hence leading to the presence of a higher day inventory as compared to the industry competitors. The inability of good projection concerning demand forecasting makes the Group 1 Automotive keep some high inventory both in the channel and in house. Additionally, the company has some limited success pertaining to the products of products outside its core or primary business. The company has faced numerous challenges regarding the diversification of its activities outside the core business due to the present culture.
E. Strategic Fit (SWOT) Analysis
Making an organization’s strategic decision is a difficult task because of the risks and uncertainties involved. Additionally, there are barriers such as bureaucratic and legislative hurdles to entering new markets as well as outplaying the competition with existing players in the field. To surmount these challenges, it is important to apply certain tools to aid in decision making. SWOT analysis is an important tool in assessing the industry dynamics that may affect the strategy of Group 1 Automotive Inc. as it seeks to expand.
External opportunity and Internal Strength Strategic Fit
Internal Strength: Product Development and Innovation
External Opportunity: Emergence of new environmental laws and policies
Creation of environmentally friendly car models for some new product segment
From the analysis of the internal and external competencies of the Group 1 Automotive, Inc. there is an opportunity from the emergence of the new environmental laws and policies like the green drive that underpins all the car manufacturing companies to ensure the car models are environmentally friendly. This company should leverage on its advanced technology through product development and innovation to start producing some new car models with lower rates of emissions hence compiling with new environmental laws and regulations and tapping into the market of environmental enthusiasts (Jones, & Hill, 2010). The production of car models with low gas emissions will help in avoiding fines and breaching of regulations like that witnessed by Volkswagen that may significant damage its reputation. The company can also venture into the new product segment of the electric cars since it will be a big drive in the diversification of their products and increase their revenue base since the given segment is still underexploited by the industry players. Only a few larger manufacturing companies like Tesla have started venturing into the given segment thus presenting a good avenue for the company to develop their brand reputation as one of the few electric car manufacturers. The electric cars will be targeting environmentally sensitive consumers who may have an issue with the existing company products.
Internal Strength to External Threat Strategic Fit Recommendation
Internal Threat; Product Development and Innovation
External Threat: Ever-changing consumer taste and preferences
Development of high-end car models or other products in anticipation of the migration to high-end car products
Internal weakness to External Threat Strategic Fit
Internal Weakness: Underdeveloped marketing strategy for products
External Threat: Availability of low quality and counterfeit products
Production of diversified Car Models that target different market segments
Group 1 Automotive can ensure the improvement of its value by working on its marketing strategy. An opportunity can be developed through the innovation of some new car models that are attractive and affordable to different market segments depending on their level of income. The development of some new car models that target different social classes provides an avenue for competition with the low quality and counterfeit products that have flooded the market (Abraham, 2013). This opportunity should be supported through the use of a highly advanced marketing strategy that has some customized strategy and message for every market segment. This will be instrumental in ensuring the new products meets the intended customers thus proving profitable. Big manufacturers such as Toyota Company develops many car models that suits different potential buyers hence increasing their sales and profitability are applying an example of such strategy.
APPENDIX:
1. SWOT TABLE SUMMARY
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Strengths(Internal) · Product development and innovation · Strong brand portfolio · Highly skilled labor · Presence of reliable supplier |
Opportunities(External) · Emergence of environmental laws and policies · Low rates of inflation · Integration of new technology · Adoption of new taxation laws |
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Weaknesses(Internal) · Underdeveloped marketing strategy · Poor demand forecasting
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Threats(External) · Changing consumer preferences · Availability of low quality and counterfeit products · Liability laws
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2. SWOT Matrix Table: Strategic Directions
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1 – S/O Match Strategic Recommendations
Product development and innovation should be matched with Integration of new technology.
Strong brand portfolio will survive any emergence of environmental laws and policies and thus must be maintained.
Presence of reliable supplier matches with Low rates of inflation where strategically, profits can be made as prices remain stable and supply constant. |
2 – W/O Match Strategic Recommendations
Group 1 Automotive Company has an underdeveloped marketing strategy that hinders benefits of Integration of new technology. This should be developed in full.
Poor demand forecasting also hinders the company from strategically taking opportunities availed by Emergence of environmental laws and policies and new taxation laws. Technology can improve forecasting. |
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3 ‐ S/T Match Strategic Recommendations
Since the company is strong in product development and innovation, the threat of changing consumer preferences can be addressed through well planned R&D. New products to suit preferences can be produced.
The strong brand portfolio can counter the threat of low quality and counterfeit products in the market. Advertising and strong visibility can differentiate this brand further in the market.
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4 ‐ W/T Match Strategic Recommendations
The underdeveloped marketing strategy must be improved to match the risk occasioned by the threat of changing consumer preferences.
Poor demand forecasting is also a weakness that must be addressed to counter the threat of changing consumer preferences. |
References
Abraham, S. (2013). Will business model innovation replace strategic analysis? Strategy & Leadership, 41(2), 31-38.
Johnson, G., Whittington, R., Scholes, K., Angwin, D., & Regnér, P. (2011). Exploring strategy. Financial Times Prentice Hall.
Jones, G. R., & Hill, C. W. (2010). Theory of strategic management: With cases. South-Western Cengage Learning.
Rastogi, N. & Trivedi, M., 2016, Pestle Technique – A Tool to Identify External Risks in Construction Projects, International Research Journal of Engineering and Technology (IRJET), Volume: 03 Issue: 01, 2016. www.irjet.net, Accessed March 5, 2018.
Rothaermel, F. T. (2013). Strategic management: concepts. New York, NY: McGraw-Hill Irwin.