Banto, Lovely P.

Bolandres, Mitchael L.
Gomera, Merlie M.
Hambre, Alexis Kliene

Automobile Industry
1. Ford Motor Companys Generic Strategy (Porters Model) COST LEADERSHIP STRATEGY:
Fords generic strategy has changed over time. Initially, Fords generic strategy was cost leadership. This generic
strategy supports business competitive advantage on the basis of cost reduction and low prices to attract customers. In the
early 1900s, Fords vision was to make its automobiles affordable for working-class Americans. To apply this generic
strategy, the firm developed the assembly line method to minimize costs and maximize productivity. Ford succeeded in
attracting customers based on this generic strategy. A strategic objective for competitive advantage based on this generic
strategy is cost minimization through process streamlining.
However, Ford Motor Companys generic strategy did not protect the business from competition with General
Motors. By 1927, GM overtook Ford to become the largest American automobile manufacturer. GM used its generic strategy
of broad differentiation to offer a wider array of products. Americans were gaining higher wages and started valuing style
and design, and not just low prices. Today, given its current One Ford plan, Ford Motor Company has been moving its
generic strategy to emphasize differentiation for competitive advantage. Ford still maintains its cost leadership generic
strategy. However, the firm is moving toward the broad differentiation generic strategy to compete against firms like GM and
Toyota. Thus, a strategic objective based on Fords current generic strategy adjustment is product innovation to gain
stronger competitive advantage. http://panmore.com/ford-motor-company-generic-intensive-growth-strategies
2. Mercedes Benz FOCUSED DIFFERENTIATION STRATEGY:
The focused differentiation strategy is intended to aid the organizations strategic goal of achieving superior
customer experience. This strategy appeals to exceptional customer needs and preferences of a narrow buying segment
with the least competition (Perner 2007).
Parment (2000) argues that 'those who buy premium brands seek superior value and that justifies the significant
price premium. Parment (2008) states that luxury brands is desired by all but consumed only by the happy few.
Implementing the strategy of differentiation by Mercedes has been at the expense of cost leadership and efficiency.
Between 1998 and 2003 the Mercedes Benz model made headlines for the wrong reason as they defaulted on quality while
attempting a dual strategy of cost leadership with high quality differentiation. This is in line with Porter's (1985) view that cost
and differentiation strategy cannot be pursued simultaneously. The built quality of Mercedes cars suffered severe backlash
that it was forced to revert to a pure luxury strategy again, at the expense of cost.
http://www.ukessays.com/essays/marketing/strategy-of-mercedes-and-the-external-market-marketingessay.php#ixzz42HpY27z2
3. Bavarian Motor Works (BMW) PRODUCT DIFFERENTIATION:
BMWs generic strategy in the automotive market lies on product differentiation. The differentiated automobiles and
motorcycles of BMW are able to satisfy the needs of their customers through a sustainable competitive advantage. This
allows BMW to desensitize the prices of their automobiles and motorcycles and instead focus on the values that generate
not only a comparatively higher price but also a better margin.
BMW is committed on its efforts to continuously develop original automotive technologies that generate a high
appeal to the general public due to its quality and cost effectiveness. Over the years, BMW has been able to build a
substantial base meant to boost the companys designing and manufacturing capabilities. This enables the company to
bring to markets truly original and more importantly efficient automotives that are reasonably priced. The research and
development team of BMW also plays a crucial role in the achievement of this feat. The company also believes that making
a positive impact in the society through their quality products is the very essence of being a manufacturer.

The generic strategies of BMW are focused mainly on driving the growth of its brands and improving the
companys financial performance. These campaigns have also helped secure significant acquisitions and
partnerships. And more importantly, these campaigns have led to the release of the potentials of the companys
employees, thus building a quality performance- based culture.
The generic strategies of BMWs local automotives are practically reinforced by the local employees
themselves. These moves certainly allow the company to improve even more without the costs of introducing
new technologies. These efforts have resulted in increased financial gains for the company and have allowed
the establishment of distribution networks for both the local and international BMW products.
4. NISSAN Motors COST LEADERSHIP STRATEGY:
NISSAN has adopted the cost leadership strategy. This is a marketing strategy in which a company focuses on
reducing the cost of production thus offering products to consumers at lower prices than the rivals. NISSAN has focused on
ensuring that it produces cars at low cost thus offering at relatively lower prices than the rivals in the market.
There are various ways that NISSAN has achieved the cost leadership strategy in the automobile industry in Japan.
One of the methods has been producing vehicles in large volumes. Increasing the volumes of output helps in spreading the
total fixed costs over a wide range of units. This implies that the cost per unit produced is lowered significantly. In the year
ending 2011, the company produced more than 400,000 units of vehicles in Japan. Therefore, this mass production helped
in reducing the unit costs. As a result, the company is able to offer the vehicles at low prices.
The company has also retained it operations costs at low levels as part of its cost leadership strategy. This has
been achieved through initiatives such as using standardized features in motor vehicles and partnering with Renault in
facilitating the purchasing process. Using the Renault NISSAN Purchasing Organization (RNPO), the two companies are
able to buy raw materials in large quantities thus obtaining discounts. This has played a major role in reducing the cost of
production for the company. Also, through this partnership, the companies purchase raw materials from countries where the
cost is low. This is also gives NISSAN a competitive advantage during production.

