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Saic motor
SAIC Motor is China's largest automaker. It faces challenges with its own brands being unsuccessful compared to its joint venture brands. To address this, SAIC Motor should focus its resources on improving one brand, MG Motors, which has shown the most success. Concentrating on one brand will allow SAIC Motor to better develop MG's design, technology, and brand awareness to compete internationally.
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Saic motor
- 1. SAIC MOTOR LIMITED:WHAT’S NEW STRATEGY ADOPT? STRATEGIC MANAGEMENT AUDIT INTERNAL AND EXTERNAL STUDENT: 311132 TEACHER: Mr. JACOPIN TANGUY
- 2. SEKA STRIVANE 2 SUMURY INTRODUCTION...................................................................................................................................3 ABOUT SAIC MOTOR.......................................................................................................................... 4 SECTOR ANALYSIS............................................................................................................................. 5 I. CHINA AUTOMOBILE INDUSTRY............................................................................................ 5 II. CHINA AUTOMOTIVE INDUSTRY PEST ................................................................................. 5 1. POLITICAL ENVIRONMENT.................................................................................................. 5 3. SOCIAL-CULTURAL ENVIRONMENT.................................................................................. 6 4. TECHNOLOGICAL ENVIRONMENT..................................................................................... 6 5. ENVIRONMENTAL AND LEGAL FACTORS........................................................................ 7 III. PORTER’S 5 STRENGTHS....................................................................................................... 7 1. NEW COMERS: AVERAGE ..................................................................................................... 7 2. CUSTOMER BARGAIN POWER: HIGH................................................................................. 7 3. SUBSTITUTE PRODUCTS: HIGH........................................................................................... 7 4. COMPETITION HIGH............................................................................................................... 8 5. SUPPLIER BARGAIN POWER: HIGH .................................................................................... 8 IV. COMPETITORS FRAMEWORK .............................................................................................. 9 1. SAIC MOTOR COMPETITORS ANALYSIS........................................................................... 9 V. CORPORATIVE STRATEGY ..................................................................................................... 10 1. COMPANY CURRENT STRATEGY...................................................................................... 10 2. COMPANY CORE COMPETITIVENESS.............................................................................. 10 3. COMPAGNY MARKET SHARE ............................................................................................ 10 4. SAIC MOTOR BUSINESS PLAN ........................................................................................... 11 5. SAIC MOTOR BUSINESS MODEL ....................................................................................... 12 VI. SWOT ANALYSIS................................................................................................................... 13 1. STRENGTHS........................................................................................................................ 13 2. WEAKNESSES..................................................................................................................... 13 3. THREATS............................................................................................................................. 13 4. OPPORTUNITIES ................................................................................................................ 13 VII. PROBLEMS AND SOLUTION ........................................................................................... 14 1. PROBLEMS.......................................................................................................................... 14 2. SOLUTION........................................................................................................................... 14 REFERENCE AND APPENDIX.......................................................................................................... 17
- 3. SEKA STRIVANE 3 INTRODUCTION Theeconomy of china has widely grown in the last 20 years. This growth created the emerging companies in many sectors and international companies are more and more interested to extend their business in Chinese Market because of the wide population and consumers. In fact, Chinese government encouraged the internationalization of Chinese domestic firms. It helps them to build global recognized brand. Among the sectors that increased in CHINA, we will be more focus on Automobile sector. This sector is very important in Chinese Economy and the government wanted to maintain and rise its worldwide ranging of automobile manufacturer. To reach this goal, the government took many incentives, it has more than 13 state-owned companies that operates in this sector and in which it invests money. Among these companies, we will focus on SAIC MOTOR LIMITED that’s the leader of domestic market in PV1 and CV2 manufacturing, selling and developing. We will understand what’s wrong in company strategy to make some recommendations to improve it. 1 PV : Passenger Vehicles 2 CV : Commercial vehicles
- 4. SEKA STRIVANE 4 ABOUTSAIC MOTOR SAIC3 MOTOR corporation was founded in 1955, it is China’s largest vehicle manufacturer in terms of unit sales and a state-owned company. The corporation is composed of 16 subsidiaries. The company manufactures and sells commercial vehicles and passenger cars, the production the company entire products happen in its own industry and has its own brands MG 4 and ROEWE5 and MAXUS6. It also operates on truck assembly business, engines and electronic components. The company operates in Joint-venture with the big international automakers like Volkswagen and General Motors. SAIC produces different kinds of car: - Automotive: the group is leading sales on the Chinese market thanks to its joint ventures with General Motors and Volkswagen but also through strategy of competitors buying ROEWE and MG. - Industrial vehicles and heavy trucks: SAIC also ranked first in the domestic market thanks to the joint venture with Fiat and Iveco, SAIC Iveco is Commercial Vehicle distributed under the Hongyan brand. - The components: company supplies automotive components through its joint venture with Magneti Marelli7 . 3 Shanghai Automotive industry corporation 4 sport cars 5 Sedan cars 6 Van cars
- 5. SEKA STRIVANE 5 SECTORANALYSIS I. CHINA AUTOMOBILE INDUSTRY This is the first 10th companies in China automotive industry, as we can see SM is the leader of with a market share of 21,4%. II. CHINA AUTOMOTIVE INDUSTRY PEST 1. POLITICAL ENVIRONMENT China government facilitate the development in local auto industry. it makes a lot of investment to support R and D project and encourage automakers to innovate. The government prioritize more hybrid and electric autos sector to reduce emission of pollution. Government doesn’t allow to foreign automakers to operate alone in Chinese market it force them to collaborate with local automakers companies, this strategy create competence sharing and technology transfer.
