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LeBanze Automotive Company Case Study


Introduction

The company will be called the LeBanze Automotive Company. The mission of the company is to provide customized SUV and pickup trucks that are affordable and very durable.

The business strategy will be marke-oriented strategies such as product proliferation, product modification, and product diversification to meet the market demand. The business intends to penetrate the Gulf automotive market within one year.

This analytical treatise attempts to explicitly review the concepts of the organizational chart, supply chain, and efficiency in the business plan for the LeBanze Automotive Company.

The purpose of this business proposal is to describe the business type, its aims and objectives, the main activities, location, unique selling point, the reasons for creating this company, market environment, business needs, as well as rationale for the business, target market, customers, and key competitors.

The business is called the LeBanze Automotive Company and it is established as a private company in order to meet local market demand for the sports utility vehicles in the Middle Eastern Block.

The core business sector is the motor vehicle manufacturing industry, which also focuses on designing and creativity to customize SUVs to clients, especially in the UAE and the rest of the Gulf region.

Business Idea and Main Activities

The LeBanze Automotive Company business will be established to address all needs of the SUV market in the UAE where the customers would be capable of purchasing their required vehicles from its outlets.

Moreover, they will get the facility to order by using the company’s web portal in which the company will deliver the vehicles within a reasonable period. The owners have already established a strong network within the UAE and the rest of the Gulf region.

The product line of the business will consist of a variety of off-road vehicles with specially integrated characteristics to mitigate physical problems like inbuilt communication unit challenges, stronger chassis, and quality part.

Aims and Objectives

The aim of formulating this business is to sell SUV products to local businesses and private customers. However, it has aimed to introduce an online platform to attract the modern customers and to become a profitable company by the end of the first year of operation.

At the same time, this business is committed to provide quality products and outstanding customer care services to solve dilemmas and to please the clients.

On the other hand, the LeBanze Automotive Company has long-term objectives, such as, expansion of business in the customized SUV market, and vertical integration and merger with different companies to enter new market within the next five years of operation.

However, the key objectives of this automotive business are:

  • To boost its profit margin per year by 8% and to start new services from the second year of the business operation.
  • At the same time, the owners have some commitment to save the environment of the indigenous Middle Eastern Blocklocality. Therefore, it will introduce environment-friendly operational activities from the third year of the operation, such as hybrid and pure electric SUVs.
  • The owners will allocate 10% of the total profit for the marketing activity as it plays a vital role to increase sales revenue.

Business Location

The business will need to find out an appropriate business location in the United Arab Emirates for setting up the SUV distribution centre and carrying out the operation profitably.

However, in this context, it is essential to argue that the owners of this new business will have to survey the market of that location carefully in order to recognize and better understand the business atmosphere, traditions, demography, people, customers’ and attitudes in order to run the operations successfully.

The store will be situated in Dubai, United Arab Emirates, where the clients will get accessible transportation services. The company will then roll out smaller stores across the Middle Eastern Block.

A good position will make sure that the business will run profitably with a good flow of patrons, as people would be better aware of its location.

Unique Selling Points for the LeBanze Automotive Company

The owners and marketers of the LeBanze Automotive Company will adopt five-stage processes in order to assess the business because banks are unresponsive to invest a large amount for the projects viewed as non-viable.

The LeBanze Automotive Company team will identify unique characteristics of their SUVs by comparing with the SUVs of the competitors, assess the emotional demand from the perspective of the customers, and find out the limitations of the competitors.

These procedures will help the management to avoid risks of investment to some extent. The business will design a unique campaign plan to aware to move forward as well as gain competitive advantages in the UAE’s SUV market (Arabian Gulf’s consumer spending boom par. 5).

Industry Analysis of the LeBanze Automotive Company

Macro-environmental analysis

The macro-environment analysis studies external forces whose influence in one way or the other affects the performance of the LeBanze Automotive Company in particular. Players in any business industry often lack the ability to control these external forces.

Political environment

The closer economic relations in the Gulf region will benefit the LeBanze Automotive Company’s business performance for a long time. The country enjoys political stability, which is a perfect environment for doing business.

