Strategic Marketing And Planning - Case Study Example

Land Rover Case Analysis Introduction On 11 March 2009, Jaguar Land Rover announced that it would be the recipient of a 27m pound government grant. The funds form part of a bailout plan in which the government tentatively set aside the sum of 2.3bn pounds for support of the motor industry. Jaguar Land Rover applied for the grant in January for the purpose of partially funding a 400m pound project for the development of a new Land Rover motor vehicle. The new vehicle is intended to be manufactured at Merseyside’s Halewood plant and is said to be the smallest and lightest ever manufactured by Land Rover.1 Competition among the auto industry has never been as important as it is now with the worldwide recession, as various automobile manufacturers and retailers struggle to remain a viable force in the market.2 In this context, the question for consideration is whether or not Land Rover places itself in a position to remain competitive by taking on this new project with government aid. More importantly, this new development raises the question of whether or not the new project and its expenses is an appropriate strategic marketing and planning method from the perspective of Land Rover and its stakeholders. In order to make this determination it is important to assess the company’s position in the auto industry; its stakeholders; and evaluate Land Rover’s external environment as well as its resources, balance and value chain as it relates to the proposed project. Jaguar Land Rover: Its Position and Its Competition Jaguar Land Rover is divided into two amalgamated company with Jaguar Cars Limited’s registered office located in Coventry, UK and Land Rover’s registered office located in Warwick, UK.3 Jaguar Land Rover is a part of India’s biggest automobile industry, Tata Motors and brings together two of the UK’s most successful and popular car brands.4 Land Rover has been in existence for 60 years and has established subsidiaries in a number of locations worldwide, including the US, Italy, France, Spain, Germany, the Middle East, Russia, Australia, South Africa, Belgium and Canada.5 From its inception in 1948 Land Rover debuted as a high profile vehicle serving as converted vehicles for Queen Elizabeth II’s “first world tour in 1953 and Pope John Paul II’s tour of England in 1982.”6 Land Rover vehicles have also been featured in popular films and television programmes over the years.7 Ultimately, Land Rover cars have always been designed for exploration and adventure globally.8 In the 1960s, Land Rove introduced a more luxurious vehicle in the name and style of the Range Rover although it combined luxury with the typical 4x4 wheel drive that characterized Land Rover’s vehicles.9 Over the years, Land Rover has continued to introduce new and improved variations of its original Land Rover. These introductions included the Camel Trophy, the Discovery and the sporty, Land Rover Sport which was its most recent invention.10 Land Rover’s top competitors are Daimler, locatedin Stuttgart, Germany, General Motors located in Detroit, Michigan and Toyota, located in Toyota, Japan.11 Daimler is noted for its manufacturing and marketing of commercial vehicles and the brand name Mercedez Benz.12 General Motors is noted for its production and marketing of cars and trucks with brand names such as Buick and Cadilac.13 Toyota is Japan’s number one car manufacturer and is well known for its fuel economy vehicles. It has also been noted for its jeeps and trucks.14 The development of new cars over the years is a testament to Land Rover’s success. Economists agree that a company’s success is tied to profitability and profitability is driven by a company’s efficiency in manufacturing, the quality of its products and ultimately it marketing strategy.15 Large companies such as Land Rover manufacture a variety of products and market those products under distinct brand names.16 It is obvious from the history outlined above that Land Rover has remained competitive by developing and marketing new versions of its vehicles year to year. In each case they have attempted to and have been largely successful in remaining on par with its major competitors. The proposed latest project, which represents a smaller and lighter vehicles can be seen as a means by which Land Rover wants to compete more effectively with Toyota, a company that is characterized by its propensity to launch fuel friendly vehicles.17 It is a well known fact that smaller and lighter vehicles are fuel efficient. Moreover, as gas prices increase, consumer habits change in response making the smaller more fuel efficient vehicle more appealing.18 The introduction of the smaller car makes sense for Land Rover, who has traditionally focused on the heavy duty vehicle. As Vlasic reports: “The switch to smaller, more fuel-efficient vehicles has been building in recent years, but has accelerated recently with the advent of $3.50-a-gallon gas. At the same time, sales of pickup trucks and large sport utility vehicles have dropped sharply. In another first, fuel-sipping four-cylinder engines surpassed six-cylinder models in popularity in April”19 There is an obvious supply and demand disparity as far as Land Rover is concerned and this compromises its ability to remain competitive. With the drop in sales for sports utility vehicles, a vehicle which essentially defines Land Rover mandates that Land Rover looks elsewhere to remain competitive. Economist agree in large part that: “…consumers, rather than suppliers, have become the governing force in the supplier-consumer chain…Therefore, the challenge for organizations is to be able to adapt to new consumer buying patterns and respond to aggressive competition. To do so, organizations are re-engineering their business to create flexible, responsive and customer-focused business processes.”20 By proposing the new project and actively seeking financing for it, Land