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Executive Summary
The strategic analysis report revolves around the reputed ‘Jaguar Land Rover Automotive plc’, the largest car manufacturing company in the United Kingdom. The report focuses on the recognized aspect relating to the strategic management of the concern. A number of analytical tools that have been designed by Michael Porter have been used to capture the various strategic approaches that can be used by the business organization to have a profitable and sustainable existence in the highly competitive automobile market. The tools that have been used here are SWOT analysis, PESTLE analysis, Porter’s five force analysis and value chain analysis. The objective is to capture the internal and external setting of the popular automobile business (Jaguar Land Rover Automotive Plc, 2018, p 1).
Jaguar Land Rover Automobile is one of the few automobile concerns that have shown a consistent performance in the dynamic market since its very existence. The theory relating to strategic management has been highlighted and used in the practical scenario of the automobile concern to understand its strategic moves. The core strategic elements of the business have been captured to understand what makes it a successful business concern. A thorough and critical analysis has been conducted to get a better understanding of the strategic management model of the automobile business. It has helped to understand the blueprint for the success of the organization (Jaguar Land Rover Automotive Plc, 2018, p 3).
Introduction
In the organizational context, strategic management has become a popular jargon that has captured the attention of the operational business undertakings of the 21st century. According to Hofer and Schendel, the strategy is the “match” that exists between an organization and its environment. It basically involves a series of plans that move from the general category to the specific category. The term “strategic management” refers to the proper management of a firm’s resources and capabilities to reach the organizational goals (Ritson, 2018, p 17). It encompasses a set of objectives that are implemented after thoroughly analyzing the competitive environmental setting and the internal context of the concern.
“Competitive Strategy” book by Porter focuses on various strategic models that can be implemented by a business undertaking in order to compete against their industry rivals. According to Nickols, the strategy can be a plan, a pattern, a perspective or a position that can be used by a firm to outsmart the competitor (Nickols, 2011, p 2).
External Analysis of Jaguar Land Rover
A thorough analysis and evaluation of the strategic model of the business have been carried out by applying the concepts and topics relating to strategic management. In this section, Michael Porter’s tools have been used to assess the external setting in which the automobile functions. The tools that have been used to assess the automobile industry setting are the PESTLE analytical framework and the five force model. In addition to these tools, the value chain analysis and SWOT analysis has been carried out to get a holistic picture relating to the competitive scenario of the business and assess the effectiveness of the business strategy that is implemented by it.
PESTLE Analysis
Political Setting – The political setting of the market has a direct influence on the profitability of the Jaguar Land Rover concern. Some of the major political elements are the Brexit setting, the political unstable setting in the U.K., terrorism and the political relations that the operational nation has with other countries (Jaguar Land Rover Automotive Plc, 2018, p 54).
As per an article that was published by ‘The Guardian’, the business undertaking could lose billions of pounds in this year in case the United Kingdom left the European Union single market (Rawlinson, 2018).
Economic Setting – Since Jaguar Land Rover operates in the global market setting, it is exposed to the changes that take place in the global economic environment such as the change in the interest rate, fluctuation in the value of the currency and the exchange rate.
Social Setting – In the current era, various social elements come into play and influence the demand for automobiles such as the lifestyle of people, the per capita income, the attitude and beliefs of people, peer pressure and social mobility (PESTLE Analysis, 2018, p 15). In recent years, automobile concerns are trying to act in a socially responsible manner so that the best possible value can be created for the customers (Jaguar Land Rover Automotive Plc, 2018, p 46).
Technological Setting – The rapid pace of the technological setting along with the scarcity of the adequate quantity of specialized resources affects the automobile industrial setting and the strategic model that is implemented by Jaguar Land Rover to function in the dynamic market setting. Due to the changes that take place in the business context, the level of risk relating to the delivering of superior automobile commodities gets increased (Jaguar Land Rover Automotive Plc, 2018, p 54).
Legal Setting – Various legal elements influence the automobile industry and the participants that function in it such as the employment regulations, taxation policies, compliance and regulatory bodies (PESTLE Analysis, 2018, p 18). The Jaguar concern carefully implements the open source technology, the protocols and the legislative change in order to introduce new models in the market (Jaguar Land Rover Automotive Plc, 2018, p 53).
