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6-1 Milestone Two: Strategic Plan
MBA 580
SNHU
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A comprehensive strategic plan has been designed which would enable the luxury
and mass-market automobile business to adopt the incremental innovation strategy. Such a
strategic approach would enable the company to integrate recent technological features into
its model and gradually into its broader product line.
Analysis of competitors’ relative strength
Some of the main competitors of the company are BMW, Toyota, and Volkswagen.
The projected growth rate for BMW over the next decade is 3.7 %. The projected growth
rate for Toyota is 3.9 %, and the projected growth rate for Volkswagen during the same
period is 4.3 %. Some of the key factors that could come into play and contribute to their
solid market performance, solid brand reputation, and focus on innovation.
Competitors – Current Market share percentage for cars and trucks
Each of the competitors has been capturing a considerable portion of the market
share. The main competitors, namely BMW, Toyota, and Volkswagen, currently capture 3.91
%, 8.53 %, and 8.76 %, respectively. The company has been facing the toughest competition
from Volkswagen in the car and truck market segment. cc
4% 8%
9%
6%
73%
Currentcc Marketcc sharecc percentagecc forcc carscc
andcc truckscc
BMW
Toyota
VW
Own company
Others
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Competitors – Market share percentage for cars and trucks in 2030
According to the forecasted growth figures of the competitors, the main competitors
that would be dominating the market are Volkswagen and Toyota. The luxury mass-mobility
company is expected to showcase better growth during the forecasted period than the BMW
brand.
Competitors – Current Market share percentage for connected cars and trucks
At present, the competitors have been showcasing solid growth in the connected car
and truck market segment. The main rivals that have been leading in the market are
Volkswagen and Toyota, as they have respectively captured 15.5 % and 8.9 % of the market
share. The luxury automobile company has been demonstrating better performance than its
competitor BMW.
4% 8%
9%
5%
74%
Currentcc Marketcc sharecc percentagecc forcc
carscc andcc truckscc incc 2030
BMW
Toyota
VW
Own company
Others
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Competitors – Market share percentage for connected cars and trucks in 2030
The forecasted market share of the company is poor, s it is expected to capture only
1.98 % in the year 2030. The Volkswagen and Toyota brands are expected to give tough
competition to the business as they are forecasted to capture 13.19 % and 8.62 % of the
market share, respectively. Even though BMW is expected to capture merely 3.7 % but its
performance during the forecasted period is also expected to be better than the luxury
automobile company.
3% 9%
16%
7%
65%
CURRENTCC MARKETCC SHARECC PERCENTAGECC FORCC
CONNECTEDCC CARSCC ANDCC TRUCKS
BMW Toyota VW Own company Others
BMW
3% Toyota
9%
VW
13%
Own company
2%
Others
73%
MARKETCC SHARECC PERCENTAGECC
FORCC CONNECTEDCC CARSCC ANDCC
TRUCKSCC INCC 2030CC
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Based on the comparative operating data of the companies, the operating income and
net income of Volkswagen and Toyota, which stand at 20.5 and 22.5, and 16.1 and 19.7,
act as their major financial strengths. Similarly, the valuable assets of the companies also
increase their financial strength and give them a competitive advantage.
Company’s market share
The company’s current market share for cars and trucks as compared to that of its
competitors namely Toyota and Volkswagen is low. While the company has captured 5.8 %
of the market share, the two competitors have succeeded in capturing 8.53 %, and 8.76 %,
respectively. However, its share is higher than the BMW competitor since it has only
captured 3.91 % of the market share. In the connected automobile segment, the company has
captured 7.10 % which is below that of Toyota and Volkswagen. The main factors for the
change in the market share include changing preferences of customers, and high
unpredictability.
The growth potential for the company in the cars and trucks in 2030 is 5.28 %,
whereas its growth potential in the connected cars and trucks segment in the year 2030 is
1.98 %. During the forecasted period, the company is expected to lose the market share in
both of the segments. The decline in the share percentage in the connected segment is high
as it would lose around 5 % of the market share during the forecasted period. Thus, the
potential for growth is bleak for the company in the future.
The financials of the company show that revenue of the business currently stands at
187.1 billion, which is better than the financially of BMW but worse than that of Toyota
and Volkswagen. The company has the lowest volume of equity in comparison to all of its
industry rivals. It implies that the business mainly uses debt in order to acquire assets. It can
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be considered to be a serious indication of financial risk for the business entity
(Killingsworth et al., 2021).
Potential total available market
TAM – Cars and light vehicles
The TAM value for the global cars and light truck market segment in the year 2020
stands at 322.70 billion. The company has made 187.10 billion in the current year. The
performance of BMW is lower as it has made only 126.10 billion. Toyota and Volkswagen
brands have dominated the specific segment as they have made 275.4 billion and 282.90
billion, respectively.
