Strategic Management and Leadership - Jaguar Land Rover - Case Study Example

Strategic Management and Leadership of the of the Introduction A successful company shows continuousas well as steady growth. This implies continuous improvement and innovation in its products and services for building strong relationships with consumers. A subsidiary of Tata Motors, Jaguar Land Rover Automotive PLC, is a global automotive firm with its headquarters in Coventry, United Kingdom. The overall success of the company can be judged from its constantly rising revenues, operating and net income. At present, Jaguar employs more than 25000 people across the globe (Jaguar Land Rover, 2013a). It is also one of the biggest automotive manufacturing companies in UK. The overall success of Jaguar can be attributed to its product innovation, human capital as well as strong brand equity among its target customers. The company majorly focuses on quality, which creates a strong differentiation from other similar luxury cars. Jaguar is on a global expansion phase, especially in Europe and emerging nations, such as, Turkey and Korea, which will add more than 2000 jobs across the globe. The total sales of Jaguar in the year 2013 was 374, 636 units, an increase of about 80,000 units from the previous year (Jaguar Land Rover, 2013d). Land rover is the bestselling brand among Jaguar group, which contributes almost half of total units sold, followed by Jaguar. The company is also planning to open a new research and development facility in UK. This will help in better understanding of the UK market as well as manufacturing variants to suit the needs and demands of locals, besides maintaining the global standards as well as objectives. Business reasons for success 1. The brand is customer-centric and gives proper emphasis on changing needs and trends of its target consumers. As a result, the brand is constantly evolving, in terms of innovation, product development and addition of new services and features (Marieke, 2004). Another important factor for the success of Jaguar is its suitability among target markets. The brand has an exclusive research and development facility in India for producing vehicles, compatible with Indian roads. 2. Information technology is exclusively utilized to support business activities of Land Rover. New age technologies such as, computer aided models, designs, network management for customers , software for supplier relationships, customer relationship management, logistics management as well as finance and HR management, have successfully been implemented for gaining sustainable competitive advantage (Bogner & Thomas, 1995). 3. Innovation has always been one of the major reasons behind success as well as competitive advantage of Jaguar Land Rover. Some of its recent innovation was introduction of low carbon vehicles and variants with greater fuel efficiency (Jaguar Land Rover, 2013e). The research and development facilities of Jaguar Land Rover are specifically designed for producing innovative and breakthrough technologies. This has provided the brand with a competitive edge. The company has also partnered with various innovative and solutions providing companies in order to increase their overall expertise (Drejer, 2002). 4. Continuous employee engagement is another factor through which Jaguar has been able to maintain a low attrition rate, high morale among employees as well as an overall productive workforce. The company engages its employees through incentive based tasks, regular training for skills and knowledge update as well as other employee engagement activities, such as, picnic, outdoor sports, family gathering and child engagement activities (D. Welch & J. Welch, 1996). 5. Another unique feature of Jaguar Land Rover is its in-depth market research. It has helped the brand in successfully expanding into the global market. As a result, it enjoys the reputation of a trustworthy organization across major continents. The company runs on the philosophy of putting customers first. The brand has implemented its deep understanding of various target markets in providing solutions and products meeting customer requirements. 6. Being in the luxury car segment, experiential marketing strategy has helped Jaguar to place itself in a unique position (Balmer & Gray, 2003). Jaguar differentiates itself from other competitors by giving customers a chance to drive products or trial drives, thereby demonstrating unique brand value. It not only involves customers, but also other partners, dealership managers as well as media. 7. Another successful strategy followed by Jaguar is strategic dealer management. The company follows stringent measures to ensure that only highly experienced and financially stable dealers are selected for distribution of Jaguar cars. The firm also makes sure that all international standards set by Jaguar international group are followed in all territories and regions. 8. The operation and production process of Jaguar is example of a successfully managed, automotive manufacturing process, embedded with innovation and continuous evolution. The company also makes regular investments in these manufacturing and production facilities, so that the appeal and demand is constant. 9. Land Rover is also the world leader in aluminium production, which is used for making body of cars. The use of aluminium during construction not only reduces the overall cost of raw materials and production, it also improves the overall quality of cars (Jaguar Land Rover, 2013b). 