Jaguar Land Rover's competitive advantage through VRIN analysis

Jaguar Land Rover Automotive PLC

Company Profile:

Jaguar Land Rover Automotive PLC is a British multinational corporation that designs, develops, manufactures, promotes, and sells automobiles under the brand names of Jaguar and Land Rover, including Range Rover brand. Jaguar Land Rover is the United Kingdom's largest automobile corporation that took its roots from a couple of strongest automobile brands: Jaguar and Land Rover. Currently, Jaguar Land Rover Automotive PLC is a renowned subsidiary of India's most successful automobile group -- Tata Motors. It is headquartered in Whitley, Coventry, United Kingdom. Tata Motors acquired Jaguar Land Rover in 2008 from Ford Motor Company. The major subsidiaries of Jaguar Land Rover Automotive PLC include: Jaguar Land Rover Holdings Limited, Jaguar Land Rover Limited, Jaguar Land Rover India, and Chery Jaguar Land Rover. Jaguar Land Rover was the result of a union between Jaguar Cars and Land Rover which Ford Motor Company did in 2002 (Jaguar Land Rover Automotive PLC, 2014).

Out of the six major Research and Development, manufacturing, and assembly facilities of Jaguar Land Rover Automotive PLC, five exist in the United Kingdom while one is present in India. The most famous Jaguar cars include: Jaguar XJ (luxury car), Jaguar XF (executive car), Jaguar F-Type (sports car), and Jaguar XK (Grand Tourer) while Land Rover brand sells Land Rover Freelander, Land Rover Defender, Land Rover Discovery, Range Rover, Range Rover Sport, and Range Rover Evoque. Jaguar Land Rover Automotive PLC has currently employed more than 26,000 people from all over the Globe whereas it has created over 190,000 jobs in supply chain, dealership, and marketing field in different regions (Jaguar Land Rover Automotive PLC, 2014).

VRIN Model Analysis for Jaguar Land Rover Automotive PLC

No company can achieve a sustainable competitive advantage if its products do not give 'value' to the customers' money; are easily substitutable and imitable by the competitors; or have nothing specific feature which is rare to be found in other competitors (Kotler, 2009). This criterion defines how stronger a brand is against its industry rivals. The analysis which helps the Management of a company and its key stakeholders in assessing the sustainability and competitive strength in the market is called VRIN Model (Panda, 2008). It stands for: value, rarity, inimitability, and non-substitutability. This section presents VRIN Model analysis for Jaguar Land Rover Automotive PLC:

i. Value:

Jaguar Land Rover Automotive has created value for its brand by manufacturing products that are state-to-the-art and totally meet the expectations of its customers. Due to their luxurious design and exceptionally remarkable performance on the road, Jaguar Land Rover Automobiles are now considered as the most competitive, reliable, and successful vehicles of the 21st Century. In order to create value for its brand and the Group as a whole, Jaguar Land Rover Automotive PLC keeps an eye on its internal strengths and weaknesses and looks for attractive opportunities which are available in the market (Jaguar Land Rover Automotive PLC, 2014).

By using its strengths along with the available opportunities, Jaguar Land Rover Automotive neutralizes, or at least weakens the external threats which are harmful for its business growth (Kotler, 2009). The 'value' which Jaguar Land Rover Automotive provides to its customers and other key stakeholders also serves as a competitive advantage which becomes a threat for its rivals; which include General Motors, Toyota, Honda, Ford, BMW, Mercedes, etc. (Jaguar Land Rover Automotive PLC, 2014).

ii. Rarity:

Jaguar Land Rover Automotive has a number of rare characteristics and advantages which are either possessed by just few competitors or are highly unreachable for the whole industry. For example, Jaguar Land Rover Automotive PLC was created as a union between two luxurious and top quality brands (Jaguar Cars and Land Rover Automobiles) which allowed it to combine the technologies and strengths of these strong brands (Jaguar Land Rover Automotive PLC, 2014). Secondly, the huge investments required in each and every section of manufacturing and assembly processes cannot be borne by all automobiles corporations. Jaguar Land Rover Automotive also takes advantage from Tata Technologies Limited which is a successful entity of the Group (Tata Motors).