Rover is taking the correct business approach. With the drop off in consumer purchases of the types of vehicles that Land Rover traditionally makes and the increase interest in the smaller vehicles, Land Rover cannot remain competitive should it insist on marketing vehicles that are no longer in demand. Organizational Stakeholders Organizational stakeholders cover a broad spectrum of individuals and institutions. Post, Preston and Sauter-Sachs describe organizational stakeholders as persons or institutions that contribute or receive something “from the corporation.”21 To this end, organizational stakeholders can be both involuntary and passive in the sense that they “contribute by tolerating the existence and operation of the firm: and are recipients of either benefits and/or harms “as a result.”22 Post et ales provide a stakeholder model which is useful for assessing Land Rover’s organizational stakeholders. Post et ales’ stakeholder model identify the following as organizational stakeholders: Governments. Employees. Investors: Shareholders and creditors. Consumers and users. Unions. Regulatory authorities. Partners and affiliates. The local communities and its citizens. Private institutions. Suppliers.23 The government’s stake in Land Rover and the auto industry in general is evidenced by its plans to put aside a large bail out sum. The government can also be said to represent the community and citizens’ stake in the organization and this commitment to the auto industry and by extension Land Rover is also evidence of the community and citizens’ stake in Land Rover. It also follows from the fact that citizens pay taxes and therefore more than mere passive or involuntary stakeholders since the funds to be set aside for the auto industry and approved for Land Rover ultimately originate from the citizens tax remittances. The community has a direct stake in the environment as they stand to benefit from fuel efficient vehicles which invariably emit lower levels of toxins into the environment.24 Consumers and users have a stake in the company since they stand to benefit from the production of vehicles and even more to gain from fuel efficient, low emission vehicles. Suppliers, like employers have a stake in the organization’s continued business success as it represents a direct source of income for them. The same factors impact the stake that all the other parties have in the organization. Taking each of these respective stakeholder interests into account, the development of the smaller car can satisfy the interest of each of the stakeholders in that it creates a vehicle that the consumer wants and will likely purchase. At the same time, the smaller vehicle replaces the sports utility vehicle which has lost favour among automobile consumers. The smaller car also saves the consumer stakeholder by fostering a cleaner environment and producing a fuel efficient car since both factors appear to be a major concern among consumers generally.25 Obviously, by pandering to consumer habits, Land Rover remains competitive or at the very least marketable with the result that shareholders, creditors, employees and suppliers benefit. The Organization’s External Environment Just as the organization is influenced by its stakeholders, it is influenced by its external environment.26 In fact organizational theorists argue that in order for a business to remain viable it is required to “adapt to its environment.”27 The external environment is comprised of all outside factors that have the potential to influence or impact the organization.28 The external environment is characterized by two different parts: Directly Interactive: The directly interactive environment is self explanatory. It has a direct and immediate affect on the organization. The new competitor is the most common example of directly interactive external environmental factors. Indirectly interactive: The indirectly interactive external environmental factor has a distant and perhaps secondary impact on the organization. This could be new statutory law. These statutes can be laws that require some form of safety procedure within the organization.29 External environmental factors are comprised of individuals and institutions with stake in the organization.30 For example the directly interactive are typically: Owners. Customers. Suppliers. Competitors. Employees and unions.31 Indirectly interactive forces are typically: Demographics: This requires an assessment of the people, their characteristics as well an assessment of social groups within each relevant society or community. Information such as age, gender, income and consumer trends are typical examples of the measurements that are required to be taken. Values: An assessment of people’s beliefs with respect to conduct, services and products. Changes in these beliefs drive changing fads.32 The PEST analysis is a structural analysis for identifying the organization’s external environment for determining what measures should be taking to respond to these matters. The results of the PEST analysis are typically used to determine how the organization can take advantage of or benefit from opportunities generated by the external environment or may counter any threats that are predicted.33 PEST typically takes the position that economic conditions impact the degree of difficulty associated with success and profitability because it influences the availability of capital, cost and demand. 