Strategic Management Analysis of Aston Martin

This assignment focuses on a strategic management analysis of Aston Martin. Students are tasked with evaluating the company's position within the automotive industry using various analytical frameworks such as PESTEL (political, economic, social, technological, environmental, legal), Porter's Five Forces, and SWOT (strengths, weaknesses, opportunities, threats). The goal is to understand the key factors influencing Aston Martin's success and identify potential strategies for future growth.

STRATEGIC
MANAGEMENT

ABSTRACT
Strategic management refers to determination and implementation of business
objectives, aims and goals in the organization. In the present dynamic and competitive
business environment, every business firm needs to ensure strategic management in the
business. In this report, we determine the role of strategic management for Aston Martin
business organization. This report will help us to establish the objectives, goals and the
organizational purpose. Both the internal and external environment analysis has been
discussed in the given report. Internal environment involves all the factors that are available
inside the business corporation. However, external environment includes all the market
factors that cannot be controlled by the corporations.
Internal environment analysis can be done by SWOT analysis. It analyses the
organizational strengths, weakness, opportunities and business threats. By minimizing the
threats and weaknesses, and increasing the strengths and opportunities, business will be able
to achieve higher growth. However, PESTLE analysis is the best way to analyse the external
environment of business. Another with it is Porter's 5 forces model that makes better
understanding of industrial analysis in which the business is operating. Moreover, the report
discusses the strategic choices that are available to the business. The evaluation of the same
determines the most appropriate strategic choice that helps to achieve business success.

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................1
(a) Environment analysis..................................................................................................1
External business analysis.................................................................................................1
Competitive industry analysis...........................................................................................2
SWOT analysis:................................................................................................................2
(b) Strategic choice...........................................................................................................3
(c) Evaluation of different approaches..............................................................................4
(d) Selection and justification of the strategy...................................................................5
REFERENCES...........................................................................................................................7

