VRIN model analysis for Jaguar Land Rover Automotive PLC

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.

The Value Chain Analysis for Jaguar Land Rover Automotive PLC

The Value Chain analysis helps the Management of a company and its stakeholders in analyzing all the minor and major processes through which the company passes to manufacture its products and finally distributes them to the ultimate consumers (Kotler, 2009). The basic purpose of this analysis is to figure out the role of each and every stakeholder (suppliers, distributors, designers, developers, engineers, and leadership) in the success of the company. The following section gives detailed value chain analysis for Jaguar Land Rover PLC:

i. Market Research and R&D (Research & Development):

Jaguar Land Rover Automotive expends a huge amount on the Research and Development section in order to make its vehicles look more stunning, give better performance on the road, and provide 'value' to the customers' money. The R&D activities lead to the designing and development of innovative, stylish, and more fuel-efficient vehicles which are superior to the competition and their own previous models as well (Jaguar Land Rover Automotive PLC, 2014).

The R&D activities of Jaguar Land Rover Automotive are backed up by a fully-fledged market research which is undertaken at a huge scale. All the major members of the company's supply chain, e.g. suppliers, designers, distributors, marketing companies, etc. participate in the market research. This research helps Jaguar Land Rover Automotive in analyzing the changing market conditions and economic, political, technological, environmental, legal, sociocultural, and demographical patterns in the existing and future markets in all the regions of the world. Based on this research, the company designs its future product, pricing, promotion, and distribution strategies.

ii. The Purchase of Raw Material:

Since Jaguar Land Rover Automotive sells its products in all the corners of the world, it has set up manufacturing units and development centers in Asia (India) and Europe (UK) which are among the largest automobile markets. Jaguar Land Rover purchases the highest quality of raw material in order to produce the most valuable luxurious, sports, and executive cars for the entire world. Due to heavy expenditures on the purchase of top quality raw material, Jaguar has to charge high price for its final products in order to recover these costs and earn high profitability.

iii. Manufacturing of the Products:

The manufacturing units of Jaguar Land Rover Automotive PLC are present in Asia and Europe while the designing and development is mainly done in Europe (United Kingdom). Jaguar Land Rover Automotive has implemented the most advanced plants and machineries to manufacture products which not only meet the requirements of the customers, but also exceed their expectations in terms of quality, performance, efficiency, design, and reliability (Jaguar Land Rover Automotive PLC, 2014).

Like all other multinational automobile corporations, the manufacturing processes of Jaguar Land Rover Automotive take the highest part of its resources (including all financial, human, informational, and operational resources). While manufacturing the top quality luxurious, executive, and sports cars for different segments of consumers, Jaguar ensures that its each upcoming model brings something unique and better than the competition. This strategy further strengthens its competitive position unless the same feature in imitated or substituted by the competition.

iv. Distribution of the Products:

The distribution of Jaguar, Land Rover, and Range Rover cars is done around the Globe at a massive scale. The company has strong linkages with the world's most renowned and reliable distributors. It pays attractive commission to its distributors which not only make its products available to the worldwide consumers, but also play an important role in promoting them to the potential customers of the future. Moreover, the distribution companies also locate potential markets where Jaguar Land Rover Automotive can set up its business as a part of international expansion strategy (Jaguar Land Rover Automotive PLC, 2014).

Strategic Capabilities Analysis of Jaguar Land Rover Automotive PLC

Table 1.1: Strategic Capabilities

Sr. No.

Resources

Components

Competencies

1

Physical

Top-quality products (executive, luxury, and sports cars)

Strong brand image (union of two successful brands: Jaguar and Land Rover)

Large scale business operations (manufacturing setup and global distribution network)

Products are known for their reliability, performance, design, and innovative gadgets

Strong efforts are done to build and maintain brand image

The largest automobile manufacturer from United Kingdom

2

Financial

Strong financial position

Year by year increasing sales performance

High dividend payout

No financial issues while doing heavy investments in business expansion or Research and Development

High investor satisfaction

3

Human

employed more than 26,000 people from all over the Globe

Created over 190,000 jobs in supply chain, dealership, and marketing field worldwide.

Highly-efficient workforce

Periodical training and development sessions to develop leaders for tomorrow at Cranfield University (Cranfield University, 2014).

Employees gain skills and experience which ultimately contributes towards greater innovation, better market position, and stronger competitive advantage of the company.

Play an important role in strengthening the public image of Jaguar Land Rover Automotive (Jaguar Land Rover Automotive PLC, 2014).

4

Informational

Research and Development

Market Research

Information Management Systems (IMS)

Customer Relationship Management systems (CRM)

Inventory Management systems

Highly efficient management of manual records, human capital, and databases.

Efficient customer services and in-time delivery of products around the Globe.

Good inventory management saves heavy storage costs for both raw material as well as finished products (Jaguar Land Rover Automotive PLC, 2014).

Figure 1.1: Activity Mapping for Jaguar Land Rover Automotive PLC

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).