5. HONDA DIFFERENTIATION STRATEGY:

Honda is a broad company that tries to reach its entire consumer in the most effective ways possible. Honda always
tries to be an innovator when it comes to their products in the market. They spend considerable amount in their R&D
department trying to differentiate their products from competitors. Hondas generic strategy is differentiation, this is because
Honda always strives to create and produce products of the highest quality at a reasonable price for worldwide consumer
satisfaction. Honda tries to separate itself away from other car companies by projecting an image that their consumers only
have good things to say about their product. They believe that striving for customer satisfaction and loyalty will help for the
projected good company image in the market.
Honda as being in an automobile manufacturing industry markets to the people especially into the world's major
busy cities where buying an automobile is almost a must to keep going and stay away from the fuzz of commuting in the
morning rush and in the late afternoon traffic. At Honda even though they are not the leading company in automobile
industry, they provide means in which to give people an alternative by introducing cars that is fuel-efficient in response to
the unpredictable rise of fuel consumption.
The heart of Honda's strategic strength is the capabilities to produce innovative yet simple, low-cost products.
Honda's competitive advantage over the rest of automotive manufacturers is not the flashy design of automobiles but lies in
the strategic differentiation strategy being employed by Honda especially in the quest of developing new innovative means
to enhance fuel efficiency without the extra cost. http://www.ukessays.com/essays/business/the-generic-strategies-used-byorganizations-business-essay.php#ixzz42HurN1tA

6. Volvo COST LEADERSHIP and DIFFERENTIATION STRATEGY:

In the effort of improving efficiency in order to achieve cost leadership, according to the chairman's report, Lif
Johansson (Volvo annual report 2009) The company has managed to pursue joint venture strategy which has helped it to
enjoy the benefits of economies of scale through; Geographical expansion with diversified portfolio. Enjoying the benefits of
local firms that have enhanced the company with easy local knowledge and entry to the market.
Use of major global branding which initially could have been incorporated in the company's research and
development expenditure. Therefore it has contributed to improve its internal efficiency as one of the company's strategic
objectives. Also economies of scale has helped to create barriers of entry against new rivalry reduce level of competition.
On the other hand one could argue that Volvo operational loss was partly due to its joint venture strategy in that, as
the company tends to increase its joint web of operations with an increase in demand and reduce its spider web when
demand falls, aiming at increasing efficiency (Volvo annual report 2009).
This implies that regardless of company initially successful pursuing the strategy, failure to analyze and coordinate
its value chain activities it has posed a threat to Volvo as it has encouraged erosion of cost advantage position (e.g. out
competed by Toyota) and hence ending up losing its customer royalty.
Through sharing local knowledge, experience and use of major global branding, the company has managed to
successful launch new diversified portfolio products that have enhanced its credibility and strength over its competitors.
According to Johansson, it has helped the company; responding rapidly with market demand growth, which seems to be
sophisticated; Reduce bargaining power of customers with diversified range of products hence, retaining its market
attractiveness. With the fact that the company is having diversified products towards achieving its competitive advantage,
one could argue that it shortened product life cycle of existing products. Implying that initially Volvo would be incurring
introductory cost for the product such as research and development expenditure as part of its fixed cost, however with short
product life cycle will mean that it will not be able to capitalize its cost at maturity stage where its benefits seems to be
accrued.
In addition to that, the loss of sales might be due to company's failure to explore its diversified existing products into
the new markets. This could have been an opportunity for Volvo to capture the market using existing resources, improving
its internal efficiency and hence increase its profit growth and so its market share. Therefore in general terms Porter's
generic strategies (1980) seem to be proved difficulty to Volvo, and basing on the evidenced above the problem might due
to the fact that the company is trying to pursue both strategies at the same time. And this proves his idea that in the real
world, irrespective of size or type of organization, it is difficult to apply a generic strategy despite being used by many
industries. http://www.ukessays.com/essays/marketing/business-strategy-in-a-global-environment-history-volvo-marketingessay.php#ixzz42Hxcagn2