TAM – Connected vehicles
The future potential total available market (TAM) and growth for each chosen
product/service and technology is considered to be high. The TAM value of the global
connected cars and light trucks market is 53.9 billion. The company has been able to make
3.827 billion in the specific market segment. The performance of BMW is lower as it has
made 1.617 billion. The Toyota and Volkswagen companies have been leading in the
specific segment as they have been able to make 4.797 billion and 8.355 billion,
respectively.
Projected CAGR for cars and light trucks and connected vehicles
The projected compounded annual growth rate for cars and light trucks at the global
level over the next decade is 4.1 %. The company is expected to grow at a CAGR of 3.1 %.
The competitors BMW, Toyota, and Volkswagen, are expected to grow at a CAGR of 3.7
%, 3.9 %, and 4.3 %, respectively.
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The projected compounded annual growth rate for IoT cars and light trucks at the
global level is 25.2 %. The company is expected to witness a CAGR growth of 10.20 %. Its
performance is expected to be much lower than that of its industry rivals. BMW, Toyota,
and Volkswagen companies are expected to witness a CAGR of 25.50 %, 24.80 %, and
23.30 % over the next decade in the specific market segment.
The fastest-growing competitor in the cars and light trucks segment is Volkswagen.
The business has been showcasing stable performance in terms of revenue, assets, as well as
market share. In the IoT cars and light trucks segment, Volkswagen is also expected to lead.
Its solid financial performance in terms of revenue and market share would influence its
growth and profitability.
Adjustments in case of change in business conditions
In case the business conditions change, there are a number of measures that the
company could take so that its innovative automobile offerings could be accepted in a better
way by the potential customers. In case the customers are slow to respond to the incremental
innovation of the business, and thus they do not buy the offerings, one of the main strategies
that could be adopted relates to the introduction of new promotion and advertisement. The
business could promote its improved offering on its social media channels and official
business website. Such a strategy would ensure that the customers are aware of the business
and the improved connected offering that it has introduced in the market. Researcher
Milandra (2018) has argued in his study that promotion can be used as a useful and
effective marketing strategy for a business that could positively influence its sales and
revenue (Alexandrescu & Milandru, 2018). cc
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In case one competitor of the luxurious automobile company is overtaking all the
other businesses including then the entity must try to work on gaining a competitive
advantage. The company could adopt the differentiation strategy for gaining a competitive
advantage. It could try to differentiate its offerings by strengthening the IoT-based features
in its automobiles. Such a strategy would help the company to showcase how it would
create value or its intended market audience (Widuri & Sutanto, 2019).
Steps from concept outline to launch
A series of steps would have to be adopted, starting from concept outline to launch.
In order to effectively adopt the incremental innovation strategy, it is vital for the business
to integrate new kinds of IoT-based features into the existing offerings. In order to succeed
in the new innovative strategy, the company would rely on a solid development size. The
company would have to develop its existing technology-based infrastructure so that the
connectivity competencies could be enhanced. cc In order to succeed in the strategic approach,
the business entity would require additional capital, as well as personnel. Additional
financial capital would be a fundamental necessity that would help the company work on its
current connectivity capabilities and integrate new attributes into them. Apart from capital,
the company would also rely on personnel who have high technical skills and expertise
relating to the Internet of Things (IoT) technology. Since the new strategic approach would
be based on IoT technology, the skills of the personnel in the specific domain would play an
instrumental role in helping the automobile company progress towards the intended path.
While determining the timeline relating to the new IoT-based product launch, the high
emphasis would be given to the flexibility aspect. As technology is continuously evolving in
the prevailing times, maintaining a flexible timeline would be vital so that the company
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could effectively work on the IoT-based features and attributes. The time duration could
span between six to eight months, depending on the specific areas in which the connective
capacity would be utilized. In order to work on the incremental innovation strategy, it is
necessary to follow systematic steps so that the company could identify the areas where
connectivity capabilities could be adopted to enhance the driving experience of the
customers.
References
Alexandrescu, M. B., & Milandru, M. (2018). Promotion as a form of Communication of the
Marketing Strategy. Land Forces Academy Review, 23(4), 268-274.
Killingsworth, J., Mehany, M. H., & Kim, J. (2021). Using accounting ratios to measure
construction industry lag. Journal of Financial Management of Property and
Construction.
Widuri, R., & Sutanto, J. E. (2019, January). Differentiation strategy and market competition
as determinants of earnings management. In 3rd International Conference on Tourism,
Economics, Accounting, Management, and Social Science,(TEAMS 2018) (Vol. 69).
