Village Automotive Group Case Solution

The Harvard Business Review published a case study that primarily focuses on Village Automotive Group. The following case solution has been designed to give the reader an overview about the business world along with a clear understanding of its growth dynamics. Recently, Village Automotive Group has been subjected to strategic as well as managerial problems that require immediate attention so that they can be resolved to allow future growth, expansion, and competitive edge within the marketplace. This case study solution is being written to provide a strategic solution to Village Automotive Group using various appropriate tools and frameworks. Harvard Business Review’s case studies involve a central problem that is faced by a particular company. The problem identified involves strategic and managerial implications for the company. Therefore, it is important for readers to critically identify the problem Village Automotive Group faces. Moreover, it is also essential to highlight the key stakeholders that are impacted and influenced by the problem identified.

External Environmental Analysis

The external environment holds significant importance for Village Automotive Group to ensure that the company is able to respond to all the changes in the macro-environment. This is because Village Automotive Group cannot control the factors and thus can directly influence the company's operations (Indris & Primiana, 2015). The external environment of Village Automotive Group will be assessed using PESTLE Analysis.

Political

• A stable political environment provides a favorable market growth trend for Village Automotive Group.

• It is important for Village Automotive Group to analyze the pressure groups, and social environment activists. The company can make close collaborations with these groups to achieve company goals (Wang, Wang, & Shi, 2022).

• High restrictions on trade and high levels of taxes can contribute to the complex business environment for Village Automotive Group by impacting imports and exports.

Economic

• Village Automotive Group can benefit from wide-range opportunities in business growth by operating in developing economies (Munro, 2017).

• High GDP can determine the long-term growth strategies of Village Automotive Group, signaling the ability of consumers to spend on more products.

• Higher rates of interests can provide Village Automotive Group with more investment opportunities.

• The flexibility in the labor market allows Village Automotive Group to take advantage of higher workforce productivity.

Social

• The selection of appropriate demographic segments has allowed Village Automotive Group to select the right segments of the market that have high growth potential.

• The research on gender roles has helped Village Automotive Group to develop and align communication as well as marketing strategies accordingly.

• Village Automotive Group has been successful in understanding the norms and cultures of different countries by developing local teams and partnerships (Hueske, Endrikat, & Guenther, 2015).

Technological

• The adoption of innovative marketing techniques that involves communication technologies has allowed Village Automotive Group to collaborate successfully with consumers.

• The company has stayed ahead in the market, and can significantly increase its market share by placing its major focus on emerging technologies (Akpoviroro & Owotutu, 2018).

• Village Automotive Group should maximize its profits by investing in disruptive technologies.

Environmental

• It is crucial for Village Automotive Group to adopt effective waste management practices to reduce environmental pollution (J. K, W. J, & D., 2016).

• Village Automotive Group should adopt eco-friendly products to establish better relationships with the stakeholders.

• Village Automotive Group can take advantage of subsidies offered in renewable technologies to achieve the long-term goal of sustainability.

Legal

• Village Automotive Group should follow proper laws concerning employee health and safety, and anti-discrimination laws to effectively develop HRM.

• Consumer protection laws are also important for Village Automotive Group as it involves the consumer protection from fraudulent marketing (S. Samusenko, S. Plaskova, & A. Prodanova, 2020).

• Village Automotive Group can gain a competitive advantage, and can position itself strongly in the market by protecting intellectual property laws.

Porter’s Five Forces Analysis

Threat of New Entrants

• It is difficult to achieve economies of scale in Village Automotive Group’s industry, making it a weaker force for new entrants.

• There are high capital requirements in the industry. This makes it difficult for new businesses to set up their companies, and compete against Village Automotive Group.

• The industry has a strong product differentiation, and heavy investment is needed for customer acquisition. Thus, Village Automotive Group can focus on innovation to differentiate itself from its competitors (H. Th. Bruijl, 2018).

• There are strict legal requirements to join the industry in which Village Automotive Group operates, making it difficult for new entrants to enter the market.

Bargaining Power of Suppliers

• The bargaining power of suppliers in the industry is weak.

