Firm Analysis
Rivian Company is a recent firm specializing in the manufacture of electric vehicles. The business plan to expand its operations into a new nation. Among the government with potential, China is a favored area through which Rivian Company can thrive. The country’s political stability, broad market, and faster economic growth propel the company’s establishment in China. The firm currently produces two models, but it should aim at increasing the number of models. The company recognizes that its employees are essential, and thus they are given a chance to develop more. To foster innovative thinking and the pursuit of better business outcomes, the firm’s culture must encourage and enable its workers to take risks in their work.
Company History
The founder and the CEO of Rivian grew up obsessed with cars. RJ Scaringe launched the soon-to-be electric vehicle competitor in 2009 (Pratama et al., 2021). After graduating, he worked at Mainstream Motors, which specialized in producing inexpensive sports cars. The firm originated in Florida under the name Avera Motors, but later the headquarters were transferred to California. In 2011, the company shifted to producing only electric cars, and it made its name in 2018 through two electric model cars: pickup RIT and SUV RIS (Wen, 2022). The corporation has been producing new energy vehicles since 2018 (Wen, 2022). In the early stages of Rivian in Florida, Tesla was the only electric car company. Because of its closeness to suppliers, California was an obvious choice for the business headquarters.
Current Locations
With its headquarters in Irvine, California, Rivian company focuses on vehicle engineering and design. Additionally, the headquarter undertakes the commercial functions of the firm (Rivian Automotive Company, 2022). Plymouth, Palo Alto, Normal, Michigan, Carson, Illinois, Wittmann, and Arizona are other production facilities. These factories cover a large area and manufacture vehicle components such as robotics, stamping machines, production equipment, and paint shop. The facility in Plymouth and Michigan concentrates on vehicle engineering, supply chain, and accounting. Other nations where the company is operating are the United Kingdom and Canada.
SWOT Analysis
A firm’s competitive position and strategic planning may be evaluated using SWOT analysis. The analysis must be accurate to help the business to make critical decisions in the existing market (Gurel, 2017). It assists an organization in overcoming risks through the decisions made after the SWOT analysis, therefore putting the business in a competitive zone in the market. The strengths of a company make it stand out from the rest. For an organization to achieve at its highest level, it must overcome weaknesses. To stay competitive, these are the areas in which the corporation has to focus its efforts. A competitive advantage may be gained through taking advantage of favorable external events, which are referred to as opportunities. Concerning threats, they are factors that may be bad for a firm. Recyclable battery packs are intended to be readily removed from cars and utilized in stationary storage.
The first strength of Rivian company is the membership program that the corporation offers. The first advantage is that the corporation will send a person to charge the car if it runs out of power (Rivian Automotive, Inc, 2022). As a result of the members’ unrestricted use of 4G internet services, customer expenses are reduced. Educational events, seminars, and the Rivian hubs are all available to the members. If a member is stranded, the firm will dispatch a rescue vehicle. For the off-road capabilities, the Rivian motors have stood superior to the Tesla. The cars are environmentally friendly as no emissions contribute to global warming. The vehicles have excellent safety features and simplified dashboards with touch screens. The respect for the environment has been a significant boost for its operations.
The main weakness is the limited electric vehicle models, which may discourage many potential buyers. Customers may not be interested in the only two models R1Tand R1S (Laseter & Sesia, 2021). Therefore, they may resolve to purchase vehicles from other firms such as Tesla. The firm must endeavor to lauch more car models with different costs to attract more clients. Other EV firms such as Tesla have more vehicle brands, giving customers a wide range of choices.
The existing opportunity is striving to get access to the international markets. The company is primarily based in the United States and is only interested in exploiting the market in the nation (Wen, 2022). However, there is a potential market in other continents, such as Europe and Asia. The country should strive to open more branches globally so that it can have access to a broad market. It will help improve the profits and sales gained in the business and spread electric vehicle technology globally. The corporation can focus on technological innovation to develop more exciting features that will help attract customers. Innovations can also be a competing tool to help beat incumbent companies like Tesla. An opportunity to also export the vehicles outside the USA to expand its market scope.
