Strategic Management: Types of Strategy, External Environment, Strategic Drift, and Strategic Capabilities of Bentley Motors

This report discusses the types of strategy, external environment analysis, strategic drift, and strategic capabilities of Bentley Motors. It provides insights into the company's mission and vision alignment, as well as its business canvass model for creating, delivering, and capturing value within the industry.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................3
Task 1 ..............................................................................................................................................3
Understanding of the types of strategy in relation to the schools of strategy and strategic
concepts.......................................................................................................................................3
Task 2...............................................................................................................................................4
Appropriate model to review the external environment of company.........................................4
Task 3...............................................................................................................................................6
The extent to which company is facing strategic drift................................................................6
Whether the company's mission and vision align to the demand of marketplace.......................7
Company's strategic capabilities.................................................................................................7
Business Canvass Model to describe how company creates, delivers and captures value within
its industry...................................................................................................................................9
Task 4.............................................................................................................................................10
Strategic choice models to sustain the company’s competitive position..................................10
Task 5.............................................................................................................................................14
Resource implications of the selected strategy.........................................................................14
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Strategic management refers to planning, monitoring and analysing the internal and
external factors which affect the business so that strategies can be formulated which can help in
achieving the goals and objectives of the business. It is basically a technique which can help the
company in planning its future and aligning its processes and resources which can help it in
achieving its shot-term and long-term goals (Abdolshah and et.al., 2018). This project report is
based on Bentley Motors Ltd. which is a British manufacturer and marketer of luxury cars and
SUVs and is headquartered in Crewe, England. The company was founded by W.O. Bentley in
1919 and is subsidiary to Volkswagen Group since 1998. In this report the strategies of the
company and the development in strategic thinking will be discussed along with the strategies
that the company can follow to defend its core business. Also the external environmental factors
affecting the business and the competitive advantage it has over other competitors in the industry
will be discussed. Further recommendations regarding improving its strategies are also given
which will help the company in future.
Task 1
Understanding of the types of strategy in relation to the schools of strategy and strategic concepts
Organisation has to formulate various strategies which helps them to ensure their
survival. Strategies could be classified into various categories such as corporate strategy, general
strategy or competitive strategy. The organisation engage their employees in formulation of the
strategy which helps them to guide their employees and achieve their objectives. The Mintzberg
has developed various thoughts of school of strategy which helps them in strategy formulation.
The thoughts of school of strategy formulation are :
The design school In this school of strategy formulation the focus is upon the conception
of the idea for which various analysis is done by the company.
The planning school This school focusses upon the planning of the entire strategy in
rigorous manner that will help the company in efficient management.
The positioning school As per this school while formulating the strategy the position of the
product need to be at the priority.
The entrepreneurial This school of thought considers the visions, styles of the entrepreneur

school who motivates them to formulate future strategies accordingly.
The cognitive school In this the perception of the people need to be considered while
formulating the strategy for the company.
The learning school Accordingly to this school the management need to focus upon the
their past learning while formulating their strategy for future.
The power school The power school of strategy formulation will help the company to
take decision by the the person who has the authority to do so. Such
persons has to be considered by the while formulating strategy.
The culture School As per this school of strategy the human capital as well as social
capital need to be considered. This will help to develop a positive
culture that can give the organisation a proper direction.
The environmental
school
In this school of thought, the environmental factors need to be
considered while formulating the strategy. It make the strategy o
formulated an effective one.
The configuration
school
This thought of strategy school helps the management to understand
the need to configured which helps the company to move from one
position to other.
While formulating strategy Bentley considers all such factors so that efficient strategy
can be made which will help them in achieving their goals and objectives.
Along with this various strategic concepts need to be considered by the company which
will help them to understand the situation. Such concepts helps the Bentley in identifying broad
terms for what is to be done in the organisation. These concepts can be mould by the managers
as per the situations and the department in which they have been applied.
Task 2
Appropriate model to review the external environment of company
The functions and operations of a business are affected by various factors which can be
either internal or external. The external environmental factors are those which cannot be changed
or controlled rather the companies have to adjust their strategies in order to survive in the
competitive marketplace. The positive and negative affects of these factors need to be analysed