This is a good assurance for shareholders, both domestic and foreign, that their investment is safe and it is an incentive to them to add even more (Arabian Gulf’s consumer spending boom par. 5).

With continued political stability, the LeBanze Automotive Company is poised to grow and expand even more as many investors are assured of safety in the event that they decide to put their money into the venture.

Economic factors

The Gulf region offers an economically sound environment that is good for business activity. The World Bank acknowledged UAE as a rich country in 2005 while the country’s GDP hit the $ 1 trillion mark in 2006.

The UAE economy has one of the highest Purchasing Power Parity (PPP) in the world. The country has little inflation and interest rates with one of the best infrastructures in the world.

UAE’s stable economy with the high living standards of her population portends a lucrative market for LeBanze Automotive Company’s business performance.

More citizens of the UAE and the Gulf region have a high demand for SUVs due to the country’s high per capita income. UAE’s improved demand for SUVs will prove substantial for the overall performance of the LeBanze Automotive Company.

Technological factors

The LeBanze Automotive Company may invest heavily in information communication technology as it aims at improving service delivery and customer satisfaction. The online purchase portal is as a result of the company’s initiative.

The Service Oriented Architecture is yet another technological initiative by the LeBanze Automotive Company which will enable the company management to monitor general trends in performance at a glance and spot out any existing bottlenecks that could be slowing down business.

The speed with which this happens helps the management to put corrective measures in place that eventually averts losses or negative growth. These technological advances will attract more customers to the company due to the improved efficiency with which clients are being attended to.

Legal factors

The LeBanze Automotive Company will be a registered business entity that is licensed to operate UAE.

The company will remit taxes to both governments as a legal requirement and the funds go a long way to finance activities such as building and improving infrastructure, financing public goods paying salaries and buying necessities such as medicines.

As a legal requirement, the company is expected by the regulatory authorities to be tax compliant. The fees are remitted directly to the government of Abu Dhabi.

In the UAE laws of commerce, certificate of compliance for taxes are issued to business that remits their returns accurately form which taxes are deducted (Arabian Gulf’s consumer spending boom par. 5).

Micro-environmental analysis

Industry competitiveness analysis using Porter’s five forces model

Threat to market entry

It is difficult for any aspiring automotive company to enter into the industry in the UAE market and manage to break even more comfortable.

In UAE, the LeBanze Automotive Company’s business magnitude together with that of its main competitors such as Toyota and Nissan are well established and would easily enjoy economies of scale to the disadvantage of a new entrant.

It would require massive capital for an aspiring investor to outperform their business prowess.

The LeBanze Automotive Company is well-positioned to survive in the competitive market through gaining from economies of scale, competitive price tags, and reliable customer base in the UAE and other Gulf nations (Arabian Gulf’s consumer spending boom par. 5).

Threat of substitutes

Toyota and Nissan automotive companies pose the greatest danger to LeBanze Automotive Company’s existence and business performance. These companies have been in the industry for a more extended period and are well established than the LeBanze Automotive Company.

The Toyota and Nissan companies have the same products as the LeBanze Automotive Company and sometimes offer significant discounts to customers. In the UAE automotive industry, loyalty to a brand plays a vital role in customer behaviour.

Therefore, Toyota and Nissan brands have the ability to offer an alternative perfect substitute to customers who may be unsatisfied with the SUVs offered at the LeBanze Automotive Company. Unsatisfied customers, therefore, have other alternatives from where they can get the SUVs.

However, in order to remain relevant, the LeBanze Automotive Company has established a unique market for its customer through customised optometry SUVs.

Power of suppliers

Suppliers in the UAE automotive industry have more power owing to the existence of many SUV brands. As a matter of fact, suppliers may instigate market demand and supply variances.

This leaves the suppliers with the power to dictate on proceedings in the industry, such as the market prices and distribution logistics.

However, the LeBanze Automotive Company has endeavoured to use its deep reservoirs as a strategy for balancing the supply forces in the fragile SUV market of the UAE and other Gulf nations (Arabian Gulf’s consumer spending boom par. 7).

