Macro and micro environment

Strategic Analysis: Report

Create a critical strategic analysis report for Audi which for the content of the report please check both of module handbook and the protocol file for detail as both of them contain the word limited, the layout of the report, what does it involved, the guideline and the marking criteria of the report. also please just plenty of academic referencing and different analysis tools such as: PESTEL, Porter Five Forces, SWOT analysis etc to analysis and make the link between macro and micro environment for Audi and at last reach a conclusion as to why Audi gas been successful with their strategic.

Answer:

Introduction

Audi is the automobile brand working under the Volkswagon group. Volkswagon is a giant division that manages other strong brands Lamborghini, Bugatti, Ducati, Bently, Suzuki, Skoda, Porsche, Scania and Volkswagon commercial (Shukri et al. 2015). As Volkswagon dealing with giant automobile companies and also operates in more than 153 countries thereby giving extended exposure to Audi giving it an opportunity to expand internationally. Audi has developed itself as the leading luxury automobile brand as a reason for its immense technological and precision engineering capabilities. The leading premium car brand is successful to target multiple segments of consumers while it seeks to provide customers with leading premium vehicle in the world. Audi in progressive line with the Volkswagon group seeks to produce exclusive models that anticipate the desire and vision of clients. Audi poses significant expertise in the field of comprehension energy efficient processes, light weight construction, and effective heat management technique within the vehicles. Audi’s capability and expertise in the field of technology which in turn leads to innovation initiated since the early years of its collaboration with the Volkswagen group. Audi developed its core competency with the development of four stroke engine.

Macro and Micro environment

SWOT	Analysis
Strength
Weakness	Unlike Audi, BMW diversified into cost differentiation strategy offering a larger product portfolio, thereby increasing the rate of turnover(Shukri 2015). Such an approach allowed BMW to take the front seat in the luxury car segments leaving AUDI to lag behind. The promotional approaches by Audi are less as compared to BMW and Mercedes that promotes its products much vigorously.
Opportunities	has its presence in limited market. The company can introduce its products in the emerging markets thereby covering extended geographical territory.
Threats	Likewise any other industry, competition in the luxury car segment is high. The strongest competitor of Audi is BMW playing smartly to grab the whole of it.

PESTEL Analysis of AUDI

Porter’s five forces model

Porter’s five forces	Analysis
Threat of new entrants	The luxury car brand industry is ruled by giant players like Audi, BMW and Mercedes (Khatri et al. 2015). The threat of new entrants is relatively low as the entry barrier is significantly high and require a very high expenses of initial set up, R&D expenditure and potential strategic move to establish in the ground of strong competition.
Bargaining power of customers	Audi being the biggest client to the suppliers due to its size and brand loyalty, the bargain power of suppliers is not high rather considered to be the moderate(Anisimova 2015).
Bargaining power of consumers	The bargain power of consumers is relatively high, as a result of the high level of competition in the industry (Kirk, Ray and Wilson, 2013). Consumers get a number of branded options to deal with like BMW, Mercedes Benz, and Lamborghini. Moreover, the cost differentiation strategy by BMW is engulfing a major proportion of consumers giving the opportunity of consumer bargain (Jahn and Kunz 2012).
Product substitute	Although it is quite hard to replace automobiles in short term as how it is commonly used in global scale. However, recent statistics makes it evident that increasing number of consumers are shifting to travel through trains, buses and reasonably cheap private cars, instead of choosing luxury brand cars (Drake and Rhodes 2015). Such an attitude of consumers can develop as a potential threat in long run.
Competitive rivalry	The automotive industry is strongly positioned in the western economy. As a result, there is not much room to expand in the North American and European market (Rugraff 2012). However, the market of South East Asia is expanding at a high rate with the increase in its consumption ability. Nonetheless, Audi and its competitors such as Mercedes Benz and BMW will continue to hold on its share in the market.

Strategic capabilities

The strategic capabilities of Audi consider its efficiency, aptness of resources and expertise for long term sustainability and consistent growth.

Engineering and Technological excellence

Brand management

Value- added workforce

Culture

As per the recent statistics in January 2014, Mercedes Benz was ranked the highest selling luxury car brand in US with BMW the second lead in the industry (Mikusz, Jud and Schäfer 2015). With the focus to combat similar past results, Audi set its goal to become the leading premium car brand globally. Audi’s current approach proposed in the year 2010 and anticipated to run through 2020 is largely integrated on three tier strategy house considering Mission, Vision and goals.

