Introduction
Strategic decision-making is crucial for business organizations since it helps them cope with the rapid changes in the market. The motor vehicle industry is one of the most lucrative sectors but is being affected by the social and environmental changes in the global market. Jaguar Land Rover Automotive PLC (JLR) is a British multinational organization that is focused on producing luxurious and sport utility motor vehicles. This report analyses the strategic positioning of JLR concerning the increased focus on environmental sustainability and the shift toward electric vehicles (EVs).
Organization Overview
JLR is one of the world’s best-known car manufacturer brands, dominating the luxury and sport utility vehicles market. The organization is a subsidiary of Tata Motors, headquartered in Whitley, UK (Mishra and Dhingra 2022, p.1272). The company’s history of its foundation started in 1984 when Jaguar Cars and Land Rover reunited. In 2008, Tata Motors established Jaguar Land Rover Limited, a holding company, for the acquisition of Ford (Mukherjee 2022). JLR was fully incorporated in 2013 when the parent company underwent restructuring.
JLR Strategic Position
The motor vehicle industry is becoming more competitive due to new entrants and technological developments. The rapidly shifting market environment impacts human needs, including luxurious drives. The motor vehicle industry is one of the largest consumers of petroleum and natural gases (Yao et al., 2022). However, oil depreciation in the fields has increased, leading to energy crises (Mukherjee 2022). Additionally, the limited amount of oil available has led to increasing costs of diesel and petrol, which are primary energy sources for JLR vehicles. Therefore, many organizations have opted for EV production for sustainability.
External Environment Analysis
The PESTLE model can be used to describe the external environment that is affecting the company. The model explains political, economic, social, technological, legal, and environmental factors that influence JLR’s strategic positioning (Debnath et al. 2021). Given its excellent brand reputation and a good market share in the luxurious and utility motor vehicle industry, the political, legal, and economic factors are less impactful on JLR’s activities (Coffey and Thornley 2020, p.143). Therefore, the social, technological, and environmental factors are more influential.
Social factors involve those that the society surrounding JLR creates. Although JLR serves the global market, most of its clients are from European countries (Samiee 2019, p.543). Customers are sensitive to climate change and develop positive perceptions of sustainable and renewable energy sources (Yao et al. 2022). For instance, car purchasers from England believe EVs help avoid global warming (Malagi and Ramya, 2022). The negative perception towards diesel and petroleum risk in the JLR market in Europe. Therefore, JLR needs to meet its consumer base’s social needs through innovative strategies.
In the motor vehicle industry context, technological and environmental factors intersect to some extent. Technology informs cars’ design and development, which positively responds to environmental needs (Wilson et al. 2020). For instance, the advanced integration of artificial intelligence has led to the development of more efficient engines that reduce carbon emissions (Hai et al., 2022). JLR has continuously considered EV technologies for environmental sustainability (Mukherjee, 2022). Transitioning operations to complete the manufacturing of EVs is inevitable, given the need to sustain the environment and save on energy costs.
Porter’s Forces Model
Porter’s Five Forces model highlights critical forces that shape an organization’s competitive environment: industry competition, new entrants, suppliers’ power, customers’ power, and substitutes’ threat (Liu et al. 2022). The company is experiencing competition from organizations such as Tesla, which has fully transitioned to electric car production. The shift towards electronic and environmentally sustainable vehicles has opened doors for new entrants in the motor vehicle industry (Yang Xing and Li 2021). JLR and other European car-making companies are receiving increased competition from Asians. According to Dau et al. (2022), more than ten new entrants have started exploiting a business opportunity in Europe. The new entrants are increasing the already existing competition in the market.
Existing brands such as BMW, Toyota, and Tesla, among others, are expanding their operations concerning the manufacturing of EVs (Mali et al. 2022, p.14). The increased competition has led suppliers to demand electric car components. On the other hand, the increasing number of EV companies has given customers broad options to choose from, increasing the customers’ power (Qamar Collinson and Green 2022 p.9). JLR is an established brand with a loyal customer base, making suppliers’ and customers’ power less impactful (Choudhary et al. 2022, p.2). Therefore, industry competition and the threat of new entrants are the most impactful forces on JLR’s strategic positioning.
