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BYD	  
1.	  BYD	  -­‐	  Company	  Overview	  2.	  PEST	  Analysis	  3.	  Industry	  Analysis	  4.	  Market	  Analysis	  5.	  Comp...
PEST	              “Chinaʼs	  Government	  is	               supporFng	  electric-­‐car	             technology	  more	  t...
PEST	              PoliFcal	  •  January	  –	  February	  2009:	  the	  Chinese	     government	  approves	  the	  "Adjust...
PEST	     PoliFcal	                          17	                                             5	                    Governm...
PEST	                  Economical	  •  2009:	  13.7	  million	  motor	  vehicles	  manufactured	     in	  China,	  surpass...
PEST	                Economical	                             Total	  China	  Vehicle	  Sales	  	                          ...
PEST	                       Social	  •  According	  to	  a	  recent	  survey,	  60%	  of	  Chinese	  respondents	     show...
PEST	                            Social	                   Gross	  domesHc	  product	  per	  capita,	  constant	  prices	 ...
CHINA	  –	  	  	  CARS	  PER	  1000	      INHABITANTS:	        40	  
USA	  –	  	  	  CARS	  PER	  1000	      INHABITANTS:	     675	  
PEST	                           Technological	  •  Main	  technologies:	  hybrid,	  electric,	  fuel-­‐cell	  	  	  •  Wor...
PEST	                         Technological	                                                                Global	  Daily...
INDUSTRY	            ANALYSIS	  “I	  think	  everyone	  is	  going	  to	  be	  surpised	  at	  how	  fast	  this	         ...
TRENDS	                                      Per	  capita	  car	  ownership	                                              ...
TRENDS	                                 Number	  of	  Vehicles	  on	  Road	                                       1980-­‐2...
TRENDS	  
TRENDS	               •  In	  the	  next	  decade,	                  powertrain	  is	                  available	  and	   ...
TRENDS	                                                        By	  2020,	  it	  is	  expected	  25%	  of	  new	  cars	  c...
BUYERS	     SUBSTITUTES	                         THREAT	  OF	  ENTRY	                             PORTER	  INDUSTRY	  RIVA...
•  Capital	  requirement	                        •  Government	  and	  legal	  barriers	                                  ...
SUPPLIERS	     Power	  ba_ery	  suppliers	                      •  Price	  sensiFvity	                    •  Bargaining	  ...
BUYERS	                      Dealers	                 •  Price	  sensiFvity	               •  Bargaining	  power	         ...
SubsHtutes-­‐short	  distance	  •  Gasoline	  cars	  •  Electric	  bicycles	  •  Motorcycles	  •  public	  transportaFon	 ...
Chinese	  market	  share	       BYD	     Geely	      FAW	                                         INDUSTRY	  RIVALRY	     ...
COMPLEMENTS	  
BUYERS	                        High	  price	  sensitivity	                                     &	                         ...
 M ARKET AL	              THO RIZON ION	                T SEG MENTA
V	  CompeHtor	  	                                                                                O	                       ...
V	                                                                                                  O	                    ...
Toyota	                        	  	  	  	  	  	  Hybrid	  world	  leader:	  7	  hybrids	  models,	  2	  million	  Strategy...
V	                                                                                              O	                        ...
Volkswagen	                      	  	  	  	  	  	  Volkswagen	  focuses	  on	  efficiency	  in	  terms	  of	  fuel	  Strateg...
V	                                                                                                 O	                     ...
Chery	                         	  	  	  	  	  	  Chery	  offers	  5	  electric	  models	  (A5BSG,	  A5ISG,	  Strategy	     ...
V	                                                                                                    O	                  ...
Geely/Volvo	                       	  	  	  	  	  	  2	  electric	  models	  in	  the	  Chinese	  market	  -­‐	  In	  Marc...
COMPANY	  	                ANALYSIS	        “If	  I	  had	  a	  car	  like	  that	  in	  high	  school,	  	  I	  would	  h...