The main threat is the competition from the prominent global players that have shown interest in investing in electric cars. Other electric vehicle companies such as Tesla have existed before and therefore have paused a hefty competition to Rivain (Brown et al., 2020). There is a limited mineral resource globally and a growing demand from the other competitors. The fluctuating prices of the raw materials are a risk to the financial health status of the company. The legal suits that the firm faces have a negative impact as they can affect customers’ perception of the firm’s products. The limited operating history makes it harder to compete with companies such as Tesla effectively.
Situation Analysis
Many organizations have shown the desire to invest in Rivian Company. Automakers and non-automotive industries are paying particular attention to the company’s willingness to continue making electric cars. Additionally, Rivian has maintained its operation because Amazon purchased 100,000 custom-designed electric delivery vehicles from Rivian (Mulholland, 2022). Car subscription services and other revenue models are part of the company’s retail future goals. Rivian can revolutionize the concept of sustainable transportation because of these factors.
The firm shows exemplary competition regarding automotive technology, product design, investor relationships, and business strategies. For the production of its cars, the company relies on many suppliers worldwide with whom it has long-term relationships (Rivian Automotive Company, 2022). Suppliers are chosen based on a broad range of criteria, including product quality, price, technical knowledge, and geographic position, to name just a few. Rivian’s connection with many of its suppliers goes well beyond the supply of raw materials and components. The firm and its suppliers work together on the creation of new products. The company believes that these strategic collaborations contribute to economic and time benefits in the production of automobiles.
The legal challenge Rivian has been facing is the court cases. Recently, Tesla had a lawsuit against Rivian Automobiles claiming that it had stolen trade secrets by employing former workers to provide confidential and sensitive information (Alley, 2021). Rival denied the accusations, claiming that it was speculation and Tesla’s attempt to escape reality. Additionally, Tesla claimed that the former stole the battery technology. Tesla aims to protect its information by necessitating its employees to safeguard its data from being acquired by other companies. Such cases negatively impact the corporation’s operations, reducing profit margins and affecting the customers’ perception of Rivian products.
Industry Trend
Since its introduction more than a century ago, electric vehicles have re-emerged in favor due to the same reasons they were popular in the first place. In the 1800s, a succession of advances led to the first electric car on the road (Denton, 2020). Hungarian, Dutch, and American inventors started experimenting with the design of battery-powered vehicles in the early 1900s, creating some of the earliest small-scale electric cars. Although Robert Anderson, a British scientist, produced a basic electric carriage around the same period, French and English inventors made functional electric automobiles later in the 19th century (Denton, 2020). William Morrison invented the first practical electric automobile in the United States in 1890 (Denton, 2020). The six-passenger car designed by William Morrison generated interest in electric automobiles (Denton, 2020). Since then, electric vehicles from various manufacturers have appeared in the United States.
The EV technology spread to other parts of the world faster. The Prius was the world’s debut mass-produced hybrid electric car when it went on sale in 1997 in Japan (Palmer et al., 2018). A group of engineers formed Tesla in 2003 to show the public that electric automobiles can be faster, more efficient, and more enjoyable to drive than gasoline-powered vehicles (Long et al., 2019). Before assuming the helm as CEO, Elon Musk was the driving force behind Tesla’s early investment. Tesla’s Roadster, the company’s first electric vehicle, was unveiled in 2008. With the Tesla Model, the corporation established itself as an electric vehicle frontrunner and one of the few successful independent manufacturers.
Interestingly, it was also a big hit with car purchasers as customers loved the product. Other manufacturers started releasing electric cars in the US in recent years. The new battery technology emerged, allowing plug-in electric cars to go farther on a single charge (Zeng et al., 2019). Additionally, research contributed to creating the lithium-ion battery technology, which led to the storage of more energy to run the vehicles. Several automakers have realized that electric cars represent the industry’s future and have invested significantly in developing their electric cars.
