...Case Study 3: Carmakers Target Gen Y (Case 7-2) 2 Explain the strategy behind Asian automakers targeting generation Y The strategy behind Asian automakers targeting Generation Y could be explained in a number of ways. Asian automakers customer base is aging hence the need to identify a different segment to cultivate loyalty to support present and future sales. Generation Y consists of young Americans born in the mid 1970s and mid 1990s. This segment consists of around 71 million with a purchasing power estimated to be $200 billion. With such a sizable population and impressive purchasing power, Generation Y is poised to be that fastest growing segment that could soon outgrow that of baby boomers. Generation Y is educated, diverse, and tech-proficient. This is a unique segment that has unique needs. Asian automakers understand that a company's product can only serve some but not all demographic groups. It is with this in mind that the automakers are focusing on serving generation Y as a distinct segment, with unique needs and preferences. The strategy behind targeting Generation Y (Gen Y) by the Asian automakers seems to be driven by the 80/20 rule. According to Keegan and Green (2011), “ This rule (also known as the law of disproportionality or Pareto's law) suggests that 80 percent of a company's revenues or profits are accounted for by 20 percent of a firm's products or customers” (p.213). Generation Y is a large segment that is still growing and has the potential...
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...Global Expansion Strategies of Two Korean Carmakers- Case Analysis B6110: Supply Chain Optimization and Outsourcing January 27, 2012 Two Korean Carmakers- Strategic Situations Daewoo and Hyundai are two Korean carmakers who enjoy many structural similarities. Yet the two are direct competitors in the Korean automobile industry, where they are jostling for position, pushing for economies of scale, and hoping to sure up a competitive advantage. Both Daewoo and Hyundai look to international expansion as their recipe for success. Each has formulated a specific expansion strategy in the past based on its particular market situation. Both Daewoo and Hyundai now look to international global expansion for future success. Expansion & Supply Chain The direct competition with each other in the Korean car market had an enormous influence on each firm’s past globalization strategies. The Korean automobile industry has been dominated by Hyundai since the 1970’s. By 1993, Hyundai had established a 50% market share in the Korean market, whereas Daewoo only held 20% (Bowon, 2005, p. 148). In 1993, Hyundai also enjoyed 58% of the market share of automobile exports by Korean companies, whereas Daewoo’s exporting efforts had failed (Bowon, 2005, p. 148). Moving forward from 1993, Daewoo and Hyundai took into account their competitive position against each other when deciding how to conduct their global expansion strategy. “Daewoo focused on expeditiously achieving...
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...Modern carmaker Toyota has been under heavy scrutiny for the past several months due to its acceleration and braking defects. As a result, it will cost the Japanese carmaker $2 billion dollars in repairs and loss sales. Of course the auto industry has a history of vehicle recalls which is not breaking news. This problem is not Toyota’s lack of engineering or quality of their cars; it’s the arrogance of their company’s culture and lack of a quick response to solve issues. Toyota has long been known for its superior car quality, global brand presence and its unmatched reliability, which is now threatened by their turn of events. Surprisingly, Toyota had technical defects in their parts, which was widely ignored. In 2002, Safety Research and Strategies (SRS), a consumer advocacy group, reported that there were a high number of acceleration problems in Toyota’s cars during the same time the carmaker introduced their new electronic throttle control technology. The car company ended up blaming the problem on the floor mat. They’re reasoning was that the floor mat was loosened which jammed the gas pedal, causing the pedal to accelerate uncontrollably. The National Highway Traffic and Safety Administration, (NHTSA) conducted an investigation is 2003, but did not take their action seriously. Toyota ignored these problems which resulted in the car company to recall nearly 3.8 million domestic vehicles in November 2009, the company’s biggest recall ever. Since the past 10 years...
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...RUSIA : A HUGE EMERGING CAR MARKET ISOLATED FROM OIL CRISIS High oil prices are causing pain for carmakers in America as people there are sacrificing their fancy for pick up trucks and sport-utility vehicles for more frugal small vehicles. In May 2008, General Motors announced a 30 percent fall in car sales, compared with a year earlier; Ford posted a 19 percent drop, and sales of its F-150 pick up fell behind Toyota’s Camry and Corolla for the first time. But far in Russia, the high oil price is powering expansion of the market rather than painful restructuring. Thanks to abundant natural resources, Russia has been witnessing a rising economy since decade ago. With nearly doubled and steadily rising real disposable income, cars are no longer unaffordable for many Russians. Currently, car ownership in Russia is still low at about 200 per 1000 people, compared with the over 500 in most of Western Europe and the around 800 in American (even in other former communist countries in Central Europe, the number is between 300 and 350). But the car market there is expanding : in 2007 Russia's sales of new cars grew 36 percent by volume and 57 percent by value; sales of passenger vehicles exceeded 2.7 million. According to analysts, Russia could out strip Germany as Europe’s biggest market by 2008, with sales reaching around 3.3 million; by 2012 Russians will be buying more than 5 million new cars a year, of which nearly 90 percent will be foreign brands. However, all of the growth has...
