Business Strategy Report: Analysis of Mc Laren Auto Company's Strategy

This report provides a comprehensive analysis of Mc Laren's business strategy, encompassing a detailed examination of its macro and internal environments. The report utilizes frameworks such as PESTLE analysis and Porter's Five Forces to assess the external factors influencing the company and the competitive landscape. It delves into the internal environment, evaluating Mc Laren's capabilities through Porter's value chain model. Furthermore, the report explores strategic management decisions, evaluating the company's strengths, weaknesses, and competitive advantages, and proposes suitable strategies to improve its market position. The analysis covers a range of theories, concepts, and models for strategic planning, ultimately aiming to formulate a strategic management plan considering tactical and strategic priorities and objectives. The report concludes with a summary of key findings and recommendations.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1 ..............................................................................................................................................1
P1 Suited frameworks to analysing influences and impacts of macro environment...................1
M1 Analysation of macro environment to determine and inform strategic management
decision........................................................................................................................................5
Task 2...............................................................................................................................................5
P2 Suited framework to analyse the internal environment and capabilities................................5
M2 Critically analyse of internal environment to assessing the strength and weakness ............8
Task 3...............................................................................................................................................8
P3 Porter's five forces model to evaluate the competitive forces................................................8
M3 Suitable strategy to improve the competitive edge and market position.............................10
Task 4 ............................................................................................................................................11
P4 Range of theories, concepts and models for strategic planning and its application.............11
M4 Strategic management plan by considering tactical and strategic priorities objectives......14
CONCLUSION..............................................................................................................................14
REFERENCE.................................................................................................................................15

INTRODUCTION
Business strategy is consider as set of actions and plans, prepared by
management for running their business successfully and increase profitability. The main
object of business organisation is to attracts number of people and employees also,
which helps to perform all business functions effectively by increasing productivity
(Aaker and Adler, 2014). This is a master plan, implemented by management for carry
forward their operations and achieving business goals in competitive market. To
understand about Business strategy Mc Laren has been selected which is auto mobile
company manufacture cars. Its head quarter in UK and number of employees are 3,798
who helps in business activities (About Mc Laren, 2019). The present report is contains
various topics such as application of frameworks to analyse the impacts of macro
environment, internal environment and capabilities of business firm, porter's five forces
model for competitive advantages and different theories to make strategic decisions.
Task 1
P1 Suited frameworks to analysing influences and impacts of macro environment
Introduction: Business strategy is defined as plans which are prepared by
management for running their business successfully. The main aim of business
organisation is to provide better quality of products at reasonable cost which helps to
increase the trust and profits of organisation. To become successful international
company is the goal of business industry for this different types of strategies are
formulated by management which increases productivity and profitability. Business
organisation deal with macro environment which impacts on business strategies.In
context to Mc Laren company, different strategies are formulated by management which
impacts on business strategies by analysing PESTLE factors which are considers in
macro environment such as:
Vision: “To become largest company in auto mobile sector by offering better
quality of cars”
SMART Objectives :
Specific Measurable Achievable Relevant Time Bound

 To
increase
the
product
and
market
image by
introducin
g
qualitative
and
quantitativ
e
products.
 To
increase
10%
profit
share by
2020.
 To
evaluate
the goals
qualitative
and
quantitativ
e data
going to
be used.
Moreover
compariso
n with last
year
budget
and
preparatio
n of new
budget
help to
measure
goals.
 To
achieve
the
organisati
onal goals
different
resources
such as
money,
man,
machine
and time
are used
by
manageme
nt in order
to reach
near by
goals.
 These are
relevant
goals that
will
increase
the market
image and
share by
attracting
people.
Proper use
of
resources
also
improve
the
business
performan
ce.
 Such
goals
complete
in specific
time
frame that
is 1 year
with the
help of
available
resources
and
skilled
employees
.
Mission: The mission statement of Mc Laren is “ To win Grands Prix and world
championships by providing better quality of products.”
PESTLE analysis: This analysis are involves in to macro environment which
helps to run business by understanding the risk in businesses. This is used by Mc Laren
organisation which influences and impacts on business organisation in UK. The detail of
this analysis in regard of UK country are as defined:
Political: It states the political system of UK country where different regulations
are formulated by government for business industry which are require to follow by