34 The PEST structural analysis includes a measurement of the following factors: Political factors: This would essentially involve an evaluation of how far and to what extent the government supervises the economy. This would invariably involve an evaluation of the government’s tax policies, labour laws, environmental regulations, trade law, tariffs and governmental stability. Likewise, political factors would also include assessing how the government encourages the provision of goods and services. Economic factors are comprised of growth, interest rates, currency exchange rates and inflation. Social factors would include culture, environmental and other health concerns, age distribution, careers and socio-economic factors. Technology relates to both environmental and ecological factors as well s the rate of technological development and advancement. Technology can impact costs, quality and innovation. Environmental factors relates to things such as climate, weather and climate changes. These concerns may impact the products that the organization produce and market.35 The table below is representative of the LoNGPESTEL Model. LOCAL NATIONAL GLOBAL POLITICAL Provision of services by local council UK government policy on subsidies World trade agreements e.g. further expansion of the EU ECONOMIC Local income UK interest rates Overseas economic growth SOCIAL Local population growth Demographic change (e.g. ageing population) Migration flows TECHNOLOGICAL Improvements in local technologies e.g. availability of Digital TV UK wide technology e.g. UK online services International technological breakthroughs e.g. internet ENVIRONMENTAL Local waste issues UK weather Global climate change The PEST analysis should reveal that economic factors, environment/climate changes and the rise in petrol prices have impacted consumer habits to such an extent that the auto industry has been impacted in a negative way. These negative consequences are fortified by the political environment in that the government has set aside funds to support the automobile industry. The cumulative impact of the factors as determined by virtue of the PEST analysis is that consumers are exhibiting a decrease in interest in the types of vehicles typically manufactured by Land Rover. Land Rover’s Resources, Balance and Value Chain in Reference to the Bail Out Land Rover has its name and reputation as a quality vehicle manufacturer. It also has years of experience and success as a primary resource. The company has cultivated a propensity for innovation and improvements with respect to its vehicles and has established a well-known and respected brand name. However, the heavy duty vehicle is no longer appealing to the consumer to the extent that it did in the past as more and more consumers are becoming cost conscious with respect to the price of petrol and are paying more attention to the concerns about environmental pollution. The years in business has generated consumer confidence in Land Rover so that if Land Rover at the very least cuts back on its manufacture of heavy duty and luxurious vehicles and puts those resources into the production of the lighter, smaller vehicle that confidence would increase. Moreover, the government’s approval of Land Rover’s application for a bailout speaks to the value of the proposed project. The value chain commands attention to consumer interests, the economic factors and environmental concerns. More importantly, from Land Rover’s perspective, the value chain commands that Land Rover focus on its own business success. With government support and consumer interest in smaller cars all indications are that the new car should be business priority. Likewise, cutting back on production of the heavy duty vehicles should be a priority and those resources can be put to better use in the production of the new car. The manufacturing of the smaller, lighter vehicles will correspond with these values. The car will help to sustain Land Rover’s competitive position in the industry market because it directly responds to external environmental factors and panders to its stakeholders. It does so by taking account of pollution in the environment and the changing trends brought on by economic factors. References Anderson, C. and Zeithaml, C. “Stage of the Product Life Cycle, Business Strategy, and Business Performance.’ The Academy of Management Journal, (1984) 27(1), 5-24. Chhatlani, J. (19 June, 2008) “New Survey Shows Concern over Fuel Prices and Environment Drive Consideration of Hybrid Electric Vehicles to Highest Level Ever.” Synovate http://www.synovate.com/news/article/2008/06/new-survey-shows-concern-over-fuel-prices-and-environment-drive-consideration-of-hybrid-electric-vehicles-to-highest-level-ever.html Retrieved 18 April, 2009. Cooper, L. (2000) “Strategic Marketing Planning for Radically New Products. Journal of Marketing 64(1) 1-15. Corriea, Z. and Wilson, T. D. (2001) “Factors Influencing Environmental Scanning in the Organizational Context.” Information Research, 7(1), 1-30 Duncan, R. (1972) “Characteristics of Organizational Environments and Perceived Environmental Uncertainty.” Administrative Science Quarterly, 17(3), 313-327. Dutzik, T.; Monopolis, A.; Telleen-Lawton, T.; Sargent, R. and Aurillo, A. (2006) “The Road to a New Energy Future: Energy Efficiency and Renewable Energy Technologies for a Cleaner More Secure Energy Future.” U.S. PIRG Education Fund, 4-34. Hovers. (n.d.) Land Rover. http://www.hoovers.com/land-rover/--ID__134833--/free-co-factsheet.xhtml Retrieved 18 April, 2009 Jagdev, H.; Brennan, A. and Browne, J. (2004) Strategic Decision Making in Modern Manufacturing. Springer Jaguar Land Rover.(n.d.) http://www.jaguarlandrover.com/index.html Retrieved 18 April, 2009. Jennings, D. and Seaman, S. 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Brookings Institution Press PESTEL Analysis of the Macro-Environment. Oxford University Press, 2007. http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm Retrieved 18 Aprik 2009. Post, J.; Preston, L. and Sauter-Sanhs, S. (2002) Redefining the Corporation: Stakeholder Management and Organizational Wealth. Stanford University Press Staff Reporter. (11 March 2009) “Land Rover Gets Government Cash.” BBC News. http://news.bbc.co.uk/1/hi/business/7937196.stm Retrieved 18 April, 2009. Thompson, J. (2002) Strategic Management, London: Thomson. Vlasic, B. (May 2, 2008) “As Gas Costs Soar, Buyers Flock to Small Cars.” New York Times. Read More