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...Prince Mohammad Bin Fahd University Marketing Principles BUSI- 3313 Sec. 203 Name: Leena Al Mushcab ID# 201100096 Assignment #1 Topic: Case Study Submit to: Ms. Nadia Lucien 3/9/2015 1. Talk to five people varying in age about their vehicles or car and ask them what value means to them with regards to an automobile or car and how the manufacturer or dealer creates such value. Please write a brief report of what you learned about customer value? Write clear sentences and illustrate your points with examples. “Those who expect to reap the blessings of freedom, must, like men, undergo the fatigues of supporting it." Thomas Paine was, of course, not talking about the freedom of automobile or even horse & carriage ownership. Nonetheless, there’s a point to be made: having a car can be a blessing and a burden. First, we should understand the market place, market offerings, value and satisfaction, and exchanges and relations, and customer needs, wants, and demands. A car is not an investment. It is a depreciating asset, meaning it loses value over time. On average, new cars and trucks lose more than 20% of their value in the first year (Motley Fool). On the flipside, that means that if you can find a well-maintained car that’s just one or two years old, you’ll get a huge discount on an almost-new model. So, after talking to 5 different people from different ages and owning different cars, I came to a conclusion that someone who’s...
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... consumers still have a bad image of Diesel, in their mind Diesel is noisy, smelly and smoky. This bad perception of the fuel negatively affected the sales of one of the most fuel efficient car especially during an essential economic deterioration. Therefore Ford decided not to launch the car in the USA, but they argue that it it’s due to the cost of exporting from Europe but also the uncertain demand. Ford and also other carmakers are facing some challenges due to the elusive price of fuel but also the oil decline. Ford is mostly affected by people’s perception of Diesel, but the fuel represent 50% of sales in Europe due to its expensive price. Carmakers has the choice between Gasoline engines, Diesel engines or Hybrid Engines. Gasoline engine, are not the most wanted, indeed people prefer electric cars .But due to oil Embargo in 1973, it increase the price of gasoline thus made it more attractive .CAFE installed some regulations. Oil price decrease enabling carmakers to build better car and meet CAFÉ regulations but at the crises carmakers realize that it was time to find alternatives to oil. Diesel was the fuel of choice, provide more power even for big cars, but in Europe and Asia due to taxes it became expensive. Consumer prefer small cars with diesel to lower their fuel expenditure. In USA people has bad perception of the fuel, in 2006 they start producing clean diesel with an extra cost of 5-8$ per gallon. But due to strict emission standard,...
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...acted unethically concerning the German-headquartered VW carmaker because it applied the double standards, violating the stakeholders' theory, which is aimed at protecting the interests of all parties like the government, businesses, and the customers. While the government was satisfied with fining VW for exceeding the nitrogen oxide emission level, other stakeholders were harmed. Thus, the carmaker and its return clients were affected in a negative way by the U.S. Environmental Protection Agency EPA. The government as one of the stakeholders obviously violates the interests of other two major groups of stakeholders such as the manufacturers and the customers. In this case, the balance between the interests of stakeholder has been distorted, and the market lost the balance. Though all stakeholders have equal rights at first blush, the customers are still superior to other since they create demand in the market – the main driver of the free market economy. The main ethical challenge here is the application of the double standards concerning various carmakers. The most obvious solution of the problem must be the compliance with the deontological ethical approach, explained by the Kant's categorical imperative. EPA has to treat all carmakers equally, keeping in mind the preferences of their customers as well. Hence, EPA indirectly discriminated the VW customers in the U.S. by fining the German-headquartered carmaker. Another ethical issue here is the sequence of interests...
