Report: Analysis of Denso Corporation's Organisational Strategy

This report provides a comprehensive analysis of Denso Corporation's organizational strategy. It begins with an introduction to organizational strategy and its importance for long-term goals, then focuses on Denso Corporation, a company specializing in vehicle testing and safety. The report utilizes PESTLE analysis to evaluate the macro-environmental factors impacting Denso, including political, economic, social, technological, legal, and environmental factors. It then applies Porter's Five Forces to assess the company's industrial position, examining competitive rivalry, the threat of new entrants, substitutes, and the bargaining power of buyers and suppliers. Furthermore, the report employs VRIO analysis to evaluate Denso's internal resources and capabilities, considering value, rareness, imitability, and organization to capture value, and concludes with an analysis of stakeholder perspectives, differentiating between internal and external stakeholders. The analysis provides insights into Denso's strengths, weaknesses, and strategic positioning in the automotive industry, offering a holistic view of its operational environment and strategic choices. This report is contributed by a student and is available on Desklib, a platform providing AI based study tools for students.

Organisational
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Pestle Analysis........................................................................................................................1
TASK 2............................................................................................................................................4
Industrial Position...................................................................................................................4
TASK 3............................................................................................................................................6
Internal Resources and Capabilities.......................................................................................6
TASK 4............................................................................................................................................7
Stakeholders' Perspective.......................................................................................................7
CONCLUSION................................................................................................................................8
REFERNCES...................................................................................................................................9

INTRODUCTION
Organisational Strategy refers to the sum up of the actions which a company takes in
order to achieve its long term goals. These objectives help in the growth of a company and its
long term sustainability (Watson, 2013). This report is based on Denso Corporation, which was
established in 1949 and is headquartered in Kariya, Japan and provides facilities of vehicle
testing in terms of passenger security and harmful emissions. It covers a detail analysis of the
external environment and industrial attractiveness. It also includes analysis of its internal
resources and capabilities and stakeholders' perspectives.
TASK 1
Pestle Analysis
Macro-environmental factors are those external elements that influence how a company
functions (Hillson and Murray-Webster, 2017). For understanding the effects of Macro-
Environment Factors on Denso, PESTLE Analysis is the most appropriate approach which is
mentioned below:
(Source: PESTLE Analysis, 2018)
Political Factors:
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Illustration 1: PESTLE Analysis

Political Factors includes mainly the policies of the government which affects the
working of a company. Major operations of Denso are in developed countries like Japan, Europe,
Singapore, where Political condition is stable. This scenario provides more concern upon
providence of the operations with the minimal impact upon environment that creates opportunity
in front of an organisation to develop new systems for instance Artificial Intelligence and
Emission Control System, to ensure maximum safety towards environment and optimum security
of cars in Automobile industry (DENSO AI: Artificial Intellegence Supporting People, 2019).
However, there are various countries like UK which couldn't provide the firm stability in its
operations due to political instability which is a major threat for the firm as changes in policies
also tend to change in methods, import prices and policies that might not be favourable.
Economical Factors:
These are the factors which includes the economic growth, inflation rates, exchange rates which
affects the working of Denso. For instance, quite recently the firm is planning to expand its
operations in Christian County, Missouri, United States investing $3.5 million that would help
them in creation of 45 jobs. With progressing economy in the US, the company is willing to get
support from the local government which could be an opportunity for the company as this will
help to setup their business easily (DENSO Air Systems plans $3.5M expansion in Hopkinsville,
2017). However, the company faced a lot of troubles in countries like the UK and India due to
events like Brexit and Demonetisation respectively. These events could be a threat for the firm
economically as it enhances the risk for potential economic loss.
Social Factors:
Social Factors are those factors which a company has to accomplish for the society in
which the company is established. Denso is also working upon their contribution to the society as
the company is undertaking some activities in order to resolve the issues of local public such as
harmony with the environment, ensuring safety and security in communities, and the human
resource development. This will creates opportunity for an organisation to become leader in
world. However, there are various threats present in this factor as well. For instance, in the
automobile industry, there are various companies like Ferrari, Lamborghini and Toyota which
prefer testing their vehicles at their own facilities. This enhances the threat for the firm as there is
a huge risk that this company will be preferred by less companies.
Technological Factors:
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In this factor, the innovation in technology is included as these changes can affect a
company favourably and unfavourably. The company is creating innovation in its products more
faster than other companies. The continuous innovation of R&D Department in its products
makes Denso different from others. Artificial Intelligence has deeper roots than those which are
already discovered which is a major opportunity for the company to determine effective ways of
product testing. The technological threat that the company might face are the cyber breach and
technological infringements by other companies that could gain a competitive advantage over
Denso and disrupt its image.
