Audi Case Study

pic mensu grade A COMPANYS COMPETITIVE repose AND MARKET dominance IN THE GLOBAL ECONOMY CASE STUDY AUDI pic Team members 1. NGUYEN Ngoc Khanh qi 2. NGO Thi Nam Phuong 3. HUYNH Thi Bich Son 4. NGUYEN Truong Thinh 5. CHAU Ngoc Son Vu 6. DOGIELSKI David 7. NGUYEN Quoc Tuan TABLE OF CONTENT I/ cast WORK (Thinh)4 A. IDENTIFY THE STRATEGIC line of merchandise UNIT WITHIN AUDI AG4 B. appoint SBU AND MARKET FOR THIS SBU4 C. SELECT PERIOD OF TIME FOR THIS SBUS MARKET4 II/ dismember COMPETITIVE POSITION AND MARKET POTENTIAL5 A. DEFINE THE COMPETITIVE SCOPE (Thinh)5 B. quantify THE INTENSITY OF THE COMPETITION (VU)7 1.Determine the phase of the life cycles/second of the auto labor. 7 2. Competitive topology8 3. Entry barrier9 4. Evaluate competitive intensive10 C. EVALUATE THE COMPANYS COMPETITIVE POSITION AND ITS MARKET POTENTIAL (PHUONG)10 1. Diagnose the familiaritys strengths and weaknesses using the value chain10 2. Benchmark the company performance by similitude with the man ufacture leaders13 III/ coerce RECOMMENDATION FOR COMPANY DEVELOPMENT14 A. PROPOSE A GENERIC dodge (PORTER 1980) (DAVID)14 1. Diffentiation or Cost Leadership? 14 2. driveway wide or accompaniment atom? 15 B. SELECT AN transnationalisation STRATEGY (SON)15 . Select an internationalization musical arrangement15 2. Audi 201016 3. Audi 2015 keeping and amend the uniform scheme16 C. STUDY THE RELEVANCE OF A COOPERATION STRATEGY (CHI)17 1. The current situation of Audi AGs symbiotic food merchandising corpse17 2. Recommendation for Audi AGs symbiotic marketing suppuration17 D. PRESENT A selling PROCESS (TUAN)20 1. Market segmentation20 2. Tar blend in marketing scheme20 3. Position the company and/or product21 E. GIVEN MAIN penchant FOR THE MARKETING MIX (TUAN)21 I/ FRAME WORK (Thinh) A. IDENTIFY THE STRATEGIC BUSINESS UNIT WITHIN AUDI AG Potential SBU Organization profile fabrication mood Demand dimension Supply dimension Compact railway gondola special accompli shment Most of the parts bought with city-dwellers Specialized (A1, A2, A3) alter VWs central buying unit entry level draw a bead on competitor (Mini, DS3) (benefit from economy of scale) single Medium political machine special skill highschool fictitious character part save extravagance consumer Specialized decentralize channelise competitor (BMW, Mercedes) Big car special skill high character reference part only opulence consumer Specialized decentralize signal competitor (BMW, Mercedes) merriment car Special skill higher(prenominal) quality part only Young, excited, sportive hobbyDifferentiation focus on modify Very niche market Direct competitor (BMW, Mercedes) There is no antithetical for medium-sized car and big-sized car SBU so Audi is segmented into three SBUs i) SBU 1 premium compact car ii) SBU 2 premium car (medium- and big-sized cars) iii) SBU 3 Sport car B. SELECT SBU AND MARKET FOR THIS SBU ? SUB SBU-2 premium car ? Ma rket chinawargon market C. SELECT PERIOD OF TIME FOR THIS SBUS MARKET Product life cycle of a premium car is nigh 4 year and today is 2010 so we will field in the period of time 2010 2015 II/ ANALYSE COMPETITIVE POSITION AND MARKET POTENTIAL ? The Macro Environment of Chinese locomote industry analysis PESTEL framework Opportunities Threats Political Political stability Entry mode regulation colligation- think with 50% WTO shareholding for foreign partner Policy to encourage the automobile industry game import tariff to protect domestic industry development Economic Economic booming, high GDP growth, locomote expend commensurate Rising oil post income ( car purchasing power improver Economic downturn Social Large population Culture going between Western and chinaware Chinese like to buy luxury product to show their success Technological Chinese puts high confinement on research and development environmental Green car suffering fuel consu mption Legal Law is not very cloud slight Lack of transparency Intellect right is not respected passing in china A. DEFINE THE COMPETITIVE SCOPE (Thinh) Way of gaining C. A Many Fragmented attention Specialized industry Few plight industry Volume industry Sm solely Big The size of C. A The number of way for Audi to gain the competitive wages is many through with(predicate) the complexity of the product. It also has great usefulness in engineering science, innovation, high quality of benefit. So Audi selects the specialized industry. Key Success Factor 2010 2015 high up engine room & innovation Stronger Top service Stronger Adaptation Stronger to meet local anesthetic anaesthetic node expected firebrand equity Stronger, do not enter damage war ? Industry analysis Posters Five Forces chinaware Market P5F 2010 2015 Threat of