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MGT3010 Business Strategy In A Global Environment
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MGT3010 Business Strategy In A Global Environment
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Course Code: MGT3010
University: University Of Southern Queensland
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Country: Australia
Question:
This report is based on the assessment in which author conducts the strategic situation of the Vauxhall Motors and the essential elements of the marketing plan.
Assessment focus on the marketing evaluation of the Vauxhall motors and conducts analysis of different marketing strategies which can be used by the Vauxhall for ensuring growth and profitability such as differentiation strategy, cost leadership strategy, focus strategy, expansion strategy, etc.
However, most suitable strategy of the Vauxhall motors is the cost leadership strategy, and this can said based on the information analysed about the company’s internal and external factors in both assessment and assessment .
Further, this report recommit the brief marketing plan for the company which highlights marketing objectives, situational analysis, market segmentation, target market, etc.
Answer:
Introduction:
For each organization, whether it is a start up or a multinational organization, it is important to develop an effective strategy that reflects the effective road map for the complete business of the organization. Development and establishment of rational and well consider marketing strategy, organizations ensure promotions of their business such as through effective marketing strategy organization ensures right type of clients, correct allocation of resources, and increment in the firm’s reputation. It must be note that effective marketing strategy includes number of fact that must be determined by the organization while framing the strategy such as value of shareholders, risk in context of reputation, and impact of the technology. An effective marketing strategy is considers as that tool which can be used by the company of any size, sector, etc. This strategy can be opted by considering the expectations of the clients, and by conducting detailed analysis of the operations of the company (Financier worldwide, 2014).
This assignment mainly focuses on the identification and evaluation of the strategic and marketing options for the Vauxhall Motors. It mainly helps the reader in getting the critical knowledge in context of the marketing and strategy, and the deep understanding of the process of marketing and strategic analysis. This report also highlights the analytical tools related to the strategic and marketing management in context of both internal and external environment of the organizations for developing the strategic and marketing options in this complex business environment.
Structure of this report includes the evaluation of the possible strategies and justification of the appropriate approach in context of marketing. This report also recommends the marketing plan for the Vauxhall motors. Lastly, this paper is concluding with the brief conclusion.
Background of Assessment:
Assessment 1 in this context defines the current strategic situation of the Vauxhall Motors and the essential elements of the marketing plan. Current marketing strategy of the Vauxhall is 4P’s strategy. This assessment also describe the factors which becomes the strength of the organization in survive in the external environment such as diversity in products, worldwide familiarity, big market share, etc.
Remaining part of assessment 1 defines the external factors tools, which help the organization in developing the effective marketing strategy. In this context, PESTEL analysis of the company is conduct. After that strategies to deal with the external business environment is define and these strategies include Prediction strategy and disaster management strategy. In part, one of the assessments, SWOT analysis is also conduct for evaluating the internal environment of the organization.
For the purpose of this assignment, we choose Vauxhall motors, an organization that is establish in 1903. This organization is engaged in manufacturing the cars, and still even after 100 years this organization is considered as most familiar automotive manufacturers in Britain’s. Vauxhall motors mainly focus on manufacturing such vehicles that are relevant for all.
There are number of products which are offer by the organization to its customers that are Astra, range-topping Insignia Grand Sport, Viva, Adam , etc. Vauxhall is the largest manufacturer of UK in context of light vehicles, and conduct their business by offering large number of products to their customers. Recently, on 1st August 2017, this company and its sister company that is Opel became part of Groupe PSA. Groupe PSA designs the unique automotive experiences and delivers the mobility solutions that provide the freedom and enjoyment to customers across the world (Vauxhall, 2018).
Evaluation of the marketing strategies:
This section of the report is based on the learning outcome 1 and reflects the critical knowledge of the theory of the marketing and strategy, and it provides the deep understanding of the process of marketing and strategic analysis.
The marketing mix strategy is considers as one of the most important concepts of the marketing theory, as business environment operates in the dynamic and complex situations and these situations effect the organizations in both positive and negative manner (Cravens & Pierch, 2009). There are number of strategies that can be use by the organizations stakeholders’ analysis, 4P’s strategy, etc. By making the right marketing strategy, targeting the right market, and forecasting and studying the surrounding environment for gaining the competitive advantage over the competitors (Foxall, 2001).
Marketing strategy mainly ensures the competitive advantage for the organization over its competitors, and helps the organization to ensure the development in goods and services provided by the organization (Hassan, Qureshi, Sharif & Mukhtar, 2013). This strategy not only identifies the areas that can affect the growth of the organization but also frame the plan through which organization can fulfil its customer’s needs. Marketing strategies are frame after conducting proper market research and this research includes the fixing of the right price for goods and services of the organization. It helps an organization to make optimum utilization of its resources so as to provide a sales message to it’s target market. Marketing strategy also help the organization in fixing the budget related to the marketing activities in advance and provides the method through which scope of the plan can be developed (Olson, Slater & Hult, 2005).
