company internal and external analysis to identify its problem and find solutions

1. SAIC MOTOR LIMITED: WHAT’S NEW STRATEGY ADOPT?
STRATEGIC MANAGEMENT AUDIT INTERNAL AND EXTERNAL
STUDENT: 311132 TEACHER: Mr. JACOPIN TANGUY

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SUMURY
INTRODUCTION................................................................................................................................... 3
ABOUT SAIC MOTOR.......................................................................................................................... 4
SECTOR ANALYSIS............................................................................................................................. 5
I. CHINA AUTOMOBILE INDUSTRY............................................................................................ 5
II. CHINA AUTOMOTIVE INDUSTRY PEST ................................................................................. 5
1. POLITICAL ENVIRONMENT.................................................................................................. 5
3. SOCIAL-CULTURAL ENVIRONMENT.................................................................................. 6
4. TECHNOLOGICAL ENVIRONMENT..................................................................................... 6
5. ENVIRONMENTAL AND LEGAL FACTORS........................................................................ 7
III. PORTER’S 5 STRENGTHS....................................................................................................... 7
1. NEW COMERS: AVERAGE ..................................................................................................... 7
2. CUSTOMER BARGAIN POWER: HIGH................................................................................. 7
3. SUBSTITUTE PRODUCTS: HIGH........................................................................................... 7
4. COMPETITION HIGH............................................................................................................... 8
5. SUPPLIER BARGAIN POWER: HIGH .................................................................................... 8
IV. COMPETITORS FRAMEWORK .............................................................................................. 9
1. SAIC MOTOR COMPETITORS ANALYSIS........................................................................... 9
V. CORPORATIVE STRATEGY ..................................................................................................... 10
1. COMPANY CURRENT STRATEGY...................................................................................... 10
2. COMPANY CORE COMPETITIVENESS.............................................................................. 10
3. COMPAGNY MARKET SHARE ............................................................................................ 10
4. SAIC MOTOR BUSINESS PLAN ........................................................................................... 11
5. SAIC MOTOR BUSINESS MODEL ....................................................................................... 12
VI. SWOT ANALYSIS................................................................................................................... 13
1. STRENGTHS........................................................................................................................ 13
2. WEAKNESSES..................................................................................................................... 13
3. THREATS............................................................................................................................. 13
4. OPPORTUNITIES ................................................................................................................ 13
VII. PROBLEMS AND SOLUTION ........................................................................................... 14
1. PROBLEMS.......................................................................................................................... 14
2. SOLUTION........................................................................................................................... 14
REFERENCE AND APPENDIX.......................................................................................................... 17

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INTRODUCTION
The economy of china has widely grown in the last 20 years. This growth created the
emerging companies in many sectors and international companies are more and more
interested to extend their business in Chinese Market because of the wide population and
consumers.
In fact, Chinese government encouraged the internationalization of Chinese domestic firms. It
helps them to build global recognized brand.
Among the sectors that increased in CHINA, we will be more focus on Automobile sector.
This sector is very important in Chinese Economy and the government wanted to maintain
and rise its worldwide ranging of automobile manufacturer. To reach this goal, the
government took many incentives, it has more than 13 state-owned companies that operates in
this sector and in which it invests money.
Among these companies, we will focus on SAIC MOTOR LIMITED that’s the leader of
domestic market in PV1
and CV2
manufacturing, selling and developing.
We will understand what’s wrong in company strategy to make some recommendations to
improve it.
1
PV : Passenger Vehicles
2
CV : Commercial vehicles

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ABOUT SAIC MOTOR
SAIC3
MOTOR corporation was founded in 1955, it is China’s largest vehicle manufacturer
in terms of unit sales and a state-owned company. The corporation is composed of 16
subsidiaries. The company manufactures and sells commercial vehicles and passenger cars,
the production the company entire products happen in its own industry and has its own brands
MG 4
and ROEWE5 and MAXUS6. It also operates on truck assembly business, engines and
electronic components. The company operates in Joint-venture with the big international
automakers like Volkswagen and General Motors.
SAIC produces different kinds of car:
- Automotive: the group is leading sales on the Chinese market thanks to its joint
ventures with General Motors and Volkswagen but also through strategy of
competitors buying ROEWE and MG.
- Industrial vehicles and heavy trucks: SAIC also ranked first in the domestic market
thanks to the joint venture with Fiat and Iveco, SAIC Iveco is Commercial Vehicle
distributed under the Hongyan brand.
- The components: company supplies automotive components through its joint venture
with Magneti Marelli7
.
3
Shanghai Automotive industry corporation
4
sport cars
5
Sedan cars
6
Van cars

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SECTOR ANALYSIS
I. CHINA AUTOMOBILE INDUSTRY
This is the first 10th
companies in China automotive industry, as we can see SM is the leader
of with a market share of 21,4%.
II. CHINA AUTOMOTIVE INDUSTRY PEST
1. POLITICAL ENVIRONMENT
China government facilitate the development in local auto industry. it makes a lot of
investment to support R and D project and encourage automakers to innovate. The
government prioritize more hybrid and electric autos sector to reduce emission of pollution.
Government doesn’t allow to foreign automakers to operate alone in Chinese market it force
them to collaborate with local automakers companies, this strategy create competence sharing
and technology transfer.