- 6. SEKA STRIVANE 6 2.ECONOMIQUE ENVIRONMENT China economy situation (speedy growth) plays main role in automobile industry. Chinese government promote Chinese lifestyle by increasing people income and middle class increasing last 10 years, so People wage and turnover rise, they can seek to buy a personal car. Then Chinese car consumers becoming more demanding because the car is not only a transport mean but a symbol of success that is why brands like Ferrari, Lexus had big success in China. 3. SOCIAL-CULTURAL ENVIRONMENT Social and cultural factors play an important role because the demography constantly growth and change. more than 90% of population are literate that’s means that government emphasizes on education. About automobile industry foreign automakers need to be more deep in Chinese culture to succeed, the best way for them it’s to join “guanxi” Chinese concept of relationship to learnt more about culture. 4. TECHNOLOGICAL ENVIRONMENT China Government invest in research and development and innovation in automobile industry that means that local automakers can easily produce cars with more functions as safety and product design. Then to face problem of emission control government keeps auto industry innovation upgrading to produce hybrid cars.
- 7. SEKA STRIVANE 7 5.ENVIRONMENTAL AND LEGAL FACTORS Environment protection is a part of government strategy its why to reduce carbon emission government promote friendly cars using and hybrid cars production. However, there are others factors related to china growing auto industry like the high consumption of petroleum, traffic noise increasing in the big cities, and lack of parking. Many regulations exist to assure the industry success; however, the government had been accused to baize curtains regulations, that’s can discourage the potentials investors. III. PORTER’S 5 STRENGTHS 1. NEW COMERS: AVERAGE Companies can entry only by joint-venture with domestic company It’s a government policy, this incentive reduce comers Company freedom to 80% or 50%. However, brand awareness And loyalty is important because CHINA automobile industry is wide and have more than 170 automakers. 2. CUSTOMER BARGAIN POWER: HIGH The automakers in CHINA increased, products and services are available, domestic brands compete with global brand to satisfy customer needs and in the same time increase they market share. government has also rise Chinese lifestyle by wage and turnover increasing now customer have the power to decide which brand he prefer. 3. SUBSTITUTE PRODUCTS: HIGH
- 8. SEKA STRIVANE 8 Chinesesubstitute cars by bicycle, Taxi, Rail transport, and motorcycle because this means of transport are cheap then because of the wide population and lack of space the are many problem to park. 4. COMPETITION HIGH The competition is high between state-own, foreign financed and private-owned manufacturer companies. This competition causes decreasing of car prices. 5. SUPPLIER BARGAIN POWER: HIGH Suppliers have a strong bargaining power because of the number of automakers.
- 9. SEKA STRIVANE 9 IV.COMPETITORS FRAMEWORK 1. SAIC MOTOR COMPETITORS ANALYSIS COMPAGNY BUSINESS REVENUE Competitive advantage STRENGTHS WEAKNESSES CHINESE COMPETITORS SAIC MOTOR Manufactures Sales Develops PV and CV Revenue 2015: 106.68 B $ Market share 2015: 24% -R and D -Big players experience -Leader of china market -Good reputation -Government support -joint venture with big player automakers -Weak global presence - unexperienced to match global portfolio - have 3 own brands GEELY Develops Manufactures Sales of PV Revenue 2015: 30.14B Market share 2015: 2,03% Export in 24 countries Entire strategy focus on 1 brand -Volvo acquisition -Sales network -Less advanced technology -Image of low-end brand CHERY Manufactures Sales Develops Design innovation Export in 80 countries Strategy focus on 1 brand -Experienced business units -Reduced labour costs -Future market size JAC MOTOR Manufactures Develops Sales CV Offer best price Strategy focus on 1 Brand -Distribution and and -sales network -Skilled workforce -Small business units SAID MOTOR is the leader in CHINESE domestic market thanks to the government support and its numerous joint-venture with the big automakers companies, however its competitors evolve with they own resources and 1 brand. We thing that SAIC MOTOR needs to be concentrated on its own brands, it needs to build its own brands reputation like its competitors.
