A SWOT Analysis of the Bird Company - Essay Example

A SWOT Analysis of the Bird Company Bird is a company domiciled in Japan that designs, manufactures, and assembles sedan cars and related motor vehicle spare parts and accessories worldwide. Moreover, Bird Company has existed for the past twenty years with impressive sales even though it has faced stiff competition emanating from new entrants. Bird is the third largest automaker in the world whose sales in the year 2011 were 5 million reducing by 5% to 4,750,000 in the year 2012 and even lower in the year 2012 to 4,560,000, a decrease of 4%. The company’s revenue for the year 2013 was $ 200 billion with a total workforce of 320,000 employees who are all based at the manufacturing plant. The Operating Environment New entrants in the motor vehicle industry have changed the game with the tide swinging to the newcomers who enter with new vehicle designs and modern technology features. The company management blamed the current decline in sales to increasing competition and client prevalence for more comfort while preferring to pay less for the vehicles. In addition, high fuel prices and environmental concerns have driven clients to prefer vehicles that consume less fuel while emitting fewer exhaust fumes. While addressing the lost market share, management has held a number of meetings of which the resolution’s implementation started immediately. Some of the factors the management identified with relation to the operation include the following; Strengths High quality Cheap prices Supportive to CSR Experience Dominance Brand recognition Extensive distribution network Weaknesses Diversity Setting standards Recalls hindering growth Shrinking cash reserves Intense competition Opportunities Digital technology Provision of parts Threats Environment Friendly Maturing Industry New Entrants Supplier power Buyer Power Threat of Substitutes Efficient vehicles High quality: Bird boasts of manufacturing high-quality vehicles that many buyers prefer. The vehicles have low breakdown rates with the heaviness contributing to stability. In addition, the cars can move at high speeds with a large angle of tilt. Cheap prices: Bird vehicles are manufactured with the low-end customers’ budget in mind. The vehicles have standard features but go for a relatively cheap price. As a result, the vehicles compete favorably with other brands in the market. Supportive to CSR: Bird Company believes in giving back to the society as a way of creating awareness on various matters. The company has been active in planting trees and among other conservation measures meant to create clean environments. Experience: Having stayed in the industry for a long time, the company has known how to react to customer requests by modifying specific parts that could increase the vehicle value. The company has invested in research and innovation with aims of remaining relevant while beating the competition. Dominance: Bird is the leading supplier of sedan cars in the world with a significant market share of 30%. This dominance results from the fact that the company has specialized in this market segment enabling the company to make decisions on whether to produce or outsource parts, whichever is cheaper. Brand recognition: Having supplied many vehicles running on the road, Bird has a strong brand that clients speak of first whenever they are looking for a new vehicle. Customer reviews have shown that customers rely heavily on the reliability of Bird as a vehicle to beat. Extensive distribution network: The marketing department at Bird has done an impressive job of creatively analyzing the market to find out the specific requirements per segment, by that, Bird Supplies environment tailored vehicles that survive long in that environment. This is one factor that helped to increase the Bird’s sales leading to a wide acceptability. Diversity: Bird has concentrated production of vehicles in the sedan category, giving competitors an edge given that Birds’ clients do not have a variety to choose. Management has noted this issue and is financing the designing and manufacturing of different types of vehicles that serve different purposes. With diversity, Bird shall manage to capture back its lost market share given its strong brand presence. Recalls hindering growth: The Company had issues with faulty airbags and it recalled 200,000 vehicles to replace the faulty airbags. This followed a similar case a year earlier when it recalled 100,000 vehicles to replace faulty braking system. These replacements are done free of charge and have played a big part in draining Bird’s cash reserves. Management has embarked on training the production team on the best ways of testing simulation vehicles to ensure that they are safe before releasing the real vehicles to the market. Shrinking cash reserves: with stiff competition and the need to research into better methods of production, the company has been forced to eat into cash reserves to finance research and innovation. Management decided to take this action so that the company can improve its sales and regain its cash reserves from the future vehicle sales. Digital technology: Employing new technology has boosted mass production by that reducing the cost of production significantly. The company shall continue to employ newer methods of production to reduce further the cost of production. Provision of parts: with specialization, the company has contracted other companies that have specialties in producing specific parts to supply it with parts for assembly. This has assisted to reduce the cost of producing main parts like engines and gearboxes. Environment-Friendly: Bird produces vehicles that are a bit heavy with high fuel consumption rates. These cars produce more carbon emissions compared to lighter vehicles that consume less fuel. The company has been on the frontline in CSR projects and by that, it is working on its transmission system to increase fuel efficiency. Maturing Industry: The motor vehicle industry is saturated with vehicles to an extent where almost every medium and high-income home have at least one vehicle each. With each company supplying to the market many vehicles every day, it will reach a point where companies shall find it had to make sales. In that respect, bird is diversifying its portfolio to heavy vehicle and machinery segments that have the potential for growth given the large number of capital projects many countries keep on investing in over time. New Entrants: The motor vehicle industry requires large amounts of capital for a new investor to join. However, the industry has a ready market, a factor that new entrants bank on when they decide to join this industry. In addition, new entrants come in with better features and highly efficient cars that beat the old players like Bird. Bird’s management has decided to embark on research to keep on fitting its vehicles with efficient features that make driving comfortable. Supplier power: Bird as a company does not manufacture all the parts it uses to assemble vehicles. The company has contracted other parts suppliers who produce and deliver the parts to its assembly point. Due to competition, the suppliers have been gaining more power dictating terms of delivery to the disadvantage of Bird. As a result, the management decided to sit down with all contacted companies to negotiate better terms of supply that shall offer credit facilities. Buyer Power: Motor vehicle buyers are people who are very particular about the amount of money they spend on vehicles with respect to the available features. Strong customer bargaining power has taken a toll on the company’s cash reserves given that there is inflation, but vehicle prices have remained relatively constant. To counter this phenomenon, the company is looking for efficient ways of manufacturing its products while outsourcing the manufacturing of others in a way that the company can reduce the cost of production. Threat of Substitutes: The motor vehicle manufacturing industry has attracted many participants with the majority producing vehicles that are multi-purpose unlike Bird that produces only sedans. Bird needs to venture into other categories of vehicles including trucks, buses, and four-wheel drive vehicles to increase its market share. Efficient vehicles: New entrants are employing new technology to produce vehicles that that are digital giving Bird a stiff competition. These vehicles run on hybrid sources of energy with low fuel consumption per kilometer. In addition, these vehicles are far much lighter in comparison to Bird vehicles hence beating Bird in sales when technology and efficiency are the customer requirement. Management has initiated research and innovation to produce vehicles running on electricity and fuel in addition to introducing mechanisms that reduce fuel consumption as a way of wooing clients who mind conserving the environment. As the case is there is a threat from competitors who are eating into Bird’s market share, but the company is still the dominant brand in the market, hence it has the ability to regain its lost market share and most likely acquire more. The business is still profitable as it is, and there is every reason to continue investing in this industry. Management should continuously analyze the market to single out those relevant selling point features, which Bird shall incorporate in its models to increase the suitability and beat competition. In addition, with diversification, the company shall increase sales and expand its brand presence in the region as the leading motor vehicle manufacturing company. References Romein, A., & Trip, J.J. (2010). The creative economy in CCC cities and regions. Research Institute for the Built Environment, 7-14. Sahar, F. (2008). The Ride for Big Profit. Business Intelligence FE 2401, 6-24. Tuckwell, K. J. (2007). Strategic planning principles. Integrated marketing communications: Strategic planning perspectives. Toronto: Pearson Education Canada. Read More