strategic management in automobile industry

7/24/2019 Strategic Management in Automobile Industry

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Strategic Management in Automobile Industry around

the World

Subject:

Strategic Management

Submitted To:

Sir Mustabsar Awais

Submitted By:

Aneeka Niaz

Roll No:

MBK-M-12-04

MBA (B&F) Mrning

!t"semester

Alfalah Institute Of Baning And !inance

Bahauddin "aariya #ni$ersity

Multan


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Strategic Management in Multinational com%anies around the

World

Strategic management is t"e "ig"est #e$e# % manageria# acti$it' in genera# er%rme b t"e

c"ie% e*ecuti$e %%icer (+,) an e*ecuti$e team % a cman' use t seci% b.ecti$es % t"e

rganizatin b e$e#ing #icies an #ans t ac"ie$e t"ese b.ecti$es an reac" t"e

cman/s ga#s A#s it/s a rcess % istributing resurces % t"e cman s as t ursue t"e

#ans Strategic management su# $era## irectin t t"e entire enterrise An rganizatin/s

strateg s"u# be suitab#e %r its resurces' situatins' an b.ecti$es "e rcess takes in

cnsieratin t .in t"e cmanies/ strategic a$antages t t"e business en$irnment t"e

rganizatin %aces "e imrtant b.ecti$e % an $era## strateg is t make t"e rganizatin int

a sitin t its missin e%%ecti$e# an e%%icient# A best crrate strateg must inc#ue anrganizatin/s ga#s' #icies' an tactics int a c"esi$e w"#e Strategic management can be

cnsiere as cmbinatin % strateg %rmu#atin an strateg im#ementatin

1 Strategy formulation:

First ing a situatin ana#sis' bt" interna# an e*terna# an bt" micr-en$irnmenta#

an macr-en$irnmenta# Secn#' a#ngsie wit" t"is assessment' targets are set "is

inc#ues cra%ting $isin statements (#ng term)' missin statements (meium term)' $era##

crrate b.ecti$es (bt" %inancia# an strategic)' strategic business unit b.ecti$es (bt"

%inancia# an strategic)' an tactica# b.ecti$es Fina##' t"ese b.ecti$es "a$e t' in t"e #ig"t %

t"e situatin ana#sis' rse a strategic #an "e #an gi$es etai#s abut "w t reac"

t"ese ga#s "is t"ree-int strateg %rmatin rcess etermines w"ere u are nw' w"ere

u want t g' an t"en "w t get t"ere "ese t"ree 3uestins are t"e basics % strategic

#anning

2 Strategy im%lementation:

s a%%ectatin % ae3uate resurces (%inancia#' ersnne#' time' an cmuter sstem surt)'

e$e#ing a c"ain % cmman r sme a#ternati$e structure (suc" as crss %unctina# teams)'

an sting resnsibi#it % seci%ic tasks r rcesses t seci%ic ini$iua#s r grus t

a#s in$#$es managing t"e rcess "is inc#ues bser$atin resu#ts' cmaring t benc"marks

an best ractices' e$a#uating t"e e%%icac an e%%icienc % t"e rcess' insectin %r $ariances'

an c"anging t ant"er rcess i% necessar 5"en e*ecutin seci%ic rgrams' t"is in$#$es


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"a$ing arriate resurces' e$e#ing t"e rcess' training' testing t"e rcess'

cumentatin' an integratin wit" (an6r cn$ersin %rm) #egac rcesses

&lobali'ation in Automobile industry:

7#ba# mean t"at t"e wr# is ne cm#e* #inke sstem 7#ba# market can e*ist i% t"e

#ca# market % an cuntr can be in%#uence b %reigner market "is means t"at t"e #ca#

market is in%#uence b e$e#ment (tec"n#g %r e*am#e) in t"er natins in t"is case

g#ba# e%ine t"e u#timate #e$e# % wr#wie integratin' s t"is kin % g#ba#izatin is t"e

rcess % increasing internatina# intercnnecteness an it make ressure n t"e autmbi#e

cman t ursue a g#ba# snerg "e enterrise erating in man cuntries is a#was

#king %r a rcess t rganize itse#% t s#$e t"e rb#em % "w t manage mu#ti#e %irms

unit S as s#utin t"e cman rganizes a## eratin in eac" cuntr but #et e$er cuntr

unit autnmus as ssib#e "a$e crss brer snergies t"e cman uses t"e 8 essentia#

integratin mec"anisms b inc#uing it n "er internatina# management9

i "e autmbi#e cman es t"e same t"ing in eac" cuntr wit" n aatatin t

t"e #ca# market' same ruct' same wa % running t"e business' same resurces

em#e in t"e ructin t"is rceure is stanarizatinii Secn#' t"e crinatin is t create re#atin between t"e cuntr unit t ser$e t"e

c#ient in t"e same wa in e$er cuntr a#s t resn r attack +metitrs

+man t grab art % market %r t"e cmaniii Fina##' centra#izatin is w"en t"e cman regrus sme % "er acti$it in ne

seci%ic #catin (cman "me cuntr' r smew"ere e#se)' s as t"e cman

take a$antages %rm t"is articu#ar cuntr suc" as t"e car seats wi## cast #wer

t"an ruce it in t"er cuntr r t"e 3ua#it wi## be better r t take a$antages

%rm ta*es %aci#ities :we$er t"e autmbi#e cman cannt maintain a sustainab#e

snerg acrss brer because % t"e #ca# resnsi$eness make ressure n t"e

cman t

"e cman cannt neg#igee t"e seci%ic emans % eac" #ca# market an cuntr' e$er

market "as articu#ar c"aracteristics' eac" cuntr is i%%erent %rm ant"er' t"is i%%erence

between cuntries ress a #t n t"e rganizatin % t"e cman

The Auto Industry Today:


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"e aut inustr as a w"#e is an e*treme# cmetiti$e market #ace ,ac" autmti$e

cman is %ig"ting %r t"e #argest market s"are % t"e wr#/s number ne autmti$e market

"e Big 8' w"ic" inc#ues 7M' Fr' an +"rs#er "a$e been #sing t"e %ig"t t kee a minant

"# $er t"e aut market ;rir t 1' t"e Big 8 cntr##e a $ast ma.rit % t"e market s"are'

ar*imate# arun =0?' but since t"en t"e "a$e seen t"eir s"are ec#ine t be#w 48?

"ese imrters are gaining market s"are because t"e seem t ruce mre eenab#e an

mre e%%icient cars

+nsumer @ert #iste t"e t 8 mst re#iab#e cars in t"ese ! searate categries w"ic" inc#ue'

Fami# cars' Sma## cars' #arge cars' Mini$ans' Misize Ss an Sma## Ss % t"e 1= cars

#iste' 14 were Caanese engineere' an % t"se 14 cars' 12 were mae b9 ta' :na' r

Nissan $era## Caanese %irms accunt %r D=? % t"e mst re#iab#e autmbi#es w"i#e t"e S

autmakers accunt %r n# 22?

:we$er' in t"e ast %ew ears wit" t"e "using bubb#e estring an t"e ecnmic cntractin

t"at %##we' aut sa#es as a w"#e "a$e been ec#ining rai#' ue "ea$i# t creit markets

s"rinking an t"e abrut r in cnsumer sening "is tig"tening u % mne "as great#

imacte t"e ma.r #aers in t"e autmbi#e market' causing a ramatic ecrease in sa#es %rm

t"e ear be%re 7M sa#es are wn 881? %rm Ari# 200=' Fr/s are wn 818?' +"rs#er

4=1?' ta 41


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"e Big 8 #agge be"in t"e internatina# cmanies w"en creating %ue#-e%%icient cars an i

nt re#ease ne unti# 2004 "e Big 8 are wrking n re%ining t"eir ructs' "we$er t"e are

sti## #agging be"in t"e internatina# %irms Fr ears t"e cnsensus "as been t"at Caanese

autmakers bui# 3ua#it cars w"i#e t"e S autmakers bui# unre#iab#e cars t"at wi## break

wn 3uick# $er t"e ast %ew ears' t"e Big 8 "a$e begun t increase t"e eenabi#it %

t"eir cars' w"ic" is s"wn b "ig"er rankings %rm +nsumer @erts Magazine

()ST Analysis of Automobile industry:

(olitical9

Eaws an g$ernment regu#atins "a$e a%%ecte t"is inustr since t"e 1

1 "is was t"e %irst act t set stanars %r autmbi#e ##utin "en in t"e 1


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but it is $er true Manu%actures knw t"is "aens an targets t"eir markets b t"ese t"ug"ts

Fr e*am#e' anne w" ri$es a mini $an is ercei$e as a sccer mm "is is because t"e

manu%actures target mini $ans t mt"ers Anne w" ri$es a nice $e"ic#e is t"ug"t t be

wea#t" N ne wants t be seen ri$ing an unattracti$e iece % .unk because % w"at t"er

e#e wi## t"ink % "im r "er +nsumers a#s .ust %ee# better w"en t"e are ri$ing a nice r

new car' i% makes t"em %ee# better abut t"emse#$es

Ant"er asect % t"e sci-cu#tura# is t"e en$irnmenta# cncerns %r t"e nee % %ue#-e%%icient

$e"ic#es Man en$irnmenta#ists are wrrie abut t"e imact t"at t"e gas cars "a$e n t"e

en$irnment "ere is e$en #egis#atin t"at re3uires cars t a$erage a certain mi#es er ga##n

Technology:

"e internet "as a%%ecte .ust abut e$er inustr in t"e wr# an "as a#s "a a "uge imact

n t"e autmbi#e inustr "e buers re%erre t t"e internet be%re making t"eir urc"ases an

mst % t"e e#e went t t"e aut websites be%re ging an taking a test ri$e Business-t-

business market#aces "a$e gi$en t"e inustr man rtunities because % t"e internet' suc"

as mre e%%icienc an #wer cst Fr' 7M' an aim#er +"rs#er annunce in 2000 t"eir

#ans t create a g#ba# n#ine e*c"ange %r su#iers an t"e rigina# e3uiment manu%acturers

+ncerns %r t"e ecnm an g#ba# warming "a$e cause t"e autmbi#e inustr t e$e#

a#ternate %ue# $e"ic#es n t"e beginning' autmakers i nt want t #k int t"e e$e#ment

because % t"e "ig" cst an t"e man risks in$#$e Because % new #egis#atin' t"e "a n

c"ice but t cme u wit" t"e tec"n#g t make t"e %ue#-e%%icient cars "e autmakers

ecie t"at e#ectric cars wu# be t"e best wa t meet t"e #egis#atin emans G,ar# me#s

were unu#ar because % s#w cruising sees an #ack % er%rmance' but b t"e en % t"e

centur' e#ectric car ructin began t be ractica#G(Mtr e"ic#es) At t"e en % t"e 1


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#arger $e"ic#es $er assenger size $e"ic#es as generatins are sti## buing t"e trucks'

mini$an an esecia## t"e Ss' e$en wit" t"e riicu#us gas rices t is nt n# t"e unger

generatins eit"erH t"e bmers w" are a## reac"ing t"e retirement age are mre intereste in t"e

bigger $e"ic#es "ere acti$ities a%ter retirement are wa mre acti$e t"an t"eir arents "e are

nt .ust sitting arun an #aing g#% r ging n $acatins "e are sti## wrking in sme

was an being mre acti$e in t"eir granc"i#rens #i$es Since t"e bmers are sti## acti$e' t"e

want t ri$e t"e same $e"ic#es t"at t"eir c"i#ren ri$e in rer t make #i%e t"at muc" easier