Changes in the Organization’s Environment
Most Critical Changes
The external and competitive environments analyses above, show various changes within JLR’s business. Firstly, the organization’s business environment is experiencing new technological trends (Liu et al., 2022). Many competitors are adopting technologies that promote the production and design of EVs. Changes in the production of vehicles that do not depend on diesel or petroleum have led to further developments (Ruble 2019). For instance, some companies, such as Tesla are working on producing self-driven vehicles through artificial intelligence (Liu et al., 2022). There is a need for JLR to align its activities with the prevailing changes.
Another change in the JLR environment is the move towards cleaner and affordable energy sources. While EVs promote a clean environment, other power sources, such as solar and wind, are cheaper (Alkawsi et al. 2021). Therefore, instead of designing vehicles that need recharging stations, the new market entrants are working toward solar-powered cars (Bamisile et al., 2020). Although using renewable sources is cheap for consumers, the technology and research needed to develop efficient machines are expensive.
Causes and Drivers
Change drivers are internal or external pressures that shape a shift from one strategy to another (Klofsten et al., 2019 p.152). The production of EVs, which are environmentally sustainable by JLR, is driven by its mission to produce cars that promote a mutually beneficial relationship between the company and its stakeholders (Francesca, 2022). While JLR benefits from an excellent sustainable brand reputation, its clients save on costs associated with diesel-powered vehicles—another change driver of the advanced technology in the motor vehicle industry (Albert Rubio and Valero 2021). The technology has allowed the organization to meet its needs and that of its stakeholders through sustainable vehicle designs.
In contrast to the drivers, a cause of change is why an organization shifts its operations from one strategy to another. Various causes have led to the shift towards EVs and a more sustainable vehicle power source (Hsieh Pan and Green 2020). The inconsistent availability of oils with increased prices has caused many motor vehicle companies to seek alternative sources of power (Yao et al., 2022). Therefore, JLR must respond to the changes, drivers, and causes in a manner that promotes its staying afloat in the business.
Status of the Changes
Environmental sustainability is one of the highly prioritized moves in the global market. Countries such as the UK, Russia, the U.S., and China have developed policies that guide business organizations toward green energy (Fragkos et al. 2021). Additionally, oil, the primary energy source, is depleting at an alarming rate. For instance, in Russia, oil production is expected to drop by 40% by 2035, while Saudi Arabia’s Aramco has been recording an 8% drop in natural oil (Blondeel and Bradshaw, 2022). Therefore, the change towards sustainable motor vehicles is more likely to be permanent due to the prevailing natural circumstances.
Change Justification
JLR will reap many benefits by transitioning to manufacturing and production of electric cars. Firstly, the move will present JLR as an environmentally friendly organization that cares about the alarming rate of global warming due to ozone gas emissions by fuel-powered vehicles. Consequently, the organization will gain an excellent brand reputation in the global market (Mali et al., 2022). Additionally, by producing electric-powered cars, JLR will meet unique consumer needs in terms of cost savings (Francesca, 2022). Furthermore, the change is consistent with the goal of the global market to become green (Blondeel and Bradshaw 2022). Therefore, JLR needs to restructure its operations to accommodate the transition to the manufacturing of electric cars.
Key Strategic Issue Identified Facing the Company
Environmental sustainability change is inevitable, given the tremendous support of the global community. Car manufacturers can reap many profits from producing electric cars if they strategically address the change (Tirunagari Gu and Meegahapola 2022). The key strategic issue identified for JLR is shifting towards fully electric car production while maintaining a competitive edge in the market. While EV production is profitable, it is associated with increased production costs. JLR needs to adopt various activities to align its client’s needs with the overall business activities in the context of environmental sustainability.
Ability to Sustain EV Manufacturing
Change Implications
The shift towards electric car production presents negative and positive impacts on JLR’s relationship with its key stakeholders, competitive environment, and value chain. Stakeholders’, value systems, and competitive environments’ analyses can help better understand how the identified strategic change will impact JLR (Sholichah and Sutopo 2020). The organization must make various strategic changes to encumber the negative implications while maximizing the advantages of the new transition.
Stakeholders’ Analysis
Suppliers, customers, employees, and regulators such as the governments are key JLR stakeholders who will either negatively or positively impact the overarching change to electric car production. The organization will have to seek a positive relationship with the suppliers of electric car parts such as batteries (Sholichah and Sutopo 2020). Meanwhile, the relationship with suppliers of traditional car parts will be cut off. Any supplier wishing to continue business with JLR must shift towards electric and sustainable parts (Francesca, 2022). For the customers, JLR may have increased expectations. The clients will need cars that are recharged quickly and with longer battery life.
