Strategic Management at Geely Automobile Chinese Company - Case Study Example

MM403 Geely Student’s name Institutional Affiliation MM403 Geely Introduction Geely is an automobile Chinese company which began in 1997. Over the years the company has been making tremendous advancement in the job market. It has been ranked among the top ten companies dealing with automobile in terms of sales of passenger cars. This paper will discuss the in-depth capability analysis of Geely automobile Holdings. The internal analysis of a company focuses on factors within the company that give the organization certain added advantage and disadvantage in meeting the needs of the target market. The strengths of a company are core competencies that make it thrive in the market. The organization remains market oriented and customer focused to ensure longer and profitable stay in the job market. The weaknesses of a company are examined from a customer perspective. The customers are in a position to point out the weakness of a company that is not evident on the side of the company (Barney & Hesterly, 2012) There are various areas that are analysed in internal analysis which include; resources and capabilities. The resources analysis may include profitability, sales, product quality brand association, and existing overall brand, relative cost of the new product, employee capability and finally product portfolio analysis (Pand and Pandova, 2016). Capability analysis of a company involves the analysis of company’s internal strategic strengths, weakness, problems, constraints and uncertainties. There are key factors that remain unchangeable such as resources which are not productive on their own thus require close collaboration within the teams and finally the analysis interest is not in capability of the company but the incapability relative to other companies (Guo &Yang, 2014) The company’s strategic capabilities are identified under the functional analysis, resources analysis and process and system analysis (Guo & Yang, 2014) The functional analysis involves all functional areas in an organization which include; corporate functional area which has the capability of financial control, experience in strategic control, ability to motivating and coordinate firm’s unit. Information management is another functional area with capability of comprehensive and effective information system that is paramount in managerial decision making. Research and development area has the capability of doing basic research. Product design and marketing area has the capability of designing their product, managing their brand and promotion and responding to the market trends. Finally the sales and fulfilment functional area has the capability of promoting and executing sales efficiency and speed of fulfilment and offering quality customer service (Guo & Yang, 2014) VRINE ANALYSIS MODEL VRINE is an acronym for value, rare, inimitable, no-substitutable and exploitable. This is a framework for firm analysis of resources and capabilities. VRINE is a variant of VRIO with addition of non substitutable and exploitable element of analysis. Valuable The question of value is asked while internal analysis is done. It looks into the importance of the certain resource or capability to the firm’s operations. The capability can be strength of the company aiding in exploitation of the opportunities in the market place and dealing with the threat in the firm. However, if none of those advantages are evident it is deemed to be a weakness. The valuableness of a capability provides the opportunity to exploit various elements in the market such as technology, new markets, economic change, and political changes and in addition deal with threats arising from competition such as threat of substitutes, buyers, suppliers, rivalry and entry (Barney & Hesterly, 2012) Geely’s automobile Holdings utilizes its capabilities to exploit opportunities in the automobile market such technology which makes it thrive in the market by selling vehicles at low price with attractive design to the customers. The company has asset seeking acquisition strategy to deal with fierce market completion in the international market. The company bought shares from Manganese Bronze Holding in 2006, acquisition of Volvo cars in 2010 and later the acquisition of the leading Australian transmission producer in 2009.Moreover; the company has invested in expertise team that make critical decisions concerning the market. The decisions made improve the quality of the brand products and employment of skilled employees. Combination of these factors has made the company to remain competitive. In conclusion, the exploitation of opportunities and dealing with threats result in outcomes such as increase in revenue and reduce cost of sale. Rare The question of rarity seeks the answer to whether the capability is absolutely unique and scarce and owned by few firms. If the answer is yes the company has the competitive advantage. The capability has to be of short supply and persistent over time (Barney & Hesterly, 2012). Geely automobile company produces unique car models such as Maple model in 2002 which was a result of innovation in product architecture. This kind of model was unique that other competitors could not afford to imitate as the innovation in product architecture was rare. The competitors included the Volkswagen, Toyota, general motors, ford, BMW and Chrysler automobiles. This made the Geely Company to remain competitive in the market Inimitable The rarity and valuableness of the capability make it difficult to imitate. Imitating the innovative strategy of a firm may lead to drastic fall or collapse of the market. The competing companies in the market can opt to duplicate the product of rival company and if the cost of production in obtaining the resources is minimal and therefore attain competition parity. The innovative company whose capability is rare, valuable and inimitable experience long term competitive strategy (Pand and Pandora, 2016). Geely automobile company produce cars that are difficult to imitate by the competitors and end up expanding its market to international level for export. Non- substitutable Imitation can be done in two ways either direct duplication or substitution. The rival company can opt to produce substitute product to your company. This offer direct competition in the market. The capability as a strength must be non substitutable. This can be achieved by maintain the cost of imitation high so as to experience the sustained competitive advantage. In addition, the capability has to remain valuable and rare (Guo & Yang, 2014) Geely automobile company produce car models designed to attract customers and also sell them at low price .This strategy has made the rival companies to opt out of the idea to produce substitute for the car models. Organised The capability has to be arranged in a manner exploitable and available in every part of the company. Once the organization is organized the company is in position to enjoy sustained competitive advantage. The arrangement may include reporting structure where the correct communication channel is observed, management control system where decision made by the executive aligns with the company’s strategy. This includes the budgeting and reporting means so as to be at par with the activities happening at the ground. Another control system is to keep the companies culture in all the endeavours. Finally, the company’s compensation policy which include the vacation days, bonuses, stock and increased remuneration. The impact of this organization element has indirect advantage to maintain the competitive advantage (Grünig & Kühn, 2015) Exploitable The capability of a company has to be in position to be nurtured and modified to viable business element or opportunity. The four elements mentioned above should accrue the firm’s intended benefits. Otherwise, all the investment and efforts used to find the rare resources and make the valuable will be useless if they won’t allow exploitability (Barney & Hesterly, 2012) References Barney, J. B., & Hesterly, W. S. (2012). Strategic management and competitive advantage: Concepts. Englewood Cliffs, N.J: Pearson. Grünig, R., & Kühn, R. (2015). The strategy planning process: Analyses, options, projects. Bottom of Form Top of Form Guo, C., Jiang, C. X., & Yang, Q. (November 01, 2014). The Development of Organizational Capabilities and Corporate Entrepreneurial Processes: The Case of Chinese Automobile Firms. Thunderbird International Business Review, 56, 6, 483-500 Panda, A., Jurko, J., & Pandová, I. (2016). Monitoring and evaluation of production processes: An analysis of the automotive industry Top of Form X Bottom of Form Top of Form Bottom of Form Top of Form Read More