"e manu%actures target t"e sa#es % t"eir cars t certain e#e an t"eir gegra"ic #catin

+n$ertib#es are nt markete twar e#e w" #i$e in arts % t"e wr# t"at are c# a## ear

run

&lobal:

7enera# Mtrs' Fr Mtr +man' aim#er +"rs#er' BM5' #kswagen' #$' ta'

Maza' an Nissan Mtr +man cme tget"er t create a new trae re#atins"i create t"e

A##iance % Autmbi#e Manu%acturers "e rganizatin was t re#ace t"e American

Autmbi#e Manu%acturers Assciatin t"at n# cnsiste % American manu%acturers' t"e ga#s

% t"e assciatins Gwere t wrk tget"er n ub#ic #ic matters % cmmn interest t

r$ie creib#e inustr in%rmatin an ata' an seek cnsistent g#ba# regu#atr stanars

"e manu%acturers a#s starte merging in t"e #ate 1


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t"e "a$e been rucing "ig"-3ua#it cars %r ears an t"eir cra%tsmans"i smb#izes

urabi#it

+manies e*en a substantia# amunt % mne n researc" an e$e#ment r.ects

annua## an' as a resu#t' inn$atin is a ke %actr in #eaers"i in t"e autmbi#e inustr

Mre$er' BM5 en a %rum n its web site t s#icit inn$atin %rm utsie users w" can

submit ieas abut esign r aitina# %eatures %r t"e %irm/s ructs resu#ting in a wie range

% ieas t cnsier % t"e ursue an iea t"at cmes %rm utsie t"e %irm' BM5 takes t"e

%urt"er ste in cnsu#ting wit" t"e in$entr Bt" t"e e*erience #abr %rce an researc" n

inn$atin "a$e #e t manu%acturers ruce $er "ig" 3ua#it cars

ransrtatin is ant"er %actr cnitin %r t"e autmbi#e inustr t"at is current# a int %

cntentin between manu%acturers an t"e g$ernment e"ic#e manu%acturers "a$e re#ie

"ea$i# n "ig"was t transrt %inis"e cars because it is eas an %ast ruck transrt is t"e

3uickest wa t e#i$er cars an time#iness in e#i$er t ea#ers"i r cks %r e*rt is $er

imrtant As en$irnmenta# cncerns increases' g$ernment es nt want t #et manu%acturers

transrt cars n "ig"was but rat"er is us"ing t"em t use e*isting rai#ra sstems as t"e

main transrtatin esite t"is issue' autmbi#e inustr "as a great a$antage wit" its

transrtatin sstem as we## structure an maintaine rai#ras cnnect wit" a netwrk % rts

an e#i$er ints t"rug"ut wr#

+emand conditions:

+ustmers "a$e man i%%erent reasns an cnitins %r buing an autmbi#e w"ic" makes

t"e inustr cntinua## i$ersi% its ructs %rm sma## cars t buses t meet t"ese $arius

emans "e inustr is cmrise % cmnents inc#uing tires' assenger an cmmercia#

$e"ic#es inc#uing e#ectric $e"ic#es' uti#it $e"ic#es' cnstructin $e"ic#es' cranes' %rk#i%t trucks'

mtr "mes' tractrs an t"er agricu#tura# $e"ic#es' trai#ers' cntainers' mtrcc#es' an retai#'

istributin' an maintenance % cars +ustmers care%u## searc" t"e best $e"ic#e t"at %its t"eir

buget' #i%est#e' an taste an eman a wie range % c"ices Autmbi#e custmers rea##

knw w"at t"e want an t"e searc" %r a seci%ic car t"at meets t"eir nees wit" a ruct

range %rm t"e nian ata w"se MS; is I2'>00 t #u*ur cars suc" as Ferrari' ;rsc"e retai#ing

%r I2>0'000 S"isticate custmers us" autmbi#e cmanies t inn$ate an a new

%eatures t t"e autmbi#es Fr instance' e#e want t "ear t"eir wn music in t"eir car an t

satis% t"is nee manu%actures "a$e been tring t insta## i%%erent music kits in cars


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+nsumers in 5r# are becming mre emaning abut %ue# e%%icient $e"ic#es :bri cars

"a$e been t"e rising star in t"is inustr as e#e becme mre en$irnmenta## cncerne an

#k %r t"e cars t"at use mre e#ectric an a#ternati$e %ue# surces an #ess i#

!irm Strategy and Ri$alry:

"is autmbi#e market in 5r# "as "ig" barriers t entr wit" "ig" %i*e cstsH start-u csts

are aunting +manies in t"is inustr re3uire strng su# c"ainsH new entrants wu# nee

t integrate wit" ne % t"e e*isting cmanies wit" strng bran recgnitin as it is "ar t

break int t"e strng e*isting cnnectin between su#iers' manu%acturers' an custmers