Legal Factors:
There are various legislations imposed by governments regarding customer safety for
instance National Traffic and Motor Vehicles Act in the US that requires vehicle manufacturers
to ensure effective safety to the passengers of their vehicle (National Traffic and Motor Vehicle
Safety Act, 2019). Such legislations are an opportunity for the firm as it would help them to
comply with such laws effectively. However, there are legislations that govern environment too.
There are emission standards set by the United States that detects the maximum emission that
could be emitted by a vehicle (Emission Standards United States. 2019). There might be cases
that some companies use defeat devices to clear their vehicle from such legislations. If these
companies have been associated with Denso in any manner, this could get the firm in legal
trouble.
Environmental Factors:
The affects of this factor is necessary to understand because it is related to the
environment on which the production process of Denso creates bad effects such as pollution,
emissions of harmful gases. However, it is true that company is now moving towards protecting
the environment by its several programs such as “ECO VISION in which the company set three
targets which are Energy, Clean, and Green. Also, the company is promoting ten actions in order
to achieve these targets. In addition to this, the company is also using that technology which
reduces the emission of harmful gases such as CO2 in the environment. Currently, the company
is working and testing their products in order to make them eco friendly and make the
environment safe and security of the customers using the cars. The threat is that there are
chances where technology could fail to provide effective benefits to the environment which will
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affect the corporate social responsibility of the firm towards society and the nature. This might
hamper its future growth completely.
TASK 2
Industrial Position
Porter's Five Forces Analysis helps in getting an information and evaluation about the
competitive strength and position of Denso in the industry (Cárcamo and et. al., 2014). It focuses
on five components and by doing analysis on these, the position of Denso in the industry can be
easily known. The explanation of these components are as under:
Competitive Rivalry:
The company is dealing in a very competent environment as there are many companies
doing the business in this sector like Valeo, Bosch etc. (ENSO's Competitors, Revenue, Number
of Employees, Funding and Acquisitions, 2019). TThese companies apply various different
technologies and resources that could effectively enhance their competence and somehow make
them better than Denso. This enhances the threat of existing competition for this company.
Overall, the threat which is associated with Denso in case of such situation presented under
industry is moderate that allows them to perform and grab sufficient amount of market share.
Threat of New Entrants:
In the automobile industry, the innovation and the amount of finance required is very
high in order to stay in the market. However, due to its popularity, there are various investors
that could invest their resources for new companies to enter this industry. But since the firm is
quite established this weakens this threat of new entrants. So the threat level is low for Denso.
Threat of Substitutes:
Automobile industry is perhaps one of the largest industries of the world and has various
sectors with multiple product lines. Denso apart from providing effective testing also deals in
component supplying of safety and eco-friendly resources. There are various companies like
Manufacturers of Emission Controls Association (MECA) that deals in environmental protection
in vehicles (TECHNOLOGY FOR A CLEAN MOBILITY FUTURE, 2019). Such companies could
be effective substitute of Denso and thus, the threat of substitutes is high for the firm.
Bargaining Power of Buyers:
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The main buyers of this company are automobile companies like Toyota, Lexus, etc. and
their bargaining power is low as as Denso provides technologies which are unique and limited in
the market. So in order to take advantage of the technology of Denso, the buyers must gave to
pay the prices. Moreover, the company is having a large customer base, which reduces the power
of individual buyers to influence prices. Thus, the bargaining power is high for Denso.
Bargaining Power of Suppliers;
The suppliers of the firm are individuals providing them raw materials for testing such as
assorted building materials and effective electrical supply. Denso is operating at a very large
scale and having a number of suppliers which reduces the power of handful buyers to fluctuate
the pricing. The raw material used is available with a number of suppliers so it is easy to acquire
which reduces the switching cost. Thus, suppliers' bargaining power is weak in case of Denso.
TASK 3
Internal Resources and Capabilities
To analyse whether Denso's internal resources and capabilities are sufficient to have the
competitive advantage, the most apt method would be VRIO Analysis. This technique could be
used in order to analyse the strengths and weaknesses of the internal resources and capabilities of
Denso (Spithoven and Teirlinck, 2015). The Analysis focuses on four major dimensions which
are Value, Rareness, imitablity, and Organised to Capture Value. The firm has various resources
like monitoring systems like Surround Monitoring Electronic Controller Unit and Driving Assist
ECU, Smart ECU and Image Capturing Technology. These resources help in ensuring passenger
safety as well as effective environmental protection.
Value:
When a resource is valuable to the company, it is providing some benefits to the
organisation. Surround Monitoring Electronic Controller Unit is quite valuable for Denso as it
focuses on the safety of the customers which is the prime agenda of the company. Moreover, this
technology accomplishes the mission of auto-mobile industry to produce vehicles that could
guarantee maximum safety to the customers.