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2. ECONOMIQUE ENVIRONMENT
China economy situation (speedy growth) plays main role in automobile industry. Chinese
government promote Chinese lifestyle by increasing people income and middle class
increasing last 10 years, so People wage and turnover rise, they can seek to buy a personal
car. Then Chinese car consumers becoming more demanding because the car is not only a
transport mean but a symbol of success that is why brands like Ferrari, Lexus had big success
in China.
3. SOCIAL-CULTURAL ENVIRONMENT
Social and cultural factors play an important role because the demography constantly growth
and change. more than 90% of population are literate that’s means that government
emphasizes on education. About automobile industry foreign automakers need to be more
deep in Chinese culture to succeed, the best way for them it’s to join “guanxi” Chinese
concept of relationship to learnt more about culture.
4. TECHNOLOGICAL ENVIRONMENT
China Government invest in research and development and innovation in automobile industry
that means that local automakers can easily produce cars with more functions as safety and
product design. Then to face problem of emission control government keeps auto industry
innovation upgrading to produce hybrid cars.

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5. ENVIRONMENTAL AND LEGAL FACTORS
Environment protection is a part of government strategy its why to reduce carbon emission
government promote friendly cars using and hybrid cars production.
However, there are others factors related to china growing auto industry like the high
consumption of petroleum, traffic noise increasing in the big cities, and lack of parking. Many
regulations exist to assure the industry success; however, the government had been accused to
baize curtains regulations, that’s can discourage the potentials investors.
III. PORTER’S 5 STRENGTHS
1. NEW COMERS: AVERAGE
Companies can entry only by joint-venture with domestic company It’s a government policy,
this incentive reduce comers Company freedom to 80% or 50%. However, brand awareness
And loyalty is important because CHINA automobile industry is wide and have more than
170 automakers.
2. CUSTOMER BARGAIN POWER: HIGH
The automakers in CHINA increased, products and services are available, domestic brands
compete with global brand to satisfy customer needs and in the same time increase they
market share. government has also rise Chinese lifestyle by wage and turnover increasing now
customer have the power to decide which brand he prefer.
3. SUBSTITUTE PRODUCTS: HIGH

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Chinese substitute cars by bicycle, Taxi, Rail transport, and motorcycle because this means of
transport are cheap then because of the wide population and lack of space the are many
problem to park.
4. COMPETITION HIGH
The competition is high between state-own, foreign financed and private-owned manufacturer
companies. This competition causes decreasing of car prices.
5. SUPPLIER BARGAIN POWER: HIGH
Suppliers have a strong bargaining power because of the number of automakers.

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IV. COMPETITORS FRAMEWORK
1. SAIC MOTOR COMPETITORS ANALYSIS
COMPAGNY BUSINESS
REVENUE
Competitive
advantage
STRENGTHS
WEAKNESSES
CHINESE COMPETITORS
SAIC
MOTOR
Manufactures
Sales
Develops PV and CV
Revenue 2015: 106.68 B $
Market share 2015: 24%
-R and D
-Big players
experience
-Leader of china
market
-Good reputation
-Government
support
-joint venture with
big player
automakers
-Weak global
presence
- unexperienced to
match global
portfolio
- have 3 own brands
GEELY Develops
Manufactures
Sales of PV
Revenue 2015: 30.14B
Market share 2015: 2,03%
Export in 24
countries
Entire strategy
focus on 1 brand
-Volvo acquisition
-Sales network
-Less advanced
technology
-Image of low-end
brand
CHERY Manufactures
Sales
Develops
Design innovation
Export in 80
countries
Strategy focus on
1 brand
-Experienced
business units
-Reduced labour
costs
-Future market size
JAC MOTOR Manufactures
Develops
Sales CV
Offer best price
Strategy focus on
1 Brand
-Distribution and
and -sales network
-Skilled workforce
-Small business
units
SAID MOTOR is the leader in CHINESE domestic market thanks to the government support
and its numerous joint-venture with the big automakers companies, however its competitors
evolve with they own resources and 1 brand. We thing that SAIC MOTOR needs to be
concentrated on its own brands, it needs to build its own brands reputation like its competitors.