10. In order to create a sustainable competitive advantage over other competitors, the brand engages its engineers and scientists in various education and development programs by partnering with various top colleges and universities (Jaguar Land Rover, 2013c). Strategic Capabilities of Jaguar The strategic capabilities of Jaguar can be evaluated through a comprehensive analysis of its value chain, VRIN analysis as well as competitive advantage. Value Chain In order to analyze the value chain of Jaguar, it is important to concentrate on the primary activities, such as, inbound and outbound logistics, marketing and operations as well as support activities, such as, management of human resources, technology development as well as procurement strategies. Inbound Logistics: The inbound logistics include the raw materials and equipments required for manufacturing and production of Jaguar brands. The supplies are sourced from well-known and registered suppliers. The company also engages in reverse supply chain and sources its raw materials from other subsidiaries of Tata. Operations: Jaguar currently owns six major facilities for manufacturing, research and development and vehicle assembly. While the research and development sites are principle locations for engineering and innovation, the manufacturing plants are facilities for the production and assembling of final products. Jaguar is known for its innovation, reliability as well as style, which is possible through state-of-the-art facilities, innovative research and development as well as effective and skilled workforce. Outbound Logistics: Outbound logistics includes transportation and delivery of goods from plants to final customers. The final products are generally distributed to various dealers; and from there, it is either sold directly to customers or through retailers. Since it is a luxury style statement, Jaguar is sold only in exclusive Jaguar outlets across various continents. Mostly, the inventory management is just-in-time, as the volume of sales in lower compared to other segments of cars. Sales and marketing: Sales and marketing is an important aspect for enhancing brand equity and brand strength. The marketing communication mix for Jaguar basically includes television advertisements, newspaper and magazine advertisements, outdoor advertisements as well as online digital promotions. Since it is a high-end purchase item, purchase decision making process is long and the company implements strategic advertisement activities, such as, relationship marketing and direct marketing for engaging its customers (Vavra, 1992). Support activities Procurement: Procurement activities involve purchase of services, goods and raw materials. The objective here is to secure lowest prices for highest quality. The outsourcing activities are completed either by reverse supply chain or through partnering with various component suppliers. Technology development: Technology is an important source for competitive advantage. Jaguar achieves competitive advantage through various activities, including lean manufacturing, internet marketing, digital campaigns as well as effective customer relationship management (Haberberg & Rieple, 2008). Human resource management: Humans are a vital as well as an expensive resource. The recruitment process of Jaguar is very stringent and involves selection, recruitment, training and development of the new entrants. Apart from that, it also covers features such as, remuneration, rewards and fringe employee benefits (Tuan, 2012). Firm Infrastructure: The overall firm structure is driven by strategic or corporate planning. The company has implemented effective software, including management information system for internal communication as well as control and planning in various departments. VRIN Analysis A VRIN analysis is conducted in order to analyze capabilities as well as long-term sustainability of resources and attributes present within an organization. It evaluates whether the resources and attributes are valuable, rare, non-imitable and non- substitutable. Company Attributes Valuable Rare Non-imitable Non-substitutable Sustainability Product Innovation yes yes yes yes Sustained Competitive Advantage Financial Capability yes no no yes Temporary Competitive Advantage Marketing Capability yes yes no no Temporary Competitive Advantage Human capital yes yes yes yes Sustained Competitive Advantage Valuable: Product innovation capability as well as human resource capital of Jaguar can be considered as valuable and providing sustainable competitive advantage. The brand is known for its innovative design and features. The company has established state-of-the-art facilities, where engineering innovation takes place. The brand has been involved in producing mid-sized and compact cars, SUVs, executive, luxury and sports cars. Rare: Jaguar has mastered the process technology and with the help of an effective research and development facility, it has become a pioneer in producing vehicles, which are technologically more advanced than other cars in the contemporary times. Non- Imitable: Product innovation and human capital of Jaguar can be considered as non-imitable. The company carefully chooses the best engineers and scientists from all over the world for its research and development. The designs as well as internal engineering of Jaguar cars are known for their creativity and advanced technology. However, financial capability as well as marketing strategies can be imitated by other competitors. Non-Substitutable: Product innovation and human resource capabilities are again regarded as non-substitutable. The company has built a strong brand image over the past years. This