Daewoo

1. IntroductionThe induce of this report is to critically evaluate the Daewoos 1995 UK automotive trade entrance. After entering the highly warlike British gondola car diligence, Daewoo managed to achieve a competitive favour by focusing on delivering effective client inspection and repair. We seek to understand why establish car firms did not respond to client ask prior Daewoos entrance and what strategies they could possibly adopt to outper motley Daewoo presently.The report also takes a look at the innovations associated with the UK entry of the Korean car manu pointuring business and how they could sustain these innovations to retain and build on their subsisting food commercialise share. Possible notice extension strategies go away be suggested for Daewoo to follow subsequent to the successful launch of the car. We lastly assess other sectors where firms could achieve a competitive advantage by applying a customer-centred system.2. Analysis of the Case 2.1 Dil emma facing the car industry The industry is faced with two main choices when responding to Daewoos challenge. The first of which is to save resources and not respond establish on the belief that Daewoos competitive advantage is not sustain fit. Daewoos direct dissemination strategy testament incur increased customer service and logistics costs (Doyle and Stern, 2007) and the firms current scrappy promotional strategy will also affect their bottom tr close.Furtherto a greater extent, the post modern criticism of delivering much(prenominal)(prenominal)(prenominal) high service levels is that it is unsustainable collect to the fact that the customer will simply increase their expectations in line with improved offerings (Kotler et al, 2007). However, such a strategy would involve a high level of risk. The second natural selection for responding to Daewoos challenge is to adopt defence strategies (Lambin, 2007). We feel that it is important to establish that there is no everyd ay strategy and individual players would be advised to review whether the threat of Daewoo is relevant to their target market.For example, high end car manufacturers such as Audi and Mercedes are highly unlikely to suffer any repercussions as they do not target the same price sensitive market. Companies that do target price sensitive customers (such as Ford, Fiat and Renault) would be advised to take a much more direct approach only. The well-nigh appropriate mode of doing this would be through a combination of office, flank and pre-emptive defences (Lambin, 2007). Firstly, through a localization defence, it would be recommended that manufacturers utilize their alert home run equities and customer build.Daewoo do not returns from a long standing presence in the UK market and, as a result, protecting existing customer databases is a crucial element in defending market share. A combination of fender and Pre-emptive defences would be recommended to address the threat brought ab out by Daewoos dispersion strategy. An obvious way of doing this would be to imitate the strategy and meet or even go through the standards set by Daewoo. However, this would be a costly and difficult process to implement due to the high exit barriers caused by existing distribution agreements.Therefore, to pre-empt the next move in Daewoos strategy would be a more viable declaration and could give the competition a first mover advantage. The growth of e-commerce and internet usage in 1998-2000 was scarce (BBC, 2010) and developing an online platform represents an luck to create an interactive and cost effective distribution strategy. Adoption of such a solution would allow manufacturers to lead digital convergence and offer further decreases in emphasize and intrusion into the customers decision making process.2.3 Customer-focused approach According to the pre-launch research conducted by Daewoo, the boilersuit standard of customer service in the UK car market was low. The maj ority of consumers suffered from unpleasant buying experiences due to apathy from dealers, inconsistent pricing and poor after-sales service. This provided Daewoo a competitive advantage by operating as a customer-focused brand. The Korean conglomerate focused on optimizing their customer services, including an exceptional showroom atmosphere (Rodgers, 1995). despite of this example, the industry had failed to innovate in a customer-focused manner. The fundamental reason is that as the UK car industry expression had remained unchanged for one hundred years. Conventional innovation approaches include building high quality cars (Volkswagen and Toyota) or offering low prices as (Lada). However, they did not break the tradition by investing in an innovative, customer-focused strategy.An supernumerary cause could be that UK automobile manufacturers were highly conservative. According to Whittington (2010) customer centric strategies are so hard that requires the company not only analy se the problem from the market researches, but also develop an documental view to consider financial and operable issues. We feel that, that on consideration of the financial and operational enthronisation required, manufacturers denoted the risk of following such a strategy was too high risk.The last possibility is that the market did not believe this kind of customer-focused innovation was feasible and underestimated the importance of after-sales services and the ever-changing customer trends. The opportunity was clearly shown through market research data, however we feel it was ignored and the market change adverse. Ironically, they failed to visit a market entrant could identify and achieve a competitive advantage through customer-focused innovation. Daewoos successful launch strategy taught the market a bitter lesson.2.4 Sustainable competitive advantage Daewoo has achieved its aim of gaining circa 1% share of the UK new car market. A challenge the company now faces is to sustain this position and improve it further in the future. As highlighted in 2.1, it can be argued that Daewoos competitive advantage is not sustainable. It could, therefore, be easily imitated by competitors, substituted by rivals offerings and as a result lose their tenuity and be less orderd by customers in the longer-term (Barney, 1991 Srivastava et al, 2001 Kotler et al, 2009). In order to avoid such a fate, the company should undertake a number of steps. Firstly, it should improve the quality of cars to be able to compete more effectively with competitors when they inevitably counter act Daewoos strategy.High quality cars combined with the brands positive image and reputation gained during the launch stage will help to retain customers. Secondly, it should conduct