LAND ROVER STRATEGIES

Land Rover Strategies



Land Rover Strategies

Introduction

Put simply, today's global automotive market is unstable. Traditional auto manufacturers are struggling to survive financial and economic crises. At the same time, they must meet explosive demand growth in new geographic regions and manage increasingly complex supply chains (strategic management's), changing customer preferences, and evolving production changes. The pull of customer demand from developing regions, such as China has fuelled new competitive business strategies by many non-Chinese automotive manufacturers who wish to delve into this growing and profitable market.

Foreign automotive firms have only begun producing in the Chinese market within the last 25 years. In 1984, Volkswagon (VW) began a JV with Shanghai Automobile Company to produce 30,000 cars each year. In 1987, VW began a second JV with the first automobile company to produce the higher status Audi. Since 1987, General Motors, Mazda, Isuzu, Daewoo, Fiat, Iveco, and Ford have entered the Chinese market through JVs with various Chinese automakers. By 2004, Toyota Motor Corp., along with its partner Guangzhou Automobile Group, announced an investment of US$461 million to boost automotive capacity in China and catch up with other established car plant rivals in the country. More recently, Daimler AG and an established Chinese automaker, Cherry Automobile Company announced JV plans.

Historically, despite positive production growth projections and the associated benefits of local market entry, many foreign companies have experienced significant difficulties gaining desired market access in China. The Chinese Government and already-established companies have not extended an overly welcoming hand for foreign investments into China. We examine Land Rover's strategic management development and its integration into the Chinese business environment.

The remainder of this paper is organized as follows. A brief literature review is presented, followed by a description of research methodology. Then, three sections are presented which introduce the major stages of strategic management adaptation: market entry preparation, supplier network establishment, and logistics integration, respectively. Analyses and implications and future study are presented, and the paper concludes with a summary and limitations of the research.

Literature Review

In this study, we have reviewed findings of research in three specific areas related to Land Rover: the first is an exploration of the general views of strategic management theories; the second is definitions of Porter's business strategies and the third is the meaning of various aspects of organisational performance. Many scholars have discussed and defined strategic management theory by dividing it into two important perspectives: the industrial organisational (IO) theory and the resource-based view (Whittington, 2004, 62-68).

Industrial organisational theory

The latest development of the IO theory by Porter (1998a, b) explains how the profit potential of companies within a particular industry depends on the five market forces: bargaining power of buyers, bargaining power of suppliers, threat of new entrants, threat of substitute products, and rivalry among competitors. Companies can earn above average returns by offering standardised products or services at a cost below those of their competitors (known as a cost leadership strategy), or by manufacturing differentiated products at a premium price known as a differentiation ...