Environmental setting – In the 21st century, many rules and regulations have been introduced that automobile concerns need to abide by to have a sustainable existence relating to the infrastructure, the social implications, the ecological consequences and the climatic factors (PESTLE Analysis, 2018,p 20)
The Jaguar business takes into account the environmental policies and standards to produce (Jaguar Land Rover Automotive Plc, 2018, p 11).
Appendix 1 highlights the PESTLE framework that influences the strategic model of Jaguar Land Rover in the automobile industry.
Porter’s Five Forces Analysis
Porter’s five forces model is a popular tool that helps business undertakings to assess the competitive intensity in their operational market. It has been used to evaluate in macro environment of Jaguar Land Rover and assess how its strategic model fits in. The major elements that have been analyzed by using this analytical tool are the bargaining power of the suppliers and customers, the threat from the new entrants, the threat from the industry rivals and the threat from the substitutes. It has been used to define the operational market appropriately and identify the competitive intensity (Five Force Framework, 2018, p 7).
Bargaining power of the suppliers – The power of the suppliers of the Jaguar Land Rover business is weak due to the strong and cordial relationship that exists between them and the automobile concern. The business has always gone an extra mile to recognize and appreciate its global suppliers that make its business possible. In the year 2015, the Jaguar Company had presented a total of 13 awards to its suppliers from all around the world. In addition to this, the robust supply base that stretches all across the globe minimizes their bargaining power against the business undertaking (Five Force Framework, 2018).
Bargaining power of the customers – The customers are the main stakeholders of Jaguar Land Rover that have a strong force against the business. The main reasons for the high level of power are the low switching costs, the availability of other transportation options and the better availability of information.
The threat from new entrants – The threat from the new entrants in the automobile industry is limited due to the presence of various barriers to entry including the heavy financial requirement, the knowledge on innovative designs, and robust technological infrastructure. These elements increase the complexity for a new player that wishes to enter the automobile industry.
The threat from industry rivals – The threat from the industry rivals is high and Jaguar Land Rover tries to keep on upgrading the innovative business model to have an edge against the other automobile participants. The major rivals of the business undertaking are Audi, Mercedes-Benz and Lexus. These firms keep the Jaguar Land Rover firm on its toes and encourage it to focus on innovation (Owler.com, 2018).
The threat from substitutes – The threat from the substitutes is moderate in the automobile industry. The main external factors that come into play are the modest availability of the automobile substitutes and the reduced convenience in shifting from one vehicle to another. Some of the other substitutes that pose a threat before the Jaguar Land Rover firm are the public transport options, bikes and other transportation alternatives (Owler.com, 2018).
This analytical tool has helped to assess the macro environment in which the business entity operates by implementing its strategic approach. The same has been presented in Appendix 2 as well. Numerous strategic consultants have used this analytical framework to evaluate the strategic position of a business undertaking (Jaguar Land Rover Automotive Plc, 2018, p 8). With the same intention, the analytical model has been used in the report to capture the essence of the strategic position of Jaguar Land Rover. The Jaguar firm has always designed its strategic approach by taking into account the core needs of the target audience. It has introduced the automobiles that can be categorized under the premium category, the leisure category and the dual purpose category. Such a focused strategic approach has helped the business to have a sustainable and profitable existence in the dynamic market setting (Five Forces Model Based Upon Michael E. Porter’s Work, 2018, p 7).
Internal Analysis of Jaguar Land Rover concern
Porter’s Value Chain Framework
The Value Chain Framework is a popular analytical tool that was developed by Michael Porter to get a better insight into the various activities and operations that impact its performance. The analytical tool has been used in the report to identify the primary and support activities of Jaguar Land Rover firm that help it to operate in the dynamic automobile market. This tool has been used to understand how its use impacts the business in the prevailing market environment. Appendix 3 highlights the primary activities of the automobile concern namely the inbound logistics, operations, outbound logistics, marketing and sales and services. The support activities basically deal with the firm infrastructure, the human resource function, technology and procurement.
Primary activities of Jaguar Land Rover
Inbound Logistics – The businesses adopts a coordinated approach to manage the logistics of the automobile concern. In order to create value for the customers, Jaguar Land Rover relies on top-quality suppliers from all around the globe. The business focuses on design and engineering, innovation and technology. It works along with its partners and engineers to strengthen the automobile manufacturing setting in the U.K.