so that the businesses can sustainably grow and develop. PESTLE analysis for the company
Bentley Motors Ltd. will help in analysing the external environmental factors of the company : Political : These are the rules and regulations of the government which affects the
strategies of businesses. Bentley Motor follows strict CSR policies which is a positive
factor as UK government supports auto-mobile companies that follows safety regulations
and emission policies. Brexit on the other hand might have negative impact as the
company will have to look for new investment options in other countries which will
increase company costs (Ansoff And et. al.,2018). Economic : These factors are related to economic conditions like GDP, unemployment
rate, interest rates etc. As the disposable income of people in UK is growing it has
positive impact on the company. However, growing inflation might have negative impact
on the company. Social : These are the factors related to composition of population of the country. The
population of UK are attracted towards rich culture and are status conscious which is
advantageous for the company. However, the growing awareness among people
regarding global warming might decrease the sales of cars. Technological : These are related to the R&D that takes place in the country and the
technological advancements. UK is technically advanced nation which helps Bentley to
bring innovation in its products efficiently as new technologies are available at cheaper
rates. However, the companies that are introducing electric vehicles, self-driving cars
etc. which increase competition for Bentley Motors. Legal : These are the laws that exist in the country. Restrictions and strict pollution
norms in UK affects the car sales and the cost of copyright is also increasing which
further increase company's costs. However, as Bentley follows government laws it has to
face less governmental intervention (Cordell and Thompson, 2019).
 Environmental : These are related to the environment of the country like pollution, water
etc. UK is conscious about increasing pollution which causes negative impact on
company however, CSR followed by the company gives it strategic advantage to grow in
UK.

Another tool that can be used by the company to analyse the industry scenario so that its
competitiveness in the external environment can be determined is the Porter's Five Forces model
which will help Bentley Motors in identifying the following five forces : Rivalry : It is the competition faced by the company due to existing competitors and
competition in the luxury car industry is extremely high and so the company needs to
formulate strategies which can help it to deal with the competition. Customer : As the supply of luxury cars in the market is low it means that the bargaining
power of buyers is low but they can easily switch to other brands which are providing
the same features under same price. Suppliers : The bargaining power of suppliers of Bentley is low as it has suppliers
located at various parts of the world and has strong supply chain management with its
suppliers which enable the company to buy resources from them at low cost and of high
quality. Threat of substitutes : Threat of substitute products in the car industry is high as there
are many options available in the market which can provide same level of satisfaction to
customers and at better prices.
 Threat of new entrants : Threat of new entrants in luxurious automotive industry is low
as large investments in infrastructure, marketing, supply chain and distribution etc. are
involved in this industry (Costantino, and et. al, 2012).
Bentley motors has many competitors like Mercedes Benz, Rolls Royce motors, Jaguar,
Porsche etc. which gives the company motors tough competition. However the company is able
to sustain successfully in the competitive market through its 25 years of experience in the
luxurious car manufacturing industry also the brand image of the company has gained trust of
many customers which gives it a competitive advantage. The company also offers unique
features in its products which helps in creating a unique identity in the market and gives the
company a competitive edge.
Task 3
The extent to which company is facing strategic drift
Strategic drift is a concept of strategic management and refers to the response which the
company has on the changing environment so that it can continue to exist substantially in the

market. Strategic drift occur when the companies are unable to change their strategies which can
help them in dealing in the competitive market which ultimately affects the business existence.
Bentley Motors is facing a strategic drift in the market as the environmental conditions are
changing and the awareness towards increasing pollution and alternative energy sources is
increasing among the people. This has led the company to make changes in its strategy so that it
can survive in the market and can deal with competition efficaciously (Davis, and et. al., 2016).
Whether the company's mission and vision align to the demand of marketplace
Mission : The company aims at creating extraordinary cars for its extraordinary
customers.
Vision : To lead the car manufacturing industry by building the most luxurious cars in
the market.
The demand in the marketplace is increasing for luxurious cars as the disposable income
of people is increasing and people are more concerned about their status in the society. This
helps the company in increasing its sales as the company has a brand image of being one of the
most luxurious cars which helps the customers in leveraging their status in the society. The
company has staff members with efficient skills and are innovative in their ideas which helps the
company in bringing innovations in its features and thus the mission and vision of the company
helps it in aligning to the demand of marketplace (Doane and Franzon, 2013).
Company's strategic capabilities
Strategic capability is the ability of a business to use all its resources, skills and
capabilities in an efficient manner so as to gain a competitive advantage in the market so that the
chances of its survival increases with increase in its value. The strategic capabilities are the
internal capabilities of the business which are explained in reference to Bentley Motors as
follows :
SWOT analysis
Strengths
 The Bentley cars are highly popular for
their luxury and sport nature.
 The company has a brand uniqueness in
the market which helps it in
Weaknesses
 The company cannot sustain a high
growth as it focuses on small target
market.
 The company launches very few cars