RESOURCES	             CAPABILITIES	                  Tangible	      Intangible	  	  	  	     Human	  Financial	  
RESOURCES	             CAPABILITIES	                 Tangible	             Intangible	  	  	  	      Human	  Physical	    ...
•  …	  •  Zhabuye	  Salt	  lake	  	  Lithium	  mine	  
RESOURCES	            CAPABILITIES	            Tangible	                      Intangible	  	  	  	     Human	             ...
%	  of	  surveyed	  people	  that	  recognize	  the	  brand	  as	  an	  EV’s	  producer	  
RESOURCES	         CAPABILITIES	             Tangible	       Intangible	  	  	  	     Human	     •  From	  20	  employees	...
RESOURCES	     CAPABILITIES	  
RESOURCES	     CAPABILITIES	  
RESOURCES	     CAPABILITIES	  
RESOURCES	     CAPABILITIES	  
RESOURCES	     CAPABILITIES	  
RESOURCES	     CAPABILITIES	  
RESOURCES	     CAPABILITIES	  
COMPETITIVE	  ADVANTAGE	  
Financial	  assessment	  of	  BYD’s	  	     compeFFve	  advantage	  
COST	  DRIVERS	                             DRIVERS	  OF	  UNIQUENESS	                    -­‐	  Reverse	  engineering	    ...
CompeHHve	  resources	     capabiliHes	                                     advantage	  
CompeHHve	  capabiliHes	                     advantage	  
CompeHHve	   advantage	  
CONCLUSIONS	        “It	  was	  fantasFc,	  	   I	  am	  amazed	  by	  the	  quality	  of	  the	  vehicle”.	              ...
BLUE	  OCEAN	                                                                                                    BYD	     ...
3	  FUNDAMENTAL	  ELEMENTS	  OF	  A	  	                    BLUE	  OCEAN	  STRATEGY	  • Focus	  	  • Divergence	  	  • Comp...
3	  FUNDAMENTAL	  ELEMENTS	  OF	  A	  	                   BLUE	  OCEAN	  STRATEGY	  • Focus:	  	     	   	  emphasis	  on	...
RECOMMENDATIONS	  Buffet	  asked	  Wang	  how	  BYD	  would	                  sustain	  its	  lead.	                       ...
HYBRID	  
VOLKSWAGEN	  
INFRASTRUCTURE	  
Thank	  You!	         Q&A..	  
Thank	  You!	         Q&A..	  
Byd - chinese automobile industry, electric segment - DDIM 2010/2011 Shanghai
Byd - chinese automobile industry, electric segment - DDIM 2010/2011 Shanghai
Byd - chinese automobile industry, electric segment - DDIM 2010/2011 Shanghai
Byd - chinese automobile industry, electric segment - DDIM 2010/2011 Shanghai
Byd - chinese automobile industry, electric segment - DDIM 2010/2011 Shanghai
Byd - chinese automobile industry, electric segment - DDIM 2010/2011 Shanghai
Byd - chinese automobile industry, electric segment - DDIM 2010/2011 Shanghai
Byd - chinese automobile industry, electric segment - DDIM 2010/2011 Shanghai
Byd - chinese automobile industry, electric segment - DDIM 2010/2011 Shanghai
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Byd - chinese automobile industry, electric segment - DDIM 2010/2011 Shanghai

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Business Strategy groupwork presentation on BYD (Build Your Dreams), Automotive sector, China.

