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McLaren Planned Diversification or Organic Growth - Case Study Example

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The author of the paper "McLaren Planned Diversification or Organic Growth" will be seeking out answers to the following questions: How has McLaren overcome the market entry barriers that are present in the mass car market? How would you define the level of diversification shown by the McLaren Group?…
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Download file to see previous pages Well known in Formula 1 circles as the innovative racing team founded by Bruce McLaren, the company in 2012 announced its long-awaited MP4-12C supercar would go on sale to the public (Madslien, 2012). This new addition to the supercar segment is priced at £800,00 (Madslien, 2012). With a long list of failures littering the automotive landscape, ranging from the Edsel of the established Ford Motor Company in 1957 (Rubenstein, 2001, p. 65) to the Delorean in 1982 (Andrews et al, 2006, p. 379). The launch of McLaren has different characteristics that distinguish it from these two examples and many others. The MP4-12C is targeted for the supercar segment that consists of specialty models manufactured by Ferrari, Porsche, Lamborghini, and others for a discerning market (Codling, 2011, pp. 23-24). One of the key aspects to enter this market segment is that the manufacturer must have a superior pedigree established by credentials earned in racing, engineering, driving or some other segment reputation (Ambastha, 2008, p. 4). Interestingly, Bruce McLaren had all three! The reason for the need for superior qualifications is cars in this category reach top speeds in excess of 200 miles per hour, with horsepower ratings usually starting at 600 (Mitchel and Collins, 2005, pp. 31-33). The barriers for entry to this market segment differ from the standard production car segment as McLaren is not seeking to produce 1 million vehicles a year. The indicated production run for the MP4-12C is estimated to be just 1,000 vehicles in its first full year (Sanchez, 2012). Cars in this category are not produced and then shipped off to showrooms to await a buyer. As soon as McLaren made the official announcement they were set to produce a supercar, pre-orders poured in sight unseen (Tutu, 2010). This is a result of the reputation of the 8 times Formula 1 company that has a long list of automotive triumphs to its credit. With 2,700 pre-orders for the MP4-12C in house, there was never a question if the MP4-12C would sell  (Tutu, 2010). The McLaren Technology Centre (2013) is a highly advanced company comprised of six other companies and five more under the McLaren Group. The McLaren Group (2013) is composed of the “… McLaren Applied Technologies, McLaren Electronic Systems, McLaren Marketing, McLaren Racing, Absolute Taste, and the McLaren Automotive division”. The McLaren Group Limited (2013) as it is officially known uses its subsidiary companies (as listed above), design as well as engage in the manufacture of exotic sports cars. The portfolio of subsidiaries is headed by McLaren Automotive that was established in 1989 under the name McLaren Cars  (McLaren Group, 2013). Its purpose was to engage in design, technology applications, engineering, and organization geared to result in the production of supercars (McLaren Group, 2013). During its thirteen years of operating history, the company has used the technological expertise gained from designing and constructing a Formula 1 car that built its reputation as an innovative automotive engineering and design operation. A long series of successful projects that culminated in the invitation to design the famous SLR McLaren for Mercedes (McLaren Group, 2013). This vehicle made revolutionary use of new materials, and aerodynamic design to produce a visually stunning car that sells for around 500,000 euros (McLaren Group, 2013). ...Download file to see next pagesRead More
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