Strategic Audit Report: Analyzing Jaguar Land Rover's Growth Strategy

This report conducts a strategic audit of Jaguar Land Rover (JLR), a subsidiary of Tata Motors, to assess its market position and identify a suitable growth strategy. The report begins with an introduction highlighting JLR's challenges, including declining sales in China and the environmental impact of its SUVs. The body of the report includes an internal audit using SWOT analysis, examining JLR's strengths (e.g., revolutionary technologies), weaknesses (e.g., SUV focus), opportunities (e.g., electric vehicle market), and threats (e.g., diesel vehicle decline). An external audit using PESTEL analysis explores political, economic, social, technological, and environmental factors influencing JLR. The political section addresses tariffs and Brexit, the economic section discusses sales targets, the social section examines consumer trends towards electric vehicles, the technological section covers investment needs, and the environmental section focuses on carbon footprint. Based on these audits, the report recommends a diversification growth strategy, emphasizing the need to shift towards electric and hybrid vehicles. The report concludes by summarizing the challenges and uncertainties JLR faces, stressing the importance of adapting to the changing market and addressing financial deficits to achieve long-term growth.

Running head: STRATEGIC AUDIT FOR JLR
Strategic Audit for Jaguar Land Rover
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1STRATEGIC AUDIT FOR JLR
Table of Contents
Introduction......................................................................................................................................2
Body.................................................................................................................................................2
Internal audit (SWOT).................................................................................................................2
External audit (PESTEL).............................................................................................................4
Growth strategy...........................................................................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

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Introduction
Strategic audit of a company produces pieces of information required to assess its current
market position and thus identify a suitable growth strategy. Strategic audit in this report will be
conducted for the case company “Jaguar Land Rover”. Jaguar Land Rover is a subsidiary
company of Jaguar Land Rover Limited and is headquartered in the United Kingdom. It is also a
subsidiary unit of Tata Motors, Indian automotive company (Mukherjee 2016). Land Rover has
seen its massive sales decline in Chinawhere few years back in 2017it registered record sales.
Land Rover invests heavily in SUVs, the sales of which have started to accelerate in the United
Kingdom and Europe. However, SUVs are less fuel efficient compared to smaller cars. Studies
indicate that SUVs is only second to power sector in contributing to the global CO2 emissions
(Mohammadi-Zadeh et al. 2017). All these problems question JLR’s credibility in terms of sales
as well as sustainability. It is because of this JLR wants to devise a strategy to ensure a sustained
growth and thus, the needs to conduct a strategic audit of the company were felt.
Body
This section conducts an internal audit (SWOT analysis) and external audit (PESTEL
analysis) for Jaguar Land Rover. The purpose of these analyses is to identify a strategy for JLR
to support company on its sustained growth.
Internal audit (SWOT)
Strengths: Jaguar Land Rover is recognised for its revolutionary technologies,
craftsmanship and performance. Since JLR operates in a niche category, it produces strong

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barriers to entry to the new entrants. The ownership of Tata Motors helped JLR gain in terms of
being a reliable motor brand. JLR invests hugely in R&D (research & development) activities,
which is needed to be flexible with the market demand and be able to spend in potential projects
(AnnualReport 2019).
Weaknesses: The shape and weight of JLR SUVs makes it hardly compatible with the
electric cars, which is more environment friendly compared to the SUVs. Instead, SUVs that are
going to be banned by 2040 in the UK or elsewhere, has significantlybeen the current investment
area for JLR (Washingtonpost.com 2020). JLR lags behind to its major rivalVolkswagen in
terms of production on a year basis. It is affecting its production facility as lackluster sales have
left it unused notably. However, low count for production has helped it otherwise for avoiding
legal charges for polluting the environment compared to its rivals. The problems will arise once
lenient fleet emission targets get expired in 2028 (Washingtonpost.com 2020). JLR must be
quick on changing its strategy or else it might face uncontrollable problems.
Opportunities:The backlash against SUVs largely contributed by BMW is in severe
threat of legal hurdles. Berlin government for example has increased subsidies for electric
vehicles (Washingtonpost.com 2020). It shows problems are growing for SUVs. On the other
hand, opportunities are mounting for electric vehicles. Big size SUVs is for a family ride, which
also has a large baggage capacity. However, it is not that good in terms of environment
friendliness (Washingtonpost.com 2020). Conversely, electric cars and hybrid cars are more
environment friendly compared to SUVs.
Threats: JLR’s business model is quite shaky for an instance it sold more than 80% of
the diesel vehicles in Europe in 2018. However, these figures are conflicting with the future of
the diesel vehicles, which will nowhereexist in the next 15 or 20 years. The demand for

