BYD Company Analysis - Essay Example

BYD Company Analyse Table of Contents Introduction 3 Analysis of the Environment 4 PESTEL Analysis 4 Political Analysis 4 Economical Analysis 4 Social Analysis 5 Technological Analysis 5 Environmental Analysis 6 Legal Analysis 6 Porter’s Five Forces Analysis 7 Threat of New Entry 7 Threat of Substitution 7 Competitive Rivalry 8 Buyer Power 8 Supplier Power 9 Market Entry Strategy 9 Marketing Mix 11 Conclusion 13 References 15 Introduction BYD Co., Ltd is one of such organisations in the world that provides green technology support to the several sectors it operates. It is notable that the organisation has emerged from being a battery manufacturing company in China, but the review of its peripheral operation it is evident that the organisation operates in several other sectors. These include Information Technology (IT), automobiles, energy fields, and many more (BYD Company Limited 2015). Moreover, the success of the organisation is evident from its reputation of leading global market share in cell phone keypad and batteries. Furthermore, the organisation has also marked its presence in the automobile industry during the year 2003 and since, then this Strategic Business Unit (SBU) has witnessed a robust growth. In the current day context, the organisation has also earned the reputation of being the fastest growing automobile organisation during the last few years. It also has been the global pioneer in manufacturing energy vehicles, which includes pure electric models and Dual Mode electric models (BYD Company Limited 2015). In is also worth mentioning that the organisational growth is largely because of the development of Research and Development (R&D) team of the organisation. The R&D team of the organisation has largely contributed in the development of energy storage system, LED lighting, and solar energy products, amongst others (BYD Company Limited 2015). Contextually, the objective of the current study is to prepare a business report that would guide the organisation in effective expansion in the continent of Europe by targeting the car market operating in Germany. Analysis of the Environment Analysis of the macro and microenvironment of European hybrid-car industry is extremely important for the current study. However, in the study special emphasis is provided to the German market. In order to conduct effective environment analysis, PESTEL and Porter’s Five Forces analysis are considered most suitable to increase the transparency and ensure effective development. Therefore, the underlying subheads address the analyses of the external as well as internal environment using these marketing tools. PESTEL Analysis Political Analysis Alike most of the nations in Europe, Germany is also a democratic nation. It is notable that the political environment of Germany along with other nations of Europe is mostly stable. This considerably encourages investors from different nations to invest in European nations including Germany (Jerez-Mir and Vazquez 2009). Besides these, it is notable that the governments of these nations have been highly effective in implementing several policies and bills that considerably encourages investors (Porta 2006). Thus, analysing the existing political scenario the encouraging political environment of Germany and other nations of Europe, it would not cause any related issue to BYD in operating its business process in such nations. Economical Analysis The macro and micro economic environment of Germany and other nations of Europe are highly encouraging. Germany is considered as one of the developed nations in the world (Pete, Andrew and Stan 2011). It is worth mentioning that along with Germany, most of the other nations in Europe are either completely developed or undergoing a developing stage. Although, most of the nations in Europe have experienced significant economic crisis due to the recent Euro crisis faced by the region, but this economic crisis has comparatively less affected Germany. Moreover, it is also eminent that most of the nations in Europe have been able to overcome from the crisis and incorporated turnaround strategies to meet with global changes (Balzat 2006). Thus, considering the prosperous economic scenario of Germany and other nations in Europe, the expansion planning BYD is considered as highly effective. Social Analysis Another important aspect of analysing the macro and microenvironment of Germany and other European nations is the social factor. In this regard, it is eminent that Germany along with other European nations has developed social structure. Germany is the most populated nations in Europe and this have considerably encouraged the investors to invest in the nation (Charles 1998). Besides this, there are several other factors in Germany and other European nations, which would encourage BYD to expand its business process. These include the high literacy rate, higher human development index, high employment, and higher purchasing power of the individuals, and other factors that signifies social development (Porta 2006). Technological Analysis In the modern era of competitive business environment, technological development is one of the encouraging factors to the investors. This is because BYD, which has the goal of effective expansion in Europe through targeting German market. It is eminent that the European nations including Germany have considerably developed itself in terms of technology (Zeller 2007). In the recent years, internet and Information Technology (IT) has considerably developed among the European nations. Moreover, technological development has improved communication and transportation within the European nations as well as within the country of Germany (Roebuck 2012). Environmental Analysis Another factor for analysing external business environment analysis is the ecological environment. It is important to note that most of the European nations have unfavourable climatic conditions during winter. Moreover, this unfavourable environment further increases through the recent phenomena of global warming and climate change (Kleibohmer 2001). However, it is notable that Germany along with the European nations has adapted strategies for controlling environment and climate change to ensure stability within the social constraints. This has been highly effective up to a certain extent. Furthermore, this could considerably encourage BYD to operate its businesses process in Germany and other European nations (Bullinger 2009). Legal Analysis Another decisive external factor that influences business environment is the legal scenario prevalent within the targeted region. In this regard, it is eminent that Germany along with other European nations has considerable