Environment and Models and Strategic Decisions: A Case Study of Jaguar
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| Environment and Models and Strategic Decisions: A Case Study of Jaguar |
Paying consideration to the environment to make a particular business model brings strategic depth to the decision-making process. A strong strategic process is a need of every business organisation (Hubbard 2008). This paper critically evaluates these concepts as per identified questions in the context of Jaguar automotive.
The impact and influence of the macro-environment on business strategies
Local and global business environments change dramatically because of different political, economic and social factors. In recent years, Covid-19 has generated a negative impact on businesses. The business environment is completely different from the pre-2019 business environment. Consumers buying capacity has reduced and this has contributed to the reduced sale of products. Jaguar is one of the renowned automotive companies and the organisation has been experiencing a similar situation due to the pandemic impact. Hubbard (2008) believes that during critical times organisations either become more innovative or close down their businesses. However, according to Hubbard, strategically it is a wise decision to conduct a macro environment analysis that helps organisations to understand different factors that shape the business environment. This process according to Hubbard is known as PESTLE.- Political
- Economical
- Social
- Technological
- Legal
- Ecological (Hubbard 2008)
Political factor
The United Kingdom has a strong established political system and government; however, government policies in particular pandemic contexts have imposed certain restrictions on business. Jaguar has faced the negative economic impact of these restrictions. Business organisations cannot go against the political will as some decisions are made for the public interest. Although, political stability has helped businesses to overcome financial constraints sooner as compared to less politically stable countries (Wang et al. 2020).The strategic department at Jaguar requires an understanding of different types of political pressures that are other than government pressure. These include the following;
- Larger trading companies
- Government bodies
- Legal bodies
- Regional agencies
- Labour union pressure (Deresky 2008)
Economic factor
Economic pressures deeply influence the growth system of an organisation. Politics has a great impact on the economy. Manufacturing organisations due to high production costs opt for moving in tax-free markets where tax exemption as well as the availability of cheap material brings economic relaxation for business organisations. Macroeconomic environment analysis consideration means focusing on certain aspects that can affect the overall volume of trade (Wang et al. 2020). These factors include the following;- GDP
- Fiscal policy
- Monetary mechanism of a market
- Inflation
- Employment rates
- Consumer spending (Wang et al. 2020)
Social factors
Jaguar sells costly products to its customers who spend a lot of money because of quality products. The organisation manufactures most of its parts in China. The language, working culture, religious and social norms of China are different from the United Kingdom. To overcome these issues hiring the local staff to deal with workers and to perform ongoing tasks is one of the most crucial aspects of environmental consideration. A concise consideration of growth rate, working attitude, working culture and compliance with health and safety issues are considered social factors (Wang et al. 2020).Technology
Technology adoption is the need of time. Most of the manufacturers in the automotive industry are moving on two types of systems which include artificial intelligence and electronic vehicles. Artificial intelligence system allows organisations to conduct different types of product reliability and durability tests to inspire customers in the market (Wang et al. 2020).Generation Z is more technology-prone; hence, it is essential to provide innovative manufacturing in the market. Similarly, most of the renowned companies are in a race to produce electronic vehicles that are more environmentally friendly. Consideration of this aspect is necessary (Wang et al. 2020).
Legal
Changes in employment regulations, law, taxes on the import and export of goods, taxes on manufacturing material, employment rights and fair treatment are certain factors that have legal consequences. United Kingdom labour legislation allows workers to claim their rights and fight legally against illegal termination or if they are not paid for working overtime. Jaguar requires deep consideration of these issues to avoid legal complexities. It is always productive to hire legal professionals who have a better understanding of internal trade laws (Collins and Rugman, 2009).Environment factors
Jaguar is following an environment-friendly policy and revolutionizing its vehicle engines to reduce the emission of CO2. Using renewable energy sources and using eco-friendly strategies are certain norms that will ensure environmental sustainability. Jaguar is also in a race to produce electronic cars for its users; however, this project will take time to put into practice (Ritchie & Roser 2017).Good consideration of environmental factors is essential to run a business successfully. Macro and micro factors have the potential to damage a business, hence, doing business in politically and economically developed regions brings more business opportunities. Similarly, a deep consideration of regional cultures where a business operates and respecting others’ cultures bring a positive reputation for an organisation. In the present business environment, a business organisation needs to pay deep consideration to legal and environmental issues using technology to make their manufacturing more user and environment-friendly. This will surely bring more customers to Jaguar in the near future.