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Byd - chinese automobile industry, electric segment - DDIM 2010/2011 Shanghai

  1. 1. BYD  
  2. 2. 1.  BYD  -­‐  Company  Overview  2.  PEST  Analysis  3.  Industry  Analysis  4.  Market  Analysis  5.  CompeFtors  Analysis  6.  Company  Analysis  7.  Conclusions  8.  RecommendaFons  
  3. 3. PEST   “Chinaʼs  Government  is   supporFng  electric-­‐car   technology  more  than  any     other  country  on  earth”       Kevin  Wale,     head  of  GM  China  group  
  4. 4. PEST   PoliFcal  •  January  –  February  2009:  the  Chinese   government  approves  the  "Adjustment  and   VitalizaFon  Plan  for  Auto  Industry”  •  June  2010:  Green  Car  Subsidy  Trials  starts  in  five   pilot  ciFes.  Subsidies  of  up  to  60,000  RMB   ($8,784)  for  purchasers  of  pure  electric  vehicles   and  plug-­‐in  hybrids  •  2010:  According  to  the  local  government,   Shenzhen  will  have  24,000  electric  vehicles  and   12,750  charging  staFons  by  2012  •  In  the  next  10  years,  Chinese  government  will   grant  100bn  RMB  to  support  new  energy  cars  
  5. 5. PEST   PoliFcal   17   5   Government  investment   in  electric  car  industry   (billions  of  dollars)  
  6. 6. PEST   Economical  •  2009:  13.7  million  motor  vehicles  manufactured   in  China,  surpassing  Japan  as  the  largest   automobile  manufacturer  in  the  world  •  2010:  Chinas  share  of  the  global  electric  vehicle   market  will  grow  from  2.7  percent  this  year  to  35   percent  by  2020  •  China:  19%  world  populaFon  but  less  than  1%  of   world  oil  reserves2009    •  2010:    China  invests  $34.6  billion  in  wind,  solar,   and  other  green  energy  products  
  7. 7. PEST   Economical   Total  China  Vehicle  Sales     2005-­‐2009,  in  Million  Units    16   Sales   13,64  14   23%  12   9,67  10   8,98   8   7,34   5,9   6   4   2   0   2005   2006   2007   2008   2009  
  8. 8. PEST   Social  •  According  to  a  recent  survey,  60%  of  Chinese  respondents   show  a  strong  interest  for  electric  vehicles  •  The  average  age  of  Chinese  car  buyers  is  35  compared  with  50   in  the  U.S.  and  Europe      •  Electric  mileage  and  reliability  of  new  energy  are    main   concerns  for  buyers  of  NEVs    •  Among  all  brands  of  NEVs,  BYD  enjoys  the  highest  popularity,   Toyota  the  second    •  98%  of  urban  Chinese  are  concerned  with  climate  change,   among  which  69%  are  willing  to  change  their  living  habits  
  9. 9. PEST   Social   Gross  domesHc  product  per  capita,  constant  prices  (US$)  18.000.000  16.000.000  14.000.000  12.000.000  10.000.000   8.000.000   6.000.000   4.000.000   2.000.000   0   1980   1985   1990   1995   2000   2005   2010   2015   2020  
  10. 10. CHINA  –      CARS  PER  1000   INHABITANTS:   40  
  11. 11. USA  –      CARS  PER  1000   INHABITANTS:   675  
  12. 12. PEST   Technological  •  Main  technologies:  hybrid,  electric,  fuel-­‐cell      •  Worldwide  increases  in  the  price  of  petroleum  caused     automakers  to  release  hybrids  (e.g.  Toyota’s  Prius),  now  a   core  segment  of  the  automoFve’s  future    •  The  future  of  bakery  electric  vehicles  depends  primarily  on   cost  and  availability  of  bakeries  with  high  energy  densiFes,   power  density,  and  long  life  •  The  rare  element  dysprosium  is  required  to  fabricate  many   advanced  electric  motors  and  bakery  systems  
  13. 13. PEST   Technological   Global  Daily  Oil  ConsumpHon  Breakdown     (by  applicaFon,  2007)   ResidenFal   7%   Commercial   3%  Industrial   35%   ResidenFal   Commercial   TransportaFon   TransportaFon   Industrial   55%  Total  ConsumpFon  =  85  million  barrel  /  Day  
  14. 14. INDUSTRY   ANALYSIS  “I  think  everyone  is  going  to  be  surpised  at  how  fast  this   is  going  to  unfold.     In  ten  years  China  will   be  a  100%  electric  vehicle   market”     Shai  Agassi,    founder  and  Ceo  of  Bekerplace.  
