Aston Martin's Business Strategy: A Case Study of Value Chain, BCG, and Porter's Diamond

This report delves into the strategic tools employed by Aston Martin, a renowned luxury and sports car manufacturer in the UK. It examines the application of Value Chain analysis, BCG matrix, and Porter's Diamond model to understand the company's competitive advantage and strategic direction. The report analyzes the benefits and limitations of each tool, highlighting their relevance in Aston Martin's context. It also explores how these tools can be integrated to create a comprehensive business strategy for the company.

BUSINESS STRATEGY
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Executive Summary
The following report has been the detailed case study of the tools such as BCG, Porters diamond
and Value chain analysis. The case of Aston martin is taken which is a premier luxury and sports
car manufacturer in the automotive landscape of the UK. The following studies have been done
with comparative studies of all the aspects of the tools mentioned and their relevance in the
working of the company.
The brief study also included how the three tools are not perfect and have certain limitations as
well. The important thing is to make use of the tools in such a way that it is beneficial to the
organization. The BCG matrix is the study in which the products are carefully studied and it is
determined which product to promote and which one to discontinue. The value chain taking care
of the primary and support activities and the porters diamond, all aim towards making the whole
process of strategizing the business effective and efficient.
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Table of Contents
Introduction......................................................................................................................................4
Value Chain.....................................................................................................................................5
BCG.................................................................................................................................................8
Porters Diamond..............................................................................................................................9
Reflection.........................................................................................................................................9
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................11
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Introduction
The business strategies are used to make the business efficient and more profitable. Since, all
businesses need to generate good revenues so that they can sustain for a long time in the
automotive market. In order to make the business more profitable the processes need to be made
more efficient and the whole scenario needs to be studied in detail so that the appropriate steps
can be taken by the management to make the required changes.
In the case of Aston Martin, the company has a history of making the strategic implementation of
the business strategies to help in the boost of channel sales as well as making the company one of
the top most companies in the automobile sector. The various strategies such as value chain,
Porters diamond, BCG etc are used in order to make the process of strategizing the business
more profitable. In the further studies, it will be clearly observed and reported how it has been
profitable to the company and in what areas can the company improve its performance.
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Value Chain
In order to understand value chain it is important to see the primary target of any company,
which is to stay as a valuable entity for the customers, serve the general masses with the best
products, and experience as opined by Gereffi and Fernandez, (2017). The company first
identifies its primary and support activities, i.e. products and services as well as the management,
operations, logistics to make the processes cost effective.
Figure – Value Chain Analysis
(Source – Gereffi and Fernandez, 2016)
Value chain analysis is helpful to Aston martin in this case in order to make the company aware
about the areas or activities that are most valuable, such that the company can have a competitive
advantage over the other rivals in the automobile industry.
Benefits
Competitive analysis is based on two main types- Cost advantage and Differentiation
advantage
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Cost advantage
This approach is used when two organizations try to compete on cost of operations or overall
costs of production as opined by Fearne and Dent, (2012). Cost advantage in the case of Aston
martin can be implemented in the case of making the assembly line more efficient and making
minimum errors during the production of the cars. That way, it will be easier to improve the
overall efficiency of the unit as a whole and boost the production. The various steps involved in
the whole process are-
 Identifying the firms primary and support activities
 Relative importance of each activity on the total cost of the product
 Cost of drivers and links between the activities
 Reduction of the cost of operations and overhead costs.
Differentiation advantage
The firms like Aston martin are mostly the ones that try to use this differentiation advantage by
creating superior products and services as opined by (Schaltegger and Freund, 2012). This means
that the product is so exclusive that the company enjoys the monopoly of marketing the product
according to the quality of the product. Pricing is also not very competitive in this case as the
company is mainly focusing the exclusivity of the product rather than making the product
cheaper as mentioned by Fearne and Dent, (2012). The target customers are not the middle class
here as the Aston martin cars are mainly popular among the upper class population.