Following are some of the effective marketing strategies which can be used by the Vauxhall Motors, and these strategies are identified on the basis of the information stated in part 1 of the assessment:
Generally, relative position in the industry is uses to determine whether organization’s profitability is above or below the industry average. In the present case, Vauxhall Motors profitability index is high as company holds number of strengths. As defined in the Assessment 1 it use prediction strategy which helps it in dealing with the risk factors, it provide wide range of products and services to its customers, its stabilized cash flow, etc.
It must be noted that, above average profitability in the long run can ensure sustainable competitive advantage for business organizations, and there are two types of competitive advantage which firm can possess that are low cost and differentiation (Michael, 1985). These two competitive advantages can be getting only by focusing on the most important activities of the organization such as marketing. Organization can use the generic strategies for the purpose of achieving the average performance in the industry that are cost leadership, differentiation, and focus. It must be noted that focus strategy has two variants that are cost focus and differentiation focus (Tannwa, 2013).
Cost Leadership- Cost leadership is the strategy which is used by the organization for the purpose of becoming the low cost producer in the industry. The sources of cost advantages are different and also depend on the structures of the industry. Some common sources of the cost advantages are economies of scale, proprietary technology, favored admission to raw materials, etc. A low cost producer focus on finding and exploiting all the sources related to the cost advantage. In case organization achieve and sustain the overall cost leadership, then organization can be successful in becoming the above average performer in their industry. In other words, organizations can command the prices at or near the industry average. Strategy of cost leadership requires number of internal changes in the organizations such as:
Productivity of the high level.
Increased utilization capacity of the organization.
Strong bargaining power of the organization over its suppliers.
Lean methods of production.
Effective use of the technology (Armstrong & Baron, 2004).
Differentiation: in this type of strategy, organization needs to be unique in its industry in those areas which are more valued by the customers. It mainly selects one or more areas that are considered important by the customers and use unique techniques for meeting the needs of buyers in those important areas. Following are the internal changes which must be made by the organization in context of this strategy:
Conduct good and appropriate research for ensuring development and innovation in the product.
Ensure high quality in the products and services.
Effective strategies of sale and marketing (Ouma & oloko, 2015).
Focus: Focus strategy base on the choice of narrow competitive scope in the industry in which organization operates. In this organization selects the segment or group of segments in the industry, and frame its strategy in serving them to the exclusion of others. Following are the two type of focus strategy:
First strategy deals with the cost focus in which firm tries to get the cost advantages in its target segment. This strategy mainly focuses on the cost differences in particular segment.
Second strategy is the differentiation focus in which firms tries to differentiate in its target segment. This strategy mainly focuses on the special needs of the buyers in particular segment.
It must be noted that, focus strategy must be choose on the basis of the target segment of the focuser and also on the basis of the other segments of the industry.
Above stated Generic strategies must be choose on the basis of the SWOT analysis of the company or also after conducting PESTEL of the industry in which company operates (Torrington, Hall & Taylor, 2002)
Strategy appropriate for Vauxhall:
The most suitable strategy for Vauxhall Motors is the Cost leadership strategy, and this can be said on the basis of the SWOT analysis of the company done in assessment 1. As per 1st part of the assessment, following are the strengths of the organization:
Company’s cash flow is stabilized.
There is effective management of raw material and their allocation.
Company effectively managed its economic aspects, and any changes occurred in the economy will be handled by the organization in effective manner.
Sales pattern of the organization is of such nature as it helps the organization in dealing with the internal financial crises.
As stated above, there are number of internal changes required in context of implementing the cost leadership strategy in the organization, and these internal changes are possible in the organization with the help of these strengths. Strengths of the Vauxhall allowed the organization to ensure high level Productivity, increased utilization capacity of the organization, ensure strong bargaining power of the organization over its suppliers, lean methods of production, and effective use of the technology.
Cost leadership is the strategy through which organization reflect itself as the cheapest manufacturer and provider of any particular product or commodity in the competition. This strategy is little difficult to implement because it requires the management to work at each level of the organization for reducing the cost and remain competitive (LIB, n.d.).
Cost leadership strategy is considers as the important part of the marketing strategy, and this strategy is very useful in context of gaining the market share and also attracting the consumer. Management team must reduce the cost at each and every level for implementing the strategy. Cost leadership does not mean that organization can produce the goods of the inferior quality for reducing the cost of the products. For gaining the market share through this strategy, organization must produce the goods of acceptable quality and provide this to the customers at the price which is lower than their competitors.
