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

Strategic Management and Leadership Jaguar Land Rover Plc Background Jaguar Land Rover Plc began as a producer of motorcycle sidecars in 1922 named Swallow Sidecar Company and developing to build automobiles. After the Second World War, the company moved to Coventry and changed its name to Jaguar, producing saloon and sports cars. Racing success of their cars, technological improvement and successions through purchases of Land Rover and Jaguar companies over the years saw the development of two companies that were making large strides in the automobile industry. It was until 2008, that Tata Motors of India bought the two companies from Ford and joined them to form Jaguar Land Rover Automotive plc in 2013. Jaguar land Rover Plc made $2 billion dollar contracts with suppliers in UK for the production of Range Rover Evoque model with 100 more staff being employed to allow production at the Halewood plant. There has been an increase in workforce size at JLR by 25 percent at Solihull where there was a creation 1000 jobs in 2011 with a further 1000 jobs created at the Halewood plant in March 2012 .There has been an increase in the investments made by JLR with the announcement of a deal with China - based Chery for the investment in a joint venture for the manufacture of Land Rover and Jaguar models vehicles and engines for tune of US$2.78 billion. 1.0 Company data to measure Jaguar Land Rover Automotive plc success Success of any company is measured on the ability of the company to meet its objectives of productivity, profitability, and growth (Daniell, 2004).Profitability is measured through the amount of sales and profits that have been achieved by a company, while growth entail the continued expansion of the firm to other areas with positive results on the bottom-line as well as revenue from sales.Jaguar Land Rover Automotive plc is renowned for producing dazzling designs, splendid performance cars, and use of cutting-edge technology. After Jaguar Land Rover Automotive plc was bought by Tata in 2008, during the financial crisis, Tata has managed to turn around the fortunes of the two automotive brands.The largest manufacturer of premium vehicles in the United Kingdom is Jaguar Land Rover Automotive plc making this is the first measure to show the success of Jaguar Land Rover Automotive plc. The other measure of Jaguar Land Rover Automotive plc is on the sales potential of the company is that there have been substantial increase in sales in the company with a record of 27% increase in sales in the third quarter of 2013 compared to same period in 2012 of 112,172 vehicles. The main areas where these sales were strong for the company is United States, China, Brazil, and India where in 2013, the manufacturer sold 425,006 saloons and sports vehicles (Topham, 2014). The other measure for success of the company is the profitability of Jaguar Land Rover Automotive plc as demonstrated by profits of £842m made in the last quarter of 2013 up from £404m for the same quarter in 2012 (Topham, 2014). The sales revenue of the company for this period was £5.3bn making a pretax profits of £1.675bn, this makes the firm one of the most profitable car manufacturing firms in the United Kingdom.When the firm was bought by Tata in 2008, there was a loss of £376m on sales of £4.45bn, but since then the company has been recording high sales and increased profit margins, to be the most profitable car manufacturer in United Kingdom as depicted by the latest sales and revenue figures of the company (Topham, 2014). The other measure that shows the success of the company is the customer satisfaction of the brands produced by Jaguar Land Rover Automotive plc. There has been surging demand for vehicles from Jaguar Land Rover Automotive plc by customers including in North America, Europe, and China leading to an increase in sales by 14 per cent in 2013. Customer satisfaction, a high focus on design, quality, technology, and innovation are the reasons for the increased demand. Selling 350,000 Land Rovers globally and 76,500 Jaguars representing augmented sales by 15 percent and 42 percent respectively(Topham, 2014). 2.0 Business reasons for success Jaguar Land Rover Automotive plc has been successful owing to a number of business reasons that have allowed the company to meet its profitability, customer satisfaction and profitability objectives. Some of the reasons are enumerated below. Leadership-the leadership of JLR has been a main reason for the success of the company owing to the determination, vision, and trust that the leaders had in the ability of the firm to be the best in the market (Gupta et al, 2014). Lack of funds from Britain did not deter the leadership of JLR headed by Rahan Tata, the chairperson of JLR, and scion of Tata Conglomerate that owns JLR, Tata sought for funds from India and other financial institutions. The leaders never doubted the ability of JLR to be successful even during the recession and were willing to put in extra money to make the firm a success. This kind of vision is exceptional in times of adversity and is the main reason for the record sales recorded by the company