differentiating its products. each year which increases waiting time
for customers and they can easily
switch.
Opportunities
 The company can focus on the
emerging markets where it can expand
its business.
 The company can acquire other lower
brands so that it can reach to a large
number of people.
Threats
 The government norms are becoming
more environment friendly which
possess threats to Bentley cars.
 The fuel prices are rising which possess
problems to the company.
Another analysis that can be done to analyse the internal capabilities of Bentley cars is
the VRIO model :
VRIO analysis Value : This factor analyses the ability of company products and services to create a
value for its customers. Bentley is able to provide its customers with highly luxurious and
unique car models which creates value for money to the customers. The company's
financial resources, patent, human resources and distribution channels are valuable
resources which gives it a strategic advantage (GUO and GONG, 2018). Rare : It means the ability of company to provide unique and extraordinary products and
services to customers. Bentley is able to provide its customers with unique and luxurious
cars to its customers. The company's financial resources, human resources and patent are
rare which gives the company strategic capability. Imitable : It means if the company products and services can be easily replicated by other
companies. Bentley manufactures highly luxurious and sporty cars to its customers which
are difficult to be imitated as it requires high investment. The company's financial
resources and patents are not imitable which gives the company strategic capability.
 Organisation : This relates to the managerial systems, policies, culture and structure of
an organisation which gives it a strategic advantage. Bentley has strong financial
functions which gives strategic capability to the company.

Resource/
Capability
Valuable Rare Difficult to
imitate
Is it organised
Distribution
channel
Yes
Human
Resources
Yes Yes No
Patents Yes Yes Yes No
Financial
Resources
Yes Yes Yes Yes
Business Canvass Model to describe how company creates, delivers and captures value within its
industry
Key Partners
 Other
automoti
ve
company
to share
R&D
costs.
 Key raw
materials
and
manufact
uring
equipme
nt
suppliers
.
 Automoti
Key Activities
 Extensiv
e safety
testing.
 R&D so
that new
technolo
gy can be
installed.
 Increasin
g unique
features
for
customer
s.
Value
Proposition
 To
provide
customer
s with
highly
luxurious
and
sporty
cars.
 Increase
the
safety
standards
in the
cars.
Customer
Relationships
 Excellent
customer
and
maintena
nce
services
 Effective
call
centre
services
to
customer
s.
Customer
Segments
 Custome
rs who
belong
to high
income
groups.
 Custome
rs who
can
afford
highly
luxuriou
s cars.
 People
who are
looking
Key Resources
 Skilled
staff
Channels
 Global
distributi

ve
dealers
that
stock
Bentley
cars as
primary
channel
to
customer
s.
members
 capital
resources
to
manufact
ure the
cars.
 Suppliers
who may
deliver
the raw
materials
of
required
quality.
on
channels
with the
key
partners.
 Paid
advertise
ments on
various
media
channels.
 Car
shows
for
highly
stylish
automoti
ve.
Cost Structure
 R&D costs
so that
innovative
features
can be
installed in
cars.
 Marketing
on multiple
platforms
Revenue Streams
 Income
from sales
cars
 Maintenanc
e charges
and
customized
vehicle
parts.

Task 4
Strategic choice models to sustain the company’s competitive position
In order to sustain in the competitive environment it is important for the company to
define its strategy or direction and make decisions regarding the allocation of resources so that
the company can achieve its goals and objectives. Bentley Motors can use various strategic
choice models so as to sustain its competitive position in the market which are given as follows :
Porter's generic strategies : This model helps the company in determining about how a
company takes competitive advantage in the the market across its chosen market segment so as
to reach its target customers and increase its sales (Hill and et. al., 2014). The Porter's generic
strategies models help in determining strategies which can be adopted by the company so that the
company can reach to its customers. The strategies are mentioned as follows : Cost leadership strategy : This generic strategy means that the company offers its
products at lower prices than the other competitors in the same industry so as to increase
the sales of company products and services. This can be done through reaching at
economies of scale, having access to proprietary technology, preferential access to raw
materials and other factors which can help the company in reducing its profits and
providing the customers with quality products. This strategy helps the company in taking
cost advantage in all the sources which makes the company a cost leader in the industry. Differentiation strategy : This generic strategy means that the company offers products
and services which offer unique attributes to the customers which help in enhancing
value for customers and also the customer experience can be maximized. The value that
is added for the customers by offering them unique products or services can be charged
by the company in the form of premium price. The premium pricing policy hence
increase the price of products and services and thus makes them affordable only by the
high income groups. The company can bring differentiation in the products by having
access to scientific research, highly skilled and creative workforce, strong sales team or
brand reputation in the market.
 Focus strategy : In this strategy the company concentrates on narrow segment and tries to
achieve cost advantage and differentiation in that narrow segment. The companies enjoy
a high level of loyalty from that segment which helps the company in achieving
competitive advantage in that segment. The company following this strategy can tailor a

