Strategic Management and Planning for Bentley Motors
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The report focuses on the strategic management and planning for Bentley Motors. It includes competitor analysis, PESTEL analysis, Porter's Five Forces model, and McKinsey 7s framework methods of environmental analysis. The report also identifies the strengths, weakness as well as the opportunities and threats that exist in the environment.
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Executive summary The report focuses on the strategic management and planning for Bentley Motors. Strategic planning helps an organization to set its objectives and identify actions and activities that need to be undertaken in order to achieve the set objectives ( Frynas, 2015). Bentley Motors Limited is a company based in the UK. It was started in the year 1919 by W.O Bentley. The company specializes in luxury and sports car manufacturing and marketing. The report begins with competitor analysis whereby the major competitors of Bentley are identified. BMW, Mercedes, and Rolls Royce are the major competitors of Bentley. The Competitive advantage of Bentley is to focus on the niche market of the luxury car market and focusing on building a strong brand in manufacturing high-quality premium cars. PESTEL analysis, Porter`s Five forces model and McKinsey 7s framework methods of environmental analysis are used. The report also identifies the strengths, weakness as well as the opportunities and threats that exist in the environment. Bentley should focus on manufacturing cars that are friendly to the environment. The company also needs to venture into the emerging markets and utilize the opportunities that arise in these markets.
Contents Executive summary.....................................................................................................................................2 Introduction.................................................................................................................................................4 Section 1......................................................................................................................................................4 Environmental analysis............................................................................................................................5 Competitive advantage............................................................................................................................5 PESTEL analysis........................................................................................................................................6 Political factors....................................................................................................................................6 Economic factors.................................................................................................................................6 Social factors.......................................................................................................................................6 Technological factors...........................................................................................................................6 Environmental factors.........................................................................................................................7 Legal factors........................................................................................................................................7 Porters five forces....................................................................................................................................7 Bargaining power of suppliers.............................................................................................................7 The threat of new entrants..................................................................................................................7 Threat of substitute.............................................................................................................................7 Bargaining power of customers...........................................................................................................7 Industry rivalry.....................................................................................................................................8 McKinley 7s.............................................................................................................................................8 Identifying strategic groups.....................................................................................................................9
Introduction Bentley Motors Limited is a British luxury car manufacturer and marketer. The company also manufactures Sports Utility Vehicles. It is a subsidiary of Volkswagen AG. Bentley Motors Limited is located in Crewe, England and it was formed in the year 1919 by W.O Bentley. The company deals in luxury sports cars and its products include Bentayga, Mulsanne, Continental GT and Continental Flying Spur. In the year 2012, the company had a production output of approximately 9,100 vehicles. The revenues for the vehicle manufacturers in the year 2012 was € 1,453 (Holland & Lam, 2014). In the global motor vehicle manufacturing industry, Bentley Motors Limited occupies the niche position in the market. The company focuses on the luxury car production and it has a significant share in the luxury vehicles market. The paper analyzes the industry in which Bentley operates to determine the competitive position of the company. The role of environmental analysis in strategic planning is to identify the factors that affect the organization. The analysis identifies which factors are influencing the business positively and those influencing the organization negatively (Kotler&Pfoertsch, 2010).The internal environment of the firm is analyzed to identify the potential strengths and weaknesses of the firm as well as the opportunities that the firm can utilize to grow and expand. Recommendations on the future direction of the company are made based on the analysis. Section 1 Strategic planning is the process that an organization identifies and defines the direction it wants to take in future. Strategic planning is about decision making and resource allocation to help achieve the objectives of the organization. Strategic planning is helpful to Bentley since it will enable the organization to set goals that are strategic, realistic and achievable. In addition to this, strategic planning enables an organization to outline the actions that should be undertaken by the organization to facilitate achievement of the set objectives. During the strategic planning process, an organization determines the resources that are needed to achieve the objectives. Once the resources are identified, the company determines the sources of these resources and how the resources will be allocated to the organization. By doing this, Bentley will be able to avoid wastage of scarce resources and hence achieve efficiency within the organization(Cadle, Paul&Turner, 2010). Through strategic planning, Bentley Motors is able to identify their core