legal developments. These nations have developed public, administrative, and private laws (Brewer 2013). Moreover, it is notable that these nations have considerable development in civil and criminal laws. These laws significantly encourage business operations within such nations (Goodnow 2005). Thus, considering the developed legal structures of these nations, BYD has a significant opportunity to expand in the market of Europe by targeting German market. Porter’s Five Forces Analysis Threat of New Entry The hybrid car e6 e of BYD has low threat from the new entrants. This is because there are less number of organisations that produces electric car similar to that e6 of BYD. Hence, the less diversification of products and lo number of competitors the company has less threat of competitors. There is a considerable low threat from the new entrants. However, from a long-term perspective, it is deemed that the several organisations would arise with the concept of energy cars like electric cars and others (Osswald 2007). This is so because of the increasing consciousness among several European nations regarding environment protection and reduction of carbon emission have considerably encouraged several investors to invest in electric and other energy cars that prevents from degradation of environment. Conversely, this creates a considerable threat from new entry to BYD (Tallman 2010; Katzenstein 1989). Threat of Substitution There is a considerable threat from substitutions to the hybrid electric car e6 of BYD that plans to expand in Europe through targeting the automobile market of Germany. In this regard, it is important to note that there are different types of cars available in the market of Germany and other European nations. These include petrol, diesel, and bio fuel cars, which are considered as the substitute of electric car e6 of BYD (Griffin 2012; Flink 1990). Thus, it is eminent that there is a considerable threat from substitutes to BYD, while targeting the market of Germany with hybrid electric car e6. Competitive Rivalry It is notable that BYD has a significant competition in automobile industry in Germany and other European nations. This intense rivalry within the industry considerably threatens BYD to gain market share in the region. In this regard, it is eminent that BYD has considerable threat from rivalries like Nissan, Tesla, Mitsubishi, Ukjent, and BMW among others (Kwon 2004). This intense competition in the automobile industry in Europe, considerably threatens BYD to execute its business process in the region. However, the success in this region would enrich organisational image (Henry 2011). Buyer Power BYD, which has the goal of expanding in Europe through targeting market of Germany by introducing its electric hybrid car e6, has considerable bargaining power among the buyers. In this regard, it is notable that the car buyers in Europe have considerable bargaining power due to several options for buying cars (Domansky 2006). However, it is also notable that the bargaining power among the buyers considerably reduces due to the significant product differentiation witnessed by BYD in e6. The use of electric energy that do not affect environment attracts customers and even helps in developing the prominence in the global market. It also has been the Unique Selling Proposition (USP) of BYD. This reduces the bargaining power among the buyers up to a certain extent (Porter 2013). Supplier Power There are several suppliers in the automobile industry in Germany and Europe. This has considerably reduced the suppliers’ power in such region. This significantly encourages BYD to execute its business process in the region (Hart 2007). However, it is also notable that some of the parts used in the electric car e6 have comparatively less suppliers in Europe. This creates a considerable bargaining power among the suppliers (Daft 2009). Market Entry Strategy In order to attain the goal and objectives of expanding Europe through targeting the market of Germany, BYD requires implementing some of the market entry strategies. It is important to note that the USP of the organisation is owing to its uniqueness of product, which is the hybrid electric car e6. The targeted product of the organisation i.e. e6 is an electric car that do not create pollution. This would significantly attract the consumers and the government of the region (Tang 2009). Moreover, considering the increasing trend of global oil price from the last decade, the consumers of automobile industry are expected to be attracted with the hybrid electric car e6. Thus, it is important from the perspective of the organisation that it should implement market entry strategy through considering its USP related to the product (Parlabene 2012; Levi 2007). In the context of market entry strategy, it is important from the perspective of BYD to focus on the quality aspect of the product. This is justified by arguing that the automobile consumers of Germany along with other European nations are quality conscious. This is largely because of the high purchasing power among the consumers in such nations. Therefore, the organisation in order to mark its presence in the automobile industry in Europe during its entry stage should focus on product development. Organisational focus on its product quality would support in effective entry in the market of Germany, despite of intense competition. The intense competitive rivalries are apparent from the competitors like BMW, Tesla, Nissan, and Mitsubishi, among others. (Kasperk, Wilhelm and Wagner n.d.). The organisation should communicate effectively with its customers regarding the superior quality product that it offers. Moreover, in the initial stage it is important from the perspective of the organisation to offer free test drives to its customers. This would certainly increase customers’ insight regarding the product, which would considerably influence the customers in purchasing the product (Bach 2007). Besides this, in the entry stage it is also important from the perspective of the organisation to implement a reasonable pricing strategy. This reasonable pricing of the product would not only influence prospective customers to purchase e6, but it would also provide considerable profit margin. This would eventually lead to the increase in the profit of the organisation. This would also support the organisation in attaining considerable market share, which is highly important for any organisation during its initial stages of operation (Lymbersky 2008; Kwon 2004). The aforementioned market entry stage can also be justified through the arguments suggesting that focussing on the USP of the product would lead to the attainment of competitive advantages. The electric