Operations – The materials that are collected by the business undertaking undergo various processes in its business plans. For example, the U.K. operations of the concern are categorized based on the locations namely Halewood, Castle Bromwich, Solihull, Wolverhampton, Coventry, Whitley, Gaydon and Warwick University. These 8 sites play a vital role and help the automobile concern to design and produce automobiles that are sold in 153 markets all around the globe.
Outbound Logistics – The outbound logistics process involves the global logistics network of Jaguar Land Rover that helps it to reach far and wide regions of the globe. A robust distribution network is followed in order to make sure that high-quality automobiles reach the target audience.
Marketing and Sales – The fundamental objective of Jaguar Land Rover’s marketing and sales division is to boost the brand presence in the dynamic market setting. The marketing and sales activities are designed to represent the automobile brand in a positive light in the market. The objective is to reach all the customer touchpoints and create value for them (Jaguar Land Rover Automotive Plc, 2018, p 8).
Services – In order to deliver top-class offerings in the market, the services of the business revolve around the needs and expectations of the customers. The customer-oriented approach enhances the value of its service offering in the market (Jaguar Land Rover Automotive Plc, 2018, p 11).
Secondary activities of Jaguar Land Rover
Infrastructure – The infrastructure of the automobile concern is totally dependent on innovation and technology. This helps it to create innovative and luxurious automobiles for the customers.
Human Resource Management – The HR function acts as the core asset of the business. The concern treats its personnel as the most important asset that helps it to create value for the target audience.
Technology Development – The technology and innovation are strengthened due to the involvement of its partners, designers and engineers. Appendix 4 highlights the value chain framework of Jaguar Land Rover that helps it to combine its core strengths, capabilities and resources to create value for its market audience. The tool shows how the firm categorizes its primary and support activities within specified boundaries which help the automobile business to design and implement its strategic model and create values for the target audience.
Procurement – In order to procure quality inventory and raw material, Jaguar Land Rover’s concern depends on the reliable supplier base that exists in different parts of the globe. Such an approach helps it to control the overall dependency level on the suppliers of the business.
SWOT Analysis of Jaguar Land Rover Company
Strengths – The major strengths of Jaguar Land Rover concern that have helped it to have a sustainable and profitable existence in the dynamic and competitive market setting include strong technological focus and innovative organizational culture. In addition to these core strengths, the business uses traditional and reliable analytical frameworks to design its business strategy in the market. The experience of the concern has helped it to strengthen its strategic vision and have a competitive edge against its industry rivals (Jaguar Land Rover Automotive Plc, 2018).
Weakness – Some of the major weaknesses of Jaguar Land Rover include the reduced profitability due to the matured nature of the market and the negative growth of sales that the company faces in the emerging market context.
Opportunities – In the innovative market setting when Artificial Intelligence (AI) is ruling different industries the Jaguar Land Rover business can incorporate AI elements in its automobile models. The business can use the opportunity to create value for the customers as well as itself.
Threats – The major threats that arise before Jaguar include the fluctuation in the currency which impacts the profit position of the business, the stiff competition that exists in the global automobile setting and the rapid evolution of the technological environment. These threats affect the sustainability and profitability of the automobile business.
Main Issues faced by Jaguar Land Rover Concern
Some of the major challenges that arise before Jaguar business in the current times are the dynamic nature of the economic setting. According to ‘The Guardian’, in case the U.K. would leave the European Union single market setting, the firm could lose billions of pounds in 2018 alone. Thus the major issues arise in the investment setting as the firm must carefully analyze its investment options in order to act in a profitable manner in the dynamic market setting. Long with this challenge the rising competition increases the stress for the business in the current times (Rawlinson, 2018).
Analysis of Jaguar’s strategic model
The Jaguar Land Rover Automobile concern has designed its strategic model by focusing on its customers. The concern tries to create value in the market by making and achieving the long-term commitments. The five key elements that form an integral part of the organizational strategy are integrity, understanding, excellence, unity and responsibility. Since the automobile concern directly focuses on the customer needs, it is able to design the strategic approach that creates value for the business undertaking as well as its market audience. Appendix 5 highlights the strategic model of the firm that guides in the uncertain automobile industry.