Vauxhall Motors can also implement this strategy and this can be done in following manner or by implementing the following strategies (Valipour & Birjandi, 2011).
Reducing the retailer’s commission:
Organization can reach to the consumers by opening the direct stores in the market. As this help the organization in reducing the distributor’s commission and cost in maintaining the distribution channels. Generally, organization pay good amount of money to the distributors of the vehicles in the form of commission, and by approaching the customers directly help the organization in reducing this cost (Kouki & Guizani, 2009).
Outsourcing services:
There are number of companies which are considers as the cost leaders in context of oil change services or manufacturing some particular parts of the motor vehicles. Vauxhall can outsource some of its operations to the cost leaders for the purpose of reducing the cost of the services.
Effective control in capital system:
Another important method through which this strategy can be implemented is operating capital control, it is considers as the analysis of the factors that will impact both costs and production. For this method, it is necessary for organization to ensure skills of management, human resource availability, and manufacturing resources compatibility. Vauxhall must ensure their market strength and also access to those raw materials which are of acceptable quality at the low cost, and also the effective production by ensuring the required operating capital. In this context, organization can use pull systems for the purpose of avoiding the overproduction. Applicability of the common strategy in the complete organization which is base on the low cost process also ensures the strong relationship with the suppliers. In other words, Vauxhall must ensure the adequate control over their in- bound supplies and logistics, because these are the most important factors for cost effectiveness (Merchant & Van der Stede, 2007).
Effective skills:
There are number of skills which are required by organization for ensuring the low cost of its products and getting the competitive advantage such as effective engineering skills. These skills are considered as most important skills for the motors manufacturing companies, and this can be done by standardized the tasks, as it is the base for empowerment of employee and improvement. This can also be ensures by using the tested technology that not only helps the people but also processes. Those leaders who understands the necessary technologies and able to perform the task more efficiently which ultimately reduce the cost.
Management of labor:
Another important component which helps the implementation of cost leadership strategy is the effective management of labor, and this is base on the organization’s infrastructure, recruitment of best talent, facilities in context of customer support, and capabilities related to the logistics. Vauxhall must take the decisions after considering all the alternatives and implementing the decisions rapidly. Management must be able to take the decisions without any undue influence of the suppliers, creditors, etc.
After considering the above factors, organization can implement cost leadership strategy for the purpose of reflecting itself as the low cost leader of the industry. This strategy provides following advantages to the organization:
The biggest advantage provided by this strategy is the competitive advantage over its competitors.
Organization can ensure economical corporate culture in the organization, and this happens by reducing the cost of the inputs used in production.
Another advantage of this strategy is the development of the economies of scale, and this can be done by conducting the operations of the organizations in more efficient manner (Jermias, 2008).
Marketing plan:
This section of the report recommends the brief marketing plan for the Vauxhall Motors in context of implementing the above stated research:
Mission:
Organization mainly focuses on becoming the cost leader of the industry and in this context organization focus on providing the products and services to the customers at such price which is less than their competitors, and also builds strong relationship with the consumers.
Vision:
The main aim of this company is to provide the best quality of the cars at low price to the customers, and such vehicles must fulfill the requirements of the customers for which these cars were manufactured.
Situational Analysis:
Situational analysis of the organization mainly considers the internal and external factors of the organization, and also helps the organization in identifying their capabilities, customers, potential customers and the business environment and also their impacts. In context of conducting the situational analysis of the company following factors are analyzed:
SWOT analysis:
Strength
weakness
Opportunity
Threat
Competence in engine manufacturing, diversified portfolio, and strong leader in UK in context of motorcycles.
The biggest weakness of this company in context of cost leadership strategy is the less investment in research and development process.
Providing the acceptable quality of products at the price which is lower than their competitors is the opportunity for the organization.
New entrants with innovative ideas can be considered as the biggest threat for this company.
PESTEL analysis:
Political
Economic
Social
Technology
Environment
Legal
Government of UK proposed the limit on number of cars sold in UK, and this issue can directly affect the sales of the Vauxhall.
Economic conditions of UK are not constant and it cause direct effect on the sale price of the products manufactured by company.
In UK customer prefer the local brand instead the brand of any other company, and this is considered as great advantage for the company.
Technology is the most important aspect and it is also considered as the basic need of the people. It is necessary for the company to ensure latest technology in their cars.
Because of the global warming, there is less petroleum, and this increase the price of petrol which effect the sales of car.
Legal provisions of the UK are strict and it imposes number of obligations on the motors industry.
Market Objectives:
As stated above, the main objective of this organization is to become the global leader in terms of cars and other vehicles. This organization mainly focuses on the requirement of the consumers and also tries to build strong relationships with the consumers. Vauxhall conduct the cost leadership strategy in context of becoming the cost leader of the industry. Following are the important objectives of the company in context of cost leadership strategy:
Providing high quality services and products
Ensure less prices of the services and products as compared to the competitors
Customer satisfaction.