Entry High threats Weak threats the same High scratch market attracts new self-coloureds High threats same 2010 plus mainland china is in its developing phase of automobile - Hyundai, Tata (acquired the Jaguar and Land life-cycle scouter sets), Geely (Chinese firm) (acquired Attracting policy for FDI Volvo) will move to this segment. Weak intellectual property laws swallow hole up high threat for new entrance Weak threats High investment for set up mass end product facility Germany firm and Audi itself is very warm and reputation Regulation ambiguous Regulation about environment == amplification R&D be Sump up ascertain threat for new entrance Threat of Substitutes Used car weak Weak Public transportation weak Switching cost high Sump up Weak Bargaining power of purchaser Backward integration low Bargaining power of buyer is moderate Switching cost low purchaser independence moderate Buyer size moderate Sump up dicker power of buyer is weak Bargaining power of supplier Utilizing VW ne both(prenominal)rk (economy of scale) W eak bargaining power of supplier is weak Market competitor Moderate High pic B. EVALUATE THE INTENSITY OF THE COMPETITION (VU) 1. Determine the phase of the life cycle of the auto industry. Most of the Western car market enters into saturation stage. In europium and USA, specifically there is a high motorization rate (car per family and car per persons) and the rent is almost entirely constituted by renewal purchase. In reverse, mainland China market just come to development stages with blooming in sale. In the year 2010, at the first time, China market reaches nearly the same ratio with Germany. pic ancestor Audi (2010) Annual Report, p. 132 2. Competitive topologyIn battle array to physical body competitive topology, we choose 2 most KSF of Audi in Chinese market Market penetrative level and Brand candor. pic Volkswagen Group, the owner of Audi, is hotshot of the earliest automobile manufacturers has production in China. In 1991, FAW and the Volkswagen Group refrac tory to set up a joint venture under the nominate FAW-Volkswagen automotive Company to manufacture of the Audi 100 model. This early penetration in Chinese market help Audi get a big advantage of knowing exactly Chinese consumer, customize its designs to cater to Chinese tastes. The two main some other competitors, BMW and Mercedes manufactured in China quite slowly (2004 and 2006) when Audi already had a strong position in China local market.According to researcher IHS Automotive, the market share of Audi by 2010 is 31% while Mercedes and BMW is only 21% and 21. 6%. pic Source IHS Automotive China already generates the fattest profit margins for German luxury carmakers because nodes in China typically purchase higher-end models than buyers in the U. S. or europium do. Slowing economy and rising fuel outlays fuddle led to a glut of cars in Chinese showrooms this year, forcing dealers to cut prices. Among luxury brands, Audi still keep the high price and prevent to joint int o price war while other especially, Mercedes has been offering the steepest discounts, according to car determine website cheshi. com.With the high price level, Audi prove their strong position in China market which focuses on the level of product to show up their amicable position. 3. Entry barrier a. High technology, costly to R. While German self-propelling industry already built up a high banner quality, high technology feature, it take a lot of effort for rising up competitors from Korea as Hyundai to catch up the high-tech race and R need to be invested a huge m superstary b. Strong brand recognition of German car With anything in China, the first mover gets more, doubting Thomas Callarman, director of the Center for Automotive Research at the China europium International Business School in Shanghai said that.This is accepted to automotive industry people are just more beaten(prenominal) with Audi. It will take a lot of time for another competitors to build up the brand recognition to China market especially the one not come from Germany. That make Audi be in possession of a unique advantage that make any other competitors very difficult to follow, that is the time. It has a strong position brand name in China market in a very long time for premium car. c. Bottleneck in the production and distribution. By 2015, Mercedes plans to double its yearly production capacity in the worlds biggest automobile market to 200,000 vehicles annually, though that wont be enough to keep up with its rivals.BMW plans to quadruple potential end product to 400,000 and Audi is seeking to more than triple capacity to 700,000 by the middle of the decade. This will make Audi keep the advantage in distribution car to customer in the shortest time if compare with other. 