To understand the various aspects of the value chain analysis, the factors to be included are-
 Firm Infrastructure-The infrastructure of the firm is important to be up and running at
all times, so that the various sectors involved in the unit work seamlessly.
 Human Resource Management- The human resource management is responsible for
making the most of the workforce and keeping the workforce efficient. This also includes
looking into the interests of the employees and the workers.
 Technology development-A company in the automobile sector must always be on top of
the game by making the best technological advancements. This ensures that the product is
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always the best in class and the customers get the best experience because the products
are prices at a very high price.
Limitations
The value chain analysis seems a perfect tool to use in the case of any organization, but it has
certain limitations too, to name one the company sometimes loses its overall strategy and vision
in the process of breaking down the segments of all the processes.
In addition, linking each activity to the overall chain becomes sometimes difficult and it’s
possible to lose sight of the whole process altogether.
Application
The whole case study of value chain analysis shows how Aston martin can make use of it for
improving the business. The company is a premium car manufacturer in the UK automotive
industry. Therefore, the company must focus in the differentiation advantage rather than cost
advantage in the case of quality of its products. The major areas where the value chain analysis
can be implemented are the production, quality control, after sales service and firm
infrastructure.
BCG
The BCG or the Boston Consulting Group’s product portfolio matrix helps an organization with
deciding which products to review in the portfolio and make changes accordingly. This also
helps in the development of the products and making the long-term strategic planning easier for
the company as mentioned by Stern and Deimler, (2013).
Benefits
This helps in deciding which brands and models to continue, which ones to promote and which
ones to discontinue. In the present report, the case of Aston martin has been taken thus it is
related to the automotive sector and cars in this case. The key dimensions used while
implementing the BCG analysis are as follows-
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 Relative market share- The relative market share has a direct relation with the
corporate position of the organization. Higher relative market share means higher
sales and revenue generation. Thus, it is pivotal in the whole scenario as profit is
directly related to it.
 Market growth rate- Higher market growth rate simply means the demand of the
certain product is high and the product is selling like hotcakes. This also means that
the liquidity gets affected by this as it involves many cash. The cash is used to
stimulate further growth and pave the way for more sales and increased revenue.
The investment in this case is determined by taking into consideration the following types of
performers divided into four quadrants-
 Dogs-The dogs hold low market share and have slow growth. This means that the
dogs are not worth investing as they do not move quickly and do not even have the
potential for growth in the longer run. This leads to low or negative market share in
some cases, and thus it is better to do a deeper analysis of the products to avoid
losses.
 Cash Cows- The cash cows are the most profitable products in a company’s
portfolio. They are the profit makers or the market mover in the portfolio and the
other products rely heavily on their performance to make the whole picture look
good. The cash gained from the cows is mostly used to support the further growth of
the stars.
 Stars- The stars are the biggest cash generators and maintain market share at a
higher degree. Stars are also the highest cash users, and they are the primary units in
which the company must invest its money.
 Question Marks- Question marks do not always succeed in generating market share
and they even incur large amount of losses sometimes in the market. Moreover, they
are not always the best performers and sometimes become dogs. Hence, they need to
be considered very closely.
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Figure- BCG matrix
(Source- Stern, 2012)
Porter’s Diamond
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In order to understand the efficacy of the Porter Diamond on formulating the business strategies
it is important to understand the meaning of the term Porter Diamond. The Porter Diamond refers
to the Porter Diamond Theory that has been designed to understand the significance of the
competitive advantage any nation or a group can possess and give a detailed analysis of how the
government can work as a catalyst in improving the position of the country (Bakan and Doğan,
2012).
Figure 1- Porter’s Diamond
(Source- Riasi, 2015)
According the diamond structure, these factors are being created and not being inherited and
these factors can assist in gaining competitive advantage in the general market. The factors are
being created by Aston Martin through vivid training and educational programs for their
employees.