INTRODUCTION
Strategic management comprises of formulation, implementation and evaluation of
business decisions in order to achieve the business objectives. It is a way to make business
plans and policies and allocating resources that helps to become a successful organization
(Rothaermel, 2012). Aston Martin is a private company that operates in an Auto mobile
industry. The company was established in the year 1913, headquartered in Gaydon,
Warwickshire, England, and UK. It manufactures luxurious sport cars and grand touring cars
for the customers. The mission statement of Aston Martin is to be the best in every business
area. However, the vision of the company is to become a leading organization in terms of
product quality, personality, performance and style (Martin, 2013). The core values of Aston
Martin helps in accomplishing the organizational mission. It comprises of integrity, serving
customers effectively, accountability, making continuous improvement in the business.
(a) Environment analysis
External business analysis
PESTLE analysis determines political, environmental, social, technological, legal and
economical factors for the external environment analysis.
Political
Changing the UK political environment bring
risk to the business. It includes changing the
tariff duties and the tax rates (Team, 2013).
For instance, higher tax rates negatively
impact the business and vice versa.
Economical
Economical instability impacts business in
an adverse direction. In case of Aston
Martin, UK economic situation is stable
hence; it affects the business in a positive
manner.
Social
Consumer behaviour, their likes and dislikes,
taste and preferences comes under the social
factors. Changing the customer demands,
Aston martin needs to bring changes in their
organization.
Technological
In the present highly competitive
environment, Aston martin need to use
advanced and professional technology in
their manufacturing process (Brown, 2014).
Further, business has to make improvement
over it on a regular basis.
Legal
Governmental legislation, UK laws, rules and
regulation comes under the legal factor.
Environmental
UK environmental laws must be complying
by Aston Martin. Reducing carbon emission
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Favourable rules and regulations impact
business positively and vice versa such as
safety laws and working regulations.
and environmental pollution which is the
responsibility of Aston Martin.
Competitive industry analysis
Porter's 5 forces analysis helps to make industrial analysis of Aston Martin. The five
forces are bargaining power of suppliers, bargaining power of buyers, threats of new entrants,
threats of substitute products and services and the industrial rivalry. Aston Martin's
competitors are producing similar kind of products, resulting in substitute availability.
Further, high bargaining power of suppliers results in inclining the product cost. However,
customers can bargain at lower rates which affect the business positively. The new entrants
and rival firms are Bentley and Mercedes Benz.
Strategic capability analysis: It refers to the abilities of the members in Aston Martin
to design the policies, strategies and implement it in an effective way to make development.
In context to Aston Martin, company has efficient human resource team, professional and
skilled engineers, product development plan, qualitative products and advanced and
innovative technology (Strategic capabilities: Bridging Strategy and Impact, n.d.). Further,
availability of adequate funds, managerial skills, better quality of standards, business policies
and all the other tangible as well as intangible business assets helps to get competitive
advantageous. All the available resources help Aston Martin for better survival.
SWOT analysis:
Strengths
 Innovative and advanced technology
 Luxury and branded products
 Strong worldwide presence in racing
events
 Effective marketing and
advertisement planning
 Large customer base and customer
loyalty
 Qualified engineering and designing
team for manufacturing cars
 Barriers for new entrants
Weaknesses
 Produce a limited products sports cars
and grand tours in the market
 High prices
 High insurance charges
 High tax structure
 High competitive market such as
Mercedes Benz, Bentley, Audi and
Maserati.
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Opportunities
 Expansions of Automobile industry in
UK
 Availability of new markets
 Deciding competitive prices helps to
retain existing customers and attract
new customers
 Higher the availability of the spare
parts and services for its products
 Increase market share
Threats
 Changes in the product prices
 Changing the governmental laws and
regulations for the industry
 Decreasing competitors prices
 Increasing costs such as fuel cost
 technological problems in production
process
 changing the financial climate for the
business
(b) Strategic choice
Porter's strategy: Porter designed strategies include differentiated, lower costing or
focus strategy to get competitive advantageous over the competitors. Under the lower cost
strategy, Astro Martin can increase their market share by decreasing the cost of the products.
It will be most suitable in case when customers are price sensitive and they are very much
affected by changes in the prices (Longenecker and et. al., 2013). According to the strategy,
Astro Martin can set their target market and offer its products at lower the prices. Decreasing
the operating cost, maximum utilization of business assets, high production volume and
controlling the marketing, financing and inventory cost help business to reduce product
prices. This in turn, demands will get incline result in increase the business sales and the
profits.
Differentiation strategy says that by differentiating the business products and services
make able the business to compete effectively. The strategy will be appropriate in case where
customers are not very much affected by changes in prices. Moreover, they have specific
demands and preferences with the products. It helps to bring uniqueness in the business
products (Hasan, 2013). Astro Martin can use this strategy by using their unique business
resources and the strategic capabilities in an effective way helps to satisfy the customer needs
to a great extent results in increasing the customers and achieve business goals.
In addition to it, focus strategy also known as segmentation strategy. According to the
strategy, Astro Martin business has to decide their target market segments initially.
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Thereafter, they should analyse the customers, their requirements, preferences and their
buying behaviour. Company should identify that in what extent customers are affected by the
price changes (Atkinson, 2013). Both the cost leadership and differentiation strategy can be
used in the target market. The strategy complies that focusing in only a target segment
business will be able to take better decisions. This in turn, organizational objectives can be
achieved in a great manner.
Strategy clock: Bowman designed the strategy in marketing to analyse the business
competitive position. It employs changes in the prices and value to the customers. Bargain
basement strategy entails that by deciding lower prices of product without differentiating
them, business can enhance their competitive position. Cost minimization strategy refers to
set the product prices at lower level by enhancing the production. Hybrid strategy is the
combination of both the cost and differentiation that helps to increase business worth. It says
that by providing products at affordable rates and at acceptable differentiation, business can
enhance their market share (Kajanus and et. al., 2012). Differentiation strategy primarily aims
at distinguishing the products according to customer choices that helps to add perceived
value. Product quality and branding is a way of differentiation. Focus differentiation aims at
identifying target market for the business and then charge premium prices to enhance profits.
This strategy can be adopted in case of luxury and branded products. High risk positioning