Target market:
Following are the markets which can be targeted by the Vauxhall:
Families of lower income
Middle class families
Taxi drivers
Sports car lovers
Implementation of marketing plan:
In context of implementing the marketing plan, following are the steps which must be implemented by the Vauxhall:
Organization must develop the appropriate expectations and in the present case Vauxhall can expect to become the cost leader with the diversified portfolio which include cars from each and every segment for the market.
Ensuring effective teams and adequate allocation of the resources and in this context Vauxhall can establish the department through which this task can be done.
Third step is the communication of plan, and for effective implementation, this step is the most important step. Management must ensure the communication of plan to each and every member of the organization and also ensure that they understand the plan in effective manner.
Time limit to fulfill the tasks related to the plan must be framed.
Effective monitoring is another important step which helps the organization in avoiding the issues.
Conclusion:
After considering the above facts, it is clear that Vauxhall motors can use cost leadership strategy in context of its marketing objectives. This strategy is considered as most suitable strategy because strengths of the organization provide support to this strategy, and this strategy also helps the organization in getting the competitive advantage over its competitors. Weakness identified in Assessment 1 or in this assessment also can be overcome by Vauxhall by implementing this strategy in the organization.
There are number of skills which are required by organization for ensuring the low cost of its products and getting the competitive advantage. With the help of this strategy, organization reflects itself as the cheapest manufacturer and provider of any particular product or commodity in the competition. This strategy is little difficult to implement because it requires the management to work at each level of the organization for reducing the cost and remain competitive.
Recommendations:
It is recommended to the Vauxhall to focus on the information of the relevant market segments and collect the data related to these markets, because in case no sufficient data is available to the company then company needs to depend on the predictions. However, there are number of times when predictions made by company go wrong and because of this strategy implemented by the company failed. Therefore, it is necessary for the organization to collect relevant data in context of framing the strategies.
Strategies based on the relevant data have high chances of getting successful, because these strategies are framed by experts after considering and evaluating the needs and benefits of the customers and organizations also.
References:
Armstrong, M. & Baron, A. (2004). Strategic HRM: The key to improved business performance. London, CIPD.
Cravens.W.D & Pierch. N.F. (2009). Strategic Marketing. 9th. McGRAW-HILL.
Financier Worldwide, (2014). The importance of an effective marketing strategy. Available at: https://www.financierworldwide.com/the-importance-of-an-effective-marketing-strategy/#.W07OI9UzbIU. Accessed on 18th July 2018.
Foxall, G.R,.(2001)” Strategic Management” London, Groom Helm.
Hassan, M. Qureshi, S. Sharif, S. & Mukhtar, A. (2013). Impact of Marketing Strategy Creativity on Organizational Performance via Marketing Strategy Implementation Effectiveness: Empirical Evidence from Pakistani Organizations. Middle-East Journal of Scientific Research, Volume 16(2), Pp 264-273.
Jermias, J. (2008). The relative influence of competitive intensity and business strategy on the relationship between financial leverage and performance. The British Accounting Review, Volume 40, Pp 71–86.
Kouki, M. and Guizani, M. (2009). Ownership Structure and Dividend Policy Evidence from the Tunisian Stock Market. European Journal of Scientific Research, Volume 1, Pp 42-53.
LIB. The Nature of the Cost Leadership Strategy. Available at: https://open.lib.umn.edu/strategicmanagement/chapter/5-3-cost-leadership/. Accessed on 18th July 2018.
Merchant, K. A. and Van der Stede, W. A. (2007). Management Control Systems: Performance Measurement, Evaluation and Incentives. PrenticeHall, New York.
Michael, P. (1985). Competitive Advantage, The Free Press, NY.
Olson, E.M., Slater , S. & Hult, G. (2005). The Importance of Structure and Process to Strategy Implementation. Business Horizons, Volume 48, Pp 47-54.
Ouma, G. & Oloka, M. (2015). The relationship between porter’s generic strategies and competitive advantage. International Journal of Economics. Commerce and Management United Kingdom, Volume 3(6).
Tanwar, R. (2013). Porter’s Generic Competitive Strategies. IOSR Journal of Business and Management, Volume 15(1), PP 11-17.
Torrington D., Hall, L. & Taylor S. (2002). Human resource management. UK.
Valipour, H. & Birjandi, H. (2011). The Effects of Cost Leadership Strategy and Product Differentiation Strategy on the Performance of Firms. Journal of Asian Business Strategy, Volume 2(1), Pp 14-23.
Vauxhall, (2018). About Us. Available at: https://www.vauxhall.co.uk/about/our-heritage.html. Accessed on 18th July 2018.
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