9
Strategic Plan
Andrew Luo
Southern New Hampshire University
MBA-580
Dr. Sharon
8/27/2021
Strategic Plan
Competitors Strengths
Based on the comparative growth data sheet data, the compound annual growth rate for the global market is estimated to be at 4.10% by the year 2030. This data shows that the vehicle market is on the rise. My company’s major competitors are BMW, Toyota, and VW. The biggest competitor of the three is VW. It has a market share of 8.76%, with its growth rate expected to have the most significant rise of 4.30%. Toyota is next in line, owning 8.53% of the cars and light trucks market. Its expected compound annual growth rate is at 3.90%. Finally, BMW is the lowest competitor with a 3.91% market share in the cars and light trucks market. It has an expected compound annual growth rate of 3.70%. In ten years, the three companies have experienced market growth, recording growth in their market share.
Figure 1 current market shares cars and light trucks
Figure 2 cars and light trucks market share in 2030
It also contains information on connected cars and trucks sales and estimated value in ten years. My company has a 7. 10% market share. In contrast, the three competitors, BMW, Toyota, and VW, have the following market shares on the connected cars and trucks: Toyota owns 8.90% while BMW owns 3.0% of the market share. In comparison, VW, the most prominent competitor, has a 15.50% of market share%. By 2030, the three competitors have the following market share in the connected cars and truck market: BMW has 3.05%, Toyota has 8.62%, and VW has 13.19%. This represents a market share drop in for the connected cars and trucks.
Figure 3 connected cars and trucks market share now
Figure 4 connected cars and trucks market share 2030
My company and the three competitors’ operation statistics are also available in the data. The data is essential in determining the financial strength of the companies. VW produces the greatest revenue of $282.9 billion, then it is followed closely by Toyota with $275.4 billion. The last on the list is BMW, with $126.1 billion. The net income puts Toyota at the top, followed by VW then BMW with $19.7 billion, $16.1 billion, and $6.1 billion, respectively. This makes my company have the least net income and the least financial strength
Company’s Market share
As the market share for cars, connected cars, light trucks, and trucks is expanding within the ten years, my company’s market share is shrinking. My company has a 5.80% market share in the cars and trucks market with a 3.10% projected compound annual growth rate. However, at the end of ten years, the market share has dropped by 0.52% to have a 5.28% market share. The same applied to connected cars and light trucks. Presently, my company has a 7.10% market share with a 10.20% projected compound annual growth rate. By 2030, the market share has drastically dropped to 1.98%.
My company’s loss of market share is not a total failure in the vehicle industry. The main reason why we are losing the market share is that my company is approaching its operating capacity. This has provided the limits through which we can increase our business activity at the current capacity. Therefore, as the other companies expand, my companies have remained the same, thus causing the decreased market share. Another reason causing the market share drop in the competition in the market niche has been very challenging. The competitors have more expansion capacity and resources, thus occupying more shares (NICKOLAS & DRURY, 2021).
My company’s projected annual growth rate in cars and trucks is 3.10% and 10.20% in connected cars and light trucks. This shows that my company has a high potential in its growth with the right resources and an expanded capacity. As per the financial capability of my company, in revenue generation, my company is placed third behind VW and Toyota with $187. 1 billion annual revenues. However, the net revenue of my company is meager, with the least in the list producing $0.9 billion. This shows that the financial capability of my company is shallow.
Potential total available market
In this industry, the cars and trucks total available market is currently at $3227.7 million, with my market having a potential of $187.10 million. On the other hand, the potential total available market for the IoT-connected cars and light trucks is $53.9 billion, with my company having a $3.83 billion market potential. This shows that the market has a great potential that my company should exploit to grow and expand (Cummings, 2021).
The market size should expand in the next ten years since the industry is growing and more clients are venturing into luxury vehicles. The projection for cars and trucks compound annual growth rate global market is 4.10% in the next ten years. In this category, my company has a 3.10% projected compound annual growth rate. On the other hand, IoT-connected cars and trucks have a 25.20% projected compound annual growth rate.
After performing a market analysis, the fastest-growing competitor is BMW. Although it has a small market share, BMW is snowballing. It projected that the cars and trucks compound annual growth rate is at 3.70%, while for the IoT-connected cars and trucks, its CAGR is at 25.50%. This puts it at the top of the list as the fastest-growing competitor.
Adjusting to changes in business
Slow response from customers
Even under the correct initiative, introducing an innovation can reduce the customers’ will to adopt the new product. The slow response to the new product may delay the return on investment to my company. The slow response may be due to high prices, introducing a non-competitive product, or inferior quality product (Heidenreich & Handrich, 2014). This may even result in a takedown of the product from the portfolio leading to considerable losses. Dealing with slow responses to innovations requires my company to develop new and competitive routines that will embrace the customers’ new and old needs and values. This will force my company to incur both economic and psychological switching costs.
Another approach to influence the adoption rate of a new product is by changing the consumer’s mindset. During product advertising, the advertisers mostly dwell on the product’s attributes to make sales. When dealing with a market-resistant innovation, the advertisers will have to address both the product attribute and the consumer’s mindset on the new product. My company can also engage in cooperation to deal with the new car types (Heidenreich & Handrich, 2014). This can be horizontal where we shall involve the competitors in a successful marketing strategy for the new product. On the other hand, vertical cooperation involves cooperation with distributors and suppliers in developing a marketing strategy.
One competitor dominating the market
When one of the competitors dominates the market and taking over the market, there are several ways to handle the situation. The most effective means is to refine the target audience and segment your product. This will mean that my company will concentrate on one product line and dominate in it. Another approach would be comparative advertising, where my company would mention the dominating competitor’s products in an advertisement and display the superiority of my product to the consumers (Bloom & Kotler, 2021).
Steps towards new concept outline to launch
The process of introducing products will most probably include an incremental product innovation. The production of the new product will be through upgrading an existing product to incorporate more technology and features. To achieve this, the company will require new developments and improvements. First, the new features and technologies will require development space where engineers operate to accomplish the changes (Cooper, 2010). The process will also include searching for new suppliers to acquire the new product. This will lead to an increase in the procurement department.
All these adjustments do not occur without capital; thus, the company will require additional capital investment. The numbers of personnel will also be increased based on the changes to be implemented. The company will hire more designers, engineers, and car assemblers to work in the new product line. The new product line represents a new project in the company. This project will require a project manager to head the product development and launch. The project manager will use a project management tool to develop the product schedule, thus creating a timeline for the involved activity. This will help determine the timeline of the project from the beginning of product development until its launch.
References
Bloom, P., & Kotler, P. (2021). Strategies for High Market-Share Companies. Harvard Business Review. Retrieved 22 August 2021, from https://hbr.org/1975/11/strategies-for-high-market-share-companies.
Cooper, R. (2010). The Stage-Gate Idea to Launch System. Wiley International Encyclopedia Of Marketing. https://doi.org/10.1002/9781444316568.wiem05014
Cummings, C. (2021). How Big is Your Potential Market, Really?. Bplans Blog. Retrieved 22 August 2021, from https://articles.bplans.com/how-to-determine-your-tam-total-addressable-market/.
Heidenreich, S., & Handrich, M. (2014). What about Passive Innovation Resistance? Investigating Adoption-Related Behavior from a Resistance Perspective. Journal Of Product Innovation Management, 32(6), 878-903. https://doi.org/10.1111/jpim.12161
NICKOLAS, S., & DRURY, A. (2021). How Do I Determine the Market Share for a Company?. Investopedia. Retrieved 22 August 2021, from https://www.investopedia.com/ask/answers/033015/how-do-i-determine-particular-companys-market-share.asp.
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