The governments, as regulators, will be impacted in several ways. With the advent of electricity as a power source, the government will have to formulate new policies and regulations regarding batteries and electric cars (Francesca, 2022). For instance, given the demand in the market, JLR may take advantage of exploitation of consumer rights, necessitating new consumer rights regulations (Gupta et al. 2021). JLR employees will have to advance their knowledge and skills by taking extra training in electric car production. Therefore, the change identified will impact JLR stakeholders in various ways.
Changes in the Competitive Environment
The shift towards manufacturing and production of sustainable cars will impact JLR’s competitive environment. The environment is subject to new entrants taking advantage of lucrative business opportunities (Francesca, 2022). Additionally, increased competition among the suppliers will increase supplier power over the company. Furthermore, increasing the number of car producers will increase consumer power (Liu and Dong, 2022). Therefore, the organization may spend more on supplies but earn lesser profits. There is a need to maximize JLR’s strengths and opportunities to counter the increased competition in the market.
Impacts on Value System
The value chain involves the various activities and processes of producing vehicles at JLR. The shift towards electric production will impact the value chain in some ways. The organization must enhance its quality system to ensure that the produced car meets international standards (Liu and Dong, 2022). Moreover, the operational activities that involved the creation of traditional cars will be eliminated to allow electric car production (Zarazua de Rubens et al. 2020). The company’s internal value system will be affected more than the external one. Therefore, the majority of internal organizational activities will shift towards sustainability.
Most Affected Activities
Although most of JLR activities, some will be affected more than others. Research and development will be one of the most affected activities since there is a need for intensive research on sustainability and electric car models. Additionally, the manufacturing activities will be changed to accommodate new technologies and facilities associated with electric car production (Liu and Dong, 2022). For instance, JLR may have to set up new battery assembly plants in areas with a majority of its clients. Furthermore, marketing and sales activities will be restructured in such a manner that they communicate sustainability while insisting on the value of consumer expenditure. JLR must adopt strategies that integrate the changes without interfering with its profitability and sustainability in the industry.
Impact on Organizational Culture
Organizational culture is central to a firm’s success in a highly competitive business environment such as the EV sector. The shift towards sustainable products will impact JLR culture in some ways. The move allows the organization to focus on consumer and environmental needs. Consequently, the majority of JLR employees will develop a positive attitude toward environmental conservation and sustainability activities (Kumar and Pathak, 2022). Moreover, there will be improved stakeholders’ proactivity since the move needs intense strategic efforts to succeed. JLR can have a conducive working environment due to a positive organizational culture encouraged by the move towards sustainable products.
Resources and Capabilities
JLR needs various resources and capabilities to actualize one hundred percent of EV production. The organization needs specialized and skilled employees for research and development, marketing, and production activities (Liu and Dong, 2022). Additionally, Manufacturing equipment with advanced technology will be significant in the production processes. Furthermore, JLR must have the ability to create strategic alliances with its suppliers and customers who purchase in bulk (Marković and Mijušković, 2022). For instance, electronic and battery manufacturers can form a strategic alliance with JLR. V
Value, Rarity, Imitability, and Organization (VRIO) Framework
The resources and capabilities identified above can be assessed through a VRIO framework. Specialized and skilled employees at JLR have mastered their client’s tests. They are valuable and rare, and JLR can exploit them for new business opportunities. Although the manufacturing equipment is valuable and can be exploited, they are imitable and common in other firms (Chan Lai and Kim 2022, p.2132). Forming a strategic alliance is a valuable move for the organization since it will help increase production and profitability. JLR forms strategic alliances with suppliers from different countries. The alliances are rare and cannot be imitated by JLR competitors. Figure 1.0. shows as a summary of JLR VRIO’s framework.
Impact on Strategic Directions
JLR has various strategic directions that are aimed at maximizing profits so that the business stays afloat in the industry. For instance, the organization has adopted a marketing strategy that aims to expand its consumer base (Kumar and Pathak, 2022). The strategy involves loyalty programs that reward clients who shop with the organization more than once. The change to EV production will impact the strategic direction in place, negatively and positively. The marketing strategic directions will receive increased resources to market the new electric car models. Human and financial resource allocation will be prioritized for departments central to the new production activities.
Strategic Changes Necessary
JLR’s current strategic positioning is competitive and resourceful to accommodate the desired direction, making the required changes easy to implement. Firstly, JLR will have to change its recruitment strategies to bring on board competitive employees in the renewable energy and electric car production fields (Kumar and Pathak, 2022). The human resource department ought to recruit individuals with the highest qualifications for the change.