• Village Automotive Group operates in an industry with a higher number of suppliers. This means that suppliers do not have much control over their prices.

• Standardized products that have low switching costs are provided by suppliers allowing buyers like Village Automotive Group to easily switch their suppliers (Fabbri & F.Klapper, 2016).

• Raw materials can be purchased at lower prices by Village Automotive Group. The company can also switch suppliers for more reasonable pricing.

• Village Automotive Group can benefit from a variety of suppliers as it can have multiple suppliers for its various geographical areas (Cho, Ke, & Han, 2019).

Bargaining Power of Buyers

• The bargaining power of buyers in the Village Automotive Group industry is weak.

• There is a high product differentiation in the industry, making it difficult for buyers to switch to alternative firms.

• Village Automotive Group can come with differentiated and innovative products to attract more buyers of the industry (Zhao, Zuo, & Wu, 2016).

• Buyers of this industry has low incomes. This means they prefer to purchase items at lower prices, making them more price sensitive. Organizations like Village Automotive Group can offer lower prices to attract customers.

Threat of Substitute Products or Services

• There are few substitute products available in the industry in which Village Automotive Group operates.

• Expensive substitutes are available in the industry of Village Automotive Group, making it difficult for buyers to switch to those substitutes (Aithal, 2016).

Rivalry Among Existing Firms

• The rivalry among existing firms is moderate to weak.

• There are few competitors in the industry in which Village Automotive Group operates.

• A large market share is enjoyed by fewer firms in the industry. This means that more competitive actions will be made to become leaders in the market (Seema, 2016).

• The industry in which Village Automotive Group operates has highly differentiated products, making it difficult for companies to win each other customers.

• Village Automotive Group can focus on making more differentiated products to gain a strong competitive edge in the market (Zhao, Zuo, & Wu, 2016).

Internal Environmental Analysis

Village Automotive Group can use internal environmental analysis to identify and evaluate the competitive positioning of a company in the business environment. This involves conducting a SWOT Analysis that can help Village Automotive Group to identify the company’s internal strengths, weaknesses, opportunities, and threats (Halmaghi, Iancue, & Băcilă, 2017).

SWOT Analysis

Strengths

• Village Automotive Group has a strong distribution network that has allowed it to make its products available to large customers within the given timeframe.

• A strong presence on social media platforms has allowed Village Automotive Group to have a high level of customer engagement (Rizaldi, 2015).

• Village Automotive Group has been successful in building a large product portfolio, so unique and distinctive products can be offered to consumers.

• Village Automotive Group has a strong brand image in the market.

• A low-cost structure of Village Automotive Group has allowed it to manufacture products at lower costs, so they become affordable for consumers to purchase.

• The financial position of Village Automotive Group is strong as the company has generated higher profits over the past years (Phadermrod, M.Crowder, & B.Wills, 2019).

• Village Automotive Group has invested in the training and development of its employees to keep them motivates, leading to higher efficiency and productivity.

Weaknesses

• The expenditure of Village Automotive Group on its research and development is comparatively less to other competitors of the market.

• Village Automotive Group uses a centralized decision-making process that takes time and reduces operational efficiency (Ahmadi, Dileepan, & K. Wheatley, 2016).

• There are high rental costs because Village Automotive Group operates on more of the rental properties rather than purchasing them.

• There is no workforce diversification in Village Automotive Group. This makes it difficult for the employees to adjust with the different workers who belong to different backgrounds.

Opportunities

• Since the online shopping has increased significantly, Village Automotive Group can take it as an opportunity to expand its online presence.

• Village Automotive Group can make use of social media platforms to market its products, with more customers interactions.

• Due to more technological developments, Village Automotive Group can make its operations more automated so that overall company costs can be reduced (Ahmadi, Dileepan, & K. Wheatley, 2016).

• Globalization provides an opportunity to Village Automotive Group to expand its operations in multiple countries.

• Village Automotive Group can enter in a niche market and sell distinctive products to gain a competitive advantage.

• The increase in the demand of environmentally friendly goods, Village Automotive Group, can place its major focus on making such products (E.Quezada, A.Reinao, & I.Palominos, 2019).