market research regularly to collect information about customers needs. This will get a line the company will cover up tailoring its products and services to meet these needs better than competitors. Moreover, th e company should continue innovating customer services to run for a competitive advantage. It should constantly seek new ways for the whole experience of buying a car, so that it can offer something else when competitors copy its current innovations. For example, Daewoo might launch a website where customers are precondition an option to co-create a car by adding features or add/exclude services.Finally, the company has been emphasising weaknesses of other car makers in its announce efforts so far. It should start to focus more on its own strengths communicate them in an effective manner. It will be problematic and expensive to attract customers and raise awareness with the current advertising when competitors improve their services. It is important to bear in mind that it will take some time for competitors to cope with Daewoos critical success factors as they might need to go through cultural, structural and operational changes (Woodruff, 1997). Daewoo has an invaluable opport unity now to build further on its existing capabilities to sustain its market position and become a stronger competitor in the future.2.5 Other sector optionsCustomers today are strongly foster oriented. Knowing where value resides from the standpoint of the customer has become extremely critical for managers, because greater levels of customer satisfaction lead to greater levels of customer loyalty and retention, positive word-of-mouth, a stronger competitive position and ultimately, higher market share (Kotler et al, 2009). Daewoo attacked an industry as competitive as the car sector through a value and customer service strategy. Successful companies manage to invert the traditional organisation chart by placing customers at the top of the pyramid as opposed to managers who believe that the customer is the companys only unbent profit centre (Kotler et al, 2009).Customer-centred companies such as Amazon.com are in a strong position to identify new opportunities and set a course that promises to deliver long term profits due to its customer orientation (Kotler et al, 2009). A firm can achieve competitive advantage in other industries such as travel, banking, insurance, airlines, retail and fast moving consumer goods by employing a customer-focused strategy. The illustration of how Southwest Airlines achieved a clean-cut advantage in an extremely competitive industry such as the airline industry by focusing on delivering higher customer value bears testimony to this.Customers place high value on Southwests frequent departures, on-time service, friendly employees and very low fares (Heskett et al, 1994). However, it is imperative to understand the fact that not all firms are able to achieve a competitive advantage through superior customer service (Lambin, 2007). A company should have the internal capabilities and resources to adapt to ever changing customer needs. The service level provided must also be appropriate to the target market in order to exceed cu stomer expectations. 2.6 Brand extensionMarketers must judge each potential brand extension by how effectively it leverages and contributes to brand equity. With the right product fit, the customers perception of the parent brand can reduce perceived risk within numerous consumer or B2B decision making processes (Kotler, 2009, Webster, 1991). The Daewoo brand has become synonymous with exceeding customer expectations. This creates numerous brand extension opportunities.As in 2.5, Daewoo should however ensure that this is related to their core competencies to maximize the likelihood of success. We feel that an ideal opportunity comes in the form of extending the Daewoo brand to the commercial vehicle segment. This would not require the company to re-plan their entire marketing strategy as this would hold true for targeting small to medium business (SMBs) markets as well as consumer. Furthermore, Daewoo would be able to leverage their partnership with GM to reduce research and develop ment costs by re-branding other Vauxhall/Opel models such as the Corsa van. An increasingly diversified, yet viable option would be to extend the Daewoo brand to motorcycles.This would again enable the company to leverage its brand equity and distribution networks however the product and market is outside their existing cognition base. In order to overcome this lack of knowledge and competence, we would recommend that Daewoo follow a alike(p) alliance strategy that they previously adopted with GM with a leading motorcycle manufacturer. Although this is likely to ensure that the core product will be of a high quality, Daewoo must be mindful of the fact that their existing staff will require extensive product training maintain service levels.The final and most diversified brand extension would to utilize Daewoos brand equity within the financial Services sector (motor insurance). As with the motorcycle market however, Daewoo do not currently have the knowledge or resources to compet e in the market. In this instance, we would recommend Daewoo to operate a franchise partnership with a suitable insurance provider. As stated above, it is however imperative that Daewoo ensure that both the core and increase product fit with their brand.3. ConclusionsConcluding on our evaluation of the 1995 launch of the Daewoo automotive brand into the UK market, it is clear that it was a success. The company capitalized on a weakness in the market by leveraging their knowledge base and extensive resources to provide exceptional customer service. Sceptical views of the strategies longevity are however justified. The innovative distribution strategy adopted requires additional expenditure and the companys aggressive marketing activity will again affect the bottom line. It is clear that in order to remain stable in the market and maintain a sustainable competitive advantage, the company must continue to understand and satisfy the needs and wants of the customer.Although brand extens ions offer a lucrative growth opportunity, the company must not allow this to bear away from their main competency- customer satisfaction. With regards to the market environment, Daewoos competitors have no one to blame but themselves. disregardless of this, they must adopt effective defence strategies to match and exceed Daewoos market offering in order to protect their market share from further depletion. Furthermore, to pre-empt and lead the next major development in customer satisfaction will be imperative to long term success.