Power of buyers

Reflectively, the amount of output in terms of turning over sales depends on the buyers’ purchasing power.

The higher the purchasing power, the better the turnover in total sales realised over a definite period. The LeBanze Automotive Company’s performance in the UAE depends highly on the ability of the SUV users.

On the other hand, unreliable and weak purchasing power translates into losses and underperformance of the company.

The management must, therefore, do everything within their means to ensure that service delivery and quality of the SUVs meets the expectations of customers (Barringer and Duane 34).

The purchasing power determines profitability and probability of survival of a business in the short and long term.

If buyers feel dissatisfied because of poor SUV product, they can easily opt to acquire the same SUVs from rival automotives, thus losing out on business opportunities for the LeBanze Automotive Company.

Rivalry

There are several automotive companies operating in the same industry with virtually all of them dealing with a variety of the SUV products.

For instance, the Toyota Company provides the biggest competition to the LeBanze Automotive Company due to its most significant market share and expanded network standing at 30% (Barringer and Duane 34).

With many customers looking for good value for their money, the quality of the SUVs has remained the main basis upon which customers are making their final decision to purchase in the UAE and other Gulf nations.

All the players in the industry are putting measures in place to ensure they attract more customers and therefore expand their market share. In line with this, the LeBanze Automotive Company’s Abu Dhabi branch will be the most significant and busiest SUV retail store.

The LeBanze Automotive Company’s business strategy

Cost Leadership Strategy

Cost leadership strategy is vital in business management especially in an industry with stiff competition. Reflectively, the concept, as proposed by Porter, is a mean of establishing a sustainable competitive advantage over other player in the industry.

The LeBanze Automotive Company has adopted the cost leadership strategy to improve its efficiency through streamlining operations.

As a result, this venture has developed a cumulative experience, optimal performance, quality assurance, and is in full control of their operational chains.

In order to cut down the cost of production and marketing, the company has embraced the modern technology in its online sales, human resource management, purchasing, and dispatch departments.

The company has entered into a partnership with dealerships rather than engaging its resources in obtaining raw materials and selling to its customers. As a result, the general overhead cost of operation has been reduced substantially.

Also, the company has opted for diversification and expansion of stores in order to gain from economies of scale as the overall turnover grows.

As a result, issues of underperformance have been minimized substantially. At present, this company produces the best quality packaging of its customized automotive products at the lowest possible price despite the high quality since production is done in mass.

Besides, the company has introduced a series of efficiency monitoring systems such as performance valuation, efficiency in production, target management, and electronic purchasing, which has greatly reduced labour cost.

These ventures aim at enabling the company to optimise profits through efficiency in production, sales, accountability, and use of company resources while maintaining quality (Barringer and Duane 34).

Benefits and Suitability of the Cost Leadership Strategy

Efficiency monitoring in distribution, sales, cash flow management, labour, and diversification as employed by the LeBanze Automotive Company is particularly suitable for the firm as it is more of a precautionary measure that shields the firm from effects of redundancy and underutilization of production variables.

Despite rivalry in the SUV industry, the LeBanze Automotive Company has been in a position to monitor all its operation chains and periodically evaluate the same as a means of reducing overhead cost due to underutilization, poor balancing, and unaccountability (Trassard par. 5).

As a result, the LeBanze Automotive Company has managed to transform its portfolio and capital structure by 18% since most of operation lines are optimally utilized.

Consumer Analysis

The LeBanze Automotive Company products target male and female clients in the middle and high end of the economic ladder. This group is characterized by high disposable income and high demand for luxury vehicles that attest to their social status (Barringer and Duane 22).

Despite the fact that the market for the SUVs has been in existence for a long time, there are very few companies that offer the customized SUVs that satisfy the demands of this class of clients in the Gulf region.

This group is further divided into customers in the age group of late thirties who are the primary users of the SUVs and customers in the age group of twenties who are in the minority segment in terms of demands for the LeBanze Automotive Company.