broad range of product development strengths to a low market segment which helps the
company in increasing profits efficiently (Marchington and et. al., 2016).
Bentley Motors follows differentiation strategy by which it is able to achieve a
competitive advantage in the marketplace. The company is able to provide to its customers with
highly differentiated products i.e. luxurious and sporty looking cars which are sold by the
company focusing on the high-income groups of the market. The company offers its products at
premium prices which are affordable by only the people who belong to upper class families. The
company focuses on providing its customers with products that are highly differentiated and
unique which gives luxurious experience to its customers and also adds value to them. The
company has a strong brand image which helps it in increasing its sales in the markets even
when the costs are high as Bentley cars are associated with high status families and enhances the
prestige of customers. The company is able to take a competitive advantage in the market as it
creates differentiated products which increases the customer value and also helps in creating a
strong brand loyalty of customers (Marra, Ho and Edwards, 2012).
Another model that can be used by Bentley so as to gain a competitive advantage in the
market is the McKinsey 7S model. It is a framework which can be used by companies so as to
increase organisational effectiveness by aligning the seven internal factors that are identified
through this framework which can help the company in being successful in the market. It helps
in identifying two types of elements i.e. 'hard elements' and 'soft elements'. Hard elements are
tangible, easy to identify and easy for management to change through plans and documents. Soft
elements on the other hand are intangible elements which cannot be easily changed and
influenced by the management.

Illustration 1: What Is the McKinsey 7s Model? .2019
Source : What Is the McKinsey 7s Model? .2019
Hard elements :
 Strategy : It is related with the company's strategy and plans that can help the company
in achieving a competitive advantage in the marketplace. Bentley uses product
differentiation method so as to gain a competitive edge in the market by offering
luxurious cars to the customers and focusing on the high income groups which can afford
its products.
 Structure : The company follows a matrix organisational structure where the employees
have multiple reporting relations with the management. This helps the management in
taking efficient decisions and also innovation and creativity can be given importance
through this structure.
 System : These are the procedures, processes and routines of the staff that are followed in
the company so as to help the company in achieving its goals and objectives on time and
within the company budget (Meiling, Backlund and Johnsson, 2012).
Soft elements :
 Shared values : These are the core values of the company which defines the
organisational culture and the way in which employees perform their work in order to
finish it on time.

 Style : It is the way in which the managers and employees of the company behave which
helps the company in achieving company goals efficiently.
 Staff : These are the employees and their capabilities which helps the company in
achieving its objectives. Bentley has a highly efficient and creative staff members which
help the company in bringing innovations in its products so as to increase customer
satisfaction (Oh, Yang and Lee, 2012).
 Skills : These are the core competencies and distinctive capabilities of the company
which gives the company a competitive advantage in the market. Bentley has the ability
to build luxurious cars for its customers which helps the company in differentiating its
products from its competitors.
Task 5
Resource implications of the selected strategy
Strategy is an integrated set of actions which are designed by the company to achieve a
sustainable advantage in the market so that the vision and mission of the company can be
successfully achieved. Bentley can choose differentiation strategy which can help the company
in achieving a viable, valuable and vibrant organisation through which it can achieve its goals
and objectives. The resources it needs to implicate in order to successfully apply the
differentiation strategy are sound operations so that the company can operate its functions
efficiently in order to achieve company objectives. The company also needs to have a strong
financial plan so that it can allocate appropriate budget in the R&D so as to search for
technological advancements which can help the company in differentiating its products. Also the
company needs to develop its technology so that customer satisfaction can be increased by
providing them with technologically advanced luxurious cars. Also creating a brand image will
become more effective by differentiating its products from its competitors (Palmer, Dunford and
Akin, 2016).
The company needs to interrelate and integrate the functions of all the departments of the
company such as finance, HR, marketing, operations etc. so that the strategy that has been
chosen by the company can help the company in achieving its goals and objectives efficiently.
All these departments can interrelate their functions so that the company can reach its target
customers. Though all the departments can help the company in achieving company goals it is

important that all the departments work together as a lack in the performance in one department
can also affect the performance of other department.
The differentiation strategy that is used by the company can help the company in
providing differentiated products to the customers which can help the company in building a
brand image and can also help in creating value for customers. Also the company can target the
high-income groups by providing them with differentiated products which gives the company a
competitive advantage in the market (Rothaermel, 2017).

CONCLUSION
From the above report it can be concluded that strategic management is important for
company to achieve competitive advantage in the market. The companies need to choose a
specific strategy which will determine the growth level a company can reach. Various models
and concepts can be used by the company to effectively reach to its target customers and increase
its sales. For a company to be successful in the competitive market efficient strategy plays an
important role. The companies also need to analyse the internal and external factors that affect
the business while choosing a suitable strategy so that the company can compete efficiently in
the market.

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Online
What Is the McKinsey 7s Model? .2019. [Online]. Available
through:<https://www.lucidchart.com/blog/mckinsey-7s-model>