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...7/11/12 Why Chinese Car Brands are Stuck in First Gear Publication: The Economic Times Mumbai;Date: Jul 7, 2012;Section: Global Business;Page: 6 SLOW WHEELS Why Chinese Car Brands are Stuck in First Gear Local brands make up only about 30% of their home market, the lowest proportion of any major economy ike many Chinese, Zong Zhaoxiang wishes nothing but the best for the Chinese car industry – yet he won’t be buying a Chinese car anytime soon. The 52-year-old chairman of a Shanghai chemical company, Zong said he expects Chinesebranded cars to have bright prospects. However, he loves the comfort, quality and image projected by his black Mercedes-Benz S-class, and he said he may buy another Mercedes-Benz model or a BMW in the future. “If Chinese-made cars were better designed and could demonstrate your status, more people might buy them,” Zong said. Not all of Zong’s compatriots can afford a Mercedes-Benz, of course. But most of them still prefer foreign brands to domestic ones. Volkswagen and General Motors sold the greatest number of vehicles in China in 2011, the world’s largest car market, followed by Nissan, Hyundai and Kia. All domestic car makers combined captured only about 30% of their home market, the lowest proportion of any major economy. This is not what Beijing intended. In contrast to other “strategic” industries like telecom and banking, the auto industry has been gradually opened to foreign investment over the past two decades, as Beijing allowed foreign...
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...Article Assignment #4 Article Summary: The automotive market in India is not doing as well as the expectation they set for themselves, compared to China. Two years ago, India sold over 2 million vehicles, now their sales started to slow down and it is predicted to remain slow. This decrease in sales rate in combination with over production in merchandise is likely to increase export by Indian automakers and boost domestic makers to overcome foreign markets. The Indian car markets, as well as their competition the Chinese automakers, have always set their goal to expand their business worldwide. Although China started exporting their products only 8 years prior, India’s low base price has already made the production type very popular. Being close to a few of the fastest expanding markets in Southeast Asia has helped, although Africa had a very successful market. According to a statement from South Africa’s Standard Bank, car sales in the area have increased to 160% since 2008 to roughly half of South Korea’s numbers and 3 times China’s sales. Overall, exports of Indian vehicles reached almost 3 million in the year to April 2012; although almost 2 and a half million of these were 2 and 3 wheeler type vehicles used for motor cross bikes. Tata Motors has been a persistent exporter to the less particular and picky emerging markets. In 2011, they also began selling the Nano in foregin markets, aiming in on parts of South Aferica and Asia. The Nano is one of the world’s most...
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...TRIUM GLobal EMBA - Module 1 – Group Essay What are the Main Risks Posed by Globalization to the Automotive Industry? How Can These Risks be Managed and Mitigated? LSE ID numbers : 200933569, (add everyone else’s ID number per essay instructions) Word Count: The auto industry has significantly benefitedsignificant benefits from globalization. The industry has evolved from being a local-market-focused business comprised of hundreds of small manufacturers to a global market-focused business dominated by Japanese, German, South Korean, and American producers generating over 1.7 trillion dollars US in sales. This essay discusses what we believe are the main risks posed by globalization to the automobile industry. We define globalization for the purpose of this essay to beas the integration of markets across political boundaries that allows for the flow of capital, people, goods and services within. We define the automobile industry as the set of companies that produce automobiles and light duty trucks (“The Auto Industry”).. Since WW II, globalization has enabled greater market access and corporate consolidation that has enabled large automobile manufacturers to diversify their offer product and transcend national boundaries. Volkswagen, for example, originally a German company founded by Nazi government in 1937 to offer German citizens a German produced car, now includes makes from seven different countries and has hails China as one of its largest markets...
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...After several downturns of the gas-fuelled automobiles market some caused by the 2009 financial crisis in US and the instability of the oil price, the automobile industry has been looking forward to develop new energy powered vehicles. This is the case of the British automaker Aston Martin, in recent days, has announced the deal with the Chinese firm LeTV to develop electric cars and bring them to the market by 2018. Through this initiative, both firms are vying against Tesla luxury car segment where is the forerunner of the new-energy vehicles marker. In this essay, the Porter Five Forces framework will be analysed on the electric vehicle market. The emerging market of Electric Vehicles, in the start-up stage of the industry lifecycle, is capturing the attention of automakers prompting a strong rivalry between incumbents namely Nissan, General Motors, and allowing the entrance to new comers such as Tesla that is now heading the market with a clear differentiated position in the industry. The attractiveness of the electric vehicle market has been catching the attention of the already positioned luxury automakers, for example, Daimler's Mercedes-Benz, Volkswagen's, Porsche and Audi, but also new comers such as Tesla, this last one, with a strong automobile positioned as current market leader on electric vehicles. To tackle Tesla’s strategy, Aston Martin recently signed a deal with a Chinese tech company LeCo (formerly LeTV) to develop an all-electric car, model RapidE, to...