capabilities which help the company to identify its strategic advantage. It is very crucial for an organization to identify its competitive strategy since it guides the organization in choosing the strategies that will help the company to compete effectively in the industry. Strategic planning helps an organization to understand the competitor. The competitor's strategies, competitive advantage, key resources as well as strengths and weaknesses are identified (Henry, 2018). Identifying these factors can help the company to identify the weakness of the competitor which it can exploit to increase its market share. Environmental analysis plays a huge role in the strategic management process. Internal environment analysis is the in-depth analysis of the factors that affect a business organization and the organization can control these factors. Examples of these factors include; financial resources, opportunities, a human resource as well as organizational and operational issues of the company. It is important for an organization to analyze its internal environment since this helps the organization to identify its strengths and weaknesses. This is crucial in identifying areas that need improvement as well as building on the existing strengths of the organization. In addition to this, internal environmental analysis helps an organization to identify potential opportunities for growth and development. With this, the company is able to allocate the resources that are necessary to exploit this opportunity. Analysis of the external environment of an organization is crucial in identifying factors that are outside the control of the business organization but which still have an effect on the operations of the company (Smith&Raspin, 2013). External factors may act in favor of the business or against the business. External environmental analysis assists the company to identify the risk that could hinder the business from applying its strategy effectively and hence hindering the organization from achieving its objective. Environmental analysis The internal environment of Bentley Motors Limited is done using the SWOT analysis technique as indicated below. Competitive advantage Bentley motors competitive advantage is derived from actual product performance as well as customer perception of the product. Bentley is known to manufacture high-quality beautiful
luxury vehicles which help to meet the needs of the customers. Due to this reason, Bentley is able to produce high premium luxury SUV`s which it sells to the urban rich customers. PESTEL analysis Political factors Bentley motors operate in many different countries globally. There are political factors such as those increasing tariffs on Bentley cars to increase their costs and hence discouraging consumption. Factors such as war and political instability affect the operations of the company since most of the potential consumers are not able to purchase the vehicles. Economic factors Economic factors that affect Bentley Motors include inflation, high-interest rates and economic policies of a country. When there is inflation in countries such as the USA, the value of the currency depreciates and therefore the customer's disposable income reduces due to an increase in prices of basic commodities(Botsman&Rogers, 2011).High-interest rates also discourage investments and hence making it reducing consumption of luxury products. Social factors The beliefs, practices, and customs of a society influence the kind of products they consume. Owning a luxury car like Bentley proves that a person is wealthy and they are high on the social ladder. Most people will desire to own the vehicle due to the social perceptions of the people who own the car and hence influencing the performance of the company positively. Technological factors The automobile industry is advancing very fast in terms of technology. The environmentally friendly electric and hybrid vehicles have disrupted the luxury car industry. Innovation in self- driven cars has also had a major Impact on the car manufacturing industry.
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Environmental factors Bentley cars use high capacity engines which are not friendly to the environment(Baines, Fill & Page, 2010). This is a major concern for the company since it is important to protect and preserve the environment. Legal factors The company has faced legal issues related to carbon emissions as well as various intellectual property battles with other car manufacturers. Porters five forces Bargaining power of suppliers Bentley manufactures most of its car parts and therefore does not depend much on suppliers. There are many suppliers in the market and therefore they have little bargaining power ( Kulkarni, Pachpande, &Pachpande, 2011) The threat of new entrants The threat of new entrants is very low because of the high initial capital requirements. Larger established companies enjoy economies of scale and high brand equity hence blocking potential new entrants(Batty, 2016). Threat of substitute The threat of substitute products is very high for Bentley. Brands such as BMW, Mercedez, Bugatti and Rolls Royce offer are a direct substitute to Bentley. Bargaining power of customers The price sensitivity is low since the company targets the wealthy individuals who do not worry much about price. However, the bargaining power of customers is boosted by the fact that there are many substitute products on the market.
Industry rivalry There is a high level of innovation in the luxury car industry which increases the level of rivalry among the firms operating in this industry. The firms in this industry also apply powerful competitive strategy such as events sponsorship and hence heightening the level of industry rivalry. McKinley 7s Strategy- Bentley has put in place strategies that have helped the company gain a competitive advantage over its rivals in the market. Structure- Bentley motors has a centralized organizational structure that where command runs from up to down (Armstrong, Adam, Denize&Kotler, 2014). The structure ensures proper coordination of activities between various departments within the organization. Systems- the activities that take place at the company include engineering works to manufacture new vehicles. Research and development activities are also a significant part of the companies` systems. Shared values-the shared values for the company include innovation and prioritization of the customer. Honesty and integrity are also important values for the company(Marmol, Feys&Probert, 2015). Skills- the employees at the company need to be highly qualified in engineering field since the industry is very technical. Style- The company has adopted transformative leadership style which is guided by innovation and desire to be the market leader in relation to innovation and new product development. Staff- Bentley motors have the most talented individuals in the industry. The employees are highly qualified and experienced. This explains the uniqueness of design and quality of the end product.