industries (Barney, 2016). This involves foreign trade policy, tax rates, political stability
of UK and other country, labour law, trade restrictions etc. which can impacts on Mc
Laren such as:
Positive impacts: In UK, having stable political stability and government subsidy
for low emission impacts positively on Mc Laren, helps to grown the auto mobile sector.
In Global environment, the demand of environment friendly vehicles are increasing
which can help UK country and Mc Laren to run their business successfully.
Negative impacts: Changes in political system and trade regulations in UK can
reduce the sale of Mc Laren organisation because it make difficult for business firm to
follow the new regulations and work accordingly that can reduce that profitability.
Economical: This means the economical condition of a country which helps
people to buy products and services and increase business sale (Baye, Prince and
Squalli, 2016). This involves economical stability, inflation rate, exchange rate, interest
rate, disposable income etc., can impact on Mc Laren auto mobile industry-
Positive impacts: After Brexit, the economical condition of UK is good, that
increases demand of luxury vehicles that helps to increase the sale of Mc Laren as it
manufacture luxurious cars and make efforts to developed countries.
Negative impacts: Business industries are highly depend on customer's
purchasing power which based on economical condition of country. The economical
condition of UK is not good which can down the sale of Mc Laren because people do
not buys products.
Social: The trend, customer's preference and social culture are changing
continuously in country which needs to be satisfied. This factor influences Mc Laren
organisation in UK such as:
Positive impacts: In UK, auto mobile industry is growing faster by launching
new cars as per customer's perception which affects positively Mc Laren to increase the
demand of cars and sale in high quantities (Bharadwaj and et. al., 2013). Moreover, this
affects the popularity of brand and models continuously.
Negative impacts: If Mc Laren do not focus on customer's preference, style and
culture then popularity of Mc Laren can be downfall which impacts on business sale
indirectly.

Technological: Innovation and technology is strong determinant of market share
in UK that helps to increase the market share of auto mobile sector. Management of Mc
Laren focus on innovation that impacts on business:
Positive impacts: By using new technology, Mc Laren is planning to release a
driverless cars with fuel efficient which influences sales and profitability of auto mobile
company in UK. This impacts positively as incremental in productivity and profitability.
Negative impacts: Not following new technology and innovating new cars in UK,
Mc Laren's market share can be reduced and popularity also affected negatively which
can reduce sale of business firm.
Legal: This factor gets to affect the performance and profitability of business
organisation in particular country (Ghemawat, 2013)(Hofer, 2014). This considers laws
which are related to product quality and safety, employees legislation and brand image
in UK that can impacts on business such as:
Positive impacts: Mc Laren is following the product safety rules by providing
airbags and pollution free test which attracts customers to buy Cars and increase
productivity.
Negative impacts: To follow the environmental laws, tax laws and employment
laws impacts positively on UK and organisation as successful operations in region and
international market.
Environmental: Government of UK, is supporting or favouring low carbon
emission and environment friendliness by formulating different policies and regulations.
The impacts on [such factor on auto mobile organisation defined as:
Positive impacts: In UK and other country, pollution test have grown stricter
which is important for vehicles to pass such test. By considering such factor, Mc Laren
manufacture low carbon emission and fuel efficient cars in UK which helps to maintain
the friendliness environment.
Negative impacts: Not providing low carbon emission vehicles in UK, pollution
will be increase in country which can be reason be high date rate that impacts on
business of auto mobile industry negatively (Olson, Slater and Hult, 2015).
Porter Diamond Model: This is a framework which is used by organisation to
analysis the environment and get competitive advantages such as:

Factor condition: This involves types of resources which may or may not
present in nation. It consider human resources, capital, natural resources, knowledge
and infrastructure that helps to run a business organisation independently in competitive
market. In UK, there are all resources which helps Mc Laren to perform business
activities efficiently and increase profitability by manufacturing cars.
Demand condition: This consider home market demand for particular products
and services that process to competitive advantages. In context to Mc Laren, the
products demand are increasing due to better quality and cost which can helps to
innovate new products and improve them in order to increase market size, growth rate
and market sophistication (Richard, 2016). This helps to gain the advantages in
competitive business within UK.
Relating and supporting industry: This defined, success of one organisation
can depend on success of related business and suppliers because they gives cost
effective access to inputs. In context to Mc Laren manufacture cars in UK by sharing
wind tunnel that helps to get competitive advantages.
Firm strategy, structure and rivalry: This relates with competitiveness of
business firm in one nation by setting strategy and structure themselves which helps to
get advantages (Rumelt, 2018). In context to Mc Laren, has rivalry between Mercedes,
BMW, Bentley etc. that become difficult for such organisation to sale its products. So it
uses new technology to innovate the product and increase sale in competitive market.
Stakeholder Analysis: This is used by Mc Laren to analyse the stakeholders
and people that can directly impacts on business. Description of such analysis is given
as:
a) Stakeholder: This means people who invested in company to purchase shares
of company are known as shareholders. In context to Mc Laren there are many people
who have invested in company and get shares which helps to maintain the good
relations and long etrm sustainability.
Competitors: In UK, Mc Laren has many competitors such as BMW, Mercedes,
Jaquar, Bentley motors etc. who are manufacturing cars by understanding customer's
demand and increasing sales (Scholes and et. al., 2014).

Suppliers: Mc Laren has purchased raw material on the basis of credit and pays
on times which become important for such company to share the sales, profit margin
and inventory ratio with suppliers which helps to maintain competitive profits.
Customers: These are important for business organisation to get feedback from
customers on regularly basis for product quality and prices which helps Mc Laren to run
their business successfully and gain competitive advantages.
Employees: This is important for organisation motivate their employees and
keep them relaxed in order to get best results. The employees of Mc Laren working with
good conditions and get motivation from management which helps to deliver the best
results (Schwartz and Davis, 2015).
M1 Analysation of macro environment to determine and inform strategic management
decision
From the above discussion it has analysed that business organisation should
focus on macro factors which helps to make correct business decisions effectively. Mc
Laren focuses on PESTLE analysis which helps to maintain the productivity and
profitability of organisation by monitoring them properly. The management of such
company analysis that which factor can impacts positively or negatively on business
organisation. These are external factor which are uncontrollable by management but
they can helps to perform well and increase the business activities. Moreover, strategic
management decision are taken by managers in order to solve the problems and
perform well in competitive business environment.
Task 2
P2 Suited framework to analyse the internal environment and capabilities
Internal environment considers events, culture, image and customer's preference
which helps to make correct business decision by analysing them. Every organisation
should analyse the internal environment and capabilities of organisation which helps to
make strategic decisions. Mc Laren uses Porter's chain model to analyse the internal
environment and capabilities-
Porter's value chain model: This model is given by Michael Porter in 1985 by
emphasizing on activities and systems of organisation which are linked with customers

and helps to gain capabilities of business organisation (Porter's value chain analysis.
2019). This is used by Mc Laren to analyse the internal environment and capabilities of
business that are as follows:
Illustration 1: Porter's value chain analysis. 2019
(Source: Porter's value chain analysis, 2019)
Primary activities: This involves primary activities of business organisation
which impacts on sales, production and maintenance of products (Value chain analysis,
2019). In context to Mc Laren, the primary activities are consider:
Inbound logistics: This contains receiving and warehousing of raw materials and
their distribution which helps to increase the business sales. This is strong element in
Mc Laren as managers have ability of handle raw material, vehicles, warehousing and
inventory carefully which helps to increase sale of organisation.
Operations: This means an activity of transforming inputs in to finished products
and services. This is important element in Mc Laren as managers of business
organisation transform the raw material in to cars which process to successfully
operations.
Outbound logistics: This involves a process of warehousing and distribution of
finished goods. This is high element in Mc Laren which helps to increase the sale of