+metitin is se$ere as t"ere are man cmanies cmeting wit" eac" t"er crue## in a

s"rinking market ue t t"e ec#ining ecnm "e rimar strateg in t"is market is

inn$atin +manies "a$e t cme u wit" new esigns r a %eatures r ruce i%%erent

me#s t gain market s"are in e$er i%%erent segment nn$atin in a## $arius ruct #ines

a##ws manu%acturers t ser$e man i%%erent custmer grus wit" i%%erent bran names

Related and Su%%orting Industries:

Autmbi#e inustr "as man a$antages in terms % re#ate an surting inustries

Autmbi#e manu%acturers "a$e a # % we## 3ua#i%ie caniates t c"se %rm as we## as

ub#ic an ri$ate rganizatins t c##abrate wit" in researc" an e$e#ment

Stee# is t"e main e#ement % t"e car manu%acturing ires are ant"er critica# art % t"e inustr

a## kin % raw materia# is a$ai#ab#e wit" t"e inustr easi# nterir r ane#ing' e$e#ment

% car transmissins' an ructin % water-base aints are a## t"er e*am#es % re#ate an

surting inustries in t"e regin w"ic" "e#s su# "ig" 3ua#it cmnents t t"e aut

inustr +#se cnnectins wit" t"ese re#ate inustries make inn$atin t"rug"ut t"e su#

c"ain ssib#e

Automobile Industry !i$e !orces of ,om%etition Model

Threat of Ne- )ntrants:

"e t"reat % new entrants is $er #w in t"e autmbi#e inustr "e inustr is $er mature

an it "as success%u## reac"e ecnmies % sca#e n rer t cmete in t"is inustr a

manu%acture must be ab#e t ac"ie$e ecnmies % sca#e Fr t"is t ccur' manu%acturers must

mass-ruce t"e autmbi#es s t"at t"e are a%%rab#e t t"e cnsumer Ant"er barrier t

entr is t"at it takes an increib#e amunt % caita# t manu%acture t"e autmbi#es t takes an

e*treme amunt % caita# nt n# t be ab#e t manu%acture t"e ructs but a#s t kee u


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wit" t"e researc" an e$e#ment t"at is necessar %r t"e inn$atin re3uirements Access t

istributin c"anne#s is ant"er "ig" barrier t entr A cman must %in a ea#ers"i t se##

t"eir autmbi#es r "a$e t"eir wn ea#ers"i Sace in t"e ea#ers"is #ts is $er #imite

making it i%%icu#t t "a$e a wier $ariet % in$entr

Bargaining (o-er of Su%%liers9

"e bargaining wer % su#iers is $er #w in t"e autmbi#e inustr "ere are s man

arts t"at are use t ruce an autmbi#e' t"at it takes man su#iers t accm#is" t"is

5"en t"ere are man su#iers in an inustr' t"e nt "a$e muc" wer "ere are s man

su#iers t t"is inustrH manu%actures can easi# switc" t ant"er su#ier i% it is necessar

Bargaining (o-er of Buyers9

"e bargaining wer % t"e buers is merate# "ig" "e buers being cnsumers urc"ase

a#mst a## % t"e inustries utut "e manu%acturers een n t"em t sta in business "e

buers a#s are a signi%icant rtin % t"e inustries re$enue % t"e cannt kee t"eir buers

"a t"en t"e risk #sing t"em t t"eir cmetitrs "e buers "a$e #w switc"ing cst i% t"e

are nt "a A## t"e buer "as t is se## t"e car t"e wn an urc"ase a new ne "e

reasns w" t"e wer is nt cm#ete# "ig" is t"at t"e buers are nt #arge an %ew in number

"e buers nt "a$e t"e abi#it t integrate backwars int t"e inustr % t"e want a car

t"en t"e "a$e t urc"ase it %rm a ea#ers"i

Threat of Substitute (roducts9

"ere are nt man substitute ructs %r autmbi#es Sme % t"e substitutes are wa#king'

riing bike r taking a train Substitutes ructs a## een n t"e gegra"ic #catin % t"e

cnsumer n sme cities suc" as New Jrk r +"icag' a car is nt as necessar n cities suc" as

t"se' t"e subwa is t"e mst e%%ecti$e means % transrtatin :we$er' in mst #aces a

ersn must "a$e access t an autmbi#e in rer t get arun

Intensity of Ri$alry among ,om%etitors9

@i$a#r amng t"e cmetitrs is $er strng is t"is inustr "e ma.r cmetitrs are s

c#se# ba#ance t"at it increases t"e ri$a#r n rer t gain market s"are in t"e autmbi#e must

gain market s"are b taking it %rm t"eir cmetitrs ne % t"e t"er reasns t"ere is suc" "ig"

ri$a#r is t"at t"ere is a #ack % i%%erentiatin rtunities A## t"e cmanies make cars' trucks

r Ss "e cmetitrs are cmare t ne ant"er cnstant# "e rice' 3ua#it' urabi#it'

an man t"er asects % i%%erent manu%acturers are great# taken int cnsieratin w"en


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eciing w"at te % $e"ic#e t urc"ase 5"en t"e i%%erent manu%acturers a$ertise t"e e$en

cmare t"eir ructs t t"eir cmetitrs Fr e*am#e' t"e cmmercia#s wi## %cus n areas

w"ere t"e cman uter%rms its cmetitrs

.alue ,hain Analysis:

+A is a strateg t# use t ana#ze interna# %irm acti$ities ts ga# is t recgnize' w"ic"

acti$ities are t"e mst $a#uab#e (ie are t"e surce % cst r i%%erentiatin a$antage) t t"e

%irm an w"ic" nes cu# be imr$e t r$ie cmetiti$e a$antage n t"er wrs' b

#king int interna# acti$ities' t"e ana#sis re$ea#s w"ere a %irm/s cmetiti$e a$antages r

isa$antages are "e %irm t"at cmetes t"rug" i%%erentiatin a$antage wi## tr t er%rm

its acti$ities better t"an cmetitrs wu# % it cmetes t"rug" cst a$antage' it wi## tr

t er%rm interna# acti$ities at #wer csts t"an cmetitrs wu# 5"en a cman is

caab#e % rucing gs at #wer csts t"an t"e market rice r t r$ie suerir ructs'

it earns r%its

M ;rter intruce t"e generic $a#ue c"ain me# in 1 a#ue c"ain reresents a## t"e

interna# acti$ities a %irm engages in t ruce gs an ser$ices + is %rme % %rimary

acti$ities t"at a $a#ue t t"e %ina# ruct irect# an su%%ort acti$ities t"at a $a#ue

inirect# Be#w u can see t"e ;rter/s + me#

.alue ,hain Analysis for automobile industry:

"e g#ba# aut inustr at t"e beginning % t"e 21st centur is cmse % a number %

i%%erent arts "e re3uirements % t"ese i%%erent sectins are 3uite istinct Assemb#ers an

g#ba# mega-su#iers nee g#ba# reac"' inn$atin an esign caabi#ities' as we## as

cnsierab#e %inancia# resurces n t"e secn tier' g#ba# reac" is nt re3uire' e$en t"ug"

t"ere are sme tenencies twars internatina#izatin in t"is sectr "e cmetences neee in

t"e t"ir-tier are muc" #ess' but t"e returns are muc" #wer Fina##' t"e a%termarket sectin %%ers

a cm#ete# i%%erent rute t custmers "e business is muc" mre %ragmente an access is

easier :we$er' t"is sectin is $er rice-cmetiti$e "e c"anging nature % t"e g#ba#assemb# inustr in t"e 1


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,a%ability re/uirements in the global auto industry:

Assemblers:

ncreasing sca#e re3uire t srea csts % $e"ic#e esign an braning nn$atin an esign

caabi#ities remain critica# as %irst m$ers in new markets sectins can gain imrtant rents w"i#e

t"er cmanies catc" u Sme cmanies' suc" as Fr' aear t be#ie$e t"at cre

cmetences #ie mre in braning an %inance' an t"e are utsurcing arts % manu%acturing

t"ers' suc" as ta' maintain an em"asis n manu%acturing e*ce##ence an cmetence

&lobal mega*su%%liers:

"ese %irms su# ma.r sstems t t"e assemb#ers "e are smetimes re%erre t as Gier

0>G su#iersH because t"e are c#ser t t"e assemb#ers t"an t"e %irst-tier su#iers"ese

cmanies nee t "a$e g#ba# c$erage' in rer t %##w t"eir custmers t $arius #catins

arun t"e wr# "e nee esign an inn$atin caabi#ities in rer t r$ie b#ack-b*L

s#utins %r t"e re3uirements % t"eir custmers B#ack-b* s#utins are s#utins create b

t"e su#iers using t"eir wn tec"n#g t meet t"e er%rmance an inter%ace re3uirements set

b assemb#ers

!irst*tier su%%liers9

"ese are %irms' w"ic" su# irect t t"e assemb#ers Sme % t"ese su#iers "a$e e$#$e

int g#ba# mega-su#iers First-tier su#iers re3uire esign an inn$atin caabi#ities' but

t"eir g#ba# reac" ma be mre #imiteSecond*tier su%%liers:

"ese %irms wi## %ten wrk t esigns r$ie b assemb#ers r g#ba# mega su#iers "e

re3uire rcess-engineering ski##s in rer t meet cst an %#e*ibi#it re3uirements n aitin'

t"e abi#it t meet 3ua#it re3uirements an btain 3ua#it certi%icatin (S


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Aftermaret:

A %urt"er imrtant segment % t"e autmti$e $a#ue c"ain is t"e market %r re#acement arts

"is is t"e sectr t"at man %irms in e$e#ing cuntries %irst m$e int' e$en be%re #ca#

assemb# sectrs were e$e#e Nwaas' t"ere is an internatina# trae in a%termarket

ructs Firms in t"is sectin cmete reminant# n rice Access t c"eaer raw materia#s

an rcess engineering ski##s is imrtant nn$atin is nt re3uire because esigns are cie

%rm t"e e*isting cmnents' but re$erse engineering caabi#it an cmetence t trans#ate

esigns int etai#e rawings are imrtant

Strategic ,om%arison bet-een &eneral Motors and Toyota:

Toyota motors Strategic Analysis:

"e ta Mtr +rratin is a mu#tinatina# crratin an nw t"e wr#s #argest

autmaker in terms % sa#es' net wrt"' re$enue' an r%it accring t Frtune 7#ba# >00 t

was %une in 1


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7rwt" t"rug" ac3uisitins

Threats

F#uctuating %ue# rices

New emissin stanars

@ising raw materia# rices ntense cmetitin

Natura# isasters

Areciating en e*c"ange rate

.alue ,hain Analysis

tas $a#ue c"ain is s we## e$e#e t"at it makes t"e cman mre r%itab#e t"an t"e

t"ree #argest autmbi#e cmanies in t"e SA "e main strengt"s % tas $a#ue c"ain are

in t"e inbun #gistics' ue t t"e usage % Cust-in-time ructin met"' because it

minimizes in$entr cst "e t"er mst $a#uab#e art % t"e c"ain is t"e :uman resurce "e

em#ees are suse as :uman +aita# tas :@ eartment is aware t"at "a

em#ees trans#ate int better .b er%rmance "is e3uates t t"e kin % increase ructin

an 3ua#it t"at reners satis%ie custmers

Strategic &rou% Ma%%ing

ta is sitine in t"e merate# #w-rice' "ig" $#ume market "e cman "as

manage t $ercme mbi#it barriers an entere t"e #u*ur market wit" its Ee*us bran'

w"ic" is nw cmeting wit" BM5 an Mercees

()ST)0 Analysis:

(olitical:

n times % crises t"e Caanese g$ernment is subsiizing ta "e atin % new

regu#atins in ,ure' cncerning t"e emissins % +2 an reucing t"e imact % it n t"e

en$irnment is ant"er issue cncerning ta "e cman cntinues t e*#it its knw-"w

% e$e#ing "bri cars A#s t"ere is #itica# instabi#it in t"e main i#-rucing cuntries in

t"e wr#' #eaing t "ig"er i# rices an #ess eman %r cars


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)conomic:

"e c##ase % t"e internatina# ecnm #eae cnse3uent# t t"e %a##ing % t"e wer % t"e

en' w"ic" e$a#uates t"e rices % tas s"ares n t"e stck e*c"ange "e ecnmic crisis

a#s iminis"es t"e eman %r Caanese e#ectrnics an cars n aitins t"ere was a ec#ine in

t"e wr# buing wer an "ig" rices % t"e crue i#

Social:

"e u#atin in t"e wr# as a w"#e is aging' w"ic" means t"at #ess e#e are intereste in

new car me#s A#s' as a cnse3uence %rm t"e ecnmic crises' mre e#e are using

a#ternati$e transrtatin means but cars' an b t"is again #eaing t e*cess ructin caacit

Technological:

ta is cnsiering bui#ing a "bri-e#ectric sstem a$ai#ab#e n e$er $e"ic#e it se##s

wr#wie uring t"e 2010s "e cman is t"e mst inn$ati$e cman uring recent ears'

ue t its $ast# e$e#ing @ & eartment ta is aiming at zer waste an zer

emissins as an u#timate gru ga# "e main b.ecti$e is t"e cntinuatin % e$e#ment %

"bri tec"n#g an e$e#ment % "rgen %ue# ce## tec"n#g

)n$ironmental:

ta is in$esting "ea$i# in $e"ic#es wit" #wer emissins' %r e*am#e' t"e ;rius' base n

tec"n#g suc" as t"e :bri Snerg ri$e t is cnsiere t"e mst wie# r##e-ut

en$irnment-%rien# sstem in t"e autmti$e inustr t ate

0egal:

n 1


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Resources and Competences:

ta "as g knw#ege % t"e car inustr an is recgnise as being at t"e %rnt %

inn$atin tas ski##s are c#ear in e$ert"ing t"e ' t"e "a$e g inn$atin ski##s an

are a#was #king t m$e wit" t"e market an ne$er be be"in "e "a$e a eicate

marketing team w" a#was uses t"e best se##ing arac" t us" t"e ruct int t"e #ime#ig"t

Porter's Five Forces:

tas main ri$a#s are Fr Mtr +man' 7enera# Mtrs an :na Mtr +' Et

:we$er' t"e inn$ati$e tec"n#g t"at ta %%ers cmbine wit" t"e $er #a# custmer

base an t"e cmans cnsistent' "ig"-ranking 3ua#it marks assures a su%%icient cmetiti$e

a$antage

"e segment t"at ta ccuies' esecia## t"e "bri segment' is e*eriencing grwt" ue t

g#ba# ecnmic %actrs sustain market sitin' man brans were encurage in t"eir wn

e%%rts t bring mre "bris t t"e market Jet' new entrants t t"is segment "a$e trie $arius

strategies wit"ut muc" success

ta is a #eaer in inn$ati$e tec"n#g' en$irnmenta# initiati$es' an 3ua#it Ne$ert"e#ess'

gi$en t"e %inancia# situatin t"e t"reat ma cme %rm t"er nn-autmbi#e ersna# transrt

r ub#ic transrt

Ansoff Matri1:

a2 Maret (enetration

Suitability:

The market penetration strategy is most suitable for groing and emerging

markets! "ut in this case# the car market is already ell$established and

penetration ould be made much easier if the target market is groing!

Considering that Toyota is such an established name ithin the automotive


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industry# the risk of opting to penetrate the market is not that signi%cant

barrier!

