Audi Case Study

pic EVALUATE A COMPANYS COMPETITIVE target AND commercialize authority IN THE world(prenominal) ECONOMY CASE STUDY AUDI pic Team members 1. NGUYEN Ngoc Khanh Chi 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 put everyplace OF CONTENT I/ FRAME WORK (Thinh)4 A. key THE STRATEGIC BUSINESS UNIT WITHIN AUDI AG4 B. dumbfound SBU AND MARKET FOR THIS SBU4 C. SELECT PERIOD OF TIME FOR THIS SBUS MARKET4 II/ ANALYSE COMPETITIVE horizon AND MARKET POTENTIAL5 A. DEFINE THE COMPETITIVE SCOPE (Thinh)5 B. EVALUATE THE INTENSITY OF THE ambition (VU)7 1.Determine the phase of the sprightliness cycle of the elevator auto application. 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 elementys strengths and weaknesses using the value chain10 2. Benchmark the order slaying by compa rison with the pains leaders13 III/ MAKE RECOMMENDATION FOR COMPANY DEVELOPMENT14 A. PROPOSE A generic wine STRATEGY (PORTER 1980) (DAVID)14 1. Diffentiation or Cost Leadership? 14 2. patience wide or Particular section? 15 B. SELECT AN INTERNATIONALIZATION STRATEGY (SON)15 . consume an internationalization strategy15 2. Audi 201016 3. Audi 2015 keeping and improving the identical strategy16 C. STUDY THE RELEVANCE OF A COOPERATION STRATEGY (CHI)17 1. The current situation of Audi AGs symbiotic merchandising strategy17 2. Recommendation for Audi AGs symbiotic selling contractment17 D. bear witness A MARKETING PROCESS (TUAN)20 1. foodstuff segmentation20 2. Target food market placeing strategy20 3. Position the comp whatsoever and/or product21 E. GIVEN MAIN ORIENTATION FOR THE MARKETING MIX (TUAN)21 I/ FRAME WORK (Thinh) A. IDENTIFY THE STRATEGIC BUSINESS UNIT WITHIN AUDI AG Potential SBU Organization profile Industry trend Demand dimension Supply dimension Compact moto rcar special adroitness Most of the split bought d whiz city-dwellers Specialized (A1, A2, A3) decentralize VWs central purchasing unit entry level prep ar competitor (Mini, DS3) (benefit from economy of scale) single Medium car special skill laid-back quality part and luxury consumer Specialized decentralize Direct competitor (BMW, Mercedes) Big car special skill eminent quality part only luxury consumer Specialized decentralize Direct competitor (BMW, Mercedes) feature car Special skill senior blue school quality part only Young, excited, sportive hobby eminence focus underlyingize Very niche market Direct competitor (BMW, Mercedes) There is no distinguishable for medium-sized car and big-sized car SBU so Audi is segmented into three SBUs i) SBU 1 grant compact car ii) SBU 2 aid car (medium- and big-sized cars) iii) SBU 3 amuse car B. SELECT SBU AND MARKET FOR THIS SBU ? SUB SBU-2 premium car ? Market china market C. SELECT PERIOD O F TIME FOR THIS SBUS MARKET Product life cycle of a premium car is about 4 year and today is 2010 so we go out study in the period of magazine 2010 2015 II/ ANALYSE COMPETITIVE POSITION AND MARKET POTENTIAL ? The Macro Environment of Chinese auto sprightly manufacture analysis PESTEL framework Opportunities Threats Political Political constancy Entry mode regulation pronounce-venture with 50% WTO shareholding for foreign partner Policy to encourage the automobile industry High import tariff to protect domestic industry development Economic Economic booming, broad(prenominal) GDP growth, rising disposable Rising oil price in sum up ( car purchasing forcefulness growing Economic downcastturn Social Large population Culture difference among Western and china Chinese like to pervert luxury product to denominate their success Technological systemal Chinese puts high effort on look and development Environmental Green car Low fuel inlet Lega l Law is non very clear Lack of transparency Intellect right is non respected highly in china A. DEFINE THE COMPETITIVE SCOPE (Thinh) Way of removeing C. A some Fragmented Industry Specialized industry Few Dilemma industry Volume industry little(a) Big The size of C. A The number of way for Audi to gain the competitive favor is many a(prenominal) through the complexity of the product. It also has great advantage in applied science, innovation, high quality of service. So Audi selects the specialized industry. divulge Success Factor 2010 2015 High technology & innovation Stronger Top service Stronger Adaptation Stronger to meet local node expected inciter equity Stronger, do not enter price war ? Industry analysis Posters Five Forces chinaware Market P5F 2010 2015 Threat of Entry High threats f wholeible threats the same High profit market attracts new firms High threats same 2010 plus china is in its developing phase of automobile - Hyundai, Tata (acquired the Jaguar and Land life-cycle Rover brands), Geely (Chinese firm) (acquired Attracting policy for FDI Volvo) will move to this segment. wanton intellectual property laws sump up high threat for new entrance idle threats High investment for narrow up mass production facility Germany firm and Audi itself is very strong and key out Regulation ambiguous Regulation about environment == increase R&D cost Sump up moderate threat for new entrance Threat of Substitutes Used car weak Weak Public transportation weak faulting cost high Sump up Weak dicker power of buyer Backward integration low-spirited Bargaining power of buyer is moderate Switching cost low Buyer independence moderate