4. Evaluate competitive intensive As China market is booming, the distance between each system assemblage is not so closed. The strategic freedom is medium there is incessantly chance for other to join i nto higher group. However, the entry barrier at this period 2010-2015 seem difficult for other groups to move to higher, we so-and-so close that the Competitive Intensive is medium mean each strategy group is chasing each other aggressively but the chance for all to get market share is the same in this blooming market. C.EVALUATE THE COMPANYS COMPETITIVE POSITION AND ITS MARKET POTENTIAL (PHUONG) 1. Diagnose the companys strengths and weaknesses using the value chain VALUE CHAIN STRENGTH weakness Research and Development No information Design of Products, Services,(++++) or Processes Audi has forever introduced the newest technology to China with worldwide standard put one across for Audi. Production (+++) (-) Manufacturing of Audi in worldwide pic New assembly residence in China unneurotic with the Chinese joint venture partner China FAW group partnership (Changchun, China), Audi AG opened a new assembly hall at the Chinese production plant in Ch angchun in fall 2009. The long-wheelbase form of Audi A4 & The Audi A5 are now built there to the same high standards that apply throughout the Audi production system worldwide.The addition of a new hall has boosted the locations manufacturing output to 200,000 cars annually Marketing & Sales (+++) (-) In fiscal year 2009, the Audi brand delivered 950 thousand vehicles to customers worldwide, down 5. 4% on the previous year. In Western europium, sales variants fell by 11. 8%. The downturn on the US market was 5. 7%, which was less than the figure for the market as a whole. By contrast, the brand recorded a significant growth rate of 32. 9% on the Chinese rider car market. AUDI BRAND 2009 2008 % Deliveries (thousand units) 950 1,003 5. Vehicle sales 1,183 1,275 7. Production 924 1,022 9. Sales tax i ncome (million) 29,840 34,196 12. Operating profit 1,604 2,772 42. as % of sales revenue 5. 4 8. China is the largest foreign market of the company, there was an appreciable rise in the lot of deliveries of 32. 9% to 158,941 Audi vehicle convey for the long wheelbase models developed specially for the Chinese market, the Audi A4 L, & A6 L, was particularly high in the year under review.The Audi brand consequently cemented its leading position in the Chinese premium segment conclusion year Distribution (+++) (-) 146 local franchisees by the end of August 2009 customer Service (+++) (-) Audi CSI Ranking is 836 in parity with middle point is 817 pic Source J. D. Power Asia Pacific Reports 2009 2. Benchmark the company performance by comparison with the industry leaders Thanks to its generic strategy, Audi is now the leader in delivering premium ars to customer s in China market (source Audi in China Audi China President report, 2012) Audi image in China market pic III/ MAKE RECOMMENDATION FOR COMPANY DEVELOPMENT A. PROPOSE A GENERIC STRATEGY (PORTER 1980) (DAVID) 1. Diffentiation or Cost Leadership? As Audi has chosen to target a clientele which can be characterized by its high incomeLevel, the beat out strategy to adapt in the generic strategy is Differentiation Strategy Audi seeks to separate itself from its competitors through the technological superiority of the models it sells and by the quality of the service offered, which applies to all dealerships, anywhere in the world. Advantages Disadvantages Cost Leadership Mass production Brand seen as cheap and low cost Customer less requiring about quality Differentiation Good Image of the Brand overpriced to set about Customer less sensitive to price Need to grow always a good quality production PRODUCT flavour Audi wants to apply the same standards at the international level in baseball club to build a uniform brand image and respond to the demand of a mobile clientele. 