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An Assignment on-

TOWS Matrix Analysis of Morgan Motor Company

Course Name: Strategic Management


Course Code: BA- 403

Prepared for-
Mehedi Hasan Md. Hefjur Rahman
Head & Associate Professor
Business Administration Discipline
Khulna University

Prepared by-
Group Name: Explorer
Name ID
Abdur Rakib Akon 070305
Reza Al Saad 070312
Md. Masrul Mollah 070314
Md. Nazmul Huda 070323
th st
4 Year, 1 Semester
BBA Program
Business Administration Discipline
Khulna University

Date of Submission: August 10, 2010


TOWS Matrix Analysis on-
Morgan Motor Car Company: The Last of Great Independents

Prepared by-
Abdur Rakib Akon; ID- 070305
Reza Al Saad; ID- 070312
Md. Masrul Mollah; ID- 070314
Md. Nazmul Huda; ID- 070323
th st
Students of ‘BBA Program (4 Year, 1 Semester), Business Administration Discipline, Khulna University’

Abstract

Henry Royce, W. O. Bently and Henry Frederick Stanley Morgan (H.F.S.), these three talented young men
started business of automobile manufacturing in early 1900s after leaving school. W.O. Bently was forced
to sell his company to his competitor Henry Royce in the worldwide depression of 1930. These two Rolls-
Royce and the Bently were international symbols of sophistication and wealth. But unfortunately Rolls-
Royce got bankrupt in 1960 and was divided up at government force. H.F.S. Morgan is the only company
still surviving and operates wuth same plant facilities, it has occupied since 1919. In 1992, there was a ten
year waiting list of prospective purchasers awaiting delivery of a “mog” as Morgan had high brand image
to the buyers as real sports car. Though it has some weaknesses and threats of itself, it has some strength
and opportunities created by its own and others. With its efficient strategy management and decision,
from then to today, it competed with some strong competitors profitably and efficiently in the global
market.

Strategic Analysis

Morgan, is the last of great independents faced a lot of difficulties and ups & downs in its 100 years of
experience and still it’s facing a lot of complexities to perform with only targeting a very limited and
narrow targeted niche market in this competitive era.

Morgan is always been a hand built car brand, and that’s the way people like it. Since 1908 till now,
‘morgan first’ to ‘EvaGT’, Morgan produced a lot of cars that created a different type of passion amongst
the consumer. Now, Morgan’s cars are so environment friendly, best engine providers are the supply of
Morgan, and people love it to drive it with passion.

Since the starting, Morgan tried to maintain its business to capture this niche to get the competitive edge,
but now, not that only, it’s now the only competitor of itself. Something we want to say about it
production process, Morgan is too slower of it. It may produce around 600 cars a year in this present
condition using the same plant they are using since the beginning. But, instead of having 30-40% labor
cost of total production, though in comparison to other car manufacturers, it so high, but Morgan can
serve its car at the lowest cost among the European car producers. This is one of the key benefits of
upholding the conventional culture of Morgan itself. Plant automation is costly, but they are trying to
modify their plan. In this situation this will be helpful.

But on the other hand, its backlog is its waiting list. In a sense it’s an opportunity for Morgan’s, but in long
term, it will face a huge penalty in positioning. People are devoted to this brand, and this is why a person
can wait till 10 years from order to delivery to get a ‘Morgan Car’; Because, Morgan provide cars with

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personal customization. Sometimes people also cancel the order. Using this opportunity Morgan can sell
those unique cars to other buyers.

But this is time of fastness and ease. People wants everything right present whenever they are ordering.
Now Japanese cars like Nissan and Mazda, and in some cases also Toyota are competing with Morgan
Motors. This is a great threat for Morgan, though they have targeted a very narrow and limited niche.
Strategically this is very risky to do business targeting with only single niche. This is why Morgan is trying
it’s best to make its business into a form of concentric diversification. It is trying to launch some sports
gears. Already they are producing a good branded sports watches named ‘Hublot’.

But all these are mixed up here with our solution analysis. We have tried our intelligence to make a SOWT
and TOWS analysis of Morgan Motor Company and tried to give some suggestion.