energy required by the car is a unique feature that significantly differentiates with the cars that are provided by the competitors. Thus, it provides considerable competitive advantages to the organisation. This would eventually support the organisation in effective targeting the automobile market of Germany and expansion in Europe (Tielmann 2010; Drabner 2003). Marketing Mix For the effective business execution in the market of Germany, it is important that the organisation must consider all the elements of marketing mix. This includes effective pricing strategy, effective selection of distribution channel, effective promotion of the products, and product development (Govoni 2003; Sandhuse 2000). However, it is recommended that the organisation should provide more importance to the product aspect of marketing mix. In this regard, it is notable that the organisation has witnessed considerable product development, which has been the USP of the organisation. In this regard, the organisation requires focusing more on product. The hybrid electric car e6 is innovatively developed that requires electric energy. This is unlike most of the cars in Germany that runs through fossil fuels and prevents emission of carbon gasses. However, the car manufactured BYD do not emits carbon. This significantly attracts the consumers in Germany and other European nations. (Sandhuse 2000). Moreover, the product is also expected to be liked by the government of such regions. Besides these, it is justified that the requirement of product factor of marketing mix should be standardised through the increasing consciousness among the governments regarding the control of carbon emission level (Vincze 2006; Sandhuse 2000). In addition, it is also justified by the fact that fossil fuel is in the extinction stage and the price of these are on the increasing trend. Thus, the product e6 is expected to be liked by the consumers based on its elegant features and developed standard of operation. The product along with providing environment support would also provide considerable economic support to the consumers. (Richter 2012). In order to promote the product of BYD effectively in Germany and other European nations, the organisation should consider some of the effective promotional strategies, which are extensively used throughout the world in automobile industry. In this regard, it is important that BYD alike other automobile organisations should provide opportunities to its customers for a test drive (Sandhusen, 2000). This is a highly decisive strategy because the product introduced by the organisation, the hybrid car e6 is a new concept of car that runs through electricity. Most of the customers of the region are likely to be unaware of such cars. Thus, it is important that the organisation must promote its products through test drives. This would correspondingly increase the customers’ insights (Sandhusen, 2000). The increased customers’ insight would eventually influence them to purchase the product. Thus, it is justified that the promotional strategy of test drive opportunity to the prospective customers of BYD in Germany and other European nations would be considerably effective. (Richter 2012). Another promotional strategy, which is considered as significantly effective in the contemporary era of competitive business environment, is the use of social media networks. Social media have significantly penetrated in Germany and other European nations. (Richter 2012). It is notable that most of the prospective buyers of cars are available in social media networking platforms. This creates a significant opportunity to BYD to promote the hybrid electric car e6 through social media (Get Through Guides, 2007; Sandhusen 2000). Besides this, it is also justified that the organisation should promote its products through its websites and web pages. This is because the organisation would have the opportunity to provide detailed information regarding the product i.e. e6. This along with product promotion also leads to the increase of customers’ insight. This certainly would support the organisation to influence its customers to purchase the product (Shimp and Andrews 2013). Furthermore, in similar objectives the organisation also have the opportunity to promote its products and provide detailed information about the same by joining different automobile web pages, which provides comparative analysis of different automobiles. The effectiveness of this strategy can be justified by arguing that it would provide an opportunity to the organisation in depicting product differentiation it has executed (Shimp and Andrews 2013). Besides the aforementioned promotional strategies, BYD should also consider some other promotional strategies in order to promote its products effectively in the market of Germany. In this regard, the use television, newspapers, hoardings, and other mass media promotional tools are expected to be highly effective. This is justified by arguing that such promotional tools have a significant reach to the mass media (BYD 2014). Moreover, promotions through tools are more appealing to the prospective customers. This would lead to the increase in the customers’ insights regarding the product, which eventually would attract such prospective customers to purchase products from the organisation. Subsequently, it would support the organisation to gain considerable market share. This would pave the organisation to reach its goal and objectives in the expansion process in Europe through targeting the car market of Germany (Shimp and Andrews 2013; Massenbach 2009). Conclusion From the course of the study, it is eminent that BYD has witnessed of significant growth and development in its automobile sector during the last few years. However, in the current day scenario, it has the objective of targeting the automobile market of Germany and thereby creates an effective platform for successful expansion throughout Europe. In this regard, through analysing the external environment of Germany and other European nations, it is eminent that the political, economical, social, technological, environmental, and legal environment is considerably favourable to BYD. However, analysing the external environment by Porter’s Five Forces model, it is eminent that there is a reasonable threat from new entrance, substitution, and competitors. It also identified that there is a moderate power of among the buyers and the suppliers in the industry. The study also attempts to provide effective market entry strategies. In this regard, it is eminent that organisation must focus on its product, which has been its USP, is considered as its success factor in the initial stages. 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