in the last quarter of 2013, and since 2008. Technology and innovation- technology and innovation form the other reasons for the success of JLR in the automobile industry. JLR has incorporated high technology in its production process, leading to the highest quality provision and attracting high number of customers and gaining customer loyalty. Innovation has been evident in the ability of the firm to produce new models in its production lines with the latest additions being new Range Rover and Jaguar FX that have taken the market by storm. This shows technology incorporation and innovation have been the other reasons for the success of JLR in the United Kingdom and overseas market(Leavy & Wilson, 1994). Brand equity and management- despite the domination of German brands,Audi, Mercedes, and BMW in the automotive industry, Jaguar Land Rover Plc took advantage of its British origins to market Jaguar and Land Rover in terms of reputation, fashion and luxury goods, and design. Jaguar and LandRover brands have strong global awareness, distinctive associations, and strong heritage and when this is coupled with the introduction of new models of both brands making the company as successful (Forgang, 2001). Quality and emphasis on customer satisfaction- at Jaguar Land Rover Plc there is a very high emphasis on high quality high end vehicles that meet the specifications and the expectations of the customers(Gupta et al, 2014). This is well summarized by Ralf Speth, the JLR Chief Executive Officer said "Our financial performance for this and the preceding quarters is a testament to the quality of Jaguar Land Rovers award winning product offerings which continue to meet the exacting standards demanded by our customers around the world." (Topham, 25 April 2014) New market success- the other reason attributed for the success of JLR is the high sales in new markets that has aided in propelling the company to new heights in terms of sales and revenue translating to increased profitability. JLR has been very successful in China and has increased sales in previous markets including America, India, and United Kingdom increasing its revenue. This has been attributed to the development of new models of Jaguar and Land Rover that have had great success in the market including the new Range Rover and Jaguar F-Type. The highest growth market is China with 46 percent increase; North America is second with 33 percent growth increase, Asian pacific follows with 30 percent and the United Kingdom market augmented by 10 percent. Infrastructure and distribution network form the reasons for the success of Jaguar Land Rover Plc as it has a good infrastructure and developed distribution network in Europe, Asia, and North America allowing the introduction of new brands. This international strategy allows the firm to augment sales by venturing into new markets and exploiting new market horizons globally. Well trained employees: the other reason for the success of Jaguar and Land Rover Plc is the emphasis on hiring the best employees, developing them through continous training, and development and providing a conducieve envieoenemtne for the enmployees to develop their sevles to be the best. Clear marketing strategy: JLR has been consistent in the strategies implemented over the years in the strategies made for the realization of the goal with the main strategies they have employed being great quality, high custiomer satisfaction, being innovative and technology oriented. This strategy and focusing on it despite challenges have been the other reasons for JLR’s success. 3.0 Analysis of company’s strategic capabilities Strategic capabilities are the abilities of a company that contribute to the long-term survival of the company or give the company competitive advantage over other firms in the industry. There are two measures to measure the strategic capabilities of Jaguar Land Rover Plc, which are value chain and VRIN model. VRIN model includes the analysis of a number of criteria that are value, rarity, inimitability, and non-substitutability. 3.1 Justification of success using value chain analysis and VRIN Primary activities Inbound Logistics: JLR has a good control of the supplier chain with the suppliers having long contracts with the company to ensure there is no shortage in the company and meeting this nees is a priority for the companyto meet demand and avoid losses in terms of lost sales and in production run down. Operations:the opetations of JLR include design, production, and assembly are operation activities to ensure the creation of a formidable value chain. Designing involves coming up with a model that is unique, innovative, and meet customer requirements and once this is done production begins and assembly occurs after the supplier of the parts to distribution centers. The productis a qualty vehicle for the customers; hence, design, production, and assembly are important in ensuring the company gains a successful value chain. Outbound Logistics: this involves the distribution of JLR’s vehicles with 350,000 vehicles distributed to 174 markets globally, in a year.Construction of plants and distribution centers ensure the distribution activities