- 10. SEKA STRIVANE 10 V.CORPORATIVE STRATEGY 1. COMPANY CURRENT STRATEGY Saic motor strategy is to follow the development trend and market evolution by improving its technology and industry to play in global market and lead future automobile industry. They improve skills in Research in development to increase its own brands that are ROEWE, MAXUS, MG. Then the company want to develop key technologies in new ENERGY VEHICULE (NEV) that will be technologically innovative with its joint-venture partners. The project NEV was already launch since 2010 just with three of its partners there are General Motor, Volvo buses and Volkswagen, NEV is also developed in SM8 own brands. This NEV project was encouraged by the government that is more focused on carbon emission problem. 2. COMPANY CORE COMPETITIVENESS SAIC Core competitiveness plays a strong role on company success and based on SM9 competitive advantage that is the fact that SM10 is the owner of its industries so company can perfectly use economy of scale and the creation of synergy effect in production. Then company have a leader advantage in china domestic market by government support firstly then its numerous joint-venture with the big global company and variety of product categories that’s allow it to react quickly to customers need. Finally, the company is mainly focused on innovation capabilities by improving its R and D capability. 3. COMPAGNY MARKET SHARE This table show that Saic Motors is the leader of China industry market by selling 586 million new cars in 2015. According to Nikkei Asia review Saic motors has 23,8% of the auto market share in China based on china annual sales estimated at 24.59 million of new cars. 8 SAIC MOTOR 9 SM : SAIC MOTOR 10
- 11. SEKA STRIVANE 11 Source:Autor This graphic demonstrates the evolution of sales and market share of company in China, we note that even if the sales volume increase company market share decrease of 6% between 2012 and 2015. It due to the fast increasing of market sales, then the good point is that SAIC MOTOR sales didn’t stagnate. 4. SAIC MOTOR BUSINESS PLAN SAIC MOTOR is focused on promoting development through the improving of its products and industry quality, seizing market opportunities to control properly the balance between production and sale, company tries to combine internal resources and innovation to reach 2015 2014 2013 2012 5863500 5620000 5100000 4490211 24590000 19928505 18084169 15523658 24% 28% 28% 30% S.M MARKET SHARE SAIC MOTOR SALES MARKET SALES S M MARKET SHARE
- 12. SEKA STRIVANE 12 moretarget. The company is also focusing on business internationalization; it will accelerate and complete its internationalization process. 5. SAIC MOTOR BUSINESS MODEL
- 13. SEKA STRIVANE 13 VI.SWOT ANALYSIS 1. STRENGTHS Support of the Chinese and SHANGAI government Lead the domestic market Innovative and R and D improving process 2. WEAKNESSES SAIC R AND d still not world class Need more skills to match international portfolio Weak global presence 3. THREATS Foreign companies going solo in the domestic market with the easing of rule Oil price increase leading to cost for fuel efficient cars Competition in the foreign market 4. OPPORTUNITIES Market like Europe and US still untapped Possibilities to promoting its own brand models and making them world class New products and services
- 14. SEKA STRIVANE 14 VII.PROBLEMS AND SOLUTION 1. PROBLEMS SAIC MOTOR OWN BRAND ARE NOT SUCCESSFUL Problem of brand Problem of design Problem on KBV (Knowledge base view) Lack of experience Despite government support SAIC MOTOR can’t succeed with its own brands, it leads domestic market thanks to Volkswagen and General Motors car models manufactured in the joint-venture industry. Then company started to lose money in they own brand its why they increase each year Research and Development expenses to improve their performance. 2. SOLUTION
- 15. SEKA STRIVANE 15 SaidMotor sales volume Source: saicgroup.com
- 16. SEKA STRIVANE 16 STRATEGY(build a big one brand = Focus on one BRAND) This table demonstrates the sale of SAIC MOTOR and we notice that between its own brands the most successful one is MG, so: - Instead of finding solution to improve its 3-own brands in the same time; - SM11 needs to be focus one the successful one that’s MG; - It will allow SM to be focus its resources, capabilities and RD to improve one brand in term of design, innovation, technology; - Brand awareness will be created and company will to compete in international market will can be more possible.
- 17. SEKA STRIVANE 17 REFERENCEAND APPENDIX http://www.saicmotor.com/english/company_profile/about_us/index.shtml http://www.saicmotor.com/english/images/investor_relations/annual_report/2016/6/7/1C117E 345F254379966260F97C5D9353.pdf http://www.ccilc.pt/sites/default/files/eu_sme_centre_sector_report_- _the_automotive_market_in_china_update_-_may_2015.pdf http://www.wsj.com/articles/heard-on-the-street-saic-motor-gets-ready-for-wider-audience- 1408006936 http://www.zawya.com/story/Accelerating_its_strategy_of_internationalization_SAIC_MOT OR_makes_its_Middle_East_debut_at_the_Dubai_International_Motor_Show_2015- ZAWYA20151111104034/ http://pratclif.com/economy/china/automobile/ http://www.swotanalysis24.com/swot-s/93720-swot-analysis-saic-motor-corporation- limited.html http://www.saicgroup.com/english/investor_relations/sales_volume/index.shtml http://mixsa.weebly.com/master.html http://www.slideshare.net/aravindmenonm/auto-industry-country-risk-analysis http://www.saicmotor.com/english/index.shtml https://fr.wikipedia.org/wiki/Shanghai_Automotive_Industry_Corporation www.google.fr www.wikipedia.fr
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