Business Strategies of Fisker Automotive - Case Study Example

? Export Business Plan Fisker Automotive Inc. Anaheim, California. Website: www.fiskerautomotive.com Table of Contents Table of Contents 2 Introduction 3 Export Business Plan 3 Company Analysis: SWOT Analysis 3 Industry Analysis: Porter’s Five Forces Analysis 4 Products with Export Potential 5 Matching Products to Global Trend Needs 5 Potential Markets 6 Marketing Plan 6 Identifying, Evaluating and Selecting Target Markets 6 Marketing Strategy 7 Sales Forecast 8 Organizational Structure 8 Export Budget 9 Conclusion 9 Works Cited 10 Appendix 11 Introduction The first part of the project will give a brief overview of the company followed by the SWOT analysis of the company and the industry analysis in the target market. The next portion of the project will reflect the target markets that have been recommended to the company Fisker Automobile Inc to export its product. The third part of the project will provide a marketing strategy to the company for its market extension. The next part of the project shows the sales forecast, the organizational structure and the export budget of the company. The last part of the project will be provided with a conclusion of the entire project. Export Business Plan Fisker Automotive, Inc. is one of the American automobile companies located in Anaheim, California. Henrik Fisker is the founder of the company (“The man who challenged entire industry”). The first product of the company is Fisker Karma. It is one of the first production plug-in electric cars in the world (“Luxury that’s Electric”). It appeared in the NA International Auto Show in the year 2008. It is the main product of the company. Besides the environmentally conscious features the vehicles also has solar panels. The company has decided to export its product from United States to United Arab Emirates. Company Analysis: SWOT Analysis The SWOT Analysis is an important element in strategic planning (Ferrel, and Hartline 122; Boone, and Kurtz 46). It will help to determine the strengths, weaknesses, opportunities and threats of the company. Strengths The company offers one of the first electric cars in the world having an extended range. The Fisker Karma is the main product of the company which allows drivers to enjoy the luxurious style of the car. It is environmentally conscious and possesses the capability of fuel consumption as well as emissions performance which is beyond the reach of present conventional luxury automobiles. Weaknesses The company does not promote the products by advertising. It is due to this reason that the Fisker Automotive Brand and its products remain unknown to many people. Opportunities The company has great opportunities if the high performance and the luxury of Fisker Karma can be combined with the elegant design add campaign. The particular design should provide brand recognition as well as an introduction to the Plug-in hybrid vehicles market, providing driving comfort to the customers. Threats The first threat to the company is the lack of advertising and publicity of its products which makes the car unknown to many individuals. The second threat to Fisker Automobile Plc is the competition from the companies offering similar types of vehicles or cars. The massive production of cars by the other car companies, resulting in the reduction in the expense related to these plug in hybrid products, has increased its threat. Industry Analysis: Porter’s Five Forces Analysis The five forces analysis helps to analyze a particular industry and understand the competitive advantage associated with that industry (Michael porter, 1980; 1985). Porter's five forces Analysis will help to analyze the automobile industry in Union Arab Emirates. 1. Threat of new entrants - The entry of international companies with high capital, advanced technologies and improved management skills started to reduce the market share of a large number of automobile companies. Globalization influenced world investments and as a result businesses moved from domestic markets to a global environment. This factor affected the auto market to a great extent. It is becoming easy for different foreign automobile companies to enter into the domestic market. Automobiles depend to a great extent on the consumer tastes and preferences. While these companies sell a large number of vehicles to car rental companies and businesses, the customer sales is a big source of revenue. It is due to this reason that taking customer as well as business confidence into account should be given higher priority rather than considering the other factors as the threat of new entrants is high. 2. Threat of Substitutes - The likelihood of the individuals in taking the train, bus or airplane to the desired destination is the substitute of their preferences to the cars. The greater is the cost involved in operating a particular vehicle, the more likely individuals will try to find alternative options for their transportation. The price of gasoline also has an influence on the customer’s decisions to purchase vehicles. While determining the availability of various substitutes one should take into consideration money, time, individual preference and also convenience in the auto travel industry. In UAE the customers have high purchasing power and as a result they may like the luxury style provided by the Fisker. The threat from the substitutes is moderate. 