strategy refers to deciding high prices without providing extra product benefits to the
consumers. This is very risky strategy for the business. Monopoly pricing is another strategy.
It says that in case where there are only one seller in one market can charges whatever prices
they want. Loss of market share strategy concerns with deciding of middle range of prices for
the products.
(c) Evaluation of different approaches
Success of an organization is greatly influenced by several strategies that have been
adopted by organization for taking appropriate strategic decisions. In this context, the
management of Aston Martin uses various approaches in order to increase effectiveness of
taking management decision. In order to enhance performance of company, some important
strategies have been adopted by the management of Aston Martin. By considering the porters
generic strategy model, the management of company is paying extra attention in order to
reduce the cost of production that play important role in controlling of pricing different
product or cars (Metzger, 2014). It plays important role for increasing profit and sales of
company. But, this approach could create adverse impact on the brand value and goodwill of
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the firm. This is because Aston Martin is well known brand for high end cars so as cost
control could hamper the quality of cars and also creates negative impact on brand value.
With reference to porter's strategy, the business entity is also focusing on the
differentiation strategy. This approach plays an important role in development of various
strategies associated with designing and development of new products. It provides an
opportunity to business entity for managing an appropriate range in cars that would create
unique image of company (Tansey, Spillane and Meng, 2014). By considering unique design
in cars, company is able to attract new consumers. For implementation of this approach,
Aston Martin has to manage huge investment in research and development of cars which is
essential for enhancing the product range.
In the present business environment, focus strategy found to be very effective for
selection of an appropriate target market or consumers as per the product range of company.
Success and growth of company is greatly influenced by the use of appropriate management
decisions for attainment of long and short term goals. For application of this approach in
business operations, management of Aston Martin has to examine several external factors
such as customers along with their interest and lifestyle that influence their preferences while
taking appropriate purchase decisions (Wicker and et. al., 2015). In this context, detail
evaluation of different social elements such as culture, lifestyle, traditions and demographic
factors help managers in selection of target consumers, allocation of best products, distinct
requirements and their interest. It also supports the management in selection of best
marketing approach.
In addition to that, strategy clock plays an important role in consideration of several
aspects of strategy management. It supports Aston martin in reduction of cost of production,
appropriate selection of product and potential consumers. The approach covers different
aspects of porter's generic strategic model through which company will be able to take
appropriate management decision as per the long and short term strategic goals.
(d) Selection and justification of the strategy
On the basis of above identified advantageous and disadvantageous, it can be reported
that differentiation strategy will be the most suitable strategy for Aston Martin Group. The
reason behind choosing this strategy is that it helps to achieve higher success at the market
place. By designing the sports cars and grand touring cars, according to the demands, helps to
increase customer base as well (Bettis and et. al., 2015). It will help to satisfy large number of
people and attract new clients also. Moreover, people have different choices and preferences
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with the luxurious products. Therefore, by making changes according to their perception
tends to bring higher possibility of satisfying their needs. Thus, demands will increase to a
great extent thereby results in increasing the business revenue and profitability.
Differentiation may be done through branding the products of Aston Martin.
Moreover, it can be done by patents, intellectual property, and technical expertise services
and by using innovative production process. For instance, using high quality of technology
and introducing new features to the cars helps to attract new customers and retain existing
ones (Haeussler, Patzelt and Zahra, 2012). This in turn will help Aston Martin Group to
compete effectively with its competitors and achieve business success. On contrary, adding
extra features to the products will impose additional cost to the business. It can be mitigate by
charging higher prices for the customers. Furthermore, differentiation strategy is the best way
because for the sport cars and grand touring cars, customers have specific demands. Thus,
differentiation strategy is helpful in fulfilling the customer’s choices through implementing
differentiation techniques.
Moreover, this strategy is suggested because it allows Aston Martin to charge higher
prices from the customers. Furthermore, prices do not impact the customer’s demand because
they are not price sensitive. Product is more important for them. Therefore, by providing
innovative and good quality of products, demands can be met out effectively. Thus, by
increasing the product prices results in bringing success to the organization. It helps to drives
profitability for the business. Thus, it can be said that by using strategic capabilities and
unique business resources, companies will be able to make product differentiated from the
competitors. Further, by charging premium prices for the products leads to results in
increasing revenue per unit and profit margin also.
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REFERENCES
Books and Journals
Atkinson, D., 2013. Dynamic capabilities: implications for marketing strategy formulation
and implementation. International Journal of Business Environment. 5(3). pp. 252-267.
Bettis, R. A. and et. al., 2015. Qualitative empirical research in strategic management.
Strategic Management Journal. 36(5). pp. 637-639.
Brown, S., 2014. Aston-Martin-V8-Vantage-The-Living-Daylights Spiked tires. Science.
Haeussler, C., Patzelt, H. and Zahra, S. A., 2012. Strategic alliances and product development
in high technology new firms: The moderating effect of technological capabilities.
Journal of Business Venturing. 27(2). pp. 217-233.
Hasan, M. R., 2013. Apple Inc.-An Analysis: PESTEL analysis, Porter’s 5 Forces analysis,
SWOT analysis, Comprehensive analysis of financial ratios, and Comprehensive
analysis of share performance of Apple Inc. GRIN Verlag.
Kajanus, M. and et.al., 2012. Making use of MCDS methods in SWOT analysis—Lessons
learnt in strategic natural resources management. Forest Policy and Economics. 20. pp.
1-9.
Longenecker, J. and et.al.,2013. Small business management. Cengage Learning.
Martin, A., 2013. Aston Martin Centenary. Celebration Programme.
Metzger, K., 2014. General Electric. Corporate Strategy Analysis.
Rothaermel, F., 2012. Strategic management. McGraw-Hill.
Tansey, P., Spillane, J. P. and Meng, X., 2014. Linking response strategies adopted by
construction firms during the 2007 economic recession to Porter’s generic strategies.
Construction Management and Economics. 32(7-8). pp. 705-724.
Team, F. M. E., 2013. PESTLE Analysis. Strategy Skills.
Wicker, P. and et.al., 2015. The effect of Porter's generic strategies on organisational
problems of non-profit sports clubs. EJSS European Journal for Sport and Society.
12(3). p. 281.
Online
Strategic capabilities: Bridging Strategy and Impact. n.d. [PDF]. Available through:
<https://www2.deloitte.com/content/dam/Deloitte/us/Documents/strategy/us-cons-
strategic-capabilities-bridging-strategy-and-impact-03.>. [Accessed on 22nd January,
2016].
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