2. Industry wide or Particular Segment? The target customer segment is not really price-sensitive. In China, the purchasing power is low but a fragment of the population is able to buy an Audi Car. However, it is not a particular segment like Rolls Royce or Ferrari. Audis target is the rich Chinese class, and so we chose Industry wide. Advantages Disadvantages Industry wide More potential customers Brand not seen as the best existing A large quantity produced, economy of scale Particular Segment Brand seen as very special Not come-at-able to make scale economy Customer not sensitive to price Few potential of customers Audi was the first premium segment manufacturer to produce vehicles in China, in 1988. It gives an advantage on the Chinese Market, and a leadership position compared to its competitors. B. SELECT AN orbiculateIZATION STRATEGY (SON) 1. Select an internat ionalization strategy i) Evaluate the advantage and drawbacks of the adaptation policy and the standardization policy Advantages Drawdown final exam Sale Made in Germany Costly (Labor costs in Germany is very Protect know how high) Quality control Risky Foreign Direct Investment Saving cost No made in Germany No profit before long term ii) Propose an internationalization strategy transnational strategy GLOBAL STRATEGY TRANSNATIONAL STRATEGY Audi 2010 and Audi 2015 INTERNATIONAL STRATEGY MULTINATIONAL STRATEGY 2. Audi 2010 TRANSNATIONAL STRATEGY AUDI Premium Brand (2010 and 2015)Principle Market Germany, Europe (not including Germany), Emerging Markets (China, Russia), United adduces. Reference norm world(prenominal) Developmental logic Standardization and Adaptation (Apply the same standards at the international level) Principal modes of internationalization Exporting, International Joint ventures and Owned Subsidiaries. 3. Audi 2015 keeping and improving the same strategy With transnational strategy, it will help Audi create competences of global relevance, responsiveness to local condition and innovation and learning on an scheme wide scale. It responds specifically to the challenges of globalization and tends to have a high symmetry of fixed responsibilities in the horizontal lines of management.If it is to work, the transnational structure must have very clearly defined managerial roles, relationship and boundaries. That means, Audi should adopt the Ptolemaic orientation. The employees are recruited from all over the world, so that the best people are recruited to solve global problems. Audi will have to try to develop both global differentiation and global integration between headquarter and foreign subsidiaries. The focus is therefore to gain the potential advantages of an integrated company, and to gain the advantages of differentiation in product offerings. The alignment between Transnational Strategy and Audi profile is at a low er place Concentrated decision make power Dispersed decision making power High interdependence between Transnational Strategy activities geocentric Orientation High interdependence between activities C. STUDY THE RELEVANCE OF A COOPERATION STRATEGY (CHI) 1. The current situation of Audi AGs symbiotic marketing strategy LATERAL COOPERATION OUTSOURCING COOPERATION (Alliance) (Sub-contracting) None. POLYTEC GROUP to manufacture some of Audis engine components for Audi A4, A6, A8 CORRELATION COOPERATION ELECTRIC COOPERATION (Co-branding) (Sponsoring/New products) A Bose HiFi Audi car customer can enjoy a high-quality sound Movies sponsoring system deliver the goodsd by BOSE in Audi cars. Audi sponsored adjure Man 2 and created the Tony Stark Innovation Audis Google-enhanced navigation system (Google Map, Google Challenge contest. Street View, Google Navigation). Audi sponsored Knight and DayTom Cruise and Cameron Diaz control the Apples button on steering wheel or in the dashboard of Audi cars S5 Cabriolet. for connecting to Apples Siri-based Eyes Free solving (coming Sport sponsoring in 2013. Audi Cup 2011 with 04 famous soccer groups Bayern Munich (GER), AC Audi UNICEF joint programs in several activities emergency Milan (ITA), Barcelona (SPN) and SC International de Porto Alegre giving, lineage-rising (esp. in China market) (BRA), of which three first teams are members of Audis international soccer family. Bayern Munichs basketball team joined the football players in flying the flag for Audi brand. Charity contribution Emergency giving During Chinas 2008 Sichuan earthquake emergency, Audi donated US$2,205,107 for UNICEFs support effort and long-term recovery needs of children. From 2005, Audi sponsored a fundraising project Audi Driving Dreams in China, to support UNICEF efforts to hand over children with access to sports, recreational activities and a variety of activity-based l essons, through which they can realize their fullest potential within society. Environmental activities sponsor AUDI AG adds backup for the Oak Forest research project with the Bavarian State Forestry and the Chair of Forest Yield Science at the Technical University of Munich (Source Audi annual report 2011, UNICEF website, Audi website, Polytech website) 2. Recommendation for Audi AGs symbiotic marketing development Alliance cooperation Currently, Audi does not have any kind of alliance with other partner outside Germany (except for a joint venture FAW-Volkswagen Group set up in China).Audi AG is a strong and well acknowledge brand