Current Competition
Many competitors to Rivian in the USA exist, and the company must develop strategies to battle with its rivals effectively. The electric automobile industry has three main competitors: Lucid, Ford, and Tesla (Sousa, 2022). Firms such as Rivian and Lucid are among the most recent to make headlines for the right reasons. Automobiles are frequently manufactured and sent to customers by the firms. However, compared to Tesla, manufacturing quantities are still comparatively small. However, the company has enormous plans to grow in the future. Rivian’s firm is under pressure from Ford, which is ramping up manufacturing of the F-150 Lightning, a pickup vehicle, at a quick rate. There are several uses for the automobile, but Ford emphasizes that it can operate power equipment on the work site during an outage.
Country Overview
China provides an ideal location for setting up a Rivian company. Scientific and technical advancements have greatly aided China’s economic growth (Ahlstrom et al., 2018). Given the vastness of its landmass and people, China has steered its expanding economy toward global commerce. The country is aware of the need to adapt to the worldwide market, and even official policies are becoming more and more beneficial to international enterprises. Technology innovation has progressively become a key driving factor for China’s economic development. In China, business innovation is more likely to prosper than anywhere else. One of the reasons China’s market is unrivaled is the country’s sustainable monetary environment, low taxation, and fair currency policies.
Cultural Norms
This characteristic of the company’s culture emphasizes its ongoing spirit of innovation. The firm, is always looking for ways to enhance the present models of power storage devices (Rivian Automotive Company, 2022). As industry rivalry heats up, it is essential to retain a competitive edge via constant innovation. Rivian firm aims to design products to help the company compete effectively in the market. The company encourages collaboration with other stakeholders to understand the customers’ needs. The organization supports a curious and optimistic attitude to work. It contextualizes old issues, develops innovative answers, and functions comfortably in unfamiliar territory. To have the maximum effect, the business’s employees compete with one another to provide more as a group than individually. There is a constant need for additional collaborative and daring minds to join the group’s journey.
The corporate policies encourage Rivian’s employees to seek the best possible solutions, allowing it to stand in the automotive and energy power generation and storage. The workers are passionate about ensuring the corporation is taken to a higher level (Rivian Automotive Company, 2022). The staff is friendly to customers so that more customers can be attracted to the company. The membership services accorded by the corporation attract many customers to the firm to enjoy the benefits. To provide customers with a smooth and intuitive experience across the whole customer lifecycle, Rivian delivers highly personalized and unique services. A holistic strategy is expected to raise customer happiness, strengthen brand loyalty, and improve operational efficiency while enabling Rivian to capture more lifetime value for each car produced.
Business Climate
China provides a favorable business climate through which the business can effectively operate. Compared to other big nations with comparable degrees of development, China’s business climate is now better (Medeiros, 2019). China’s economic growth and reforms have improved countless nation’s citizens’ lives, allowing for greater socioeconomic progress and an enhancement of individual liberties. It has significantly increased free movement, economic opportunities, cultural and educational interests, work and better housing, and access to knowledge. Tesla has been the only electric vehicle manufacturer in the US equities market for years. It challenges the younger entrants into the industry to match the party’s impact. Customers are likely to trust a product that has existed long in the market compared to one recently introduced. It thus pauses a challenge on companies such as Rivian, which are new in the field.
Economic Stability
Growing the economy and maintaining political stability are intertwined. However, on the other side, an insecure political climate may decrease investment and the rate of economic growth. On the other hand, the poor economic environment may lead to political upheaval. The existing peace and stability in China will encourage the growth and expansion of Rivian company (Feng et al., 2021). The business will provide financial stability to the nation by contributing to part of the nation’s GDP. People will get employed in the firm and thus earn income to sustain their livelihood. There have been infrastructure improvements because of the setting of the industrial plants in many parts of the nation.
The business operates in an environment that has allowed it to thrive. Net zero carbon emissions have been included in the corporation’s decision-making process. Transparent impact reporting is a priority for the corporation as it seeks to fully account for the whole business effect. However, uncertainties such as COVID-19 negatively impacted the company’s operations (Dhar, 2020). The mental health of the workers was adversely affected, and thus a decrease in motivation to work. The restrictions, such as the lockdown, significantly affected the production of many industries. Many workers lost their relatives in the pandemic, worsening their psychological status.