  15. 15. TRENDS   Per  capita  car  ownership   2005-­‐2020(exp)   (owners/1000persons)   840   870   900   800   675   700   600   500   China   400   USA   300   200   128   100   24   45   0   2005   2010   2020  
  16. 16. TRENDS   Number  of  Vehicles  on  Road   1980-­‐2020,  in  Million  Units   217   220   170   140   Forecast   120   Forecast   64   70   15   20   2   6   1980   1990   2000   2009   2015   2020   -­‐30  
  17. 17. TRENDS  
  18. 18. TRENDS   •  In  the  next  decade,   powertrain  is   available  and   accepted  as   alternaFve  energies   •  Among  them,   electricity  driven   powertrain  is  the   most  significant   trend   •  By  2050,  EV  and   Hybrid  EV  will   account,  according   to  InternaFonal   Energy  Agency,  for   almost  50%  of  the   total  market  
  19. 19. TRENDS   By  2020,  it  is  expected  25%  of  new  cars  could  be  EV  around   the  world,  and  China  EV  market  could  reach  6  million   Global  EV  Market  Growth   Chinese  EV  Market  Growth    (2008  vs  2020  forecast,      (2008  vs  2020  forecast,     in  thousands  units)     in  thousands  units)    25000   24,7%   28,1%   7000   %  Global  EV/   21.000   5.900  20000   Vehicle   6000   %  Chinese  EV/   Global  EV   5000  15000   Hybrid  EV   Hybrid  EV   4000   20000   5600  10000   3000   2000   5000   0,2%   O,9%   1000   1   570   1000   Electric  EV   300   Electric  EV   0   0   2008   2020   2008   2020  
  20. 20. BUYERS   SUBSTITUTES   THREAT  OF  ENTRY   PORTER  INDUSTRY  RIVALRY   ANALYSIS   SUPPLIERS! COMPLEMENTS  
  21. 21. •  Capital  requirement   •  Government  and  legal  barriers   •  Economies  of  scale   •  Absolute  cost  advantage   •  Product  differenHaHon   •  Access  to  distribuHon  channel   •  RetaliaHon  NEW  ENTRANTS  
  22. 22. SUPPLIERS   Power  ba_ery  suppliers   •  Price  sensiFvity   •  Bargaining  power    Electric  motor  suppliers   •  Price  sensiFvity   •  Bargaining  power  
  23. 23. BUYERS   Dealers   •  Price  sensiFvity   •  Bargaining  power   Private  customers   •  Price  sensiFvity   •  Bargaining  power   Government     Fleet  buyers  
  24. 24. SubsHtutes-­‐short  distance  •  Gasoline  cars  •  Electric  bicycles  •  Motorcycles  •  public  transportaFon  •  TradiFonal  taxi    SubsHtutes:  long  distance  •   Train   SUBSTITUTES  
  25. 25. Chinese  market  share   BYD   Geely   FAW   INDUSTRY  RIVALRY   Chery   Nissan   2009   Honda  Hyundai   2008   GM   Toyota   VW   0%   5%   10%   15%  
  26. 26. COMPLEMENTS  
  27. 27. BUYERS   High  price  sensitivity   &   High  bargaining   Low   High   power   Threat  of     threat   entry   SUBSTITUTES   THREAT  OF  ENTRY   Fierce   CompeHHon  INDUSTRY  RIVALRY   SUPPLIERS! High   Low   rivalry   Relative   power   High   Relevance   COMPLEMENTS  
  28. 28.  M ARKET AL   THO RIZON ION   T SEG MENTA
  29. 29. V  CompeHtor     O   L   Analysis   K   G   S   E   W   B     E      A          T              O          Y          O L   T     G   D              R          Y   E C          H           N  
  30. 30. V   O   L  TOYOTA   K   S   W   B        T            A     Y          O       T          O       G   D   N  