&cceptability:

Management ma wrr t"at targeting t"e custmers % ri$a# car manu%acturers ma resu#t in

reta#iatin an it is #ike# a retentin strateg t be cnsiere as a ssib#e an re%erab#e

tin Since a %air amunt % csts are in$#$e wit" im#ementing t"is seci%ic strateg' it is

e*ecte t"at ta wu# nee t imr$e bt" ruct 3ua#it an #e$e#s % ser$ice' backe

b rmtina# sen :we$er' i% t"e risk % unertaking suc" a strateg es nt a %%' bt"

s"are"#ers an sta%% ma be cautius "at' n t"e t"er "an' wu# #ea t s"are"#ers

#sing $a#ue in t"eir s"ares an a#s t"e em#ees ssib# #sing t"eir .bs as a resu#t % t"e

%ai#e $enture an #st re$enues

!easibility:

"e %act t"at tas range is ne % t"e #argest in t"e autmbi#e wr# an a#rea e*ists in

eac" segment % t"e car market is etermining %actr %r tentia# enetratin n t"e market "is

suggests t"at ta is in a sitin t g a"ea an enetrate an % t"ese e*isting markets'

w"ere t"e mst #ike# target market %r t"is strateg wu# be t"e sma## car market w"ic" is

reminant# aime at ung e#e

b2 (roduct +e$elo%ment:

Suitability:

iven the %erce high competition in the automotive market# it is necessary

for car manufacturers to keep up to speed ith the latest developments!

Toyota# like many other car manufacturers is knon for spending huge

amounts of money on research and development! (t spent the most on

research and development of any company in the orld in )**+! The

company spent ,+#--.million on R/0# hich is .!.1 of sales! Toyota as

running an estimated Formula 2ne budget of 34-*m per season and last


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year the budget as estimated of ,..5 million! The company is likely to

continue to build on the technology found ith the Prius and other 'ne$fuel'

alternatives! Toyota's lobal )4 pro6ect# better knon as Toyota Prius gives

the company %rst mover advantage!

Considering the rapidly vanishing natural resources and more speci%cally oil#

future plans of Toyota include development of Camry 7ybrid fueled by

compressed natural gas 8C9 hich shos that there may be possibilities of

using a hole ne fuel in the future! &lso# T;C is planning to launch 4* ne

hybrid models by the early )*4*s# in various global markets! &nother key

factor# a


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new ructs %r t"e e*isting car market it is certain# %easib#e t cntinue e$e# in t"is

market

+nsiering t"e tw e*amine strategic tins' mst #ike# t"e best tin %r ta is ;ruct

e$e#ment %r e*isting market "e cman "as r$e itse#% an e*ists in eac" segment %

t"e car market ts best tin is t cntinue t e$e# t"e bran an t"e ructs t"at are

emane mst "ug" cnsumers are becming mre en$irnmenta## cnscius w"ic"

en%rce t"e e*ce##ent abi#it % t"e cman t researc" an e$e# new %ue# e%%icient

tec"n#gies Secn' t"e crratin #ans t re#ease 10 new "bri me#s in t"e near %uture

ta "as t"e %irst m$er a$antage wit" "bri snerg ri$e an su%%icient e*ertise w"en

e$e#ing sma##' %ue#-e%%icient $e"ic#es an t"ere is an increasing eman %r t"ese cars

Strategic analysis of &eneral Motors:

Ana#zing t"e cmans interna# an e*terna# en$irnments' t"ere are man i%%erent

%ramewrks an me#s e*ist %r cmanies B "a$ing sme strategies enab#es t"e %irms t get

better unerstaning % t"e critica# %actrs %r t"eir %uture success "is is because man %irms

ta erate bt" n a natina#' regina# an g#ba# basis an as suc" nee arriate strateg

%r eac" ini$iua# en$irnment

As being a mu#tinatina# enterrise' 7M erates in ar*imate# >D cuntries' inc#uing

+anaa an S' an t"e ser$e an erate in $ariet % ser$ices %rm imr$ement' marketing'

manu%acturing % cars' trucks t ecnm an insurance ser$ices

&eneral Motors SWOT analysis:

A S base crratin

Strengths:


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7#ba# resence

New $isin an strateg

Strng bran rt%#i

Strng resence in +"ina

Knw#ege % "me market

4 we## er%rming brans

Weanesses:

:ig" cst structure

Bran intensit

Bureaucratic cu#ture

+ar reca##s

O%%ortunities:

;siti$e attitue twars greenL $e"ic#es

ncreasing %ue# rices

+"anging custmer nees

7rwt" t"rug" ac3uisitins

Threats

F#uctuating %ue# rices

New emissin stanars @ising raw materia# rices

ntense cmetitin

,*c"ange rates

,om%etiti$e ad$antage analysis of &M

(orter3s !i$e !orces:

"e cmetiti$e ana#sis % a cman is an essentia# e#ement % ienti%ing cmnents w"ic"

are a t"reat t reuce r%itabi#it Fr assessing $er t"e cmetiti$e rb#ems ' Mic"ae# ;rters

%i$e %rces ana#sis is t"e ne % t"e mst e%%icient wa ;rter (2004) "as brug"t t"e #ig"t %

%i$e suc" %actrs9


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1 @i$a#r between e*isting cmetitrs'

2 Barriers t entr'

8 ;ressure % rice %rm Substitutes'

4 Bargaining wer % buers'

> Bargaining wer % su#iers'

"ere%re' 7enera# Mtrs +rratins cmetiti$e a$antage ana#sis wi## be ne accring

t Mic"ae# ;rters %i$e %rces

Ri$alry Bet-een )1isting ,om%etitors:

@i$a#r ccurs' because ne r mre cmetitrs eit"er %ee#s t"e ressure r sees t"e rtunit

t imr$e sitin Aitina##' "e strategies ursue b ne %irm can be success%u# n# t

t"e e*tent t"at t"e r$ie cmetiti$e a$antage $er t"e strategies ursue b ri$a# %irms