Currency
The currency mainly used by the company in its transactions in the US is the dollar. This is because the dominant area of operation is in the United States. However, the currency used in the operations will be significantly determined by the location chosen for operations. In the new area of operation, China, the money chosen will be the Chinese Yuan (Han et al., 2019). A customer with other currencies will thus be required to convert the Chinese Yuan under the stipulated rates.
Political Stability
The PESTEL model can help examine the social, technological, political, environmental, and legal factors. Management teams and boards apply the paradigm in their company’s risk management and strategic development planning. The government’s acts and policies may influence political factors. In China, the enterprise will have a favorable environment to conduct its operations because of the peace in the nation (Yorucu & Kirikkaleli, 2021). Thus the company can even establish more branches across the nation. China’s government will support ensuring the business succeeds. The Chinese government reaffirmed its official political conversation and control both domestically and internationally. It is indeed projected that a weak global market and tense international relations would increase demands for economic self-sufficiency, illustrating the importance of the home market. In the COVID-19 pandemic, the government responded through travel restrictions to combat the spread of the virus.
Competition in Host Country
Even though Tesla is one of China’s largest EV producers, the business only represents a tiny portion of the enormous Electric vehicle industry there. Four out of the top five automakers in China, excluding Tesla, are domestic companies (Jiang & Lu, 2018). China’s local manufacturers, unlike Tesla, also make diesel-powered cars in addition to electric vehicles. The manufacturers in China’s EV market have the least to largest market shares (Jiang & Lu, 2018). The state-owned producer GAC accounts for a sizeable portion of China’s EV market. One of the most well-liked models offered by GAC that interested customers are the Aion S. The models produced by these local companies is comparatively cheaper than those produced by Rivian Company. Therefore this may give Rivian Company fierce competition in the new market.
Host Country Analysis
In China, there are incentives for international investors to set up shop in a particular region offered by several states. The government is working to attract investors to improve the economic climate (Zhang et al., 2017). All workforce levels may benefit from the training community colleges and technical institutions in China provide. Investors may discover hundreds of qualified people eager for a chance to work with them, no matter what their company is. Because of the country’s generally stable political climate, investors find it particularly appealing. China has efficient access to foreign markets through the air, rail, and highway transport for businesses that manufacture or sell products. Chinese employers place high importance on work ethic and thoroughness. Working in China means employers will be surrounded by professional individuals motivated to succeed.
Overview of Current Financials
Understanding the financials of an organization is crucial in determining its financial health. During the first quarter of 2022, 2,553 automobiles were produced (Rivian, 2022). Over 1227 cars were delivered in Q1 2022, resulting in over $94 million in revenue (Rivian, 2022). Non-cash stock-based compensation expenditures of over $306 million and depreciation and amortization charges of $38 million were recorded in operating expenses for Rivian in the early quarter of 2022the initial quarter of 2022 (Rivian, 2022). For the first quarter of 2022, Rivian earned a gross loss of $(502) million (Rivian, 2022). As long as the firm uses manufacturing lines built for large production, it will continue to lose money due to high labor and overhead expenses. Despite this, Rivian expects this dynamic to improve per-vehicle basis as manufacturing volumes expand faster than the future workforce and overhead cost increases.
Profits and Losses are crucial in helping businesses decide on the appropriate interventions they can undertake to match the competition in the market. Rivian reported a net loss of about 1,590$ million in the early quarter of 2022, compared to a net loss of about 414$ million in the early quarter of 2019 (Rivian, 2022). The more significant operational losses stated above were the primary cause of the higher failures in Q1 2022 compared to Q1 2021. Compared to the previous year, Rivian utilized about 1,030$ million in operational cash flow in the first quarter of 2022, compared to about 360$ million in the first quarter of 2019 (Rivian, 2022). In the first quarter of 2022, Rivian’s capital expenditures amounted to around 420 million dollars, roughly unchanged from the previous year’s (Rivian, 2022). Cash, cash equivalents, and restricted cash totaled about $17,000 million at the corporation’s end of the first quarter of 2022 (Rivian, 2022). Understanding the firm’s financial position offers the management a clue to better and informed business choices.