  31. 31. Toyota              Hybrid  world  leader:  7  hybrids  models,  2  million  Strategy   hybrids  vehicles  sold  so  far,  bestselling  model     (Prius)                A  hybrid  version  for  every  model  in  the  early  ObjecFves   2020s  -­‐  “Sustainable  mobility”,  products  with     sustainability  at  the  core                The  most  significant  sales  volume  (2  million  Strengths   hybris  vehicles  sold  so  far)  -­‐  First  mover  in  the     hybrid  market  with  a  15-­‐year  R&D  program                Focus  on  hybrid  -­‐  Lack  of  strong  relaHonship  with    Weaknesses   Chinese  government                  More  effort  on  R&D  -­‐  Hyper  compeHHon  on  a  PredicFons   price  base  –  Stronger  presence  in  China  (e.g.  FAW     joint  venture)  
  32. 32. V   O   L  VOLKSWAGEN   K   S   W   B        T            A     Y          O       T          O       G   D          R          Y   C           H          E     N  
  33. 33. Volkswagen              Volkswagen  focuses  on  efficiency  in  terms  of  fuel  Strategy   consumpFon  and  co2  emissions  (e.g.  BlueMoFon)                  By  2018    electric  cars  comprise  3-­‐5%  of  its  fleet  -­‐  ObjecFves   at  least  one  model  on  the  market  by  2012                  Strong  presence  in  China,  market-­‐share  leader  Strengths   (16%)  –  R&D  and  know-­‐how  on  engine  efficiency                        VW  doesn’t  offer  any  model  with  core  NEV  Weaknesses   technologies  -­‐  Lack  of  strong  relaHonship  with       Chinese  government                  Focus  on  NEV  for  differenFaFon  -­‐  Hyper  PredicFons   compeHHon  on  a  price  base  –  Stronger  presence     in  China  (e.g.  FAW  joint  venture)  
  34. 34. V   O   L  CHERY   K   G   S   E   W   B   E        T            A     Y          O       L   T          O       G   D            R          Y   C           H          E   N  
  35. 35. Chery              Chery  offers  5  electric  models  (A5BSG,  A5ISG,  Strategy   A3ISG,  QQEV,  M1EV)  –  Partnership  in  swap     infrastructure  with  Bekerplace                “Safer,  More  Energy  Saving  and  More  ObjecFves   Environmental-­‐Friendly”  –  Find  soluFon  to  the     lack  of  infrastructure                  Largest  independent  manufacturer  -­‐  access  to  Strengths   foreign  advanced  technology  –  best  industry     quality  cerFficaFon  –  worldwide  presence  (USA)                Focus  on  EV,  sFll  not  on  Plug  in  cars  or  Hybrid  –  Weaknesses   lack  of  relaFons  with  Chinese  government     compared  to  other  domesFc  manufacturers                Focus  on  other  sustainable  technologies  -­‐  Hyper  PredicFons   compeHHon  on  a  price  base  –  Further     collaboraFon  with  foreigners  -­‐    
  36. 36. V   O   L  GEELY   K   G   S   E   W   B     E      A          T              O          Y          O L   T     G   D              R          Y   E C          H           N  
  37. 37. Geely/Volvo              2  electric  models  in  the  Chinese  market  -­‐  In  March  Strategy   2010,  currently  developing  plug-­‐in  and  all  electric     models  (e.g.  C30  DRIVe)                Focus  on  developing  cars  that  are  enFrely  free  of  ObjecFves   emissions  –  exploit  Volvo’s  IP  assets                  Access  to  Volvo’s  know-­‐how  -­‐  world  presence  –  Strengths   Goldman  Sachs’  $330m  investment  –  EV  and     hybrids  models                  Small  domesFc  market  share  –  will  Volvo  be  a  Weaknesses   profitable  investment?                  Leverage  Volvo’s  brand  awareness  -­‐  Hyper  PredicFons   compeHHon  on  a  price  base  –  Expand  world     presence  of  producFon  and  distribuFon    