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V. CORPORATIVE STRATEGY
1. COMPANY CURRENT STRATEGY
Saic motor strategy is to follow the development trend and market evolution by improving its
technology and industry to play in global market and lead future automobile industry. They
improve skills in Research in development to increase its own brands that are ROEWE,
MAXUS, MG.
Then the company want to develop key technologies in new ENERGY VEHICULE (NEV)
that will be technologically innovative with its joint-venture partners. The project NEV was
already launch since 2010 just with three of its partners there are General Motor, Volvo buses
and Volkswagen, NEV is also developed in SM8
own brands. This NEV project was
encouraged by the government that is more focused on carbon emission problem.
2. COMPANY CORE COMPETITIVENESS
SAIC Core competitiveness plays a strong role on company success and based on SM9
competitive advantage that is the fact that SM10
is the owner of its industries so company can
perfectly use economy of scale and the creation of synergy effect in production.
Then company have a leader advantage in china domestic market by government support
firstly then its numerous joint-venture with the big global company and variety of product
categories that’s allow it to react quickly to customers need. Finally, the company is mainly
focused on innovation capabilities by improving its R and D capability.
3. COMPAGNY MARKET SHARE
This table show that Saic Motors is the leader of China industry market by selling 586 million
new cars in 2015. According to Nikkei Asia review Saic motors has 23,8% of the auto market
share in China based on china annual sales estimated at 24.59 million of new cars.
8
SAIC MOTOR
9
SM : SAIC MOTOR
10

11. SEKA STRIVANE 11
Source: Autor
This graphic demonstrates the evolution of sales and market share of company in China, we
note that even if the sales volume increase company market share decrease of 6% between
2012 and 2015. It due to the fast increasing of market sales, then the good point is that SAIC
MOTOR sales didn’t stagnate.
4. SAIC MOTOR BUSINESS PLAN
SAIC MOTOR is focused on promoting development through the improving of its products
and industry quality, seizing market opportunities to control properly the balance between
production and sale, company tries to combine internal resources and innovation to reach
2015 2014 2013 2012
5863500 5620000 5100000 4490211
24590000
19928505
18084169
15523658
24%
28%
28%
30%
S.M MARKET SHARE
SAIC MOTOR SALES MARKET SALES S M MARKET SHARE

12. SEKA STRIVANE 12
more target. The company is also focusing on business internationalization; it will accelerate
and complete its internationalization process.
5. SAIC MOTOR BUSINESS MODEL

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VI. SWOT ANALYSIS
1. STRENGTHS
Support of the Chinese and SHANGAI government
Lead the domestic market
Innovative and R and D improving process
2. WEAKNESSES
SAIC R AND d still not world class
Need more skills to match international portfolio
Weak global presence
3. THREATS
Foreign companies going solo in the domestic market with the easing of rule
Oil price increase leading to cost for fuel efficient cars
Competition in the foreign market
4. OPPORTUNITIES
Market like Europe and US still untapped
Possibilities to promoting its own brand models and making them world class
New products and services

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VII. PROBLEMS AND SOLUTION
1. PROBLEMS
SAIC MOTOR OWN BRAND ARE NOT SUCCESSFUL
 Problem of brand
 Problem of design
 Problem on KBV (Knowledge base view)
 Lack of experience
Despite government support SAIC MOTOR can’t succeed with its own brands, it leads
domestic market thanks to Volkswagen and General Motors car models manufactured in the
joint-venture industry. Then company started to lose money in they own brand its why they
increase each year Research and Development expenses to improve their performance.
2. SOLUTION

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Said Motor sales volume
Source: saicgroup.com

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STRATEGY (build a big one brand = Focus on one BRAND)
This table demonstrates the sale of SAIC MOTOR and we notice that between its own brands
the most successful one is MG, so:
- Instead of finding solution to improve its 3-own brands in the same time;
- SM11
needs to be focus one the successful one that’s MG;
- It will allow SM to be focus its resources, capabilities and RD to improve one brand in
term of design, innovation, technology;
- Brand awareness will be created and company will to compete in international market
will can be more possible.

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REFERENCE AND APPENDIX
http://www.saicmotor.com/english/company_profile/about_us/index.shtml
http://www.saicmotor.com/english/images/investor_relations/annual_report/2016/6/7/1C117E
345F254379966260F97C5D9353.pdf
http://www.ccilc.pt/sites/default/files/eu_sme_centre_sector_report_-
_the_automotive_market_in_china_update_-_may_2015.pdf
http://www.wsj.com/articles/heard-on-the-street-saic-motor-gets-ready-for-wider-audience-
1408006936
http://www.zawya.com/story/Accelerating_its_strategy_of_internationalization_SAIC_MOT
OR_makes_its_Middle_East_debut_at_the_Dubai_International_Motor_Show_2015-
ZAWYA20151111104034/
http://pratclif.com/economy/china/automobile/
http://www.swotanalysis24.com/swot-s/93720-swot-analysis-saic-motor-corporation-
limited.html
http://www.saicgroup.com/english/investor_relations/sales_volume/index.shtml
http://mixsa.weebly.com/master.html
http://www.slideshare.net/aravindmenonm/auto-industry-country-risk-analysis
http://www.saicmotor.com/english/index.shtml
https://fr.wikipedia.org/wiki/Shanghai_Automotive_Industry_Corporation
www.google.fr
www.wikipedia.fr

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