Although these strengths and advantages do not seem sustainable in the long run due to frequent mergers and acquisitions taking place in the Global automotive industry, Jaguar Land Rover Automotive can still strive to strengthen its current market position by using its distinctive competencies which are highly rare for the competitors (Jaguar Land Rover Automotive PLC, 2014).

iii. Inimitability:

Inimitability refers to the strengths and advantages of a company which its competitors cannot imitate or obtain easily (Harrison & John, 2014). Unfortunately, Jaguar Land Rover Automotive does not have any strong feature which is highly inimitable for its competitors. Its competitive advantages like luxurious design, highly innovative gadgets, use of supreme technology, and remarkable on-the-road performance, etc. are rare to be found in a single brand except few top brands, but these can be easily imitated if small and low-quality brands can arrange sufficient financial and operational resources.

iv. Non-Substitutability:

There are numerous ways in which the products of Jaguar Land Rover Automotive can be substituted. Jaguar Land Rover is not only a premium priced brand, but also offers a number of cars with similar designs to other brands like (Land Rover vs. Toyota Land Cruiser, Jaguar executive cars vs. Mercedes executive cars, etc.). Therefore, it cannot be said that Jaguar Land Rover Automotive can ensure a sustainable competitive advantage with respect to the non-substitutability of its products. Similarly, the gadgets and features available in Jaguar Land Rover cars are also present in luxurious cars offered by other manufacturers.

PESTLE Analysis for Jaguar Land Rover Automotive PLC

Jaguar Land Rover Automotive PLC operates at the Global level. Therefore, it has to face a number of external forces from its business environment which affect its business operations and financial performance in one way or another. The major forces which are present in the external environment of this automotive giant include; political and governmental forces, economic forces, social, cultural, and demographical forces, technological forces, legal forces, and environmental forces (Hitt, Ireland, & Hoskisson, 2009). These external forces are collectively analyzed using PESTLE Analysis. This analysis helps to infer whether a particular external force is favorable for the company or putting hurdles in its road to success (Kotler, 2009).

i. Political and Governmental Forces:

Political and governmental forces are one of the most important parts of the external business environment. These forces affect the company right from its entry into a particular market to its actual expansion and growth in the long run. Being a fully-luxurious and premium brand, Jaguar Land Rover also has to pay heavy taxes and duties to the local governments on every single unit it produces. These duties and taxes put direct negative pressures on the company's profitability (Kotler, 2009).

ii. Economic Forces:

Being a multinational corporation, Jaguar Land Rover Automotive PLC experiences diverse economic environments in different regions of the world. The countries where exchange rates, inflationary pressures, interest rates, and overall industry infrastructure is favorable for their automobile industries, Jaguar Land Rover does not have to face any difficulty in making attractive revenues in their markets (Quadros & Consoni, 2009). On the other hand, developing and under-developed countries have frequent exchange rate fluctuations, high interest rates and inflation, and poor industry infrastructure and market conditions -- all of which create immense negative pressures on the company's financial performance. Economic forces consist of those factors which are affecting the company at present as well as have unpredictable impacts on its operations and profitability in the long run.

iii. Social, Cultural, and Demographic Forces:

Jaguar Land Rover also has to face diverse social, cultural, and demographic environment in its international operations. The countries where there is a strong scientific and educational culture and their people demand more innovative and economical automobiles are the most potential target market for Jaguar Land Rover. Similarly, car culture, family size, income levels, demand for economical vs. luxurious cars, brand loyalty, features preferences and other various factors impact the performance of Jaguar Land Rover quite differently in different regions of the world.

Among other things, the social, cultural, and demographic forces also affect the marketing and promotional mix of Jaguar Land Rover, i.e. It has to carefully analyze the consumer behavior and preferences while designing its product, pricing, promotional, and distribution strategies in every region. In order to be successful in the market, Jaguar Land Rover makes customer segments and markets in different brands according to the tastes and preferences of each segment.

iv. Technological Forces:

Jaguar Land Rover also recognizes the importance of technological advancements in the Global automotive industry. In order to design, develop, and manufacture the most innovative and fuel efficient automobiles, Jaguar Land Rover has implemented the latest plants and machineries at its production units. Tata Technologies Limited -- one of the most successful subsidiaries of Tata Motors largely help Jaguar Land Rover Automotive in keeping itself innovative and competitive against its industry rivals (Kumaraswamy, Mudambi, Saranga, & Tripathy, 2012).

Since customers need quality, innovation, design, and fuel-efficiency at the same time, Jaguar Land Rover Automotive focuses on designing and manufacturing its automobiles which are the best among its competition in all aspects (Hitt, Ireland, & Hoskisson, 2009). Jaguar Land Rover is also introducing new and innovative features and gadgets in its automobiles in order to make them unique than its competitors' automobiles. It expends billions of pounds in acquiring new technologies and making its business operations more efficient and competitive (Jaguar Land Rover Automotive PLC, 2014).

v. Legal Forces:

The legislative requirements for the automobile industry are comparatively strict than those for other manufacturing industries all over the Globe. Jaguar Land Rover Automotive not only has to follow the local laws and regulations imposed for environmental protection, labor rights, fuel-efficiency, and other areas, but also has to keep in view the varying standards in different countries. In order to operate in a legal and effective way, Jaguar Land Rover has to adhere to all the local and international laws and regulations that govern the Global automobile industry (Henry, 2011).

vi. Environmental Forces:

Jaguar Land Rover has to follow the environmental protection standards, fuel-efficiency standards, plant efficiency and size, labor and customer safety standards, CO2 Emission standards, and other legal and governmental requirements at the Global level. These standards and requirements are same for all small and large scale corporations in the automotive industry. However, the investments required in making business operations environment friendly can only be borne by large scale automobile companies. Jaguar Land Rover, being one of the most successful corporations in the industry also strives to become an environmentally responsible business entity in the eyes of its customers, investors, and other primary stakeholders (Jaguar Land Rover Automotive PLC, 2014).