SWOT Analysis

Here are the performance and importance measurement table given below-

Performance Importance
Major Minor Major Minor
Neutral High Medium Low
Marketing Strength Strength Weakness Weakness
1. Company
 
Reputation
2. Market Share  
3. Customer
 
Satisfaction
4. Customer
 
Retention
5. Product
 
Quality
6. Service Quality  
7. Pricing
 
Effectiveness
8. Distribution
 
Effectiveness
9. Promotion
 
Effectiveness
10. Innovation
 
Effectiveness
11. Geographical
 
Coverage
Finance
12. Cost of
Availability of  
Capital
13. Cash Flow  
14. Financial
 
Stability
Maintenance
15. Facilities  
16. Economies of  

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Scale
17. Capacity  
18. Dedicated
 
Workforce
19. Ability to
produce on  
time
20. Technical
Manufacturing  
Skill
Organization
21. Visionary  

Now, we have defined several SWOT points here. In the following chart we are showing the items.

Strengths Weaknesses
 Unique niche market focus since 1919  Same plant since 1919
 Low production cost  Less diversification in product line
 Customer defined cars  Factory production process is not smooth
 High gas mileage  Hoist to lift equipment
 Only primitive car model  Labor cost is 30-40% of the production
 Its only competitor is itself cost
 Strong survival mentality  Bottleneck from labor absence
 Unionized labor force
Opportunities Threats
 42 dealers worldwide  Highly dependent on supply chain
 Longer waiting list management
 Sports gear  Waiting cancellation
 Competitions from Japanese cars

Here are the explanations behind we have chosen these features.

Strengths:

a) Unique niche markets focus: Morgan focused on niche market. It manufactured sports cars. Also
it has a restricted supply.
b) Low production cost: As the production process is not automated, the production cost is low. All
the process in the factory is done by hand.
c) Customer defined cars: They take orders from customers according to their want. For example
they let their customers to choose different colors from among 35000 different colors, stereo
system in the car.
d) High gas mileage: Though their engines are with fuel injection, electronic ignition & pollution but
it has high gas mileage.
e) Only primitive car model: This is the only company surviving from 1919 which is producing with
the same production process and car model. The other companies have made changes like in
design or in the production process.
f) Its only competitor is itself: The Morgan’s only competitor is itself. Because from the very
beginning it is having the same process of production from which they are not going out and
making any changes or diversification.

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g) Strong survival mentality: The Company has a strong survival mentality. We can see it when it fell
into different situations which threatened their survival. They introduced new dynamic models
when it was needed.
h) Unionized labor force: Morgan has a unionized labor force.

Weaknesses:

a) Same plant since 1919: From the very beginning Morgan is using the same plant.
b) Less diversification in product line: They had a diversified car model. They introduced new
dynamic models only when it fell into different situations which threatened their survival.
c) Factory production process is not smooth: In the factory for production process there are no
automated systems. Everything is done by hand from screwing to assembling.
d) Hoist to lift: There were no proper lifting systems as there are no automated systems. So the
labors do the lifting on their own.
e) Labor cost is 30-40% of the production cost: As the labors do everything there were no such
machineries or costs like electricity bills. But for that labors are highly paid.
f) Bottleneck from labor absence: As there were no backups for labor, due to labor absenteeism the
works are remained unfinished which creates bottleneck and longer waiting time.

Opportunities matrix:

Opportunities of Morgan motor car are found by using this opportunities matrix.

Success Probability- High Success Probability- Low


Attractiveness- High Company develops a more powerful Develops a device for measuring the
lighting system energy efficiency
Attractiveness- Low Develops a device for measuring Develops a software to teach
illumination model lighting fundamentals

a) 42 dealers worldwide: It has 42 dealers worldwide: North America – 3, Africa – 1, Australia – 1,


Japan – 1, Western Europe – 17 and UK – 19.
b) Longer waiting list: Because of its longer production time, they expressed in a way that they are
creating a car with proper care and by adding more value.
c) Sports gear: They are selling a line of accessories based on the marque.

Threats matrix:

Threats of Morgan motor car are found by using this Threats matrix.