of the company are managed well including a new manufacturing plant being built at Wolverhampton and investing in a joint venture with China-based Chrysler. JLR makes deals with 700 suppliers with 50% of them in Europe, 45% in United Kingdom and 5% in the rest of the world Marketing and Sales: marketing has been very instrumental in the achievmet of the company’s sales potential diue to the ability to reach to the consumer. The various marketing strategies that have been employed and were very influential for the success of the company are word of mouth advertising, audio, print and visual media advertising, use of social media, and advertising in automobile magazines. Service: provision of great service and meeting the needs of the consumers is an important activity that has been emphasized by the company. This is due to the inpact it on the ability to create customer loyalty and word of mouth advertiding that has aided the company in the development of the current market share and it will determine the ability of the company to meet its future development needs. Secondary/support Activities Infrastructure: JLR continues to develop the infrastructure that are used to ensure the meeting of the needs of the consumers through producing the best quality cars. The main measures made to develop the infrastructure are innovatively incorporating latests technology to the infrastructure available and building new production plants. This has been the main reason for the development of Jaguar FX and new Range Rover where the models were developed in new production centers that had new technology incorporated and employees trained on the use and application of the new technology. Human Resource activities at JLR Plc are training and development of employees to ensure they perform at the highest level of productivity. JLR requires the highest performance of employees at the highest efficiency rate and this is ensured by giving employees regular training and hiring the best qualified personnel in the market. JLR conducts training within the company through internships and supervision and sponsoring employees for further training in education institutions on related skills. Technology development: Technology development is emphasized at JLR as it determines the ability to increase sales and enter into new markets and is achieved through research and development and through training of employees. Technology development aids in the development of new production channels and the designing of new models using company designers. Being up-to-date in terms of technology at JLR is very imperative due to its determination of customer base, quality product provision, and creates a competitive advantage to the firm over the competition. Procurement: JLR purchases items from different companies that have proven high wualiaty provision and the procutment has to be done within the confirms of the policies of the firm. This ensures the company is able to get the best deals in tems of quality and cost for the development of high value to the consumr while maintaining the costs of procurmeta at a manageable level. The second perspective taken for the analysis of the strategic capabilities of Jaguar Land Rover Automotive plc is the VRIN framework, which contains four critical criteria; value, rarity, inimitability, and non-substitutability. Value Jaguar Land Rover Plc manages to be ahead of the competition through innovation of new vehicles as exemplified by Jaguar FX and new Range Rover. To innovate, research on customer demographics and tastes is done and a product that meets the needs and requirements of the customer is made ensuring the customers get value for their money. Customer specifications and suggestions are also incorporated in the models increasing profit margins for the company hence meet value requirements of the customer and achieve its own revenue and profitability needs. The value of the products of JLR are above those offered by firms in the industry with the main reasons being emphasis on tailoring the vehicles to the needs of the consumers, producing the cars to meet all weather conditions and testing them under extreme eweather conditions, being innovative and advancing the skills of the employees for high value production. Rarity The innovation and customer specification on JLR products ensures these products are different from these of the competitors ensuring rarity is upheld in the products offered by the company. Rarity is also ensured through investment in research and development, innovation of new methods of production and develing new models that meet the needs of the consumers. The employees at JLR are highly skilled employees able to work with the highest level of efficiency and production to give the best value that is rate to find. Qualified management ensures focus on producing the best cars tha are rae to find in the automobile industry. Inimitability Inimitability is maintained by the company owing to the development and production of the products to reflect the history of JLR and the fact that the innovation is protected by copyright ensures the products cannot be copied or imitated by competitors. JLR’s emphasis on producing the best cars and incorporating technology only available in the plants where the production occurs, the design and production methods cannot be imitated leading to inimitability of JLR’s vehicles. Substitutability Substitutability of the products is protected from the ability of the company to provide high quality to ensure customers cannot substitute JLR vehicles to others owing to the fact that the product fulfils their needs and is of superior quality giving the firm competitive advantage. The innovation incorporated in the vehicles from JLR are unique to the company and there is need for the manufacturers to learn this skills making the substitutability of the vehcle impossible as consumers love the JLR brand. 