Threats

• In recent times, there has been an increase in the bargaining power of suppliers, making it difficult for Village Automotive Group to buy raw materials at lower costs.

• Numerous players are entering the industry, posing a major threat to Village Automotive Group.

• There has been constant pressure on Village Automotive Group to conduct frequent research to understand the changing customer tastes and preferences (Kolbina, 2015).

• Technological advancements require workforce training. This adds to the costs of Village Automotive Group.

VRIO Analysis

Village Automotive Group uses VRIO Analysis to assess and evaluate the company resources to determine the competitiveness, and strategic advantage.

Valuable

• Village Automotive Group has a strong brand image and engages in corporate social responsibility.

• Village Automotive Group has a high brand recognition because of the quality of products it offers to its customers (Ariyani & Daryanto, 2018).

• The distribution system of Village Automotive Group is valued all round the world. The company has been able to successfully establish strong relationships with its suppliers.

• Village Automotive Group focuses on continuous innovation in its business. The company has expanded this innovation in its multiple functional areas.

• There are potential growth opportunities in the market, and Village Automotive Group has been able to penetrate the market through its ability to raise large funds.

Rare

• Village Automotive Group operates globally. This global presence has allowed the company to increase its customer base (Miethlich & G. Oldenburg, 2019).

• Village Automotive Group has an organizational culture that promotes more teamwork, innovation, and creativity among its employees, that leads to a competitive advantage.

• Since Village Automotive Group has a global presence, it allows the company to easily adapt to different cultures, norms and values.

• The risk-taking ability of Village Automotive Group is strong. This provides more opportunities to the company to penetrate different markets.

Inimitable

• The inimitable resource for Village Automotive Group is its high-quality products. These products have allowed consumers to make repeat purchases.

• Village Automotive Group operates through multiple locations of stores in different companies, allowing easy access to products.

• Strong marketing communications have been used by Village Automotive Group to attract more customers.

• Village Automotive Group has been using integrated technology that has allowed it to offer competitive pricing to its customers (Ariwibowo, Saputro, & Haryanto, 2021).

• Village Automotive Group maintains an excellent customer service that has enabled it to have a high brand engagement.

Organization

• Strong financial position has allowed Village Automotive Group to explore more product development opportunities.

• Village Automotive Group is successfully maintaining the efficiency and effectiveness of its business operations with the help of more integrated and advanced technology.

• Employees are given both in-house and off-the-job training opportunities by Village Automotive Group that allow more skills development (Adnan, Abdulhamid, & Sohail, 2018).

• The strong value chain and distribution network has enabled Village Automotive Group to increase its revenue through the sale of its products.

Marketing Mix

Marketing Mix is needed by Village Automotive Group to formulate effective strategies to achieve the company objectives.

Product

• Village Automotive Group has five product categories. Each of these categories has a product line that involves more variety of products (Išoraitė, 2016).

• Highly differentiated products are offered by Village Automotive Group to its customers. These distinctive products are not easily available at competitors.

• The products of Village Automotive Group are of higher quality, and thus, customers pay more prices for these products.

• Village Automotive Group designs products with traditional designs giving customers more product variety.

• Village Automotive Group offers multiple sizes for its every product to make it easy for its customers to select the right product.

• Warranty and same-day delivery option if also provided by Village Automotive Group to its customers.

Price

• Village Automotive Group follows a competitive pricing strategy.

• To attract more customers, bundle pricing has also been used by the company.

• Little higher prices are charged for products that are sold online because of the delivery costs (Thabit & Raewf, 2018).

• Optional product pricing strategy is also adopted by Village Automotive Group for some of its products, such as a base product is offered for a certain price, and there are separate prices for its accessories.

• Regular promotional prices are also offered by Village Automotive Group to its customers.

Place

• Village Automotive Group uses two channels for its product distribution. This includes online selling and through own stores.

• There are more than multiple stores owned by Village Automotive Group globally. This ensures easy product availability to customers (Pogorelova, Yakhneeva, & Agafonova, 2016).

• Village Automotive Group has partnered with delivery service companies to distribute its products effectively to consumers.