The internal environment and capabilities of Jaguar
Internal analysis is essential because of two factors; first, improving capabilities and competitiveness of strategic initiatives and second preparing a unique strategic model that enables the organisation to ensure a positive working culture (Zain & Kassim, 2012). Jaguar’s long-term existence in the market indicates that the organisation follows a unique value system that exhibits its visionary approach to achieving organisational corporate objectives. The internal environment of Jaguar is based on different corporate and strategic concepts that include the following;- Value system
- Vision, mission and objectives
- Organisational structure
- Corporate culture
- Human resources
- Physical resources
- Technological capabilities (Deresky 2008)
Techniques to analyse the internal environment
Business professionals adopt different techniques to perform internal analysis. There are various tools to understand the effectiveness of internal processes that impact organisational strategies. It is important to remember that micro and macro analysis is performed to boost strategic competitiveness which is a major source to bring regular revenue streams from the successful completion of business processes.According to Claudiu et al. (2011), at the primary level, Jaguar needs to identify its resources to ensure the classification of resources to use for various operational purposes. The availability of ample financial resources helps organisations to identify their strengths and focus on their strategic weaknesses. This leads an organisation to look for more improvement opportunities.
The second phase is known as the identification of capabilities. This also includes a critical evaluation of strategic as well as human resources strengths and presence. Analysis of capabilities helps an organisation to plan its business process. Analysis of competitiveness enables an organisation to invent different ways to utilise its resources and capabilities to strengthen its strategic operation. Making or selecting a strategy is a crucial point that can help Jaguar to identify missing resources and improve strategic processes to find the best business opportunities in the market (Claudiu et al. 2011).
Value chain framework
Porter’s research has revolutionized the business concepts that paved the way for business organisations to amend their strategies to perform business successfully. The concept of value chain analysis revolves around support activities and profit margins and focuses on the following;- Inbound logistics
- Operations
- Outbound logistics
- Marketing and sales
- Service (Claudiu et al. 2011)
SWOT in the context of internal and external factors
Organisations always require a certain set of tools that can contribute to strategic analysis and evaluation of strategic performance. PESTLE has already been discussed which is a major source to analyse external as well as internal strategic processes. Similarly, SWOT is one of the renowned sets of tools that boost organisational capacities. Evaluation of Jaguar's strengths, weaknesses, business opportunities and threats is essential for the successful completion of strategic processes (Collins & Rugman 2009).Product differentiation is the biggest strength of Jaguar. At the strategic level, the organisation has a unique brand name that attracts its customers. At the internal level, the biggest strength is the presence of knowledgeable human resources who contribute to financial growth. The organisation performs a critical evaluation of its business processes to understand internal and external business weaknesses. Thus, it becomes easy to understand market opportunities and to identify potential strategic threats.
McKinsey’s 7s model
McKinsey's model provides a complete framework to perform an internal analysis of business performance. The productive aspect of McKinsey's model appears in two different ways. The first is that it allows the analysis of hard elements and the second assists in soft element analysis (Jurevicius, 2013).- It helps to ensure a successful change process in the organisation
- It is easy to consider different aspects of strategic vision before implementing a new strategy
- A speculative analysis of future change
- Merger becomes easy
Internal environment analysis is crucial to perform alongside the external environment because the productivity of organisational processes and operations largely depends on internal performance (Zain & Kassim, 2012). The internal environment of Jaguar is based on different corporate and strategic concepts that include value system, vision, mission and objectives, organisational structure, corporate culture, human resources, physical resources and technological capabilities (Deresky 2008). The value chain analysis contributes to improving organisational capabilities. The concept of value chain analysis is unique because it not only helps organisations to evaluate organisational infrastructure but assists in managing human resources and technology development (Claudiu et al. 2011). SWOT is one of the renowned sets of tools that boost organisational capacities. Evaluation of Jaguar's strengths, weaknesses, business opportunities and threats is essential for the successful completion of strategic processes (Collins & Rugman 2009). McKinsey's model provides a complete framework to perform an internal analysis of business performance. Hard S and Soft S enable professionals to plan a result-oriented strategy for long term business productivity and success (Jurevicius, 2013).
Porter's Five Forces model application
Market factors play a crucial role in business growth and enable organisations to consider different risks. Porter's five forces pave the way to initiate a broader analysis to consider a different approach that can help Jaguar understand the market situation considering different aspects (Hubbard et al. 2018).The focus of Porter's five forces is to understand the market situation and organisational capacities in terms of its product quality, service standards, competitive approaches and long-term planning.