Recommendations
Rivian needs to expand the number of car models and advertisement proactiveness; this is the right time for the company to expand its operations. The company faces challenges because of being a new entrant in the electric vehicle automotive. The company understands that the highly competitive market may hinder its rapid progress. Therefore, the business must seek better ways to compete effectively in the market (Deepak & Jeyakumar, 2019). It includes the number of car models so that the customers can have a wide range of vehicles they can busy. The business should continue encouraging more research and innovation so that it can design more electric automobiles can be developed. Rivian should also increase its internal operations to attract customers and increase profit margins.
The company has experienced delays in the manufacture and delivery of its vehicles, and this may harm the enterprise’s financial condition. Rivian should thus be vigilant in delivering its product to customers by increasing the number of workers to speed up the production process (Rivian Automotive Company, 2022). The company’s future relies on customers’ demand for electric vehicles; therefore, Rivian should proactively advertise the product to customers. As input costs fluctuate or supply issues arise, the group’s financial performance might be negatively affected.
The team should continue maintaining the culture to retain and employ staff to take the firm to higher levels. The firm has attributed its success to its unique culture and goal, deeply ingrained in its corporate DNA (Rivian Automotive Company, 2022). One of Rivian’s most significant and long-term sources of competitive advantage is the company’s investment in cultivating a strong culture. Rivian should maintain the capacity to retain and attract employees, which is essential for growth.
Strategies Needed
The corporation needs to aim at converting its customers to subscribers of the services, enabling the customers to enjoy more privileges. The company should increase the scope of its services to continue attracting more customers. The activities may include financing, insurance, and other services that improve customer experience (Rivian Automotive Company, 2022). Rivian should continue emphasizing innovation to increase the number of car models. There should be an efficient method through which the supply chain can be managed. The business should set its sights on a profitable market objective. The availability of raw materials, such as metals, battery cells, and semiconductors, is essential for vehicle production. The organization’s prospects, economic position, operating results, and cash flows might be adversely affected if its suppliers are unable or reluctant to provide essential product materials. Material market fluctuations, supply shortages, or shortages might significantly affect the firm. Exploration of other markets will lead to significant infrastructure investments and extra production capacity, distribution, and service operations. Through this strategy, the firm will thus fetch more profits in the international market.
Entrance Strategy
The company needs to adopt several strategies to succeed in China. The company must demonstrate a high level of organization to its new customers. Rivian should understand that it will face competition in the new business environment (Rivian Automotive Company, 2022). It will help create a good company image in the new environment and attract more customers. Accurate records must be maintained to know where the firm is financially and what obstacles the company may face. Once the company’s management is aware of this, they have more time to devise solutions for dealing with the upcoming difficulties. Rivian should analyze all the potential risks that exist in the new market. It includes the potential competitors in the market and the price fluctuations. It will help the company make sound decisions to survive in the new market. Rivian Company must find new and innovative methods to strengthen its business model to stay ahead of the pack. Recognize its limitations and be open to new ideas and techniques to grow. The company should comply with the government’s regulations so that its business operations can run efficiently.
Overcoming Problems Discussed
Several strategies may be encompassed in overcoming challenges Rivian Company may face in the new business environment. In overcoming competition, the company must understand its population’s needs and match its customers’ needs (Rivian Automotive Company, 2022). The vehicle brands produced by the company need to be diversified to give their clients more options. If the firm gets to know its clients, it may develop a connection with them that lasts longer than just a few sales. The best way to learn about your competitors is to start by looking at the market as a whole. Rivian Company can take a critical look at your competitor’s business practices. A corporation can examine what its competitors are not doing and then strive to fill that gap. The company should identify the strengths of its product so that it can use them to contend with its business rivals.
Adjusting for Cultural Differences
The culture in the USA is different from the one in China. Respecting the values of others is a crucial part of integrating into a new culture (Nardon, 2018). Employees do not have to compromise their own to do so. This is a great opportunity for people to go out of their comfort zone and try new things. They should be interested in how things are done and interpreted in this unique setting. Employees unfamiliar with the workplace’s rules and customs may benefit from seeing how their coworkers conduct themselves. When employees ask for help or an explanation, it does not mean they are weak. A new language takes a lot of rephrasing, repetition, and reason to understand others and oneself.
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