• Village Automotive Group has also adopted an omni-channel distribution system.

Promotion

• Village Automotive Group uses a traditional promotional strategy that involves TV advertisements (Fan, Y.K.Lau, & Zhao, 2015).

• Social media advertisements are also adopted by Village Automotive Group to increase brand awareness.

• Village Automotive Group takes part in various events and exhibitions as a way of promoting its products.

• Large sales force is used to provide the customers with a more personal experience.

• Village Automotive Group also makes use of influencer marketing to increase the demand for its products.

• Regular content and deals are posted on the social media pages of Village Automotive Group to attract and retain customers.

Value Chain Analysis

Village Automotive Group can use Value Chain Analysis to identify and assess inter-relationships as well as interdependencies.

Primary Activities

• Village Automotive Group’s primary activities involves the production and selling of products to the final consumers (Mintz, J.Gilbride, & Lenk, 2021).

• Village Automotive Group has a strong relationship with the suppliers. This ensures that the product is received, stored, and distributed in a timely manner.

• Operational activities of Village Automotive Group are effectively aligned.

• For inbound logistics, after the arrival of raw material, the company processes it to manufacture the final product (Hasan, Nekmahmud, & Yajuan, 2019).

• In terms of outbound logistics, Village Automotive Group has been able to set up optimal costs as well as efficient delivery processes to deliver the product on time.

• Village Automotive Group invests in its sales and marketing activities to build relationships with customers.

• Marketing funnel approach is used by Village Automotive Group to effectively devise and build sales and marketing activities.

• Village Automotive Group offers both pre-sale and post-sales services to its customers.

Secondary Activities

• Village Automotive Group has an effective infrastructure that has allowed the company to successfully optimize its value chain.

• The competitive pressure in terms of employee skill development, motivation, and commitment is reduced as Village Automotive Group has developed a strong HRM (Linkov, Carluccio, Pritchard, & Bhreasail, 2020).

• Village Automotive Group uses a cost minimization approach to reduce its costs by analyzing the costs associated with training and hiring the employees.

• Village Automotive Group has been using integrated technology in its value chain activities. This includes technological customer support, research and data analytics concerning product design, and automated software.

• The procurement activities of Village Automotive Group are effectively optimized with its inbound, outbound, and operational activities (Maheswari, Yudoko, & Adhiutama, 2019).

Market Penetration Strategies

• Village Automotive Group can increase the capacity of its production so it can reach more of the customers in its existing market.

• Village Automotive Group can focus on controlling the overhead costs so that it can offer competitive pricing that can attract customers of the market (Dawes, 2018).

• Investments can be made by Village Automotive Group in marketing and sales activities to increase the chances of successful market penetration.

• Village Automotive Group can design and develop a content that increases customer engagement within a particular marketplace.

• Village Automotive Group can assess and identify more enhanced distribution networks (Radpour, Mondal, & Kumar, 2017).

• Improved distribution systems and supply chains can improve the product accessibility for the customers, making it easier for Village Automotive Group to penetrate the market.

• Village Automotive Group can adopt price cuts in its products to compete in the market. This will give a company a competitive edge over its competitors.

• Village Automotive Group can plan strategies where it can focus on acquiring the leading players of the market. Such acquisitions will give the company an opportunity to reach more customer segments.

• Strategic partnerships and joint ventures agreements can be signed by Village Automotive Group to mitigate the risk factors, and to gain customer groups of the market.

• Village Automotive Group can come up with new and innovative features in its already existing product for the market (Daouda, Barth, & T. M. Ingenbleek, 2019).

Market Development Strategies

• It is important for Village Automotive Group to invest in the research and development department so potential markets can be identified (Hilman, Bohari, & Abdullah, 2018).

• Regional expansion strategy can be used by Village Automotive Group for growth purposes. This will also take into consideration the cultural differences.

• Village Automotive Group should also consider to expand its business operations in the international market. This will allow access to a larger customer base.

• New customer groups and segments should be explored by Village Automotive Group.

• Village Automotive Group should also invest in brand-building activities as it will give an opportunity to reach more potential customers (C. Koks & M. Kilika, 2016).