Over the years, the Jaguar brand has functioned as a premium automobile manufacturing firm that offers new technologies in the market. Jaguar Land Rover is known as the global leader in the ‘lightweight aluminium’ technology segment. It has used its experience to specialize in manufacturing top-class automobiles by focusing on innovation, research and technology, designing and engineering function, and manufacturing operations (Jaguar Land Rover Automotive Plc, 2018, p 10). Such a product differentiation strategic approach has helped it to offer high-value automobile products in the market. Appendix 6 shows that the Jaguar Land Rover concern has implemented the differentiation strategy to make a unique name for the brand and its offerings. The automobile concern has mainly focused on high-quality offerings, adding new and innovative features, strengthening the brand image and expanding the distribution network in the dynamic market (Jaguar Land Rover Automotive Plc, 2018, p 6).
Conclusion
The strategic analysis report highlights the strategic model of the Jaguar Land Rover Company by using various analytical tools that were introduced by Michael Porter. Porter’s five force framework, Value Chain framework, SWOT analytical model and the PESTLE analytical model have been used to assess the macro setting and the microenvironment of Jaguar Land Rover’s business concern. It has helped to assess the strategy that the concern applies to operate in the dynamic automobile industry. The core capabilities of the firm have been identified along with the macro setting that influences its strategic model. The tools that have been introduced in the past have been used here to grasp a better knowledge of the external setting and the competitive intensity of the automobile industry. The use of multiple authentic sources including the annual report and sustainability report of the business has helped to understand the strategic approach of Jaguar Land Rover that helps it to have a competitive edge against its industry rivals. After assessing the strategic model of the largest automobile concern of the U.K, suitable recommendations have been designed that would help the firm to enhance its market performance in the complex and competitive market setting.
Recommendations
The automobile industry is highly dynamic in nature as it is influenced by the different macro and micro factors that come into play in the market environment. The firm must continue to focus on the customer needs and exploit the technological setting to create the best possible value for the target audience. Such a strategic approach would help it to adapt to the evolving market environment. The core factors that it must take into consideration while designing its business strategic model are the technological factors and the social factors.
The business must continue to strengthen its Research and development model so that it can introduce the suitable technological changes that will create value for the target customers. The innovative culture of the business must guide the organizational personnel to streamline its business objectives with the expectations of the customers. It would help Jaguar firm to sync the internal capabilities with the strategic model of the organization. Such an approach can help Jaguar Land Rover to design the most suitable strategic frameworks that can assist it to create value for the customers. The firm must continue to use the analytical tools to assess the dynamic market setting and implement innovative strategic approaches so that it can continue to deliver strong performance by offering innovative automobiles in the market all around the globe. The recommendations have been made by taking into account the complexity and competitive intensity that exists in the automobile market setting. They could help the firm to strengthen its sustainability and profitability in the competitive automobile industry.
References
Five Force Framework. (2018). Retrieved from http://www.free-management-ebooks.com/dldebk-pdf/fme-five-forces-framework.pdf
Five Forces Model Based Upon Michael E. Porter’s Work. (2018). [Ebook]. Retrieved from http://cdn2.hubspot.net/hubfs/125770/Michael_E._Porters_Five_Forces_Model_E-Book_From_Wikipedia.pdf?t=1446668543121
Jaguar Land Rover Automotive Plc. (2018). Retrieved from http://annualreport2016.jaguarlandrover.com/assets/019642_jlr_ar16_web.pdf
Nickols, F. (2011). Strategy, strategic management, strategic planning and strategic thinking. Distance Consulting LLC, 1-8.
Owler.com (2018). Jaguar Land Rover Competitors, Revenue and Employees – Owler Company Profile. Retrieved from https://www.owler.com/company/jaguarlandrover
PESTLE Analysis. (2018). Retrieved from http://www.free-management-ebooks.com/dldebk-pdf/fme-pestle-analysis.pdf
Ritson, N. (2018). Strategic Management. Retrieved from https://www.kau.edu.sa/Files/0057862/Subjects/Strategic%20Management%20Book.pdf
Rawlinson, K. (2018). Jaguar Land Rover’s £80bn UK investment plan at risk after hard Brexit. Retrieved from https://www.theguardian.com/politics/2018/jul/04/jaguar-land-rovers-80bn-uk-investment-plan-at-risk-after-hard-brexit
