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SWOT and PESTEL evaluation of the auto industry

At the start the gas price and market were stable, this create conducive environment for car manufacturers, Vehicle sales has become more powerful on the market, than it was expected anticipated to expected financial growth, whereby industry marketing expenditure were level at $ 1, 505 million and later increased $39 ml to 1544 ml scheduled to extreme advertising and advertising increase despite growing sales, oil prices were doubled in the Dec, and raise concerned about the ne next year, also marketing industry expenses increased $232 million to $, 705 million, due to heavy and also many firms decided to update their car to meet difference taste and preferences

Strategic Choices

Strategy is the course and scope of a business over the future, which achieves advantages, in changing environment through its formation, tool and competences with the purpose of fulfilling stakeholders targets, tactical decision are therefore likely to be complex in mother nature(Johnson et al, 2006;61) Strong business strategies are built on good business decision so success depends upon whether management has stable understanding of the micro environment, the industry in which its operates

Strategic Analysis

The business overall vision is to become the leading company to overall economy -focused vehicle and be best in its category reflect different style and design to be able to meet the test of different customers market segment.

At the start all companies were began under same circumstances, the principal strategy was to build up the vehicles, company was original created (one of each categories, Market Family and Pickup truck), and the automobile which were not performing better in a firm were improved to mirror the changing style and design to charm with customers' expectations

The major marketplace, and particular attention was presented with to Overall economy vehicle, the Echo, Effiz and Egad

Basic Strategy

In simulation exercise every company were started in identical situation, the initial strategy was to build up the autos that firm presented with (one in each throughout the market, Family and Truck classes) and measure their success. And whereby any vehicles which failed to perfume better in the market would eventually be discontinue and reinvest in other vehicle school.

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External Analysis

PESTEL

Political factors, the organization should be ware with all guidelines and regulation regulating the production of vehicles, such as petrol efficiency cars which can be highly emphasized, vehicle emissions, safety and standard issues should be given priority.

Economic factor, at the start of the simulation the current economic climate were in good conditions, GDP development were projected to raise from 1% to 1 1. 5% in period 1 and inflation to drop from 2, 5% to at least one 1. 5% these were fluctuation hence market decline at end of simulation.

Social Factors, automobiles is one of agent which pollute conditions scheduled to emission of Co2 and noises, large towns, has damaged with these emission and lead to diseases related to breathing and epidermis. Many traffic jams which can be frustrating, and increasing street accidents.

Legal Factors, the company should adhere to all regulations and regulation using its businesses, such as gas emission laws and regulations, protection and standard issues, vehicles regulations, compatibility spares manufactures

Technological factors, Vehicles manufactures are starting to introduce Choice Energy Vehicles, which are employing electricity only (rechargeable batteries), energy cell, hydrogen, solar or cross. Despite of its expensiveness it'll be method for energy efficiency and decreasing pollution, but during simulation we weren't accessed to build up purely vehicles, or cross models despite of its lifetime. Other solutions such as synthetic materials, web procumbent technology, JIT Management, advanced logistics computer-aided design software, increase efficiency and save money

Environmental factors, Environment pollution, is one of challenging issues threating the globe, car companies should pay attention in it issues, by transforming their technology into alternate energy vehicles, reduce emissions

Today's customers are ones of victims of Co2 emissions, hence in a future customer will favor substitute energy vehicles to protect the conditions.

SWOT-OT

Opportunities, growing of current economic climate this resulted in increase on purchasing power customers as well as growing of growing markets

Threats, New laws and regulations might imposed regarding to gas emission and safe practices issues, increasing contests from other firms, release of new technology, as well as global overall economy downturn, development of hybrid systems might be threat for car manufactures

Strength, At groundwork of the simulation, all businesses began with one car in each at the Overall economy, Family and Vehicle, this give opportunity to fair competition because of the fact, all firms within simulation were started out with zero competition, within these unexploited marketplaces, hence the firs companies which is risk taker to possibly gain lions talk about compare to other organizations which can be risk averse.

Weakness, all companies were started out with same situation simulation, hence another organizations can transfer to our future vehicle course before our company decide to move

Critical success Factors, are the ones that differentiate one products from another in the eyes of consumes, can be threshold features and differentiators

Threshold features, are those taken for granted to consumers in decision of buying such as, gasoline consumption, engine unit capacity and strength whilst differentiators would be features such as music system, climate system, Gps navigation, Bluetooth technology.

During simulation, were able to upgrade or downgrade threshold features depending how it perform in market despite for your there were few options in case of differentiators this business lead to numerous vehicles ended being similar across all businesses hence difficult to distinguish from one to some other.

Industry and Sector

(LearningSpace, 2007)

Threat of New Entrants

Threat on new entrants during simulation it was limited hence it was impossible for new businesses to enter during exercise whilst in an automobile manufactures dangers is low due to capital intensive(amount of capital required to spend is very huge) hence act as barriers for accessibility in high.

Threats of Substitutes

Car manufactures, also has substitute, scheduled to increased amount of cars in streets and lead to congestion, high car parking charges, high cost of running a vehicles, lack of infrastructure such as streets hence people choose motor cycles, general public transport, bicycling as substitute to cars, decrease in economy will force visitors to consider alternate of buy autos.

Bargaining vitality of buyers

Bargaining electricity of buyers is medium in sense that, during simulation exercise, there were few choices to tell apart against opponents this leads many vehicles were similar, because of the fact all companies were were only available in same position, this implies buyers will usage of choose one cars and another.

Bargaining ability of Supplier

Suppliers of cars components are disjointed hence and their few, this resulted in car manufactures to possess limited selections in terms of buying components because of their cars, hence causes high bargaining ability of suppliers, which reduce success of car producers.

