Business Strategy and Competitive Analysis of McLaren Automotive

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Business Strategy
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Table of Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................4
1.1 An environmental analysis conducted on the organization using PESTEL..........................4
1.2 An Organisational audit conducted on the organization using SWOT..................................7
Task 2...............................................................................................................................................9
2.1 An analysis of the strategic capabilities of the organization carried out using the VRIO
framework....................................................................................................................................9
2.2 A critical evaluation of the internal environment (internal capabilities, structure, and skills
set) to assess the strengths and weaknesses of the organization using the McKinsey 7-S
Framework.................................................................................................................................12
Task 3.............................................................................................................................................14
3.1 Applying Porter’s five forces model evaluate the competitive forces of a given market
sector for the organization.........................................................................................................14
3.2 Appropriate strategies devised using Ansoff matrix, to improve competitive edge and
market position of your chosen organization based on the outcomes.......................................16
Task 4.............................................................................................................................................18
4.1 Interpret and devise strategic planning for the organization applying Porter's generic
strategies (cost and price leadership strategy, differentiation strategy, focus strategy) and the
extended model of Bowman's strategy clock.............................................................................18
4.2 Three growth strategies recommended for the organization based on the SWOT..............20
M4 A Strategic Management plan for the organisation that has tangible and tactical strategic
priorities and objectives.............................................................................................................22
Conclusion.....................................................................................................................................24
References......................................................................................................................................25
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Introduction
The business strategies are very important in order to succeed for any organization. These
strategies determine the smooth working for the organization to achieve the objectives. McLaren
Automotive is a company that make high-end cars and formula one racing cars with worldwide
market share. In this study, various techniques for determining the business strategies are
considered and PESTEL and SWOT analysis are performed on the McLaren Automotive in
order to understand their marketing strategies and future growth rate. The study will help in
providing the strategies by which the organization will be able to enhance their services.
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Task 1
1.1 An environmental analysis conducted on the organization using PESTEL.
To analyze the effect of the external environment in relation to marketing on the organization a
framework is used called PESTEL analysis. This analysis provides the result which provides the
organizations with a key understanding of the factors that impacts the outcomes of the
organization and also provide them with the areas in which they need to work. The outcome of
this analysis is used to gather information related to the threats to the organization and
weaknesses of the organization and this information further helps in the SWOT analysis
(Professionalacademy.com, 2019). PESTEL is an abbreviation for the factors related to Political,
Economic, Social, Technological, Environmental and Legal.
Figure 1: PESTEL
(Source: Research-methodology, 2019)
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 Political Factors: It determines how the political and governmental organizations impact the
economy which in turn affects the business organizations. As the government is responsible
for implementing various policies such as tax, foreign trade policies, labor law, etc. that
affects the working of the organizations.
 Economic Factors: These factors include inflation, economic growth, interest and exchange
rates which has a direct impact over the profitability of the organizations.
 Social Factors: These are the factors related to the society and their effect on the business.
These factors can be cultural, population growth rate, education level, religious and
demographic.
 Technological Factors: The manufacturing and marketing of the products of business
organizations depend directly on technology. These factors include innovation in technology
which is related to the industry, rapid change in the technology and the growing
implementation of information technology and the internet in the working of the businesses.
 Environmental Factors: The business of the organizations are majorly dependent on the
environmental factors also that includes global warming, change in climatic conditions,
increase in pollution level and the environmental issues getting raised by the media. These
are the factors as various organizations possess threats to the environment so the organization
needs to implement an effective strategy by keeping these factors in mind.
 Legal Factors: These factors are the plans of legalization that has an impact on the
marketing strategies of the business. The costs and product demand are dependent on the
rules and regulations set by the governmental authorities and thus impacts the business
organizations profit and outcomes (Pan et. al., 2018).
The framework of PESTEL analysis implemented on the business of McLaren Automotive
provides various factors and the effect of the macro environment. The outcome of the analysis
provides us with the result in the form of information related to the strengths, weakness and
threat areas. It also provides the effect of the macro environment over the business strategies of
the McLaren Automotive.
The macro environment is the external environment that is out of control of the organizations
and it impacts the employees' efficiency as well as the productivity of the organizations. The
PESTEL factors are external or macro factors. The policy of pricing of the McLaren Automotive
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is largely affected by the macro factors and the strategy of promotion is also seems to be
changing for the organization. The analysis shows that the product promotion is also largely
dependent on these external factors.
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1.2 An Organisational audit conducted on the organization using SWOT.
The SWOT analysis is one of the most effective tools to understand the process of decision
making and generating marketing strategies for big scale organizations in every situation and
scenario. The analysis of SWOT is done for strategic and business planning, marketing, product
development, and business planning. SWOT is an abbreviation for Strength, Weakness,
Opportunities, and Threats (Phadermrod et. al., 2019).