Secondly, supplier approaches must be the ones that insist on quality raw materials and long business relationships (Marković and Mijušković 2022). The supplier power is likely to become stronger due to the increasing number of new entrants in the market, and it is only a good business relationship that will allow businesses to maintain their suppliers.
Thirdly, the marketing strategies must be changed from focusing on traditional cars to electric ones. The sales and marketing department must develop new marketing goals and objectives which are likely to increase the sale of EVs. The last strategic change needed is the operations’ quality management (Kumar and Pathak 2022). The intensified business competition calls for an excellent brand reputation which is associated with quality products and services. Making the identified changes will promote JLR’s competitiveness in the industry.
SWOT/ TOWS Framework
SWOT framework is significant in identifying JLR’s capabilities and shortfalls in the context of the strategic move to produce EVs. Based on the change impact evaluation, the analysis will help identify JLR’s key strengths and opportunities to encumber its weaknesses and threats posed by the new change. Consequently, an appropriate strategic approach will be suggested for JLR. The TOWS framework will identify potential strategies that JLR can adopt to increase its competitive advantage in the industry. Figure 2.0 below summarizes the company’s SWOT/ TOWS framework.
Strengths Opportunities (SO) Strategies
While electric car production for sustainability requires many resources, JLR has various strengths that benefit the move. The firm has an excellent brand reputation, making it easy to market new electric car models. Additionally, being a subsidiary of Tata Motors, there are sufficient funds to drive the new change (Liu et al. 2022). The excellent brand reputation can be used to exploit the opportunity of the readily available market in the UK. Moreover, sufficient funds can be used to recruit skilled employees in the country for improved production activities.
Weaknesses Opportunities (WO) Strategies
The organization falls short of qualified professionals such as electrical and mechanical engineers to enable smooth production (Liu et al. 2022). Additionally, the existing JLR employees lack sufficient skills to drive the new change due to overfocusing on traditional car production (Kumar and Pathak, 2022). JLR can take advantage of the available skillful workers in the UK motor industry to counter the weakness of less skillful workers. The company can also recruit fresh graduates from reputable universities to fill its professional deficient gap.
Strengths Threats (ST) Strategies
JLR is a subsidiary business under Tata Motors, posing some threats to it. The organization is under threat of limited funding from the holding company. Therefore, there is a possibility of insufficient resources to drive the move toward EV production (Mukherjee 2022). Additionally, the UK and other European markets are attracting new entrants who may present intensified competition for supplies and other resources (Dik Omer and Boukhanouf, 2022). JLR can use its excellent brand reputation to outdo the new entrants in the market. Another strategy would be to utilize sufficient funds to expand its operations, making it independent from its holding company.
Weaknesses Threats (WT) Strategies
JLR can reduce its weaknesses by avoiding threats in the industry. The company can avoid the threat of new entrants and increased competition by improving its human employees’ skills (Liu et al. 2022). The resourced employees will help develop unique care models that can be attractive to the consumers in the market, gaining a competitive edge over the new entrants (Mukherjee, 2022). Moreover, improved employee skills can help produce better and better quality products, which increases profits and avoids the threat of limited funding. Figure 2.0 (Appendix) shows the SWOT/TOWS framework for JLR.
Strategic Approach
Although various organizational strategies exist, the change to EV manufacturing at JLR can be better addressed through competitive positioning and an ‘outside-in’ approach. The approach allows the company to gain a competitive edge by increasing customer value by producing sustainable electric cars (Liu and Dong, 2022). Therefore, various resources must be channeled to accommodate the new change in a manner beneficial to JLR clients (Mukherjee, 2022). Although the approach is significant, it is limited to aligning organizational goals. Consequently, while trying to maximize customer value, the firm’s activities may overshadow its overall mission and objectives in the industry. The ‘outside-in’ strategic approach presents JLR as a competitive brand that prioritizes customer value.
Conclusion
Technological advancements and changes in social needs have necessitated a change to the use of electric and sustainable vehicles. JLR is one of the biggest car brands in the UK, serving the global market. The shift towards a circular economy poses a strategic issue of manufacturing more EVs for JLR clients. With social, technological, and environmental forces fundamental to strategic issues, the organization must maximize its strengths and opportunities in the market to counter challenges associated with new business activities.
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