Buyer size moderate Sump up bargain power of buyer is weak Bargaining power of supplier Utilizing VW network (economy of scale) Weak 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 intensity stage. In Europe and USA, specifically there is a high motorization rate (car per family and car per persons) and the demand is almost entirely constituted by replacement purchase. In reverse, China market just come to development stages with blooming in sale. In the year 2010, at the first time, China market reaches near the same ratio with Germany. pic Source Audi (2010) Annual Report, p. 132 2. Competitive topologyIn order to build competitive topology, we choose 2 most KSF of Audi in Chinese market Market penetrative level and Brand Equity. pic Volkswagen Group, the owner of Audi, is one of the earliest automobile manufacturers has production in China. In 1991, FAW and the Volkswagen Group decided to set up a joint venture under the name FAW-Volkswagen self-propelled Company to manufacture of the Audi 100 model. This early br ainwave in Chinese market help Audi get a big advantage of knowing precisely Chinese consumer, customize its designs to cater to Chinese tastes. The two main otherwise competitors, BMW and Mercedes manufactured in China quite late (2004 and 2006) when Audi already had a strong position in China local market.According to investigator 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 customers in China typically purchase higher-end models than buyers in the U. S. or Europe do. Slowing economy and rising fuel prices puzzle led to a eat 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 into price war while other especially, Mercedes has been offering the steepest discounts, according to car pricing website cheshi. com.With the high price level, Audi sample their strong position in China market which focuses on the level of product to show up their social position. 3. Entry barrier a. High technology, costly to R. While German automotive industry already built up a high standard 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 money b. Strong brand recognition of German car With anything in China, the first mover gets more(prenominal), Thomas Callarman, director of the Center for Automotive Research at the China Europe International Business School in Shanghai said that.This is true to automotive industry people are just more familiar 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 have a unique advantage that make any other competitors very difficult to follow, tha t 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 scattering. By 2015, Mercedes plans to forked its annual production capacity in the worlds biggest automobile market to 200,000 vehicles annually, though that wint be enough to keep up with its rivals.BMW plans to quadruple potential output 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 strategy group is not so closed. The strategic liberty is medium there is always chance for other to join into higher group. However, the entry barrier at this period 2010-2015 seem difficult for other groups to move to higher, we tramp conclude that the Competitive Intensive is medium mean each strategy gr oup 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, aids,(++++) or Processes Audi has always introduced the newest technology to China with worldwide standard apply for Audi. Production (+++) (-) Manufacturing of Audi in worldwide pic modern assembly entrance hall in China Together with the Chinese joint venture partner China FAW group lot (Changchun, China), Audi AG opened a new assembly hall at the Chinese production make in Changchun in fall 2009. The long-wheelbase version 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 boos ted the locations manufacturing output to 200,000 cars annually Marketing & trades (+++) (-) In fiscal year 2009, the Audi brand delivered 950 thousand vehicles to customers worldwide, down 5. 4% on the previous year. In Western Europe, sales figures 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 revenue (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 o f the company, there was an appreciable rise in the volume of deliveries of 32. 9% to 158,941 Audi vehicle demand 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 last year Distribution (+++) (-) 146 local franchisees by the end of August 2009 Customer Service (+++) (-) Audi CSI Ranking is 836 in comparison 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 customers in China market (source Audi in China Audi China President report, 2012) Audi see to it in China market pic III/ MAKE RECOMMENDATION FOR COMPANY DEVELOPMENT A. PROPOSE A generic wine STRATEGY (PORTER 1980) (DAVID) 1. Diffenti ation or Cost Leadership? As Audi has chosen to target a clientele which can be characterized by its high incomeLevel, the outdo strategy to adapt in the generic strategy is eminence outline Audi seeks to differentiate 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, over 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 valuable to produce Customer less slight to price Need to have always a beneficial quality production PRODUCT QUALITY Audi wants to apply the same standards at the international level in order 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 real 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 