Due to exposure to information sources such as newspapers, television, radio, and magazines, product announcement through these avenues and word of mouth does come in handy.

The decision on the best product, therefore, rely on the information on multiple exposures to different competing products.

In order to diversify market operations, the LeBanze Automotive Company has created multiple SUV products from the same product with different coloration, sizes, and customisation.

This has created an environment of their competition and blocks other competitors from invading into the company’s customized cycles market. These sub-products are differentiated by features, prices, and the difference in quality.

As forecasted in the market research, this strategy has been successful towards dominance as it offers a variety of options to consumers, while at the same time, maximizing benefits of economies of scale in the Europe market (Barringer and Duane 31).

The same should be adopted in the expansion strategy towards the Gulf region.

Market strategy and rationale

From the above analysis, it is apparent that the company may gain in the Gulf market. Among the market strategies, the company should adopt include product proliferation, product development, and market foresight.

Reflectively, product proliferation as a strategy is the same as strategies that companies adopt to create opaque barriers for their competitors.

Through this approach, the market share leader will automatically have the discretion to reap maximum benefits ahead of its closest competitors.

For instance, this strategy will be beneficial for the company when it became the first company in the Gulf region to provide customized SUVs(Arabian Gulf’s consumer spending boom par. 7).

Product development entails the innovation process aimed at modelling the existing product or improving on it to balance with the changing preferences of the customers. As a result, the older version will be phased out of the market as preferences change.

The company should model itself as the leading company in the Gulf SUV industry in terms of design and innovation. The company will benefit from this strategy in terms of market expansion, especially among its early adopter customers.

The product development variables at the company are connected at the central point of strategic planning which encompasses cost, speed, quality, flexibility, and dependability create a smooth continuous operation tracking model that operates like a computer from one segment to another.

Therefore, the major part of the success puzzle for operations implementation management strategy delivery operates on the periphery of the soft skills involving the timeless vision of organizational principles, defining value of the business, determining requirements, clarifying the concept, building teams, mitigating task, resolving issues, and providing direction as incorporated in the operations management system of the company in the European market.

The company has developed a highly structured marketing distribution channel that operates independently.

Foresight is very crucial since it gives a company rough perspective and an overview of the future concerning the expected and unexpected changes and challenges (Barringer and Duane 41).

Therefore, the company should carefully examine and evaluate their past and endeavour to adopt relevant skills that will be relevant for future challenges and responsibilities in the Gulf market.

In the quest for internationalisation, the company should opt for the use of local labour as a strategy to include in the management team members from the countries of operation through training of young and talented managers who are skillful.

Besides, the company should embrace the need for the creation of an integrated structure to absorb company goals and those that favour business in the branches that will operate in the Gulf region (Arabian Gulf’s consumer spending boom par. 7).

Therefore this strategy was very crucial, especially in the forecast of future direction as the foreign markets are used for customisation and the introduction of unique aspects in the automotive industry.

As a strategy aimed at keeping customers, the process embraced corporate social responsibility in the foreign markets such as sponsorship of education products and partnership with the local medical societies.

Benchmarking Competition in relation to Toyota Company

Situation at the LeBanze Automotive Company

Globalisation has created a serious impact on the automotive sector with an innovative and deviating period of organisational, economic activities including the development of technology, increasing market demand, production and workflow, investment and trade patterns, competition among the rival companies, as well as two facing the threats of global financial.

With lean production and outsourcing, the automotive parts industry is increasingly important for global production chains.

The LeBanze Automotive Company is going over to modular assembly in which the main components manufacturer coordinates the design manufacture and installation of the major parts or systems of the car or truck.

The value chain of the industry may suffer from declining wage rate due to competitive pressures in less developed countries with comparatively lower per-capita income. This is the situation that the company is facing.

Situation at the Toyota Company

In the case of Toyota, globalisation flourished in the nineties through FDI flow, production in other countries rather than the home and through its internationalisation strategy during the seventies and eighties with a successful record of accomplishment.