The Contribution of Leadership in the Success of Jaguar Land Rover Automotive PLC

Jaguar Land Rover Automotive PLC has always remained in the hands of renowned multinational corporations. Currently, it is under full-ownership of Tata Motors, the largest automobile group of India. Tata Motors acquired Jaguar Land Rover Automotive from Ford in 2008. In 1989, Ford acquired Jaguar Cars as a part of its business expansion strategy. Later in 2000, it also acquired Land Rover from BMW which is also among the market leaders in the Global automobile industry. After Tata Motors acquired Jaguar Land Rover Automotive in 2008, it subsequently hired thousands of employees to support its business expansion strategy (Jaguar Land Rover Automotive PLC, 2014).

Since its acquisition by Tata Motors, Jaguar Land Rover Automotive PLC has made tremendous growth in all the regions of the world. At present, all Jaguar Land Rover luxurious, executive, and sports cars are sold in 178 countries in all the six operating regions in the world. The Chairman of Tata Motors, Mr. Ratan Tata headed Jaguar Land Rover Automotive PLC from its acquisition to the end of year 2012 and contributed a big part in its international growth. Tata Motors took this subsidiary to the heights of success by formulating aggressive growth strategies in all three directions: diversification, backward and forward integration, and expansion (Jaguar Land Rover Automotive PLC, 2014).

The future growth strategies of the company include; gaining more stake in Chery Jaguar Land Rover, Changsu, China (which is currently 50%); set up of Wolverhampton Engine Plant; establishment of National Automotive Innovation Campus, Warwick, UK; international expansion strategy in Brazil (JLR Brazilia, Itatiaia); etc. (Jaguar Land Rover Automotive PLC, 2014).

In the leadership of Tata Motors, Jaguar Land Rover Automotive has seen steady growth in its sales performance in all the regions of the world. According to the latest figures, more than 21% of its sales were earned from European region; 20% from Chinese market, 19%from United Kingdom, 16% from the United States, and remaining from Asia and the rest of the world during the previous year.

An Effective Innovation Strategy

Jaguar Land Rover Automotive PLC has always been a market leader in innovation and state-of-the-art technological processes. The innovative and stunning designs of the automobiles, engineering miracles that happen at Jaguar Land Rover production units; and technological advancements occurring in the automobile industry -- all contribute towards the success of this automobile giant. Jaguar Land Rover Automotive is ranked number one in the expenditures which automobile companies in UK make in their Research and Development efforts. Through its R&D efforts and innovative business processes, Jaguar Land Rover Automotive PLC is able to manufacture world-class automobiles which are more environment-friendly, more fuel-efficient, and more reliable in the eyes of its customers (Jaguar Land Rover Automotive PLC, 2014).

Jaguar Land Rover Automotive made high investments in R&D during the last decade which enabled it to outshine the competition in the race of innovation. The latest innovation strategy of Jaguar Land Rover Automotive also includes an extensive usage of virtual engineering which uses 3D imaging and printing to design automobiles for the future generation. In addition to these innovative processes, Jaguar Land Rover Automotive is also the top market leader in aluminum.

Due to large scale use of aluminum, the company is able to produce cars which are lighter in weight by almost 40%, more environmental friendly, and more appreciated by the worldwide customers. The use of aluminum has also given a number of other benefits to the company. For example, the lighter vehicles cost less while shipping to other countries. Moreover, Jaguar Land Rover Automotive has also introduced Virtual Customer Experience which enables the customers to virtually see their favorite cars from different angles before actual purchase (Jaguar Land Rover Automotive PLC, 2014).

Conclusion

Jaguar Land Rover Automotive PLC has made tremendous growth during the last decade; especially after its acquisition by Tata Motors. It not only expanded its business operations in to new potential markets, but also strengthened its market standing through innovation and unmatchable competitive advantages. In the leadership of Tata Motors, Jaguar Land Rover Automotive significantly improved its sales volume in all the regions of the world. It strengthened its brand value, non-substitutability, inimitability, and rarity among its industry rivals.

With the help of its current strengths and the available opportunities in the market, Jaguar Land Rover Automotive strived hard to overcome its weaknesses and faced highly challenging threats. With the use of innovative procedures and highly efficient manufacturing capabilities, Jaguar Land Rover Automotive achieved the top market leadership position in the United Kingdom with respect to sales performance, R&D outcomes, and competitiveness (Jaguar Land Rover Automotive PLC, 2014).