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environment-friendly vehicles is rising; however, creatingzero emissions versions of its big size
SUVs can be a challenge for JLR.For a shift to environment-friendly vehicles, JLR will need to
invest a 4 billion pound on a yearly basis.This looks difficult considering the lackluster sales of
JLR and its partially utilized production capacity (Washingtonpost.com 2020).
The internal audit of JLR indicates that it must stop investing heavily in SUVs and
instead, focus more on environment-friendly vehicles like hybrid vehicles and electric vehicles.
The road to environment-friendly vehicles can be difficult for the company especially for its big
size SUVs.The declining sales and unused production facility affects its capability to shift
entirely to zero emission vehicles. It needs some good collaboration and a new business model to
pursue the production of environment-friendly vehicles.
External audit (PESTEL)
Political and Legal
President Donald Trump threatened to impose 25% U.S. tariff on imported vehicles. This
is for the time being look like has delayed due to the possibility of a no-deal Brexit scenario.
However, it will still be a threat for motor companies. The backlash against SUVs might harm
JLR for its emission footprint. It is an urgency situation for JLR to reach to an average emission
of around 130 g/km of CO2by the end of 2021. The efficiency to reduce its average emission of
CO2 will decide whether JLR stays in the emissions derogation state (Washingtonpost.com
2020). Britain’s exit from the European Union could create many problems for JLR such as
border friction as well as tariffs. This depends more on how the deal is negotiated. A poor or less

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favourable deal would mean a shrink of a billion pounds from the profits of JLR (Automotive
News Europe 2020).
Economic
To effectively boost up its future business and to earn more to invest more in the
production of zero emission vehicles, Jaguar Land Rover will need to sell 700,000 cars or more
by 2021. Even these sales will generate the amount needed to invest in the future plans. JLR’s
financial projection predicts that the company’sprofit margin will stay in the range of 3-4% for
the next three years and 4-6% by the end of 2023. These predictions do not sound true as there is
high possibility for a recession in next few years (Autocar.co.uk n.d.). For example, the current
‘Discovery Sport’ platform to be phased out in 2025 will leave no replacement architecture for
these high in-demand cars. According to one investor, JLR has no money in the bank for a
project to start in 18 months or more. Moreover, outline plans for smaller, affordable and low-
CO2cars look like as if dead (Autocar.co.uk n.d.).
Social
One in every three registrations in the United Kingdom is coming for SUVs. The trend
for SUVs has started to pick up. However, the future of SUVs may not be as good as is today.
The diesel-based SUVs may see an exit from the United Kingdom and other parts of world in a
decade or so (Fleetnews.co.uk, 2020). However, the current sales shares of hybrid vehicles and
electric vehicles are way much bigger from those of SUVs. Fifty percent or more of global
consumers are now showing their willingness for environment-friendly vehicles. In the United
Kingdom, seven in 10 people now consider buying a hybrid or an electric vehicle