3. Competitive Rivalry – The automobile industry is an oligopoly market where the sellers are few and any action performed by any of them affects the prices. The automobile companies have tried to avoid the price based competition in the past years but recently the rivalry or the competition has become much more intensified. This competition indirectly puts pressure on the profit to increase the vehicle sales. Thus the rivalry from the existing firms is very high. 4. Bargaining Power of Suppliers –There is large number of companies in UAE offering automobile supply business. Many suppliers rely on particular one or two automobile companies to purchase the majority of products. The life span of an automobile is very important factor. The automobile companies need automobile parts that are long lasting which will increase the customer satisfaction. As there are large number of companies offering these products, so the bargaining power of suppliers is low. 5. Bargaining Power of Buyers – The consumers occupy an important position in the automobile industry. They may get dissatisfied by the service of certain automobile companies and begin looking for other alternative cars. On the other hand when the customers do not have high purchasing power they do not purchase high volume of luxury cars. In UAE the consumers have high purchasing power mostly. This increases their bargaining power. Thus the bargaining power of buyers is high. Products with Export Potential The goal of the company is to deliver the advantages of the Quantum Technologies in the field of plug in hybrid technology to the customers (“Tomorrow starts today”). The Fisker Karma cars are different from that of others. These cars are environment conscious along with maintaining the luxury that is accompanied by the finest automobiles. The unique design of the car has the battery placed between the two axles. This provides optimal dynamics for vehicle driving and maximum safety to the customers. The interior design of the car has a spacious luggage capacity which can easily fit luggage in the trunk. There are other electronic features to facilitate the car drivers. The seating comfort, the driving modes etc. are the added features. These facilities increase the potential of the vehicles to be exported to the global markets. Matching Products to Global Trend Needs The high demand for flexible and reachable mobility concepts has increased the demand of the electric cars in the global market. The governments across the globe have committed to support the introduction of this electric mobility concept in various developing and developed countries. The customers in these countries demand for a mobility concept which will be flexible as well as affordable. The plug in hybrid technology used the Fisker Karma makes the mobility affordable by using large rechargeable batteries which have plug in capability. The cost involved in charging the batteries is very low as compared to the cost of gasoline. The use of battery for storing the energy facilitates the customers by decreasing their dependence on gasoline for the transportation. The people and countries all around the world have started recognizing the advantages of this technology and are taking steps to introduce and utilize this transport option. Canada, Europe, Japan, China and UAE provide high support to the concept of e-mobility (“Electric Vehicle Demand”). Potential Markets The potential markets for the export of Fisker Automotive Inc.’s product Fisker Karma are Europe, China and UAE. United Arab Emirates possesses the seventh largest oil reserves in the world. The responsibility of the country towards the environment has enhanced the introduction of e-mobility in the country. The country has sunny climate all the year which will facilitate to charge the battery of the cars when parked outside. The customers can also control the high expenses related to the oil consumption for transport purposes. The government of the country is taking steps towards protection of the natural resource of the environment and also towards the cost control of the people of the country. The Chinese Government supported the aim of the country to become the one of the leading countries supporting e-mobility. The intention of the country is to decrease oil dependence because the hike in the oil prices has been a major concern in most of the countries. The government support reduces the political risk related to the introduction of plug in hybrid technology in the country. United Kingdom is also supporting the e-mobility concept. The Britain Government has taken a decision that by 2020 all the cars that will be sold will be electric cars. This is a responsible step taken by the government towards the conservation of the natural resources. Electricity being used as a source for serving the purpose of transportation has been an important measure taken by the government. Marketing Plan Identifying, Evaluating and Selecting Target Markets It has already been mentioned earlier that the potential markets for the expansion of Fisker Karma are UAE. The automobile industry in United Arab Emirates is well developed. The country has taken steps to create a safe environment by bringing economic stability. A good amount of investment has been made for new showrooms and customer service centre throughout the country. There has been a remarkable growth in the automobile industry in respect of the market as well as the demand. The government