has been possible because of the long-term hard work and efficiency of the employees and other people working for the brand (Grönroos, 1997). Jaguar makes sure that its employees and other internal staffs are satisfied and loyal to the company. For this, the company provides attractive compensation and benefit packages. The company also involves its members in various training and external campaigns, thereby encouraging full participation and enhancing overall loyalty among internal employees (Bradley, 2002). Interpretation The tangible and intangible resources at Jaguar have provided the company with immense competitive advantage. The brand is not only the largest employer in the automobile sector in UK; it is also one of the leading investors for automobile research. The company stands on its values, which are integrity, excellence, understanding, responsibility and unity. No doubt, the above values provide a sustained and long-term competitive advantage to the luxury vehicle brand. The company’s supply chain strategy has spread globally. The major strategic advantage of Jaguar is that since the volumes are less compared to other mid-segment and less expensive cars, it directly controls the supply chain and logistics system, thereby giving it a firsthand experience of the various problems and issues occurring within the logistics system. The brand is involved in continuous market research, which helps in making strategies for global expansion, market penetration, product development as well as market development. Thus, by proper utilization of its resources and capabilities, Jaguar has been able to achieve sustained competitive advantage over its competitors. International strategy It is quite common to see organisations and MNCs go global. As technology is becoming cheap and industry is becoming saturated with similar products and services with no new offerings, companies are looking for new markets to sell their services and products. As a result, a well-focussed and clear international marketing strategy is given the highest priority in overall strategy making departments in organisations. Nonetheless, as markets are changing, marketing techniques and trends are also evolving with them. The international strategy of Jaguar is based on competitive focus, which in turn is achieved through complete knowledge about internal markets, a strategic international perspective as well as a strong and effective competitive positioning (David, 2011). Jaguar’s strongest business markets include China, USA, Russia and India. United Kingdom and other European countries are still a developing market for Jaguar as the company has not penetrated the entire market. Building an effective and strong relationship strategy is important, which Jaguar has achieved through strong relations with its customers, commitment for quality services and products as well as dedication to service customers throughout the international markets (Baker, Jones & Nichols, 1994). In case of emerging and developing nations, such as, India and China, consumer interest is more towards eco-friendly and fuel efficient cars. Therefore, the brand has launched many eco-friendly cars with better fuel efficiency, especially for these markets. The low volume of cars sold also enables the organisation to foster personal relationship with its customers though regular feedback and information exchange. The company has established branch offices across various international markets. Maintaining a learning culture as well as proper management in the organisation is a major priority of the human resources and training departments. Cultural diversity is maintained through control and monitoring procedures. Leadership and company’s success The overall success of Jaguar Land Rover can be attributed to its leadership activities, organizational culture, management as well as decision making process. Jaguar Land Rover is one of the most distinguished and influential brand in the global automotive industry and is renowned for its innovative design as well as engineering excellence. Jaguar Land Rover has an enviable and rich heritage and is globally recognized for its leadership and development programs for scientists and employees (Schell, 1991). Within the firm, there is a strong sense of leadership and purpose among the employees as well as management. The major role of senior management team is to discuss the various roles and responsibilities of leaders as well as to prepare objectives and strategies for successful completion of stretched targets. The middle-level management’s role is to implement the leadership strategies and programs. Jaguar Land Rover also believes in networked learning, which enables every participant to build and at the same time, share their success stories within the group. It also helps in building and developing skills and knowledge across diverse areas in minimum timeframe. The networked leadership strategy of Jaguar has enhanced the delivery program by reaching the global executives over 4 continents and 11 nations. The number of training days included every year has seen a constant increase with more and more individuals attending these training sessions (Brightman & Moran, 2001). The company structure is mostly hierarchal and is headed by the chairman, deputy chairman and CEO. They are followed by head of various departments such as, finance, manufacturing, purchasing, human resource and research and development. The organizational culture of Jaguar is based on four fundamental aspects, which are respecting the cultural diversity, working as one team, proper and