"ere%re' i% we #k at t"e 7M mtrs in t"is sectin' in t"e 1


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cmetitr/s $er i%%icu#t sitin t entr t"e inustr ,secia## %r t"e sma##er %irms'

cmeting wit" t"e 7M was $er "ar n ear# 20s' 7M in$ente se#%-starters b i%%erentiating

itse#% %rm Fr' #ater n' in 1


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management Su#ier % ructs an rcesses t"at increase t"e e%%ecti$eness % a## stages u

t %ina# custmers an t maintain' s use t gain cmetiti$e a$antage a#ue +"ain' a

Management %cuses n t"e estructin % waste insie t"e cman an a#s %cuses n t"e

custmers satis%actin insie t"e cman

a#ue +"ain assist t t"e cmanies t ienti% acti$ities w"ere it ma we## a# its resence

tentia#s an a#s ienti% w"ic" acti$ities t utsurce in rer t ecrease rices b getting

rtunit % cuntr-seci%ic a$antages ne % t"e cmnent % manu%acturing is

utsurcing w"ic" is cngress t"e %eatures % 7Ms acti$ities t"at nees a muc" mre #abur t

t"e t"er cuntries w"ere #abur csts are c"eaer' an t"is cu# re#ie$e 7M %rm em#ment

resnsibi#it Aitina##' recent# 7M cu# be ab#e t res#$e rb#ems wit" nite

Autmbi#e 5rkers

7M' %r instance' gi$es "ig"# imrtance n its custmer re#atins"is Fr t"e t"er art'

Ser$ice acti$ities are t"e acti$ities t"at cntinue an en"ance t"e ructs $a#ue inc#uing

custmer surt' reair ser$ices' etc Meanw"i#e' %r t"e 7M strateg' t"e are using n Star

ec"n#g w"ic" enab#es t"e custmers get in tuc" wit" t"e ca## center % 7M in an

emergenc situatin

B,& Matri1 Analysis Of &M:

"e B+7 Matri* met" is base n t"e ruct #i%e cc#e t"er t"at can be use t etermine

w"at ririties s"u# be gi$en in t"e ruct rt%#i % a business unit t ensure #ng-term

$a#ue creatin' "ig"-grwt" ructs an #w-grwt" ructs s"u# be unertaken b t"e

cmanies in nee % cas" inuts an generate a #t % cas" resecti$e#

As mentine ab$e' etermining t"e %actrs % inustr an as we## as %irms businesses is

#aing an essentia# r#e %r gaining cmetiti$e a$antage in t"e g#ba# market i## be%re t"e

tw ecaes' i# rices "a gne u wit" "ig" ercentages S' t"is is t"e en$irnmenta# %actrs

"a uste t"e autmbi#e sectr t t"e %ue# e%%icienc $e"ic#es 5it" t"e cnsieratin % B+7

Matri* a#ie t t"e 7M' 7M s"u# u## %% t"e brans #ike ;ntiac' :ummer w"ic" are %ue#-


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e%%icienc an i#-guzz#ing cars Furt"ermre' mre in$estment s"u# ut int rucing

sma##er %ue#-e%%icient $e"ic#es' an a#s :,s

Conclusion:

n cnc#usin' ana#zing t"e autmbi#e inustr is ne b using sme strategica## ana#zing

met"s' suc" as ;rters FF' a#ue +"ain' B+7 Matri*' an Swt Ana#sis Searc"ing an

a#ing t"e sstems int t"e autmbi#e inustr is 3uite bra because % t"e inustr/s #ng

time "istr w"ic" is mre t"an a "unre ears n t t"is cntent' t"e inustr is ana#ze in

etai# accring t %actrs % cmetiti$e a$antage' interna# an e*terna#

&eneral Motors:

% curse' e$er sing#e cman an %irm can make mistake in t"eir business #i%e cc#e'

"we$er' minimizing t"se mistakes is ne % t"e essentia# area %r t"e %irms % we turn t 7M'

t"e "a been rea## success%u# in t"e inustr w"en t"ere were n an t"er cmetitrs

:we$er' nce 7Ms ri$a#s entere t t"e business' 7M starte #ses its market s"are g#ba##

Because t"e $er#ke at t"em' t"e in/t man t"ings unti# t"e #se t"eir r%its A%ter

t"at ' t"e c"ange sme sstem' t"e starte t strugg#e wit" t"eir ri$a#s S t"at' wit"

cnsiering a## t"e ana#ze strategic %rces ab$e an t"e cman' sme recmmenatinss"u# be ne

Recommendations:

7enera# Mtrs s"u# escribe ssib#e an suitab#e sectr t ser$e

7M s"u# cncern abut arrangement a#icatin an i%%erentiatin strateg

"e s"u# sta rea %r e$en e$er "ar an i%%icu#t circumstance' Suc" as %inancia#

crisis

7M s"u# en"ance an imr$e its ruct e$e#ment


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,n$irnmenta# %actrs s"u# be cnsiere as we## %r gaining t"e "ig" 3ua#it %

business

Recommendations for Toyota Motors:

ta s"u# be crue#er in uti#izatin % its ear# #eaers"i in t"e cmmercia#izatin %

"bri sstems an e#ectric-$e"ic#e tec"n#g

ta "as t st making s man u## cars wit" a## t"e aea# % "use"# a#iances

"e cman "as t %cus mre n sa%et stanars' in rer t a$i ba ub#icit

t can ac3uire %ew sma## cmanies' t rein%rce its market sitin an e*an t"e

cman

ta s"u# searate its "bri me#s int a searate bran t"at wi## target custmers

t"at are mre en$irnmenta## %rien#

strategic management in automobile industry

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