Probability of Occurrence- High Probability of Occurrence- Low


Seriousness- High Competitor develops a superior Major prolonged economic
lighting system depression
Seriousness- Low Higher Costs Legislation to reduce number

a) Highly dependent on supply chain management: Morgan buys different parts from different
suppliers. For example they use engines of Ford and the model is old. If Ford discontinues it, then
the production of Morgan will be threatened.
b) Waiting cancellation: As it has a long waiting time of 10 years, some customers cancel their order
while some other sell it to third party with 15-20% profit.

Competitions from Japanese cars: When they entered into the US market, the Japanese cars also entered
there. But the Japanese cars are highly performed with less cost.

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SFAS Analysis Table

Here we have tried to explain the factors in a measurement process and we developed the SFAS (Strategic
Factors Analysis Summary) table through measuring of IFAS (Internal Factors Analysis Summary) and EFAS
(External Factors Analysis Summary).

Here is show the IFAS table analysis.

Internal Strategic Factors Weight Rating Weighted Scores Comments

Strengths
Should be maintained and
S1 Unique Niche 0.25 5 1.25
protected
S2 Production Cost 0.20 3 0.60 Good but needs a bit reduction
S3 Consumer Preference 0.15 3 0.45 Keep up with this trend
To be maintained as the good
S4 High Go Mileage 0.05 2 0.10
ones
S5 Only Preemptive 0.05 4 0.20 Use it as Brand Image
Create some competitive
S6 Its only Competitor 0.10 4 0.40
advantage
S7 Strong Survival Mentality 0.10 1 0.10 Should be maintained
S8 Labor Force 0.10 2 0.20 Good and dedicated
Total Scores 1.00 3.30

Weaknesses
W1 Same Plant 0.25 4 1.00 Update with modern technology
W2 Less Diversification 0.30 6 1.80 Follow the customer
W3 Production Process 0.15 4 0.60 Changing trend
W4 Hoist to lift equipment 0.10 2 0.20 Try to have some technology
W5 Labor Cost 0.10 3 0.30 Should be reduced
Should be remarked by
W6 Bottlenecks 0.10 4 0.40 investigation and improve
situation
Total Scores 1.00 4.30

Now the EFAS table is here.

External Strategic Factors Weight Rating Weighted Scores Comments

Opportunities
O1 42 Dealers Worldwide 0.50 4 2.00 Should increase coverage
Early delivery is needed (more
O2 Waiting List 0.30 5 1.50
units need to be manufactured)
Should focus more events
O3 Sports Gear 0.20 2 0.40
through diversification
Total Scores 1.00 3.90

Threats
Should ensure smooth supply
T1 Supply Chain 0.30 4 1.20
chain
Waiting list lessening (faster
T2 Waiting Cancellation 0.30 5 1.50
production)
Try to improve quality and
T3 Japanese Cars 0.40 5 2.00
promote competitive advantages
Total Scores 1.00 4.70

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Now by measuring the calculations we have come to this decision that the following strategic areas need
to be kept in mind in taking strategic management decisions. Here we have newly defined and
reconstructed the weights and ratings.

Duration

Intermediate
Short

Long
Weighted
Strategic Factors Weight Rating Scores Comments
S1 Unique Niche 0.14 4 0.56 X Uniqueness is key success factor
It needs maintained this way, if
S2 Production Cost 0.10 5 0.50 X possible, labor cost should be
reduced
Consumers like it, but after a
S3 Consumer
0.10 4 0.40 X certain period, delivery time may
Preference
cause problem
Plant needs modification during a
W1 Same Plant 0.13 5 0.65 X
short time
W2 Less Diversification 0.13 4 0.52 X Diversification attracts customers
Must be investigated and solve
W6 Bottlenecks 0.14 5 0.70 X
labor and other problems
O1 42 Dealers Dealers seems enough, but still
0.07 3 0.21 X
Worldwide need increase in number
This is a great threat can have a
T2 Waiting Cancellation 0.12 4 0.48 X
long term effect
T3 Japanese Cars 0.07 4 0.28 X Competition is tougher
Total Scores 1.00 4.30

TOWS Matrix Analysis

Morgan Motor has got several key areas to develop that we have seen in the SWOT matrix and SFAS
Analysis. But to take proper strategic initiative, TOWS matrix analysis is the criteria to make decision from
the table mixing all the variables taken from SWOT and SFAS.