Identifying strategic groups The products offered by firms in this market are very diverse. All the companies in the luxury car market differentiate products according to design, engine type as well as other technological aspects. The extent of geographical coverage of Bentley is very limited since the company operates only in developed countries. Distribution is from the manufacturer to the motor dealer and the final consumer. The company does not engage in many marketing and advertisement activities(Rao, Rao&Sivaramakrishna, 2008). It is highly vertically integrated since it supplies most of the car parts. Products are of high quality and it is a technological leader in this market. Section Two Strengths Brand Uniqueness-The brand of the Bentley vehicles is very popular since the company manufactures cars that are unique according to customer specifications (Fich, 2009). Bentley does not carry out promotional activities since it's a premium brand that is capable of selling itself. Popularity- Bentley cars are very popular globally because of their luxurious and sporty design. Their endurance and quality also make the brand very popular among customers. Research and development-the company has a vibrant team of professionals who research on the technological development of the vehicles as well as design. This makes the brand compete effectively in the global luxury car market. Car design- Bentley manufactures some of the most beautiful cars on the planet. The manufacturers design many different car models targeted at different customer segments and therefore its ability to attract many luxury car enthusiasts (Kapferer, Bastien & Dawsonera. 2012)High brand value- Bentley has high brand equity which helps the company compete effectively in the market. The Bentley brand has carved a niche in the automobile industry and hence making it difficult for new competitors to enter the market.
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Weaknesses Limited production. This means that the company misses out on potential selling opportunities. These clients may end up buying other luxury cars from competitors. The company, therefore, loses revenue due to this operational problem. The company has little presence in emerging economies. The company has no dealers in emerging markets such as Asia, Africa, and India. The number of urban rich in this areas has been increasing steadily in the recent past. Bentley is, therefore, losing out to competitors on this front (Kapferer, Bastien & Dawsonera.2012). Opportunities Bentley has an opportunity to invest in more environmentally friendly cars such as hybrid and electric cars. The future of the automobile industry lies in electric and solar powered cars that do not depend on petroleum which is non-renewable and unfriendly to the environment (Gandellini, Pezzi&Venanzi, 2012). There is, therefore, a great opportunity that the company can exploit in this industry. The company has an opportunity to target the affluent in the emerging markets. This will help to expand its customer base and increase revenues for the company. Increase in promotional activities in order to increase brand popularity(Argenti, 2013). Bentley should engage in promotional events such as sporting events which can help the brand of the company to grow further and to attract more customers. Threats Environmentally friendly engines are preferred by consumers as compared to high displacement engine cars like Bentley. This, therefore, means that the companies that invest in manufacturing environmental friendly luxury cars stand to benefit from the changing customer preference. There is the threat of increased competition from bigger luxury car firms such as Lamborghini, Ashton Martin, and BMW. This brand is very aggressive in their marketing compared to Bentley and hence they threaten to eat into the current market share of Bentley(Sekhar, N.D.)
Section Three Recommended action plan Bentley needs to change its strategy from focus strategy in order to diversify its products. The company should keep on manufacturing luxury vehicles but it should differentiate the products in order to offer consumers a wide range of choices. The company should develop hybrid electric cars. This will help to solve the challenges of environmental pollution. The innovation will also go a long way in helping meet the needs of consumers who prefer vehicles with less carbon emission. Bentley should research on self-driven cars and become a market leader in this technology which is yet to be commercialized. The company will, therefore, be able to keep pace with the changing technological demands in the automobile industry. Bentley motors should expand into developing economies and reach out to customers in this market segment(Rodiek, 2008). The company will gain greatly by capturing the new wealthy class individuals in this market. The brand popularity of the Bentley company will also increase. Conclusion The report begins with an introduction to the company. The products that the company offers include luxury cars and SUV. The company operates globally but it mainly focuses on Europe. The report identifies reasons why strategic management is important to organizations and ways in which Bentley Motor will benefit through strategic planning. The role of environmental analysis in the strategic planning process is to help identify the strengths and weaknesses of the business as well as opportunities available in the external environment (Hill & Jones, 2010). A thorough environmental analysis is carried out using tools such as PESTEL analysis, SWOT as well as Michael Porter's competitive forces. The results of the SWOT analysis are discussed and recommendations on changes that the company should undertake are made.
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