business organisation as managers are capable to keep records of inventory or
manufactured cars and distributes them in to different countries which helps to increase
sale (Seybold and Marshak, 2018).
Marketing and sales: This process is used by organisation to identify the needs
and generation of sales which helps to increase productivity and profitability. This is
again high element factor in Mc Laren company where managers identify the needs of
people and generate cars accordingly which helps to make higher profits.
Service: This means after sale services which attracts customers more after
getting services. In context to Mc Laren, managers have ability to provide after sale
services and get feedback from customers which helps to make higher profits by selling
products. It benefits to maintain good relation with customers and managers and
perform business successfully.
Support activities: This involves those activities which are required to complete
after primary activities. This helps to increase the capabilities of business organisation
by making strategic decisions. In context to Mc Laren, supported activities are as
defined:
Procurement: This consider inputs which is used in value chain of business in
order to increase productivity and profitability. Different inputs are purchased by Mc
Laren in order to manufacture cars such as raw material, equipments, machines,
labours etc. that helps to gain competitive advantages.
Technological development: Technology is important in every sector that
increases the capabilities of business organisation by innovating products and services.
In this, Mc Laren launches new cars by using new technology which helps to increase
the sale and profitability due to having strong element.
Human resource management: This is important inn business organisation who
adopts new technology and working method in order to develop products. This is strong
element in Mc Laren organisation such as HR manager recruits and select highly
skilled, technical and capable employees who accept new technology and manufacture
products accordingly.
Firm infrastructure: This involves infrastructure of business organisation which
are used to perform daily operations. Firm infrastructure of Mc Laren is high as

managers delegate the business activities in to small activities at the workplace which
helps to handle the operations successfully.
Therefore, this model is used by Mc Laren organisation to identify their
capabilities and gaining competitive advantages. This also helps to increase the
productivity and profitability of organisation by focusing on all elements.
M2 Critically analyse of internal environment to assessing the strength and weakness
From the above it has analysed that Mc Laren should analyse the internal
environment which states strength and weakness of business in auto mobile sector. The
internal analysis of Mc Laren is defined as:
Strength Weakness Opportunity Threats
 High
innovative
process
 Strong
position in
market
 String brand
 Strong control
on production
process
 High prices
 Limited
market
presence.
 Limited
supply chain
 Global sales
expansion
 Business
diversification
and high
presence on
customer's
preference
 Aggressive
competition
 Dealership
regulations
 Fluctuation in
prices of raw
material.
Critical analysis of internal environment
From the above internal analysis it has been analysed that SWOT analysis is
used by Mc Laren in order to know the strength and weakness of business organisation.
By using this model organisation analysis how it can increase its business performance
and activities to become a largest organisation and get the ideas to overcome the
weakness. Moreover, organisation get opportunities for developing the business and
increase market image.

Task 3
P3 Porter's five forces model to evaluate the competitive forces
Porter's five forces: This is a framework which is used to analyse the competition
in business environment. Different strategies are formulated by management which
helps to make higher profits than other organisation. This framework is used by Mc
Laren in auto mobile sector which helps to gain competitive advantages. The
description of five force are given as:
Industrial competitors: This element is used to analyse the level of competition
in similar business. This is high in auto mobile sector because there are many
competitors in auto mobile sector who manufacture cars that states the situation of
perfect competition (Simons, 2017). In context to Mc Laren industrial competition is high
as it has many competitors in UK such as BMW, Lamborghini, Maserati, Porsche and
many more. To face this competition Mc Laren has to set the low prices than others
which can increase high market share but less profitability.
Power of suppliers: Suppliers are used by organisation to purchase the
products which helps to decide the organisational profits. In suppliers are more in
market then their power is less and vice versa. In context to Mc Laren, the suppliers
power is high who can charge high prices from such company because there are lack
number of suppliers who sales better quality of raw material. So this become important
for business organisation to purchase raw material at high prices in order to
manufacture cars which may impacts negatively as lack in productivity and profitability
due to high supplying power.
Power of buyers: Products are manufactures only for sale which are purchase
by customers by analysing cost, quality, features etc. that satisfy them. Customers have
power to analyse the cost of products and quality then make purchase decision
(Vickery, Droge and Markland, 2013). In Auto mobile industry the purchasing power of
suppliers is low which is beneficial for Mc Laren as it can sale products by setting prices
according to themselves. In UK, there are huge customers who are ready to pay extra
amount for luxury cars in order to maintain their status. This element attracts targeted
customers and sale cars by setting the high prices than others which helps to gain
competitive advantages.