  38. 38. COMPANY     ANALYSIS   “If  I  had  a  car  like  that  in  high  school,    I  would  have  had  a  lot  of  dates  with  girls.”                      Warren  Buffet  
  39. 39. RESOURCES   CAPABILITIES   Tangible   Intangible         Human  Financial  
  40. 40. RESOURCES   CAPABILITIES   Tangible   Intangible         Human  Physical   •  Plants  and  Equipment            -­‐  Xi’an,  Shenzen:  500,000  units/year          Bejing  :  car  and  bakery  moulds     •   Laboratories   •  Proving  Grounds     •  …              
  41. 41. •  …  •  Zhabuye  Salt  lake    Lithium  mine  
  42. 42. RESOURCES   CAPABILITIES   Tangible   Intangible         Human   •  Technology  and  Patents   –   BYD  ET  Power  Technology   –   BYD  Dual  Mode     –  Sowwares   •  Know  How   •  Culture   •  ReputaFon  and  Brand              -­‐  Warren  Buffet            -­‐  Brand  awareness    
  43. 43. %  of  surveyed  people  that  recognize  the  brand  as  an  EV’s  producer  
  44. 44. RESOURCES   CAPABILITIES   Tangible   Intangible         Human   •  From  20  employees  (1995)  to  more  than  160,000   employees  (2009).     •  10,000  engineers  graduated  from  the  company’s  training   programs  and  7,000  graduated  from  the  best  Chinese   schools.     •  Engineers’  salary  :  600$/700$  per  month  >  compared   with  US    
  45. 45. RESOURCES   CAPABILITIES  
  46. 46. RESOURCES   CAPABILITIES  
  47. 47. RESOURCES   CAPABILITIES  
  48. 48. RESOURCES   CAPABILITIES  
  49. 49. RESOURCES   CAPABILITIES  
  50. 50. RESOURCES   CAPABILITIES  
  51. 51. RESOURCES   CAPABILITIES  
  52. 52. COMPETITIVE  ADVANTAGE  
  53. 53. Financial  assessment  of  BYD’s     compeFFve  advantage  
  54. 54. COST  DRIVERS   DRIVERS  OF  UNIQUENESS   -­‐  Reverse  engineering   -­‐  Culture   -­‐  Economies  of  learning   -­‐  Brand  awareness  -­‐  Easy  access  to  China’s  Lithium   -­‐  Electric  mileage   biggest  mine   -­‐  Easiness  of  use   -­‐  Process  InnovaFon   -­‐  VerFcal  integraFon   -­‐  Non  unionized  and  low  cost       labor  force       -­‐  LocaFon  advantage              
  55. 55. CompeHHve  resources   capabiliHes   advantage  
  56. 56. CompeHHve  capabiliHes   advantage  
  57. 57. CompeHHve   advantage  
  58. 58. CONCLUSIONS   “It  was  fantasFc,     I  am  amazed  by  the  quality  of  the  vehicle”.                  Bill  Gates  
  59. 59. BLUE  OCEAN   BYD   TOYOTA   CHERY  Price   Design  &   Security   Ajer-­‐   Env.     Electric   Easiness   Accessories   standard   sales   impact   Mileage   of  use  
  60. 60. 3  FUNDAMENTAL  ELEMENTS  OF  A     BLUE  OCEAN  STRATEGY  • Focus    • Divergence    • Compelling  tagline        
  61. 61. 3  FUNDAMENTAL  ELEMENTS  OF  A     BLUE  OCEAN  STRATEGY  • Focus:        emphasis  on  environmental  respect,  electric      mileage  and  easiness  of  use    • Divergence:        BYD’s  value  curve  stands  apart  from  domesFc      &  foreign  compeFtors      • Compelling  tagline:        “Build  Your  Dreams”    
  62. 62. RECOMMENDATIONS  Buffet  asked  Wang  how  BYD  would   sustain  its  lead.     “We  will  never,  never  rest”  Wang   replied.  
  63. 63. HYBRID  
  64. 64. VOLKSWAGEN  
  65. 65. INFRASTRUCTURE  
  66. 66. Thank  You!   Q&A..  
  67. 67. Thank  You!   Q&A..  

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