effective communication among all team members and departments and maintaining professional integrity by strictly adhering to the organization’s ethical principles and codes of conduct. The decision making capacity of the organization can be seen in its marketing and management practices. There has been subsequent decline in the attrition rate as well as occupational hazards, over the years. Issues External issues 1. Cost of raw materials: As a result of the increasing costs for construction and R&D, negative exchange rates as well as economic downturn, the overall sales have dropped drastically in luxury car segments. The major selling vehicle brands under Jaguar Land Rover are Evoque, Freelander, Discovery and Range Rover. However, the brand is observing a swift change in its market, in terms of sales volume. China is growing constantly in terms of sales, whereas sales in North America have declined (NDTV, 2012). 2. Competition: Competition is also becoming increasingly intense in the luxury car segment. Competitors of Jaguar can be divided into three segments; intensive, potential and substitutes. The company is facing intense competition from brands such as, BMW, Mercedes, Audi, Volkswagen, Lexus, Nissan and Volvo. Most of these companies have already launched luxury and premium car brands in order to tap high-end customers across the globe. All of the above brands falls in the luxury car segments and have been increasing their marketing activities through aggressive marketing. Jaguar also faces competition from potential competitors such as, Hyundai, Toyota, Chevrolet, GM and Ford, who are foraying into the luxury car segment, thereby endangering the already crumbling market share of Jaguar (Ferrell & Hartline, 2010). Other substitutes include electric and hybrid cars and public transportation. Internal issues 1. Quality issues: In the year 2012, the company recalled about 337 vehicles because of quality issues. It had resulted in a huge loss of brand image as Jaguar Land Rover is seen as a luxury brand with quality and innovation. Jaguar’s brand image has also been affected lately because of the decline in brand image of Chery and Tata. 2. Issues of service stores and dealers- The distribution system of Jaguar is highly uneven. For instance, there is a huge shortage in the total number of service stores and dealers in China, even though the market is one of the highest revenue generators. Apart from that, many stores in other market areas are over-stocked with less sales and low consumer traffic. This uneven distribution can be attributed to the hierarchal system of Jaguar. Strategy and decision making, which takes place in the headquarters, are merely implemented by the regional employees without any local change. Consequently, any change in market trends or conditions takes a lot of time to reach the head office. 3. Lack of Energy efficient car- At present, Jaguar does not have any fuel effective or low fuel car. Yet, most of the models follow the standard global regulations and procedures for engine and design development. Many nations are now encouraging automobile manufacturers to develop and sell energy saving vehicles, such as, hybrid cars and electric cars (Coelho, McClure & Spry, 2003). However, the major question revolves around the overall expertise and capacity of the brand, needed to pursue this objective. The company will require a lot of funding from external sources, apart from its own financial reserves, in order to produce environmental friendly and green cars (Bresnahan, Brynjolfsson & Hitt, 2002). 4. Brand Strength across the globe- The overall product publicity, product promotion and communication strategies of the brand is not enough. Comparing Jaguar’s brand influence with the competitors such as, Volkswagen and Mercedes, it can be evaluated that these latter companies are using aggressive marketing strategies such as, outdoor campaigning, digital campaigns, direct marketing as well as relationship marketing, so as to reach their target customers (Ferguson, 2008). On the contrary, Jaguar has been following traditional marketing and communication strategies, such as, billboard advertising, newspapers and print magazines and television advertisements, to reach the desired customers. As a result, it has been unable to establish itself in markets such as, United Kingdom and other European nations, primarily because of low penetration and low level of awareness among customers (Shimp, 1990). Recommendations Overall, the company can follow the following strategies for sustainable competitive advantage: 1. Target emerging markets Jaguar has seen significant growth in emerging markets. Nonetheless, the major issue in this market is the quality of cars and their adaptability in rough terrains of these nations. As a result, the company should study these markets and restructure their research process, so as to launch vehicles compatible with these regions (Johnston & Bate, 2003; Belu & Cărăgin, 2008). 2. Create long term and sustainable shareholders value For luxury car segments, maintaining relationships with customers is an important strategy, as it helps in positive word of mouth advertising in order to create sustainable and long-term value with its shareholders. The company should ensure production of high quality cars across various global target markets. This can be done by increasing safety features as well as reducing risks (Wallis, 2010; Elahi, 2013). This will help in enhancing the overall brand image of Jaguar, besides improving its score on various car rating websites. Enhancing the overall employee morale is also an effective way to improve employee productivity. 