• Village Automotive Group should consider the market education in terms of its product. The company can significantly increase its sales by giving product awareness to new segments.

Product Development Strategies

• Village Automotive Group can come up with new improvements and modifications in the existing products to attract the market.

• Village Automotive Group should undergo the NPD process, so the company is able to assess and identify new points for its customers.

• Regular investments in the research and development will help Village Automotive Group to develop something new and innovative that can give a competitive advantage (Kalogiannidis & Mavratzas, 2020).

• Village Automotive Group can develop new products by getting into more strategic partnerships.

Diversification Strategies

• Village Automotive Group can adopt vertical diversification to develop business. This can be done by adding more products to the existing portfolio (Kalogiannidis & Mavratzas, 2020).

• Horizontal integration can also be adopted by Village Automotive Group, where the company can enter into a completely new product development phase that does not exist in the current product line.

• Village Automotive Group can also consider to conglomerate by starting a different business.

Conclusion

Based on all the models and frameworks discussed above, it is concluded that Village Automotive Group should focus on widening the existing product portfolio. Moreover, the psychological pricing strategy can be adopted. Village Automotive Group should also maintain close relationships with its suppliers to benefit from lower prices. Similarly, Village Automotive Group should develop more integrated outbound logistics for its perishable items. It is also important to continue producing quality and innovative products, so Village Automotive Group is less affected by the new emerging competition in the industry.

References

Adnan, M., Abdulhamid, T., & Sohail, B. (2018). Predicting Firm Performance through Resource Based Framework . European Journal of Business and Management .

Ahmadi, M., Dileepan, P., & K. Wheatley, K. (2016). A SWOT analysis of big data. Journal of Education for Business , 289-294 .

Aithal, P. S. (2016). Study on Village Automotive Group Analysis Technique for Business Models, Business Strategies, Operating Concepts & Business Systems. International Journal in Management and Social Science, 95-115.

Akpoviroro, K. S., & Owotutu, S. O. (2018). Impact of external business enviornment on organizational performance . International Journal of Advance Research and Innovative Ideas in Education, 498-505.

Ariwibowo, P., Saputro, F. B., & Haryanto, H. (2021). Analysis of Strength & Weakness, Using the Concept of Resource-Based View with the VRIO Framework in Sharia Cooperatives. Jurnal Manajemen Strategi Dan Aplikasi Bisnis, 279 - 294.

Ariyani, W., & Daryanto, A. (2018). Operationalization of Internal Analysis Using the VRIO Framework: Development of Scale for Resource and Capabilities Organization (Case Study: XYZ Company Animal Feed Business Unit). Asian Business Research Journal .

C. Koks, S., & M. Kilika, J. (2016). Towards a Theoretical Model Relating Product Development Strategy, Market Adoption and Firm Performance: A Research Agenda. Journal of Management and Strategy.

Cho, W., Ke, J.-y. F., & Han, C. (2019). An empirical examination of the use of bargaining power and its impacts on supply chain financial performance. Journal of Purchasing and Supply Management.

Daouda, F. B., Barth, P., & T. M. Ingenbleek, P. (2019). Market Development for African Endogenous Products. Journal of Macromarketing .

Dawes, J. (2018). The Ansoff Matrix: A Legendary Tool, But with Two Logical Problems. SSRN .

E.Quezada, L., A.Reinao, E., & I.Palominos, P. (2019). Measuring Performance Using SWOT Analysis and Balanced Scorecard. Procedia Manufacturing, 786-793.

Fabbri, D., & F.Klapper, L. (2016). Bargaining power and trade credit. Journal of Corporate Finance, 66-80.

Fan, S., Y.K.Lau, R., & Zhao, J. L. (2015). Demystifying Big Data Analytics for Business Intelligence Through the Lens of Marketing Mix. Big Data Research, 28-32.

H. Th. Bruijl, G. (2018). The Relevance of Porter's Five Forces in Today's Innovative and Changing Business Environment. SSRN .

