• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Jaguar Land Rover - Strategy to expand in China

Extracts from this document...

Introduction

Business in China Practical Work June 2011 | Practical work numbers: 10544, 10577, 10731, and 10556 OWN WORK DECLARATION FOR PRACTICAL WORK (electronic upload) We hereby certify that the following piece of work complies with the Own Work Declaration form already issued and with the University's Rules and Regulations relating to plagiarism and collusion, as listed in the Essential Information for Students and the MBA Course Handbook. Industry and Competitive Landscape The market for premium cars in China, estimated to be 400,000 units, accounts for only 7 per cent of the total passenger vehicle market in the nation much lower than 15 to 20 per cent in developed economies. The segment however is experiencing massive growth. It is expected to grow by 100 per cent by 2015 and further reach 1.4 million units by 20201. The main factors driving the growth are the increase in income of the Chinese consumers as well as shift in socio-cultural factors. In 2009, there were 477,000 millionaires in China as opposed to 2.9 million in the United States. However, 206 of every 1000 Chinese millionaires bought a super-luxury car while only 78 per 1000 did in US2. As the figure represents, there is a greater propensity to spend money on premium cars in China. A premium car represents a milestone in a (mostly young and typically from real estate, finance and mining and export businesses) Chinese's life and uplifts his social standing. The market is expected to further grow disproportionately with the rise of Chinese elite. For reference, it is expected that 3.5 million people in China will have the financial means to buy a premium car by 2015 up from 1.8 million today. ...read more.

Middle

The below PESTEL analysis summarizes the current trends and characteristics of the Chinese automotive market. Hurdles and Obstacles The Automotive Sector in China is the second largest Contributor to GDP. The industry is dominated by foreign car manufacturers. In addition, the domestic auto manufacturers are highly fragmented. China is fast becoming the largest market for most of the luxury car manufacturers including BMW, Rolls Royce, and Mercedes etc. In 2011, for Jaguar-Land Rover, China became the third largest market for its cars. Although a lucrative market, it has up till now been mainly exporting cars to China. In order to make use of this opportunity it makes sense for the company to manufacture in the country. Their intent is also clear in that respect. However manufacturing and selling in china also throws challenges. 1. Form of Investment Chinese Government insists on any foreign car manufacturer to own only up to 50% of the company6. This limits the flexibility of the firm to make independent decisions. It also leads to sharing of technology which most companies are afraid to. A lot of knock offs are already being sold in China. Sharing of technology may lead to increase in competitors in the future. A disadvantage of this form of FDI is protecting their patented technology under the current technology transfer requirements to local partners that China has. For instance, in the 90's, Audi's partner launched the Red Flag sedan, which was similar to the Audi 5000. 2. Local Component Requirement There are more than 1000 component manufacturers in China. They lack in technology and efficiency due to their smaller scale. On the other hand the government encourages local component use by imposing favorable tariffs for use of local components. ...read more.

