Strategic Analysis 💡
Advise E-Ventures on which strategic analysis technique(s) should be use to develop future growth strategies for E Ventures. [20]
E-Ventures Case Study 2023 Download
Porter’s Five Forces includes an analysis of the power of buyers, suppliers, the threat of substitutes, barriers to entry and competitive rivalry.
E Ventures could use Porter’s five forces as a guide when deciding on which 10 foreign markets to enter with the greatest potential sales.
By analysing the strength of competitors for electric vehicles or the threat of new entrants in each foreign market, Jackie can focus growth strategies on the export markets with the most favourable conditions for expansion.
Moreover, the Five Forces analysis can be used to guide business strategy to increase competitive advantage. By allowing E Ventures to find its strengths against the competition from established car manufacturers, it can further build on these advantages by retaining its loyal customer base and reducing the potential negative impact on sales of these new entrants to the EV market.
However, the competitive environment is always changing, so the Five Forces model must be continually updated to ensure it is relevant to the current electric vehicle market and the laws in each of the export markets impacting E-SUV sales.
This is crucial in a rapidly changing technology market of online retailers and electric vehicles that is continually innovating and providing new opportunities and threats. A new market entry of a powerful competitor or a new way of delivery without using electric delivery vehicles like drones could completely change the five forces analysis.
SWOT analysis identifies and analyses the main internal strengths and weaknesses and external opportunities and threats that will influence the future direction and success of E Ventures. It can mitigate the key issues that may limit E-Venture’s growth potential, like the high gearing of 42% or the import tax of 25% of vehicle imports in China.
This means that E-Ventures can work to find solutions to these weaknesses when making decisions, for example, finding a source of finance that does not increase further long-term liabilities.
It also allows E Ventures to consider all the opportunities that the external environment may present. E Ventures may choose a broader export strategy to take advantage of the growth markets overseas rather than focusing on China.
However, SWOT analysis is subjective and depends on the judgement of managers in E-Ventures. Jackie and his team may not have an objective view of their current SWOT which may lead them to a growth strategy that is not suitable for the business.
Jackie’s success in growing the company may give an over-optimistic view of E Ventures’ strengths, and he may lack team members who will question his strategy and confidence in rapid growth strategies, leading to a reduction in the accuracy of the SWOT analysis.
Boston Matrix as part of product portfolio analysis could help identify cash cows and dogs in the E Ventures vehicle range.
The first E-SUV1 may be a “problem child” if it has a low market share so it should be replaced.
This information can be useful in ensuring that E Ventures maintains a balanced product portfolio, identify products for divestment and focuses on EV’s with the greatest growth potential.
However, the Boston Matrix can over simply a complex set of factors that influence a vehicle’s success. It may not be ideally suited to the market for electric vehicles in which nearly all models are experiencing rapid growth.
E-Ventures needs to focus on electric vehicles where it can make the highest margins so it can fund future growth. The Boston Matrix does not include an analysis of the profitability of each vehicle model.
I recommend E-Ventures use both SWOT and the 5 forces to develop a new strategy. Jackie has a track record of success which indicates his ability to objectively assess the SWOT of businesses he is involved with and thus reduces the likelihood of poor judgements due to subjectivity. Porter’s 5 forces will facilitate an effective analysis of competitive rivalry in the EV market, crucial when powerful established car brands are about to enter the market. Furthermore, As E-Ventures have the ambition of moving into EDV’s, Porter’s 5 forces may help E Venture develop a first-mover advantage, improving their competitive position in the larger E-vehicle market/industry.
However, identifying growth strategies that may be suitable will also be based on other factors not included in the strategic analysis.
It will depend on the E-Ventures leadership’s attitude to risk and the ambition of their objectives. Regardless of the strategic analysis leaders must decide on how much risk they are willing to accept. Jackie has set highly challenging targets to increase capacity by 200%. More established companies may review the same strategic analysis and decide on a more gradual plan for growth. However, given the predicted growth of the global EV market to 40%, a more conservative growth strategy may miss a unique opportunity in a rapidly growing market.