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...1. What happened to Pirelli in the recent years? PEST analysis (only Technology and Economic Factor Declining market share Data? Why Pirelli left behind its main competitors? 1. Their main operation: only limited to passenger car, truck, and motor tires (general product), lack of specialized product or we can say that they are underutilized their advanced and innovative technology Main competitors? Michelin they have more diversified market segment: including passenger cars, vans, trucks, farm equipment, earthmovers and handling equipment, bicycles, motorcycles and aircraft. Goodyear Goodyear also applies the same approach with Michelin. Their range of product includes the following product: Automobiles, Trucks, Buses, Aircraft, Motorcycles, Farm Implements, Earthmoving and Mining Equipment, Industrial Equipment, and Various other applications Randy search for fuckin picture like pictures above Bridgestone Bridgestone also has more variety product compared to Pirelli. The production including passenger car, commercial tire, aircraft, offroad tires, motorcycles. Continental Similar to Pirelli in market segment passenger tire, Light truck & SUV, Commercial Tires (Bus & Truck Tires) 3. Economic Slowdown in Emerging Markets which are the main contributors for Pirelli Revenue Economic Volatility (Russia) (4% contribution) Irrespective of the wider politico-economic environment, the Russian tire market is known for being something of a roller-coaster...
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...return to America is the first visible result of what is intended to be an ever closer union with Chrysler, agreed on last year when the Detroit giant was in bankruptcy. The two companies are betting that the Fiat 500—designed by Frank Stephenson, the man behind BMW’s transatlantic success with the MINI—will also prove as popular with Americans as it has with Europeans. Returning to a country from which Fiat was driven out by poor quality—Americans used to quip that its name stood for “Fix It Again, Tony”—is a big risk. But the reward is to get back into one of the world’s largest markets and gain the scale that will promote Fiat from a smallish European firm (albeit with a successful business in South America) to the ranks of global carmakers. Its home market in Italy is too small, and its operations there too uncompetitive, to provide the basis for long-term survival. Merging with Chrysler will mean sharing development costs and technology, but will also mean having to...
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...http://articles.latimes.com/2009/jan/21/business/fi-fiat21 Fiat and Chrysler sign alliance plan January 21, 2009|Ken Bensinger By taking a stake in Chrysler, Fiat may be providing a glimpse of the future of the auto industry, one that's a lot more global -- and where everybody scratches each other's back. The deal, announced as a letter of intent Tuesday, is not final but would give the Italian automaker a 35% stake in Chrysler, as well as access to Chrysler's U.S. manufacturing facilities and huge distribution network. In exchange, Chrysler would be able to sell its larger vehicles in Fiat's international dealerships and to add much-needed small, fuel-efficient cars to its fleet using Fiat's small engine and transmission technology. As such, it's a partnership that could, in theory, lead to Italian-engineered, U.S.-built Fiats being sold as Dodges at a dealership near you, and Mexican-made Dodges sold as Fiats in France. "I would love to sell Alfa Romeos or Fiats or Fiats badged as Dodges," said Jon Gray, owner of Orange Coast Chrysler Jeep Dodge in Costa Mesa. The partnership is the leading example of the business model du jour in the auto industry, one in which companies trade their strengths with competitors to cover their own weaknesses in the hope that both come out stronger. "Maybe the future for the industry consists in a series of alliances," said Thomas Klier, who, as a senior economist at the Federal Reserve Bank of Chicago, has studied the auto business...
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...engineering services to other carmakers. In 1934, Adolf Hitler commissioned Porsche to make a “people’s car” or “volkswagen.” The forerunner to the VW Beetle, the VW Type 60 hit the roads in the mid-1930s, and in 1938 the first plant dedicated to the manufacturing of the VW was opened. It wasn’t until 1948, three years after the end of World War II, that Porsche produced its first branded sports car. Within two years, the Porsche 356 series rolled off the production lines. By 2007, Porsche was the world’s most profitable automaker on a per unit basis, 5 a feat that was especially impressive considering it produced just over 100,000 automobiles annually. A.2 Industry Porsche’s takeover of VW was seen by many as a wise move for the small, independent car company that, unlike rival brands Jaquar, Ferrari, Lamborghini, and Lotus, had managed to avoid being gobbled up by the auto industry’s behomoths the likes of General Motors, Chrylser and Ford. In 2005, Porsche in partnership with VW produced a luxury sedan called Panamera which would compete against models produced by Mercedes, Aston Martin and Audi. The typical consumer of Porsche is those men that are young, wealthy and adventurous who enjoys life. But single clients in the automotive industry have a bargaining power, there are substitute products exist. Engineering and design were considered the hallmarks of Porsche’s competitive advantage. Providing outside engineering services for carmakers had always been an important...
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