3. Improve the overall brand influence across the globe The brand has been following traditional marketing and communication approach. In order to maintain strong and prudent reputation worldwide, the company will have to follow a 360 degree approach or integrated marketing communication strategy (Collis, 1991). The company can include influential celebrities for increasing popularity. Also, Jaguar Land Rover can involve personal touch in their direct marketing channels for enhancing the overall relationship. The company can also participate in various community service programs in order to enhance its overall brand equity (Sheth and Parvatiyar, 1995). The brand influence can also be increased by remaining committed to environmental innovation. 4. Maintain competitive advantage through technical innovation This will allow the brand to grow and prosper as a major global competitor as well as to increase its overall budget for research and development. The objective of technological innovation should also include addition of more fuel-efficient and green cars, such as, electric and hybrid cars, into the market. In order to enhance the climate and environment for innovation, the company can partner with other creative agencies and organizations and develop its overall skills base and knowledge capacity. Minimum wastage of resources is another area, which should be given importance in research and development as well as overall operations. References Baker, H., Jones, W. & Nichols, M. (1994). Using core competences to develop new business. Long Range Planning, 27, 13-27. Balmer, J.M.T. & Gray, E.R. (2003). Corporate brands: What are they? What of them? European Journal of Marketing, 37(8), 972–97. Belu, M. & Cărăgin, A.R. (2008). Strategies of Entering New Markets. The Romanian Economic Journal, 11(27), 83-98. Bogner, W. & Thomas, H. (1995). Competence-based competition. Chichester: Wiley. Bradley, F. (2002). International marketing strategy. New Jersey: Prentice Hall. Bresnahan, F. T., Brynjolfsson, E. & Hitt, L.M. (2002). Information technology, workplace organization, and the demand for skilled labor: firm-level evidence. The Quarterly Journal of Economics, 117 (1), 339-376 Brightman, B.K. & Moran, J.W. (2001). Managing organizational priorities. Career Development International, 6(5), 244 – 288. Coelho, P., McClure, J. & Spry, J. (2003). The Social Responsibility of Corporate Management: A Classical Critique, Economics, 18(1), 10-15. Collis, D. (1991). A resource-based analysis of global competition: The case of the bearings industry. Strategic Management Journal, 12(5), 49-68. David, F. (2011). Strategic management: Cases and concepts (13th ed.). Florence, South Carolina: Pearson. Drejer, A. (2002). Strategic management and core competencies: Theory and application. Connecticut: Greenwood Publishing Group. Elahi, E. (2013). Risk management: The next source of competitive advantage. Journal of Risk Management, 15(2), 117 – 131. Ferguson, R. (2008). Word of mouth and viral marketing: Taking the temperature of the hottest trends in marketing. Journal of Consumer Marketing, 25(3), 179 – 182. Ferrell, O. C. & Hartline, M. D. (2010). Marketing strategy. 5th ed. Connecticut: Cengage Learning. Grönroos, C. (1997). Keynote paper from marketing mix to relationship marketing - towards a paradigm shift in marketing. Management Decision, 35(4), 322 – 339. Haberberg, A. & Rieple, A. (2008). Strategic Management. Oxford University Press, New York. Jaguar Land Rover. (2013a). About Us Retrieved from http://www.jaguarlandrover.com/gl/en/about-us/ Jaguar Land Rover. (2013b). World leaders in aluminum. Retrieved from http://www.jaguarlandrover.com/gl/en/innovation/world-leaders-in-aluminium/ Jaguar Land Rover. (2013c). Manufacturing and R&D Centers. Retrieved from http://www.jaguarlandrover.com/gl/en/innovation/production-operations/ Jaguar Land Rover. (2013d). Annual Reports (2012-13). Retrieved from http://www.jaguarlandrover.com/media/14149/jaguar_land_rover_automotive_plc_annual_report_2012-2013.pdf Jaguar Land Rover. (2013e). Innovation. Retrieved from http://www.jaguarlandrover.com/gl/en/innovation/ Johnston, R.E. & Bate, J.D. (2003). The Power of Strategy Innovation: A New Way of Linking Creativity and Strategic Planning to Discover Great Business Opportunities. American Management Association, New York Marieke, D. (2004). Consumer behavior and culture: Consequences for global marketing and advertising. Thousand Oaks, CA: Sage Publications. NDTV. (2012). Jaguar Land Rover announces new global brand strategy. Retrieved from http://profit.ndtv.com/news/corporates/article-jaguar-land-rover-announces-new-global-brand-strategy-298706 Schell, C. (1991). Action Planning: A Programmed Approach for Managing Change. Leadership & Organization Development Journal, 12(1), 28 – 32. Sheth, J. N. and Parvatiyar, A. (1995). The Evolution of Relationship Marketing. International Business Review, 4 (4), 397-418. Shimp, T.A. (1990), Promotion Management and Marketing Communications. Chicago, IL: The Dryden Press, Tuan, L.T. (2012). Corporate social responsibility, ethics, and corporate governance. Social Responsibility Journal, 8(4), 547 – 560. Vavra, T.G. (1992). After marketing: How to keep customers for life through relationship marketing. Illinois: Business One Irwin. Wallis, S.E. (2010). Developing effective ethics for effective behavior. Social Responsibility Journal, 6(4), 536 – 550 Welch, D. & Welch, J. (1996). The internationalization process and networks. Journal of International Marketing, 14,103-124. Read More