Conclusion

Leveraging the differentiated brand image- JLR is a late entrant after Daimler, BMW, Audi and Lexus; however, the Chinese consumers are looking for a brand that is different. JLR is less commonly seen and therefore will become a compelling reason for consumers to choose it. Its marketing strategy- choice of channels, ambassadors, sponsored events are vital to leverage on this and maintain the exclusive image. Riding on its increased popularity from the success of its new launches in Europe and US and acclaim from auto analysts in last two years, JLR will get better brand acceptance in China. 6. Effective relations with state- JLR has to ensure that it understands the structure of the state and its working. It has to maintain relationships at every level of the concerned government authorities. This is necessary to get the necessary grants and permissions to carry out its business. For it to form a JV, it needs the approval of the relevant government authority. The local government also affects the business through taxes, audits, ad-hoc fees and approvals. E.g. Volvo maintained a great relationship with the state official right throughout in its construction equipment business.18 1http://site.securities.com/doc.html?pc=CN&doc_id=273811091&auto=1&query=Audi%3A&db=en_1y_d&hlc=en&range=365&sort_by=Relevance 2http://site.securities.com/doc.html?pc=CN&doc_id=278397089&auto=1&query=premium%3Acar%3A&db=en_1y_d&hlc=en&range=365&sort_by=Relevance 3 http://www.worldcarfans.com/110102229131/audi-bmw-and-mercedes-dominate-premium-sector-in-china#ixzz1OJgCgmVr 4 http://www.daimler.com/Projects/c2c/channel/documents/2019069_MB_China_Ltd_May_2011.pdf 5 http://www.daimler.com/Projects/c2c/channel/documents/2019069_MB_China_Ltd_May_2011.pdf 6http://www.linklaters.com/News/LatestHotTopics/2011/Pages/China_New_Foreign_Investment_Catalogue_Released.aspx 7 http://www.kpmg.de/docs/Momentum_auto_components.pdf 8 http://factsanddetails.com/china.php?itemid=360&catid=9&subcatid=61 9 http://www.dailymotion.com/video/xfk9di_the-keys-to-china-s-luxury-car-market_news 10 http://knowledge.wharton.upenn.edu/papers/download/BCG_SpecialReport2.pdf 11 Jaguar Land Rover Expands its presence in China - 25th April 2011 Shanghai Daily 12 Craze for luxury cars in China, hope for automakers but consumption mentality called flawed 3rd May 2011Xinhua Business Weekly Copyright 2011, Xinhua News Agency. 13 http://www.china.org.cn/business/2011-04/25/content_22433200.htm 14 http://www.china.org.cn/business/2011-04/25/content_22433200.htm 15 http://www.autocar.co.uk/News/NewsArticle/AllCars/255353/ 16 Relationship Mapping - Qi Tang 17 JLR to open sales firm in China to push volumes - 19th June 2010 Press Trust of India. 18 Brief Note on Chinese Construction Equipment Engineering Industry by Dry Eric Thune April 2011. ?? ?? ?? ?? ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Marketing section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Marketing essays

  1. The following marketing plan is for Swords Wines' launch into an international market, Shanghai ...

    rise as well.5 Shanghai is the largest market in China for imported wines. As the up-and-coming financial centre of Asia, Shanghai is now home to a group of exclusive five-star restaurants, wine bars, boutiques, and supermarkets that sell imported wine to foreigners and increasingly to locals as they become more educated about wine.

  2. Greggs plc intend to expand their operations into international markets in order to satisfy ...

    3.2 3.4 Kuchenmeister 7.8 11.3 ABK 9.0 8.6 Private Label 15.1 16.5 Other 31.3 30.0 Total 100 100 It is therefore important to identify, analyse and monitor competitive movement. Figure B illustrates the potential competition in the German bakery market in accordance to market share 5.2.5 Geographical Climate Greggs' sales

  1. Launching the Bmw Z3 Roadster

    The club will play a role in building a strong relationship between BMW and its clients and it will enforce the BMW image as the "the ultimate driving machine". Long term alternative 2: Launch a nation wide advertising campaign on televisions, radio station and big journals that present the different

  2. The Chinese personal computer (PC) industry

    Looking over the growth of PC market in China, due to the advent of Internet PC, PC purchase in China has increased. Soon after, the appearance of multi-media PC successively accelerated home PC demand. According to various kinds of statistics, the main reason that Chinese buy home PC is ascertained for connecting Internet.

  1. MARKETING STRATEGY

    marketing research or information on surrounding to gain access to markets or formulate marketing programs. 3. Internationalisation of company's products would require the business to assess the geographic and cultural diversity of each area they are planning to enter. However as a result of limited capital there is no in-depth evaluation of diversity by Carib brewery when going international.

  2. Marketing Strategy for coca-cola.

    I will be using the four P's of the marketing mix. They are Product, Price, Promotion and Place (distribution). To launch any thing in the market I need a Product which is the first P of the marketing mix. Product: Coco Milk The product which I am going to launch is Coco milk a product of Coca-Cola.

  1. Original IMC Plan: Coffee World. Coffee World is Swiss based global premium coffee ...

    SWOT Analysis Strengths * Strong leadership * High brand equity. * Coffee World's products are unique and innovative in the style. * A lot of variety is offered by Coffee World ranging from breakfast to hot beverages, ice blended coffee, iced coffee and tea.

  2. KFC andthe Global Fast Food Industry (703).

    4.2.2 Bargaining Power of Customers In the current competitive market, customers have a wide selection of food choices, which gives the customers more selection power. Bargaining power of the customers is likely to be low when: o Fast-food consumers are price sensitive.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work