4. An effective innovation strategy Jaguar Land Rover Plc’s success can be attributed to an effective innovation strategy that uses the skills and competencies of employees backed by a very willing leadership to incorporate new ideas into the production process of the company (Hutton, 2013).JLR has been involved in technology development and promotion of innovation in its production facilities this is backed by the company’s commitment to invest in a multimillion pound investment in new technology, innovation, and education through building the National Automotive Innovation Campus University of Warwick. The innovation strategy at JLR has been focused on cutting-edge technology and innovation leading to development of new brands that have driven sales and profits high for the company. The production of new Range Rover and Jaguar FX have been products of innovation and technology development at JLR showing the positive impact that technology and innovation has had on JLR as these two brands have shown high success both in the domestic and international market(Hutton, 2013). Innovation commitment is also evident in the innovation strategy of Jaguar Land Rover Plc through the Programme Simulation of Innovation launched in 2013 in strategic collaboration with EPSRC. This ensured JLR has the capabilities to deliver robust designs through incorporation of simulation in the product development process highlighting the presence of an effective innovation strategy bettering the ability of developing new brands that have driven the success of the company high. Innovation has been implemented at JLR through the introduction of new driving technologies as evident in the new model types developed by the company. Jaguar and Land Rover products have new four and six cylinder petrol engines and nine speed transmissionswhile the Range Rover Evoque has active driveline and is the world’s first diesel hybrid SUV. There has also been an introduction of four-wheel drive in the Jaguar XJ and XF for the first time. The incorporation of these innovative ideas in these new designs have played a huge part in adding value to the customers increasing the customer base and demand for the vehicles produced by the company. There are also plans in the innovative strategy of the company to improve existing technologies through evolving exteriors and interiors, discover new energy storage solutions, use of lightweight materials, and enhance performance. The innovation strategy of the company is in line with the overall strategy of reducing CO2 emissions and by 2020 be carbon neutral. The company has maintained a high status as a leader in innovation and technology for the future and this innovation strategy has been effective in augmenting profitability and sales in the company. This strategic capability has been the main reason for the success of the company as it has been able to differentiate its products and continuously create new brands through technology and innovation that have added features giving more value to the consumers. 5.0 Contribution of Leadership to company’s success Leadership affects the ability of an organization to meet the goals and ambitions of an organization as it determines the strategies to be taken to achieve given goal or vision.There has been a great aspect of exemplary leadership towards the success of Jaguar Land Rover Plc as exemplified on how the company has been run in the last couple of years. The match between situational control and leadership style is suggested as effective leadership by Fielder’s contingency model. Applying this to Jaguar Land Rover Plc, Rehan Tata has been effective in setting the achievement objectives of the company since 2008 despite the financial crisis and keeping the long-term goal of the organization intact with his focus and determination influencing employees and other stakeholders to give their best. The introduction of two-way communication between management and employees has allowed trust, confidence, and respect to flourish augmenting better decision-making. Success in running the other subsidiaries of the Tata conglomerate globally and his emphasis on quality positively influenced the performance of JLR (Gomes & Jackson, 2012). Supportive leadership is demonstrated at JLR due to taking into account the view of the employees on the measures of improving the designs of the Jaguar and Land Rover models and promoting employee–leader communication. Team