name for premium high-end car, so in this time it is burning(prenominal) o maintain the high homogeneity of their standard and image by standing alone and not with an alliance with other automobile makers. Outsourcing cooperation anyhow outsourcing engine parts and car interior parts, Audi should outsource their customer service to th e local service providers. Outsoaring such services such as customer care and/or car maintenance-repairing service is not only provide Audi owners the standardization quality of Audi services worldwide but also provide the customized local values, especially in important foreign markets such as U. S, China, or Great Britain. Correlation cooperationBy co-branding with leading names in other industries, Audi will continue to confirm its premium quality of the automobiles, for example, high-quality appear system from BOSE, or Audis Google-based map and navigation. This collaboration will provide a convenient and interesting driving experience to the Audi owners. pic An Audi-Bose sound system & speaker inside an Audi A4 (Source internet) Electric cooperation For Audi, electric cooperation such as sponsoring for cordial activities, especially in their important market such as China or U. S, is very important not only for marketing strategy but also for showing their cargos to the deve lopment of the society.Audi should involve more in many kinds of social activities as recommended below ? Blockbuster movies production (Hollywood movies) ? Sport games / sport tournaments (such as Olympic Games, FIFA World Cup, UEFA Euro Cup) ? Charity donation & fund raising event (such as UNICEF fund for children, or poverty relief funds) ? Music event (such as Beijing Music Festival, Audi Summer Concerts ) ? Environmental activities (such as forest research program) ? Safe driving campaign (together with the local government) Participating in such above activities will prove the commitment of Audi AG about corporate social responsibility (CSR) towards the society.Those activities would also leave back the good result to Audi living to penetrate Audi image to the market, increase the goodwill of people towards the company, and bring them the potential customers in the future. D. PRESENT A MARKETING PROCESS (TUAN) 1. Market segmentation China Western Europe NAFTA JAPAN Central eastern Europe and South the States Automotive industry Growing Maturity Maturity Maturity Growing trend, demand and Stagnation Stagnation Stagnation production Competitors New competitors coming handed-down Traditional Traditional Traditional competitors due to emerging process competitors competitors competitors 2. pose marketing strategy From the market segmentation and information, China is most piquant market (consist of 13. 5% of global market) in front of Central easterly Europe (9. % of global market) and South America (7% of global market), Western Europe (market maturity, decreasing demand), NAFTA (market maturity, decreasing demand), Japan (market maturity, decreasing demand). Therefore, Audi should target to maximize their glitz of products, new products and profit in China Market and Central east Europe (including Hungary market) and South America. On the other hand, Audi should also maintain their position, products in the other markets to cont rol their traditional competitors. Audi should adopt the selective specification strategy while the several marketing mixes are implemented in different segments. The same product is marketed differently in different segments. 3. Position the company and/or product Perceptual (Positioning) map pic E. GIVEN MAIN ORIENTATION FOR THE MARKETING MIX (TUAN) P(Product) Create new models of car with innovative technology (brand new). P (Price) Economies of scale and try to use upper limit advantage of supporting from Volkswagen Group to have maximum savings in production. P(Distribution) Coverage maximum China market and central eastern Europe and south America and try to maintain market in remaining areas. Joint venture and/or 100% subsidiaries approach should be considered. P (Promotion) Enhancement of personalized customer service. Attend every professional trade shown in every market area, especially in China and Central Eastern Europe South America. Fit and Finish Service ability Reliability Name pic? lmnorsvw? e? O? ? emailprotected$JIhJ5OJQJJh$JIho5h$JIhJ55? OJQJh$JIhuF? 5? OJQJhuF? 5? OJQJhJ55? OJQJ(jh$JIhA OJQJUpicmHnHupic(h$JIh-N5? B* CJOJQJaJph(h$JIhA 5? B* CJOJQJaJph(h$JIhirM5? B* CJOJQJaJphh$JIhAConformance to Specifications Durability Performance AUDI BRAND IN mainland China Features 31% Audi BMW 21. 6% Mercedes 21% 21% Other 2004 Brand Equity High High Low Market penetrate level