Rareness;
It refers about the rareness of the resources available to the company. It is imperative to
determine this aspect as it could provide the Denso with effective competitive advantage if the
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company has multiple resources as such. The Image Capturing Technology of Denso is quite
rare. This is because it controls the lighting of vehicle's internal cabin as per the climatic
conditions outside. This is quite a unique resource and is unavailable with other testing
companies which enhances its rareness. Other competitors cannot exploit this resource of Denso.
Imitability:
It reflects as to what extent the resources of the firm could be imitated by other
companies. If the resources are imitable, the firm has temporary advantage until that resource is
replicated. However, if it is too costly for the same, Denso will have a tough time organising
itself. Driving Assist ECU and Smart ECU use effective AI and automation to assist drivers in
driving in a safe and risk-free manner which is difficult for companies to imitate. Smart ECU
however also assists in emission controlling. With enhancements in environment safety, this
resource more or less could be imitated by other companies. Denso could clearly gain an
advantage from Driving Assist ECU as it is non-imitable.
Organised to Capture Value;
When the resources of an organisation are properly organised, it creates the chances of
exploiting the opportunities for the company and also further improvement in them if needed.
The technologies introduced by Denso are perfectly organised and each resource holds special
significance in terms of safety testing and environmental protection. The structure of Denso
provides it the ability to utilize resources and take the opportunities. The technology is also for
the betterment of society and preventing the environment so it can be said that Denso will have
sustainable competitive advantage.
TASK 4
Stakeholders' Perspective
Stakeholders are those people who have their particular interest in the organisation. There
are two types of shareholders in a company, i.e., internal and external stakeholders. Internal
Stakeholders are those one who are internally working and interested in the organisation.
External Stakeholders are those who are outside the organisation and having their interest in the
organisation. In case of Denso, Shareholders and Employees are taken as the internal
stakeholders and the external shareholders are the Suppliers and the Customers.
Shareholders:
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These are the persons who are get the dividend from the company for the shares that they
purchased. They are interested in getting more dividend from the company. Their perception
towards Denso is that the company makes those policies which maximises the wealth of the
shareholders. Moreover, they perceive that they get effective and consistent value of their
investment by the decisions taken by the company.
Employees:
Employees are those persons who work in the organisation. They can contribute in
achieving organisational goals by understanding their individual goals and performing them with
full efficiency that gives the accurate result. They perceive effective working standards, proper
equipments to work with and training programs that could help them in achieving personal
growth. Also, they perceive that Denso takes care of their personal agendas in an appropriate
manner as well.
Customers;
Customers are those persons who are the buyers or consumers of the products of a
company. The customers of this company are automobile companies like Toyota, Chevrolet, etc.
Their perception towards the company is that it provides good quality products and at affordable
prices that fulfils their agenda of passenger and environmental safety.
CONCLUSION
From the above given data, it can be concluded that the effect of the macro environment
factors are not affecting adversely to the company and by doing the PORTER's Analysis, it is
clear that Denso is also having competitive strength. The technology that it had introduced
makes it internally capable. Also, the stakeholders of Denso are also contributing towards the
achievement of organisational goals.
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REFERNCES
Books and Journals
Burns, P. and Dewhurst, J. eds., 2016. Small business and entrepreneurship. Macmillan
International Higher Education.
Cárcamo, P.F., and et. al., 2014. Using stakeholders’ perspective of ecosystem services and
biodiversity features to plan a marine protected area. Environmental Science & Policy.
40. pp.116-131.
Hillson, D. and Murray-Webster, R., 2017. Understanding and managing risk attitude.
Routledge.
Spithoven, A. and Teirlinck, P., 2015. Internal capabilities, network resources and appropriation
mechanisms as determinants of R&D outsourcing. Research Policy. 44(3). pp.711-725.
Watson, T., 2013. Management Organization and Employment Strategy (RLE: Organizations):
New Directions in Theory and Practice. Routledge.
Online
DENSO AI: Artificial Intellegence Supporting People. 2019. [Online] Available through:
<https://www.denso.com/global/en/innovation/technology/ai/>.
DENSO Air Systems plans $3.5M expansion in Hopkinsville. 2017. [Online] Available through:
<https://www.lanereport.com/102827/2018/06/denso-air-systems-plans-3-5m-
expansion-in-hopkinsville/>.
Emission Standards United States. 2019. [Online] Available through:
<https://www.dieselnet.com/standards/us/index.php/>.
ENSO's Competitors, Revenue, Number of Employees, Funding and Acquisitions. 2019. [Online]
Available through: <https://www.owler.com/company/denso/>.
National Traffic and Motor Vehicle Safety Act. 2019. [Online] Available through:
<https://www.britannica.com/topic/National-Traffic-and-Motor-Vehicle-Safety-Act/>.
TECHNOLOGY FOR A CLEAN MOBILITY FUTURE. 2019. [Online] Available through:
<http://www.meca.org/>.
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