Halmaghi, E. E., Iancue, D., & Băcilă, M. L. (2017). The Organization's Internal Environment and Its Importance in the Organization's Development. International Conference Knowledge Based Organization , 378 - 381.

Hasan, M. M., Nekmahmud, M., & Yajuan, L. (2019). Green business value chain: a systematic review. Sustainable Production and Consumption, 326-339.

Hilman, H., Bohari, A. M., & Abdullah, S. S. (2018). The mediating effect of cost leadership on the relationship between market penetration, market development, and firm performance. Journal of Business and Retail Management Research.

Hueske, A. K., Endrikat, J., & Guenther, E. (2015). External environment, the innovating organization, and its individuals: A multilevel model for identifying innovation barriers accounting for social uncertainties. Journal of Engineering and Technology Management, 45-70.

Indris, S., & Primiana, I. (2015). Internal And External Environment Analysis On The Performance Of Small And Medium Industries (Smes) In Indonesia. International Journal of Scientific & Technology Research .

Išoraitė, M. (2016). Marketing Mix Theoretical Aspects . International Journal of Research-Granthaalayah.

J. K, N., W. J, O., & D., K. (2016). Does External Environment Influence Organizational Performance? The Case of Kenyan State Corporations. Management and Organizational Studies.

Kalogiannidis, S., & Mavratzas, S. (2020). Impact of marketing mix strategies effective product development issues in MNCs/Retail . International Journal of Business Marketing and Management , 118-125.

Kolbina, O. (2015). SWOT Analysis as a Strategic Planning Tool for Companies in the Food Industry. Problems of Economic Transition, 74-83 .

Linkov, I., Carluccio, S., Pritchard, O., & Bhreasail, Á. N. (2020). The case for value chain resilience. Management Research Review.

Maheswari, H., Yudoko, G., & Adhiutama, A. (2019). Government and Intermediary Business Engagement for Controlling Electronic Waste in Indonesia: A Sustainable Reverse Logistics Theory through Customer Value Chain Analysis. Sustainability.

Miethlich, B., & G. Oldenburg, A. (2019). The Employment of Persons with Disabilities as a Strategic Asset: A Resource-Based-View using the Value-Rarity-Imitability-Organization(VRIO) Framework . Journal of Eastern Europe Research in Business and Economics.

Mintz, O., J.Gilbride, T., & Lenk, P. (2021). The right metrics for marketing-mix decisions. International Journal of Research in Marketing , 32-49.

Munro, M. M. (2017). Analyzing external environment factors affecting social enterprise development. Social Enterprise Journal, 38-52.

Phadermrod, B., M.Crowder, R., & B.Wills, G. (2019). Importance-Performance Analysis based SWOT analysis. International Journal of Information Management, 194-203.

Pogorelova, E., Yakhneeva, I., & Agafonova, A. (2016). Marketing Mix for E-Commerce. International Journal of Enviornmental & Science Education .

Radpour, S., Mondal, M. A., & Kumar, A. (2017). Market penetration modeling of high energy efficiency appliances in the residential sector. Energy, 951-961.

Rizaldi, A. (2015). Control Environment Analysis at Government Internal Control System: Indonesia Case. Procedia - Social and Behavioral Sciences, 844-850.

S. Samusenko, A., S. Plaskova, N., & A. Prodanova, N. (2020). The Analysis of the External Environment to Determine the Practical Focus of Applied Research and Development in the Framework of Innovation. Complex Systems: Innovation and Sustainability in the Digital Age , 245–255.

Seema, S. (2016). Porter's Model: A Critical Examination . International Journal of Engineering and Management Research .

Thabit, T., & Raewf, M. (2018). The Evaluation of Marketing Mix Elements: A Case Study. International Journal of Social Sciences & Educational Studies.

Wang, L., Wang, Y., & Shi, L. (2022). Analysis of risky driving behaviors among bus drivers in China: The role of enterprise management, external environment and attitudes towards traffic safety. Accident Analysis & Prevention.

Zhao, Z. Y., Zuo, J., & Wu, P. H. (2016). Competitiveness assessment of the biomass power generation industry in China: A five forces model study. Renewable Energy, 144-153.