Mission- “We delight Customers worldwide”

They define innovation
They create experiences
They live responsibility
They shape Audi

With the implementation of its new corporate strategy, Audi has expanded their objectives maintain its existing goals.

The goals of Audi are considered in details below.

Reach the top image position and gain customer mix
To achieve long term sustainability of processes and its auto products
To attain superior financial growth
To become the leading innovator

Business or corporate strategies

In addition, Audi employs skim-pricing model by positioning its brand in a way to facilitate customers with unique value. With its skim pricing strategy, Audi takes advantage of the relatively high demand and within the market of luxury vehicle. Nonetheless, Audi was elected to raise its price on all of its car models at the beginning of 2013 by a rate of 1-5% ( Van der Lippe 2014). This was a positive consequence of Audi’s market penetration and image as a luxury car brand that has produced better recognition and sales than expected. This model of pricing by Audi has been set to attract the customers of competitors and consequently based on the comparable vehicles in the line of Mercedez Benz and BMW.

Place: Audi place its primary outlets to directly interface with its customers. Audi reach its customers through 2800 strategically placed showrooms and dealers across the world. Audi delivered more than 20,000 vehicles to 7 countries in the first half of 2007 itself (Whitted 2012). On the other hand, in the second half of 2007, the company successfully delivered over 3000 vehicles across 20 countries (Wittmann and Reuter 2013).

International strategies- Acquisitions, Mergers, alliances

Audi, the luxury car brand was founded in the year 1932 as a result of merger between DKW, Audi and Horch. This was initiated by the state Bank of Saxony with the focus to form Auto Union AG. During this period, a purchase and leasing agreement was undertaken to take over the Wanderer’s Automobile Division. The emblem of Audi is consisting of four rings, representing the inseparable unity of the founding companies (Kirk, Ray and Wilson 2013).

Audi merged with NSU in the year 1969 and the company was named as Audi NSU. For the following 8 years, Audi manufactured the NSU products and then moved to the production of Audi vehicles solely. The company sought to amplify its name with a shift in their manufacturing. As a result, the name of the company changed to Audi AG, however AUDI maintains its NSU GmbH and Auto Union GmbH as the subsidiaries in order to hold their rich history and tradition (Anisimova 2015).Moreover, Audi prides itself as the progressive line with the Volkswagon group. Moreover, the company is significantly capitalizing on several key aspects such as Audi’s financial services arm, VW financial services AG, etc.

VRIO analysis of Audi

SSR model Application

Strategic options

The strategic options possessed by the luxury car brand Audi, is thus discussed in details below:

Innovation

Audi has increased its R&D technological expenditure by 18.2% to 4952 million on 2012 with the aim to propel its innovation leadership in the industry. Technology and engineering capabilities forms the heart of Audi’s strategic decisions for profitability and long term sustainability (Martín-Peña, Díaz-Garrido and Sánchez-López 2014).Considering its technological capabilities, the strategy initiatives of Audi include the following:

Reduction in carbon emission,
Engine efficiency
Lightweight construction
In-car entertainment features
Online assistance for drivers

Focus on customers

Supply chain management

Conclusion

References

Anisimova, T., 2015. Brand communication using symbolic brand values: implications for consumer satisfaction and loyalty. In AM2015-The Magic In Marketing-The Academy of Marketing Conference, University of Limerick, Ireland 7-9 July 2015.

Baur, F., Koch, G., Prügl, R. and Malorny, C., 2012. Identifying future strategic options for the automotive industry. In Zukünftige Entwicklungen in der Mobilität (pp. 273-286). Gabler Verlag.

Jahn, B. and Kunz, W., 2012. How to transform consumers into fans of your brand. Journal of Service Management, 23(3), pp.344-361.

Kagali, L., 2014. EMOTION DESIGN OF AN ICONIC (VOLKSWAGEN) CAMPERVAN.

Mikusz, M., Jud, C. and Schäfer, T., 2015. Business Model Patterns for the Connected Car and the Example of Data Orchestrator. In Software Business(pp. 167-173). Springer International Publishing.

Miravete, E.J., Moral, M.J. and Thurk, J., 2015. Innovation, Emissions Policy, and Competitive Advantage in the Diffusion of European Diesel Automobiles(No. 10783). CEPR Discussion Papers.

Whitted, B.E., 2012. Staging Exchange: Why The Knight of the Burning Pestle Flopped at Blackfriars in 1607. Early Theatre, 15(2), pp.111-130.

Wittmann, R. and Reuter, M., 2013. Strategic planning: How to deliver maximum value through effective business strategy. Kogan Page Publishers.