12 hours examination (Strategic Management)

Strategic Tools – Revisited ( Dr Annamalai) A Short Revision – Final Exam

Automotive Industry

P E

TS

1. Dynamic Inflation Rates

2. High Labor charges

3. Dynamic Currency Exchange Rates

4. Price of certain components e.g batteries

5. Seasons of a year for best sale of

automotive sector

Economic Factors

1. Hi-tech hybrid vehicles vs traditional

diesel and Petrol vehicles

2. Electric vehicles

3. Self-driving vehicles

4. Vehicles with additional sensors,

navigational equipment, weather tracking

systems, etc

Technological Factors

Political Factors

1. Younger Vs Older generations – Basically age as a factor for certain type of

vehicles

2. Certain set of people prefer certain color

of vehicles

3. Chauffer driven vs self-driven vehicles

4. Traffic issues that promote smaller

vehicles to larger vehicles

Social Factors

1. Government Incentives on specific

capacity of vehicles .e.g vehicles less

than certain size, fuel economy, etc

2. Government strategy of production of

certain category of vehicles, e.g hybrid

3. Vehicle quota systems in some countries

4. Parking space regulations

PEST Tool – Automobile Industry

Porter’s Five Forces Tool - Automobile Industry

Threat of New

Entry

(Low)

1. Capital and Labor intensive

2. Non-availability of trained

technical manpower

3. Economy of scaling

4. Cost disadvantages

Buyer Power

(High) 1. Small value Orders

2. Extreme price sensitive

buyers

3. Dynamic buyer power

for specific category of

vehicles

Threat of

Substitution

(High)

1. Too many competition for a specific

category of vehicles e.g SUV

2. Unpredictable customer loyalty

3. Brand power vs pricing power

Supplier Power

(Medium)

1. Non-availability of supplier

for few new technology raw

materials

2. Low Cost Low quality

substitutions

1. Low Cost substitution from

larger vans, Bikes.

2. Extremely high number of

product options available

3. Availability of cabs

Competitive Rivalry (High)

Source: Centre for Automotive Industry Research (2020), Cardiff Business School

Region Market Growth in Millions (2020)

North America 24

Western Europe 15

Asia Pacific 30

Central/Eastern Europe 10

South America 7

Middle East 3

Africa 12

Strategic Group Map – Real Data to draw the Map

BCG Matrix – Toyota case study

? *

1. New Models of vehicles

2. New Color introductions

3. Use of newer technology

4. Limited editions with extra

features

Diversification

1. Develop new categories of

automobiles

2. Focus on accessories

3. Develop specific components

like Navigation for OEMs

1. Discount on vehicles

2. .New Advertisement strategies

3. Customer Loyalty schemes

4. Exchange offers

Market Development

1. Online product sale

2. Newer Branches and Franchise

3. Focus on specific cities based

on need

4. Product Roadshows

Ansoff Matrix – Automobile Industry E

x is

ti n

g M

a rk

e t

N e w

M a rk

e t

Existing Product New Product

Market Penetration Product Development

Blue ocean strategy – Automotive Industry

In an automotive industry, the blue ocean strategy helps to create meaningful competitive advantage and deliver unique and distinctive customer experiences. For instance, the Australia’s flexi car introduced in 2005, create friendly service; reduce the price and choice of use; raise sustainability; and eliminate maintenance costs.

Blue oceans, where a market space is new and uncontested, and strategy centers around value innovation.

Scenario Planning - Automobile Industry As far as scenario-based strategic planning methodological framework is concerned

(Schwenker and Wulf, 2013) managers clearly understand and put emphasis on the

following key points to increase the quality of strategic decisions which can

counteract volatility:

• impact of uncertainty on planning and decision making • consequences for strategic management • to account for uncertainty, volatility and complexity in the strategic management process.

For instance, in an Automotive Industry, it could be the fuel price predictions to

produce a type of car with a specific fuel. To survive in this digital transformations,

mobility and market changes, the automotive sector has no choice but to perform

future scenario planning for the long term. The managers need to run “What-if” scenarios which should investigate the risks as well, for instance adoption of electric

vehicles, and geopolitical risks such as trade wars and tariffs.

Portfolio Analysis – Automobile Industry • A specific category of vehicles e.g SUV of Company ABC may be selling well

in the market for few years. However, suddenly a competitor rolls out a model that is an SUV as well as a City passenger vehicle (a crossover) with options to switch in terms of Power and Passenger comforts. Now Company ABC must do a portfolio analysis and either remove upgrade this category of vehicles.

• There may be a country wide policy for electrical vehicles. Company ABC may not have any electric vehicles at all. Then Company ABC must quickly do a portfolio analysis to analyze and convert a specific product line to electric vehicles to remain in the market. As far as Managers are concerned, risk has always been the concern and played as a critical role in decision-making processes (Aliu et al., 2017).

References:

1. Schwenker, Burkhard & Wulf, Torsten., 2013. Scenario-based

Strategic Planning: Developing Strategies in an Uncertain

World. Gabler Verlag Publishers Limited.

2. Aliu, F., Pavelkova, D. and Dehning, B., 2017. Portfolio risk-

return analysis: The case of the automotive industry in the

Czech Republic. Journal of International Studies, 10(4), pp.72-

83.

I hope this revision will be very useful and as a guideline for the Final Exam. Please add references from journal articles. Keep remember and recall whatever said by Prof. John on the examination day. I am confident that everyone can do well. Be sincere and dedicated whatever you do.

All the Best.