Competitive Rivalry
It is one of the prominent risks that require strong consideration. Jaguar needs to consider;- Analyse the broader concept of rivalry
- Need to identify who automotive competitors are and what types of risks they create
- Products with similar qualities
- How different jaguar products are from rivals’ products
- The level of brand loyalty among customers (Johnson & Scholes 2002)
The threat of new entrains
This is one of the most potential threats as new market players from China and India are intervening in the automotive market with great resilience. Jaguar needs to consider the following;- Its products are not easily imitable
- Adopt new technology design
- Need to improve distribution channel
- Need to be more innovative
- Should focus on developing brand loyalty (Johnson & Scholes 2002)
Bargaining power of supplier
Relying on a single supplier can make the business situation worse because a single supplier often manipulates the situation. A single supplier can create a shortage of materials, raise prices, and might produce low-quality materials (Johnson & Scholes 2002). There is a need to consider the following;- Jaguar should have multiple suppliers
- Needs to outsource multiple ways to get material
- Should approach unique material to use it for future production (Hubbard et al. 2018)
Bargaining power of buyers
Buyers’ bargaining power is high if alternative products are available in the market at a lower price. If buyers are not brand-conscious they opt for an alternative. High pricing sometimes moves customers towards new campiness. There are multiple options for buyers, especially in present times when the automotive industry is producing electronic cars. Jaguar needs to consider these issues for long-term existence in the market (Hubbard et al. 2018).The threat of substitute products
To overcome this threat there are multiple options; however, the primary concern should be an evaluation of substitute products, competitors' capabilities, and their resources. Jaguar needs to design- Inimitable product
- Adopt a differentiation strategy
- High-quality products
- Durable products
- After-sales services
- Innovative designs
- Unique modern features (Johnson & Scholes 2002)
Strategic management plan that has tangible and tactical strategic priorities
The concept of Porter’s Generic Strategies in Jaguar’s business context is not new but the organisation has been using this concept for a long time. The concept of this strategy revolves around cost and leadership differentiation with a broader and narrow scope (Islami, Mustafa & Latkovikj 2020).Price differentiation
Price is the most crucial factor that persuades organisations to think diverse to reduce the cost of business processes to lower product costs. Customers tend to buy quality products at a reduced price. A low-cost strategy enables organisations to find alternative ways to buy low-cost materials to ensure cheaper production of products to sell comparatively low-cost products to buyers (Porter, 1998).Differetiation Focus
The concept of differentiation focus enables an organisation to produce unique products in the market. A low-cost and unique product inspires buyers to purchase the product because they get a unique, durable and affordable product that is inimitable. The application of a differentiation strategy can help Jaguar understand customers’ likes and dislikes (Porter, 1998).Differentiation leadership strategy
Focusing on customers' demands is a unique feature of this strategy. Every organisation has two types of customers that include premium customers and low-affordability customers. Premium customers are brand loyal and can afford to spend. The concept of leadership differentiation involves different elements (Islami, Mustafa & Latkovikj 2020). For instance,- Emotional response
- Novel product
- Brand presentation
- Unique experience
- Price (Islami, Mustafa & Latkovikj 2020)
- Sustainable competitive advantage
- Unique value
- Brand popularity
- Core marketing message
- Strong positioning (Islami, Mustafa & Latkovikj 2020)
- Amaze customers with product quality and price
- To become remarkable in everything associated with the business
- Creating a unique market niche
- To communicate differentiation advantages
- Creating buzz (Ali & Anwar 2021)
Bowman’s strategy
This strategy has different names, some call it Bowman's model and some say Bowman's strategy clock. Bowman's strategy has unique features that not only cover pricing issues but focus on differentiation issues as well. Jaguar is a unique automotive organisation and uses different strategic models to strengthen its business strategy. Careful attention to Bowman's model means a good understanding of the market and an improved market position with strong competitive advantages (Bhasin 2019).- Low price: ensuring customers get low-cost products with good quality
- Hybrid: this ensures that the organisation uses the combination of cost and differentiation to attract customers without compromising profitability.
- Differentiation: to present products with novelty and at affordable cost. This concept is also known as a mixture of differentiation and value.
- Focused differentiation: this involves versatility and novelty.
- Increased price standard product: this concept is also known to target premium customers who are ready to spend. Customers are loyal to a particular brand and do not mind paying for something that satisfies their buying nature.
- High price low value: it's a risky strategy that damages a business immensely and results in business failure.
- Low price low value: it's not a convincing option as this strategy does not bring any good to a business. A long-term plan to operate in the market fails with such a strategy (Bhasin 2019).
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