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(Fleetnews.co.uk, 2020). Consumer trend as stated clearly shows the changing future of the motor
industry, which is the consumption of more and more electric and hybrid vehicles.
Technological
Huge investments into new technologies will be the urgency in next few years. The trend
is shifting more towards environment-friendly vehicles. The needs to switch to the hybrid and
electric vehicles have also increased in the UK people. The demand for tech investment, the shift
to environment-friendly vehicles and global uncertainties are affecting the profit forecasts of
automaker globally (Automotive News Europe 2020).
Environmental
The carbon footprint impact of JLR will soon be difficult to be managed. The lenient fleet
emission targets of JLR are set to expire in 2028. So, JLR will soon need to change its strategy
sharply to avoid any legal hurdles post 2028. What is worth mention a fact here is the big size
SUVs of JLR produces more CO2 than peers (Washingtonpost.com 2020).
The discussion indicates the needs and urgency to switch to hybrid and electric vehicles
significantly. However, this could be a bold decision for JLR considering that it struggles to lead
a change. It had fought earlier to improve the poor reliability of its vehicles; however, could not
make it happen so far.
Growth strategy
The recommended growth strategy for JLR is ‘Diversification’. According to Jaguar
Land Rover, all its models will have both electric and hybrid options in the future

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(Washingtonpost.com 2020). It shows the company has robust plans and investment in place to
move with the trends for electric and hybrid vehicles. However, it is still into the nascent stage of
product and market diversification. By focusing more on the niche segment of the market with its
upcoming range of electric and hybrid options, JLR can take forward its battle of sustainability.
This notable shift to electric and hybrid vehicles is considerable as increased tech investment
competition has resulted in profit shrink for the automaker. The challenge to invest in this
turnaround plan of JLR will be managed through a plan called ‘Project Charge’. Under this
plan, JLR will accumulate funds from reduced technology investment in 2019 and 2020 financial
years. Cash flow for the company during these years is predicted to be negative. As part of its
aggressive cost cutting project, ‘job cuts’ is expected to happen. The amount of cost reduction to
achieve cannot be fulfilled without reducing the employment levels and employment costs
(Automotive News Europe 2020).
Conclusion
Therefore, the findings of the internal and external audits indicate the potential challenges
for Jaguar Land Rover with its range of SUVs. Uncertainties are getting build up around the
automaker due to Brexit, and other political and legal challenges in the United Kingdom. The
external business environment is more troublesome for JLR than peers. It needs to show some
good improvements in terms of producing more hybrid and electric options for a sustained
growth in long-term. However, that required shift faces a barrier in monetary deficit for the
company.

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References
AnnualReport 2019. [online] AnnualReport. Available at:
http://file:///C:/Users/tabrez/Downloads/21.-Jaguar-Land-Rover-Automotive-Plc.pdf [Accessed
26 Feb. 2020].
Autocar.co.uk (n.d.). Analysis: How Jaguar Land Rover and PSA could work together | Autocar.
[online] Autocar.co.uk. Available at: https://www.autocar.co.uk/car-news/industry/analysis-how-
jaguar-land-rover-and-psa-could-work-together [Accessed 26 Feb. 2020].
Automotive News Europe 2020. Why Jaguar Land Rover is losing money and how it plans to
return to profit. [online] Automotive News Europe. Available at:
https://europe.autonews.com/automakers/why-jaguar-land-rover-losing-money-and-how-it-
plans-return-profit [Accessed 26 Feb. 2020].
Fleetnews.co.uk 2020. Seven in 10 considering an electric or hybrid vehicle. [online]
Fleetnews.co.uk. Available at:
https://www.fleetnews.co.uk/news/environment/2019/12/09/seven-in-10-considering-an-electric-
or-hybrid-vehicle [Accessed 26 Feb. 2020].
Mohammadi-Zadeh, M.J., Karbassi, A., Bidhendi, G.N., Abbaspour, M. and Padash, A., 2017.
An analysis of air pollutants’ emission coefficient in the transport sector of Tehran. Open
Journal of Ecology, 7(05), p.309.
Mukherjee, D., 2016. Case analysis: Tata Motors' acquisition of Jaguar Land Rover. The
Business & Management Review, 8(3), p.48.

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Washingtonpost.com 2020. [online] Washingtonpost.com. Available at:
https://www.washingtonpost.com/business/energy/the-climate-crisis-iscoming-for-your-land-
rover/2019/11/15/bb3c8b88-077e-11ea-ae28-7d1898012861_story.html [Accessed 26 Feb.
2020].