Toyota introduced its overseas production in Australia in 1963, Thailand in 1964, New Zealand in 1966, Peru in 1969, and Indonesia in 1970 while the company engaged with 52 overseas production factories in 2006.

Toyota Motor views globalisation as a more efficient way to address a future aspect in advance, including spreading unpredicted risks and prospects. Thus, the Toyota Companyposes the highest threat towards the survival of the company in the Gulf region.

Solution to the above situational analysis

As the international automotive market is getting more and more competitive in terms of producing environment-friendly products and capture the market as well, the LeBanze Automotive Company should recheck the strategy of the competitors to develop a product range.

It should develop an integrated marketing communication system in order to inform people about the positive side of Eco-friendly cars for the environment within the Gulf region.

Also, the LeBanze Automotive Company should increase expenditures for the R&D than the previous year, which would help to produce new Eco-friendly, creative, and differentiated vehicles.

The LeBanze Automotive Company needs to increase its integrated marketing communication effort to aware customers about the positive side of its products and the importance to use of Eco-friendly products to reduce global warming within the Gulf region.

Conclusion

As the Gulf governments seek to re-invent their economies and restore investors’ confidence, the Gulf market currently enjoys a relatively peaceful and economically stable business environment.

Factually, the Gulf region seems to be embracing the spirit of globalisation and economic liberalization with an upbeat positive mood of better focused economic growth accompanied by the development.

Thus, it is recommended that the LeBanze Automotive Company should maximize the available opportunity to establish a structurally feasible marketing program as it has the advantage of knowledge on the Gulf market segmentation and demand trends.

In line with periodic marketing analysis, the entry should be fast-tracked within not more than 18 months.

For various reasons, the sales of the SUVs and the tracks would be best done by salespersons of the Asian native. This will increase the chances of credibility and ease of the interpersonal variables during product promotion and provision.

The company can hire Asian salespersons and orient them on the product’s features and production processes and later send them as representative of the LeBanze Automotive Company in the Gulf region.

At this stage, it would be necessary to encourage and facilitate the company-agent relationship which has been found to go a long way in the creation of a healthy trade environment.

The automotive products of the LeBanze Automotive Company need to be integrated into the achievement of various organizational goals through the distribution processes to ensure that the products reach all designated customers within a reasonable period.

Correspondingly, the LeBanze Automotive Company may seek to offer different packages for its products and other associated services so that all customers are integrated into the marketing plan.

Besides, the plan should offer a variety of different distribution channels that will be vital in the attraction of new customers within the Gulf region.

Works Cited

Arabian Gulf’s consumer spending boom to sustain strong car sales for years 2013. Web.

Barringer, Bruce, and R. Duane. How bringing its business plan to life helped a social enterprise get off to a strong start, New York, NY: Free Press, 2009. Print.

Trassard, Pauline. Mobile and Automotive Industries: New Business Models Needed to Promote Collaboration. 2 Jul. 2013. Web.

This Case Study on LeBanze Automotive Company was written and submitted by user Shane Winters to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly.

Shane Winters studied at Auburn University, USA, with average GPA 3.58 out of 4.0.

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Winters, S. (2019, August 22). LeBanze Automotive Company [Blog post]. Retrieved from https://ivypanda.com/essays/lebanze-automotive-company/

Work Cited

Winters, Shane. "LeBanze Automotive Company." IvyPanda, 22 Aug. 2019, ivypanda.com/essays/lebanze-automotive-company/.

1. Shane Winters. "LeBanze Automotive Company." IvyPanda (blog), August 22, 2019. https://ivypanda.com/essays/lebanze-automotive-company/.


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Winters, Shane. "LeBanze Automotive Company." IvyPanda (blog), August 22, 2019. https://ivypanda.com/essays/lebanze-automotive-company/.

References

Winters, Shane. 2019. "LeBanze Automotive Company." IvyPanda (blog), August 22, 2019. https://ivypanda.com/essays/lebanze-automotive-company/.

References

Winters, S. (2019) 'LeBanze Automotive Company'. IvyPanda, 22 August.

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