work has been emphasizedby the leadership of JLR augmenting the ability of employees to generate new ideas and meet the goals of the company, hence another way leadership contributed to the success of the company(Holbeche, 2009). Rehan Tata was able to understand the situation on the inability to access funds in the United Kingdom during the financial crisis and acted accordingly by seeking funds in India, other financial institutions and injecting more funds to the company. This resulted in the ability of the company to pull through the recession and emerge more successful as evidenced by the increased profits and sales. Without his leadership, this would not have been achieved. Despite success in global and domestic operations, the CEO Dr. Ralf Speth has overseen the investment in new products and facilities that aid in building the competitive advantage of the firm. He has made it clear that the company develop sustainable products that meet the demands of the customers presently and in future. He also has commitment of adding value to the communities and his consistent requirement of efficient operations and maintenance of high quality influences employees contributing to the success of the JLR (Holbeche, 2009). JLR leadership believes in technology and innovation as a driving force for the achievement of strategic and competitive advantage. There is emphasis on identification, design, and development of new brands by the leadership, which has augmented the entrepreneurial spirit of innovation on the employees and translated to the development of new models at JLR. 6.0 External and internal factors than inhibit company success and suggested solutions The main external factor is the possibility of other automobile companies copying the styles of JLR in the development of their models and incorporating the features of JLR’s brands in their vehicles. This will reduce the competitive advantage of JLR and affect their ability to ensure exclusivity in the products they offer. There is a need to have patent rights of its innovation and developing new models that incorporate technology advances keeping them ahead of the competition to avoid copying. Another external factor that affects JLR is the laws and regulations implemented in the global environment in which it operates. Compliance to this policies and regulations in new market areas is costly and eats away the profits of the company. JLR must ensure the benefits exceed the costs in compliance to these policies when expanding to new areas. One of the internal factors that inhibit the success of the company is the trouble facing Tata motors the Indian manufacturer that owns the company. This is due to the $ 2.75bn debt with $ 1.3bn maturing by June 2014, hence the need for the generation of extra cash to pay this debt. This is however affected by the collapse is sales in the Indian Market where Tata has had good sales in previous years. This has been affected by increased interest rates in India and the availability of foreign imports for the people of India. This affects the ability of the firm as they may have to reach out to the profits from Jaguar Land Rover Automotive plc affecting the ability of the company to meet its operations and sales needs hence affecting the success of the company. A suggestion for this is to source for funds from other sources apart from reducing the liquidity of the firm as this will affect the ability of the firm to be successful. The other internal factor that inhibits the success of JLR is the pricing strategy for the international market especially in the developing countries. Using the same pricing strategy for the developed and developing countries reduces the ability to exploit new market opportunities in developing countries. There is a need to develop brands that are tailored for the developing countries in terms of pricing and specifications, but meet the high quality provision of JLR to access this market. References Topham, G. (2014). Jaguar Land Rover profits continue to boom. The Guardian, Monday 10 February 2014 18.48 GMT Retrieved from http://www.theguardian.com/business/2014/feb/10/jaguar-land-rover-profits- carmaker-sales on 25 April 2014. Leavy, B., & Wilson, D. C. (1994). Strategy and leadership. London: New York. Forgang, W. G. (2001). Competitive strategy and leadership: A guide to superior performance. Lanham, Md: Rowman & Littlefield Publishers. Strategy and leadership. (1996). Bradford, England: Emerald Group Pub. Gomes, E., & Jackson, P. (January 01, 2012). Understanding Business Strategy. Holbeche, L. (2009). Aligning Human Resources and Business Strategy. Elsevier Science. Hutton, R. (2013). Jewels in the crown: How Tata of India transformed Britains Jaguar and Land Rover. London: Elliott and Thompson. Memmola, M., & Tzannis, A. (January 01, 2010). The Web Strategy Development in the Automotive Sector1. Gupta, A. K., Pande, G., & Wang, H. (2014). The Silk Road Rediscovered: How Indian and Chinese Companies Are Becoming Globally Stronger by Winning in Each Others Markets. Hoboken: Wiley. Daniell, M. H. (2004). World of risk: A new approach to global strategy and leadership. New Jersey: World Scientific. Read More