Strategic choice techniques can be more beneficial in identifying growth strategies as they allow numerical values to be attached to the different possible options for export markets and different electric vehicle models. Strategic analysis techniques will not weigh up the size of a potential opportunity compared to a threat in each EV export market, making decision-making more challenging.
| Other Acceptable Answers: Knowledge Definition: the process of conducting research into the business environment within which an organisation operates, and into the organisation itself, to help form future strategies. Explanation of strategic analysis and its techniques PEST, core competencies. Application – Core competencies – design. Analysis – SA will guide E Ventures to build on their core competencies and strengths and highlight weaknesses that need to be resolved. – SA takes time to do in terms of management focus, reducing time available for other tasks. Evaluation – Judgements as to the importance of strategic analysis techniques -Factors that the evaluation/judgement may depend on |
Planning 💡
E-Ventures Case Study Download
Evaluate how business planning can improve E-Ventures future profitability. [20]
Business planning means setting objectives and deciding on strategies to achieve objectives
Jackie has set the ambitious target of $500 million in profit in 3 years and increasing sales volume by 200%.
Planning will allow E-Ventures to break down these targets into small steps that must be undertaken to achieve the objectives.
Without detailed planning, it will be challenging to hit these targets as different departments may be working towards different goals. For example, the product design of new vehicles may be highly innovative, but they must be manufactured with high enough profit margins to reach corporate objectives. Planning can help all departments to work towards EV’s goals.
However, even with the use of systematic, detailed plans, E Ventures must implement plans effectively in order to ensure profitability. This will depend on many other factors including the quality of leadership and effective communication between each of the sales agents in E-Ventures export markets.
Planning can help E-Ventures secure further finance from investors and financial institutions.
E-Ventures currently have a high level of debt and will need to secure additional finance to take advantage of the expansion the EV market worldwide.
Detailed plans can show investors or banks a clear path to meet the $500 profitability target and repayment of debts.
Without securing finance E-Ventures will not be able to take advantage of the high-growth market for electric vehicles and new entrants may gain a competitive advantage.
However, accessibility to financing will depend on other factors such as the wider economic environment and the perception of the future market for electric vehicles. In an expanding economic environment or growing market, more finance will be available.
Jackie may also have access to venture capital that funded setting up the business and may finance expansion for additional equity.
Corporate planning will be essential to reach the ambitious profitability corporate objectives effectively. Senior management at E Ventures will have to regularly control and review the plans and their effectiveness in each functional department. During a period of rapid expansion and over 20% annual market growth for electric vehicles, E-Ventures must allow flexibility for leaders to respond to changes in each of their export markets for EVs. Strategic planning must also keep all departments aligned on the path to achieving their objectives.
However, regardless of the strength of planning other factors may considerably impact the future profitability of E-Ventures.
Planning is the first crucial step impacting future profitability but just as important will be for E-Venture to remain agile and adapt their plans to the rapid changes in the EV market.
To ensure future profitability the E-Ventures plans will need to be flexible and adapt to the changing economic environment. A new market entrant of new alternative clean car technology may mean Jackie has to significantly change plans at short notice.
Furthermore, E-Ventures currently has a brand image which allows them to charge premium prices. With increased competition from petrol and diesel car manufacturers entering the market, Jackie must ensure they can continue to maintain their loyal customer base, or they may be forced to reduce prices which will impact profit margins.
| Other Acceptable Answers: Application The factory is now operating at over 85% capacity Cost of new factory $300m Analysis – Analysis of benefits of planning and consequences of poor planning Failure of E Ventures to plan sufficiently for high demand for E-SUV1 is means sales opportunities are missed Expansion of factory requires significant planning necessary to make sure disruption to production is minimised |