Here we are showing the TOWS matrix analysis we have measured.

Internal Factors
Strengths Weaknesses
S1 Unique Niche W1 Same Plant
S2 Production Cost W2 Less Diversification
S3 Consumer Preference W3 Production Process
S4 High Go Mileage W4 Hoist to lift equipment
S5 Only Preemptive W5 Labor Cost
S6 Its only Competitor W6 Bottlenecks
S7 Strong Survival Mentality
S8 Labor Force
Opportunities SO Strategies WO Strategies
External Factors

O1 42 Dealers Worldwide  Promote the niche  Plant Modification


O2 Waiting List  Faster Production  Technology Up-gradation for
O3 Sports Gear  Event Creating can be good faster production
for gear sales
Threats ST Strategies WT Strategies
T1 Supply Chain  Manage some backup supply  Follow some modern process

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T2 Waiting Cancellation chain or create a vertical  Investigate and solve
T3 Japanese Cars integration management problems
 Find International Alliance

Strategy formulation

After the SWOT and TOWS analysis of Morgan motor car to take the effective strategies we have taken
the help from Porters competitive strategic model. From that we found that it has low diversification
position and low cost position so pure cost position is the perfect strategic for Morgan motor car. Low cost
strategic is the ability of a company or a business unit to design, produces, and markets a comparable
product more efficiently than its competitors. Though it is hard to achieve lowest production and
distribution cost, Morgan must be good at engineering, purchasing, manufacturing and physical
distribution. But this strategic has a problem that any company can obtain lower cost strategic, so Morgan
must be conscious about this.

Here we are giving the ‘Business Strategy Formulation Matrix’ and ‘Porter’s Competitive Strategic Model’-

Business Strategy Decision Table

Business Strategy Decision Table is analyzed for long term planning. Morgan has a less attractive industry
but has strong competitive strength within that limitation. This is why we went for cell 7 strategy/

Business Strategies/ Competitive Strength


Strong Average Weak
Cell 1: Growth Cell 2: Growth Cell 3: Retrenchment
High

Concentration via vertical Concentration via horizontal Turnaround


Industry Attractiveness

integration integration

Cell 4: Stability Cell 5: Growth Cell 6: Retrenchment


Pause or Proceed with Concentration via horizontal Captive company or selling
Medium

caution integration out


Cell 5: Stability
No chance or profit strategy
Cell 7: Growth Cell 8: Growth Cell 9: Retrenchment
Low

Concentric Diversification Conglomerate Diversification Bankruptcy or Liquidation

From here, we selected the cell 7: Concentric Diversification strategy. Morgan can grow its business by
taking following steps described here in this situation-

 Manufacturing Process can be diversified: Morgan’s production process is very slow and waiting
list is increasing day by day. So newer technology adaptation and its customer preference style
can be combined and make a huge potential for future.
 Sports Gear: Morgan already launched ‘Hublot’ sports watch, and it’s now a very popular watch
around Europe. H.F.S. Morgan’s plan is successful here. Morgan can arrange more and more
sports events and may increase their product line of gears. Especially young people will like it. If
Morgan can attract young people and make an interest among them, it will be helpful to Morgan
Motors.

Porter’s Competitive Strategic Model

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Porter’s Competitive Strategic Model shows us the path to define the strategic pricing or production
decision. As Morgan can offer their cars at a very lower cost and its differentiation position is very low we
have chosen ‘Pure Cost’ Strategy for Morgan.

Differentiation Position
Low High

Cost Low Pure Cost Cost & Differentiation


Position High No Competitive Advantage Pure Competition

This is all about strategic analysis and decision making of Morgan Motor Company.

[Every organization has its own policy and procedures to cope up with different situations and it need to
be solved with strategic and analytical decisions. We have tried from our limited perspective, but in actual,
this is a big deal with the firm. Within this short time we have tried our best to define these terms and
make out a solution. We believe, any mistake will be considered by screening our time and knowledge
limitation.]

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