acted as a driving force to support the technology of e-mobility. The introduction of e-mobility concept in the country by importing USA products will provide success to the industry. Thus UAE can be selected as a target market for the export of Fisker Karma from USA. It will earn good amount of revenue to the company. The automobile industry of China is the largest in the world. The annual sale is approximately 14 million vehicles (“Market Analysis Report: China’s Automotive Industry”). The increasing domestic demand has been a driving force for the significant industry growth in the recent years. The industry policies set by the Chinese Government has supported the industry growth to a great extent. The import of Fisker Karma in the automobile industry will facilitate the industry with new and innovative technologies. Thus China can be selected as a target market for the export of Fisker Karma. The automobile industry in United Kingdom has been in a good position from many years. The annual turnover of the retail auto industry is estimated as ? 14 billion approximately (“The Automotive Industry in the UK”). The export of Fisker Karma from USA to UK will ensure that this country is an attractive place for making investment. The company will be benefitted because of the high demand for alternatives of petrol or diesel cars. Marketing Strategy The marketing strategy of the company should be a mix of the company’s different plans. Product The products strategy should have the capability to attract the customers easily. The company’s product Fisker Karma is among the earliest production of the plug in hybrid cars in the world. It is a luxury car built in such a manner that it provides comfort to the people travelling in it. The interior as well as the exterior design of the car has unique features to attract the customers. The seating comfort and the additional electronic features present in the car provide satisfaction to the buyers. Price The company can follow the strategy of market oriented pricing. The target markets that have been suggested to the company are China, UK and UAE. The company can set the price after analyzing and conducting a research of the target markets. This will help the company to understand the pricing strategy of the competitors in the target markets and set the price for the products accordingly so that it can achieve competitive advantage in the markets. Place The place should be decided in such way that it helps the product to hold its importance. The place selected should add up to the value of the product. The company should use pull strategy to attract the customers. Promotion Online advertising is the best way of promoting the electric cars. This will help the company to build up a strong public image and achieve competitive advantage in the target markets. The objective of the company will reach to the customers in the new market easily by means of online product advertising. Sales Forecast The net profit or loss forecasts for the company till 2015 have been shown below: (Source: “Fisker Automotive founder quits over major disagreements") The company sales and the net profit is going to increase in the future years as forecasted in the aforementioned chart. Organizational Structure The organizational structure of the company is given as follows: (Source: “Fisker Automotive”) Export Budget The export budget of the company for the year 2014 has been shown in Appendix 1. It has been shown in four quarters estimating the budget in various fields like material handling, information technology etc. Conclusion Fisker Automotive Inc has achieved a successful position in the existing market. The introduction of the company’s product into the new market will give a good amount of revenue to the company. The correct marketing strategy will help the company to achieve competitive advantage in the new market. Works Cited Boone, Louis. E. and David L. Kurtz. Contemporary Marketing. Connecticut: Cengage Learning, 2011. Print. “Electric Vehicle Demand” Polk. R. L. Polk & Co., 2011. Web, 2 April 2013. Ferrel, Odies C. and Michael D. Hartline. Marketing Strategy. Connecticut: Cengage Learning, 2010. Print. “Fisker Automotive founder quits over major disagreements" General Motors Company. Surperformance., 2013. Web, 2 April 2013. “Fisker Automotive” The Official Board. n. p., n. d. Web, 2 April 2013. “Luxury that’s Electric” Fisker Automotive. Karma brochure., 2012c. Web, 2 April 2013. “Market Analysis Report: China’s Automotive Industry” APCO Worldwide. APCO., 2010. Web, 2 April 2013. Porter, Michael E. Competitive Advantage. New York: Free Press, 1985. Print. Porter, Michael E. Competitive Strategy. New York: Free Press, 1980. Print. “The Automotive Industry in the UK” Business and Enterprise Committee. House of Commons., 2009. Web, 2 April 2013. “The man who challenged entire industry” Fisker Automotive. Karma brochure., 2012a. Web, 2 April 2013. “Tomorrow starts today” Fisker Automotive. Karma brochure., 2012b. Web, 2 April 2013. Appendix Appendix: The export budget of the company for the year 2014 has been shown in four quarters. Budget Summary 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Facilities $466,630 $ 1667545 $ 1834299 $ 20177300 Body Shop $ 300000 $ 1500000 $16,330,000 Paint $ 0 General Assembly $ 0 Material Handling $ 0 $ 0 $533300 $ 888577 Information Technology $ 8000 $10400 $685000 $1292500 Total $474630 $1977945 $4552599 $38688377 Read More