possible 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 INTERNATIONALIZATION STRATEGY (SON) 1. Select an internationalization strategy i) Evaluate the advantage and drawbacks of the adaptation policy and the normalisation policy Advantages Drawdown Final Sale Made in Germany Costly (Labor costs in Germany is very Protect know how high) Quality see 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 amplitude Brand (2010 and 2015)Principle Market Germany, Europe (not including Germany), Emerging Markets (China, Russia), United States. Reference norm Global Developmental logic Standardization and Adaptation (Apply the same standards at the international level) Principal modes of internationalization Exporting, International Joint ventures and own Subsidiaries. 3. Audi 2015 keeping and improving the same strategy With transnational strategy, it will help Audi create competences of global relevance, reactivity to local condition and innovation and learning on an organization wide scale. It responds specifically to the challenges of globalization and tends to have a high proportion 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 geocentric 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 below Concentrated decision making 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. T he 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 reasoning(a) Movies sponsoring system provided by BOSE in Audi cars. Audi sponsored Iron Man 2 and created the Tony Stark Innovation Audis Google-enhanced navigation system (Google Map, Google Challenge contest. passageway View, Google Navigation). Audi sponsored Knight and DayTom Cruise and Cameron Diaz drove the Apples button on command wheel or in the dashboard of Audi cars S5 Cabriolet. for connecting to Apples Siri-based Eyes Free solution (coming Sport sponsoring in 2013. Audi Cup 2011 with 04 famous soccer police squads Bayern Munich (GER), AC Audi UNICEF joint programs in several activities emergency Milan (ITA), Barcelona (SPN) and SC International de Porto Alegre giving, fund-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 donation Emergency giving During Chinas 2008 Sichuan seism emergency, Audi donated US$2,205,107 for UNICEFs allayer effort and long-term recovery needs of children. From 2005, Audi sponsored a fundraising go through Audi control Dreams in China, to support UNICEF efforts to provide children with access to sports, recreational activities and a variety of activity-based lessons, through which they can consummate their fullest potential within society. Environmental activities sponsor AUDI AG provides backup for the Oak Forest research project with the Bavarian State Forestry and the Chair of Forest Yield Science at the Technical Unive rsity 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 recognized brand name for premium high-end car, so in this time it is classical o maintain the high homogeneity of their standard and image by standing alone and not with an alliance with other automobile makers. Outsourcing cooperation Besides outsourcing engine move and car interior parts, Audi should outsource their customer service to the local service providers. Outsoaring much(prenominal) 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 for eign 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 sounding 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 social 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 commitments to the development 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 arena Cup, UEFA Euro Cup) ? Charity donation & fund r aising 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 bring back the total result to Audi supporting 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 America Automotive industry Growing due date Maturity Maturity Growing trend, demand and Stagnation Stagnation Stagnation production Competitors New competitors coming handed-down Traditional Traditional Traditional competit ors due to emerging process competitors competitors competitors 2. Target marketing strategy From the market segmentation and information, China is most attractive market (consist of 13. 5% of global market) in front of Central Eastern Europe (9. % of global market) and South America (7% of global market), Western Europe (market maturity, lessen demand), NAFTA (market maturity, decreasing demand), Japan (market maturity, decreasing demand). Therefore, Audi should target to maximize their volume of products, new products and profit in China Market and Central Eastern Europe (including Hungary market) and South America. On the other hand, Audi should also maintain their position, products in the other markets to control 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 Pe rceptual (Positioning) map pic E. GIVEN MAIN ORIENTATION FOR THE MARKETING MIX (TUAN) P(Product) realise new models of car with innovative technology (brand new). P (Price) Economies of scale and try to use maximum 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 rest 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 Serviceability 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 long suit Performance AUDI BRAND IN CHINA Features 31% Audi BMW 21. 6% Mercedes 21% 21% Other 2004 Brand Equity High High Low Market penetrate level