Benefits
The related helping industry in this genre refers to the various downstream and upstream
industries that can help in innovation by the exchange of the ideas. Aston Martin plays a pivotal
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role in this exchange of the ideas. The demand condition can refer to the size as well as nature of
the viable customers of Aston Martin that can also ensure innovation and creation of new
products. A situation can be well analyzed with the help of the Porter’s Diamond. The model
includes the factors conditions like Capital, Labour, Infrastructure, Land and natural resources.
The capital refers to the investment done by Aston Martin in competing with their competitors.
Labour refers to the employees and workers involved to increase productivity and hence make a
position among the competitors (Fainshmidt et al., 2016). The infrastructure of an organisation
like Aston Martin also plays an important role in the development of the business.
Porter also does an argument that the different elements of the factor conditions can be more
important in understanding the Organisation’s comparative advantage than the natural resources .
From the above discussion, one can assess the inconsistencies forming between the industry
evidences and the theory of the diamond model. Aston Martin ahs considered all the elements
and factors that help the organisation gain the competitive advantage and branded among the
topmost industries of the world.
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Reflection
I have come to understand the various tools studies in this report in detail. This is very important
to relate the various tools to each other and I was able to get a clear picture of how they can be
used to support each other. Whether it is the Value chain analysis, or the BCG matrix study, all
are equally important in determining the growth prospects of an organization. I have been
fortunate to get to know more about Aston martin and its way of doing business in the
automotive industry. The experience has been very enlightening and the tools I have learnt about
are very important in the case study of the business strategies of any company.
Moreover, I have seen the way these tools are used in the best interest of the organization.
Hence, I will apply this knowledge in the future to study any organization and get to the accurate
conclusions. It will be easy for me to apply the tools and make relevant recommendations in the
field of study. In order to make my studies more accurate in the future, I will have this case study
as a reference and for suggestions I can always go back to learn more from my own studies. To
minimize the operational costs and make the overhead costs minimal is the key to value chain
analysis. M. Porter introduced the value chain analysis in order to make it possible for
organizations to make the process more profitable by making changes to the final product
directly or to the support activities indirectly.
The model has been formulated by Michael Porter and it depends upon the proactive theory of
economics. I observed that the diamond model is applicable for the developed countries and
hence Aston Martin a giant in the automobile industry has adapted this theory to compete with
their competitors and get competitive advantages. I learnt more about Porter’s theory, how it uses
diamond model that act as a tool for Aston Martin to understand the automobile industry as a
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whole and compete with other organization to get more profitability and productivity. In the
implementation of the Porter’s Diamond, the government plays a pivotal role in it.
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Conclusion
From the following study, it has been understood how the business strategy tools work and help
in the case study of any company. The Porter’s Diamond that has been represented by the
diagram has a resemblance with four portions of the diamond. The factors are the firm strategy,
demand conditions, structure as well as rivalry, the related helping industries in this genre. The
firm strategy as well as the structure refers to the basic fact explaining how competition can lead
a business and the various ways an organization like Aston Martin can grow their business. Since
it is a corporate planning tool, the BCG is generally used when it is necessary to find out the
growth pattern of the organization, also to get a better understanding of the business brand value
and its impact on the customers. The primary activities directly add value to the production
processes as well as the overall productivity but that does not imply that it is more important than
the support activities. In addition, it is obvious that the competitive advantage mainly depends
upon the technological improvements as well as the information systems and research and
development.
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Reference
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Gereffi, G. and Fernandez-Stark, K., 2016. Global value chain analysis: a primer.
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Riasi, A., 2015. Competitive advantages of shadow banking industry: An analysis using Porter
diamond model. Business Management and Strategy, 6(2), pp.15-27.
Schaltegger, S., Lüdeke-Freund, F. and Hansen, E.G., 2012. Business cases for sustainability: the
role of business model innovation for corporate sustainability. International Journal of
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