The outcome of this analysis determines the strategies that the organization needs to implement
as it provides the areas of strength, the weak areas on which the organization needs to work, the
areas in which the organization seeks opportunity and the threat areas that the organization needs
to keep in mind while making the business strategies (Weng, et. al., 2018).
Figure 2: SWOT Analysis
(Source: Shaw, 2017)
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The McLaren Automotive is a multinational corporation so there can be many macro or external
factors that impact the operational functionalities of the business. To determine these factors that
impact the business SWOT analysis is conducted on the organization which provided
organizations' internal attributes (Do, 2017).
Strength and Weaknesses are the Internal Environment and Opportunities and threats are the
external environments of the organization. The result of the SWOT analysis for McLaren
Automotive:
Table 1: SWOT Analysis of McLaren Automotive
SWOT Analysis
Strength Weakness Opportunities Threats
 Provides
Automobiles of
great quality.
 The facility of
manufacturing is
environment-
friendly.
 Strong Brand
power
 Champion in a
racing car
 Expensive
 Lacks in providing
repair shop that
has the
qualification.
 The number of
retailers is few.
 Produces fewer
cars every year.
 Introduction of
cheaper than
previous cars.
 Potential market
penetration
 Introduction of
hybrid cars
 Brand partnership
 Car manufacturers
copying the
product.
 Advancement in
technology
 Customer safety.
The result of this analysis has provided insight into the business strategy that the McLaren
Automotive needs to consider for the growth of the business. The decision making is very much
impacted by these strength, weakness, threats and opportunities factors. The opportunities for
McLaren Automotive is that it should increase brand partnership in order to develop products
and implements a decrease in cost for newer products. Threats include competition in the market
from the rivals of the industry. Thus, for building future strategies for the organization it is
important to consider these factors in a proper manner.
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Task 2
2.1 An analysis of the strategic capabilities of the organization carried out using the VRIO
framework.
The ability of the business to implement the competitive tactics successfully so that the business
survives and grows with time is called strategic capabilities. It includes the business strategies to
become successful in the market and gain an upper hand over other competitors with whom the
organization competes for revenue, share in the market and consumers (Hartman, 2018). The key
components of the strategic capabilities include Action planning, tools for analysis, vision,
values, strategic purpose and key goals. There are tools such as SWOT and PESTEL that are
effective for analyzing the business functionality and provides strategy building factors. Values
are considered to be the culture of the business. The organization working in a positive cultural
environment have higher chances of achieving success and goals. It is very important for any
organization to have a clear vision and work effectively in that direction as visions provide a way
for the organizational functions (Chatzoglou et. al., 2018). As for McLaren Automotive which is
a business organization of higher magnitude there are ought to be many goals but it is important
for the organization to priorities' the aims and goals in order to be clear about their direction of
working.
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Figure 3: VRIO Framework
(Source: Jurevicius, 2013)
The VRIO Framework gives information on whether the internal capabilities and resources have
the potential to provide an advantage in the competitive market. This tool analyses the resources
of the organization to find their potential in the market. In the analysis process at first, the value
of the resource is determined by exploiting them to their full capacity. The rarity of the resources
is determined on the basis of its availability in different organizations. If a resource is valuable
for the organization but it is common to all then it should not be discarded by the organization as
they are needed to be in the market. The resource should have the capacity to capture the value in
order to be fruitful for the business (Patel, 2019).
For McLaren Automotive the strategic capabilities are stronger as they implemented the correct
strategy to avert any barrier that hindered them from entering the mass car business. The major
factor that influences their business is that they have complete control over the bargaining power
due to their long term relationship with Mercedes and from there they got the resources at a
suitable price to enter the market. The bargaining is also done at the consumer side too as the
cars designed by McLaren Automotive are either for formula one racing or for the high society
people as they portray these cars as the status symbol and do not care much about the pricing.
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The organization plans its strategies by considering various threats whether from existing
companies or from new entries in the industry.
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2.2 A critical evaluation of the internal environment (internal capabilities, structure, and
skills set) to assess the strengths and weaknesses of the organization using the McKinsey 7-
S Framework.
The McKinsey 7-S framework has seven factors that interdependent and is classified as hard
elements and soft elements. Hard elements are the ones that do not involve much hustle for
identification or definition and can be directly influenced by the management. Soft elements are
more complex to describe, they have influence from the culture (Ravanfar, 2015).
Table 2: Factors of McKinsey 7-S Framework
Hard Elements Soft Elements
 System
 Strategy
 Structure
 Skills
 Staff
 Style
 Shared Values
For the organization to be successful they need to consider both hard as well as soft elements.
These elements are interdependent on each other and alteration in any of these will impact the
other elements majorly and the business functionality may get hinder in the process.
Figure 4: McKinsey 7-S Framework
(Source: Pslides, 2019)
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