Competitive Rivalry

Rivalry among existing firms is high, due to the fact that all firms were were only available in similar situation. Firm E contend with 6 firms which all putting into action different strategies to be able to perfume better in the market.

Internal Analysis

VRIO

Value, the companies have got all resources and capacities and transforms to fits customers' anticipations, and businesses has capabilities to respond threats and opportunities, credited to heavily marketing during period one demand is overshadowed with production capacity in all followed times.

Rareness, this explain how many competing companies already have got particular valuable resources and functions, in a simulation all companies were started in a same situation, the answer to introduce rareness is by starting a fresh vehicles, which is was yet created by other rivalling firms

Imitability in a simulation exercise product imitability was saturated in sense that organizations statistic were released so as other companies can usage of see, this implies you can be easy can imitate the technique for another businesses.

Organization

This ask question such as execute a firms organized to exploit the full competitive, potential of its tool and capacities, in simulation exercise organizations are incredibly disorganized, this resulted to it incurring substantial penalty fee in every decision period

Decision /Results

Strategic Direction

The initial strategic way chosen by the firm C in Market Course to be cost command by producing more market vehicles Cameo which is sold at low prices with less powerful engine unit and large products, safety was chosen this to be able to target to customer who are value seekers, price very sensitive, other strategy is promoting and advertising more in ordered to deal more.

Other Strategic direction made a decision by the company C, was to develop its family vehicle school Cafav with the theme of protection, quality and comfort which is sold at medium priced car firm opt to was chosen to be able to target customers who've medium income earner are those who have households and who like more space of cargo as well family fun built in. to target customer who would like reliable safe and transport for their individuals at an acceptable cost

Strategic way also was used by the Company C in its car Crash, in a Pickup truck class, which includes styling and performance, four-wheel drive, as well quality and safety this is chosen to be able to target the clients which charm with young and have more throw-away income.

Decisions during Simulation

Vehicle production

During the span of simulation organization C made a decision to undertake the strategy of producing more economy automobiles order to increase development the Cameo its market course vehicles by making use of somewhat of style but more on safeness in order to diversify this brand not only concentrating on value seeker but also singles

The firm's Vehicle Crash was decided to produce more units of in order to sell more truck autos by adding more on styling in interior to indicate the changes in customer requirements but not compromise protection and quality of its.

The firm's Family vehicle Cafav also made the decision was also upgraded in order increase productions to echo the changing customer changing demand updates was mainly in interior styling and basic safety.

Advertising and Promotion

The firm's invested heavily in advertising and marketing during simulation exercise to be able to attain its objective to obtain larger market talk about,

But still Cameo in a economy class did note performing good it has 10% of market share compare to its rivals Buzzy with market share of 19%

Dealership

The organization c chosen acquire more dealers in north, south, east and western in order to get huge coverage and reaching more customers who can buy our product

Technology

The firm c decide to upgrade its technological capabilities to be able to get capacity to create more cars in order to compete with other firms

The Outcomes

Despite of taking strategy of producing more vehicles in the Economy school Cameo and continue in promoting and market costs where heavy spent at period 5 but their deal were not good as it was anticipated on the market, this induced by focus more on safety strategy only, rather than adding with style later strategy taken was to undergo major upgrade this resulted in Cameo's inventory to be sold out at least expensive price.

Despite increased dealership in west and south but we failing woefully to take full coverage due to face to face completion experienced from other firms

Despite of increased advertising and campaign budget to economy course but it didn't act in response and sales were decline from time to time whereby solid market share 15. 1% per2 to 13% per5 final strategy was to endure major upgrade to the model and include safe practices with style

The firm net income has tremendously decrease $ 577. 7 ml in per 2 to $-6, 387. 2 this is due firm c hold off to float connection to cover operation cost.

The final results of Simulation Exercise

Reasons

The companies C has been performing

The firm of deal has increased $16, 438. 2 period 2 to $ 20, 442. 2 but decline $19, 030. period5 was scheduled to upgrading created by the businesses, this caused the automobile to get high price, and also competition from other firms in the market

Market show also was decreasing, from 15% to 13. 9% was scheduled to head to head competition from other businesses and wrong reposition to your products on the market.

The firm's debts was increasing from $ 3, 562. 0ml in period 2 to $41, 571ml was due businesses strategy of changing vehicle was well as vegetation but it didn't pay back. Aswell firm delay to float bonds

The organization capacity usage increased from 97. 8% to 207. 0% this is due to firm C decided to produce more cars hence utilization increased.

Conclusions

Firms aims was to become the market leader for their Overall economy vehicles, the firms CEO try to implement the best strategies for their firms, but the results had not been good as it was expected, but it hard to declare weather the businesses failure was scheduled to firms proper choices, this led businesses financial performance to deteriorate from week to week.

It's clear that the companies overall action was matched up their objectives of good performance throughout the market vehicle was marketed well and perform somehow good.

What did we learn?

Throughout simulation was overlooked and given little attention in each decision period, triggering massive losses every week, no budget had been set every week, and despite the huge losses depicted on the financial claims, there were no efforts taken up to discover the cause, drastic financial problems should be addresses quickly and procedures shouldn't continue before cause has been determined, if not resolved

From these results, it implies that the firms experienced right ideas, but its execution was not intelligent.

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Johnson, G. Scholes, K and Whittington, R, (2006), Exploring Corporate Strategy, 7th release, Feet Prentice Hall, Harlow, England

James, S. , Deighan, M. , (2007), Strategic management simulation, Interpretive Software Inc

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