Strategic Agility in ALD Automotive: Evaluating Competitive Position Case Study

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Introduction

 The term strategic agility is defined as capability of the business in order to determine potential threats, alleviate risks and influence the emerging opportunities. It is crucial for all the business to have the strategic agility because it helps the business to overcome the marketing challenges, adjust operational plans and penetrate the new markets in order to develop new products to fulfil the demand of customers. In addition, the report will be based on strategic agility of one of leading small company within car dealership sector i.e. ALD automotive to evaluate its competitive position, contemporary macro-environmental issues, strategic options and make the effective business decisions.

Main Analysis

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Brief overview of organization and strategic capabilities, strengths and weaknesses

ALD automotive is one of the leading SMEs within the car dealership sector. This organization established in the UK in 1958. This organization is popular in operation of vehicle leasing. The chosen organization is managing more than 1.5 million vehicles across 43 countries within the world. In the UK, this organization is managing and financing more than 1, 35,000 vehicles providing the customers with the flexibility of total management from pure financing of vans and cars to complete outsourcing operations (ALD autiomative, 2024). This organization is providing wide range of services such as fleet management, flexible subscription, full-service leasing and multi-mobility solutions to the customers of all sizes. The chosen organization employed fewer employees because of its size i.e. 201-500. For the first month of 2022, ALD automotive reported net income of €918.2m which was more than previous year (Motor Finance, 2022). Hrn Europe, Volkswagen financial plan, Morgans financial limited, Lease plan etc., are the biggest competitors of ALD automotive. The selected organization is listed company and the price of its share is 5.84 EUR. Along with this, the market capitalization of ALD automotive is $5.22 Billion in January, 2024. According to the market capitalization the chosen business is 2498th most valuable company in all over the world. This organization provide leasing service to the customers on the basis of cost of vehicles so the existing strategy of this company is cost focus according to porter’s generic strategies.

Business model canvas

The selected organization has wide range of strengths and weaknesses to grow and develop the business operation as well as build the reputed position within the UK. The biggest strengths of ALD automotive are high profit potential, easy admittance to financing, low maintenance cost and highly flexible. However, the biggest weaknesses of ALD automotive are dependent on resale values, vehicle maintenance, customer credit risk and high competition. Apart from this, the chosen organization has significant contribution towards the sustainable development goals (SDG). According to the geographical perspective, climate change is one of the biggest challenges for the organizations in the world. So this organization committed to reduce the impact of emission. In 2017, ALD automotive achieved Go Ultra low status for its work towards the reducing the emission of carbon across its car fleet. In 2021, this organization is also reducing the use of papers and recycled 99.8% waste (ALD Automotive, 2024).

Along with this, VRIO framework is one of the significant methods that helps the organization in evaluating its resources and capabilities to gain the competitive advantage over the competitors (Alexandru-Ilie et al, 2020)

Competitor and Macro-environmental Analysis with Strategic Scenario

With the help of Porter’s five forces model, the companies are analysis their competitors policies, standards etc., (Khurram, Hassan and Khurram, 2020). In the car dealership sector, the threat of new entry in the market is weak because it requires large amount of capital and few lawful barriers to protect the accessible organizations from the new entry. The bargaining power of suppliers within the car dealership sector is weak because it has large number of providers. The suppliers of this sector do not stance any threat of forward integration. The bargaining power of purchaser for ALD automotive in this sector is strong because it has large number of buyers and they can easily towards the other leasing service company. The threat of substitutes in the car dealership sector is weak because it has wide range of alternatives from which the customers are easily finance and managing the cars. Along with this, the industry rivalry in this sector is strong due to moderate number of competitor’s and the customers are satisfied as well as loyal to the services.

 Macro-environmental analysis of ALD automotive

To analysis the impact of the macro-environmental factors on the overall operation of car fleet leasing company within the car dealership sector with the help of PESTEL model.

Strategic options

Criteria 1

There are wide ranges of strategic options that can be implementing by ALD automotive in order to grow and develop the business operation as well as mitigate the risks and identify the opportunities. Market penetration is one of the key strategies that will be implementing by the selected business to increase the capability to improve the overall operation of business. Implementation of this strategy will be beneficial for companies in car dealership sector because it helps in increase the reach of customers (Ackermann and Eden, 2020). It helps in attracting more customers which leads to increase market share. In this strategy, ALD automotive can focus towards higher market share by tapping to the accessible services in the existing market. The chosen organization will implement this strategy for the long period of time because it helps in increase the profits and saving cost due to the economies of scale. The geographical location of this strategy will be the same market i.e. UK. With the help of this strategy, the companies within the car dealership sector can provide the similar activities or services to the customers in same market (Ali and Anwar, 2021). Implementation of this strategy require less investment as compare to other strategies such as merger, diversification etc. because in this the company sell the same products in the similar market by lowering the prices. In this strategic option, the selected organization will not require to pay to others in contrast to other strategies.

Criteria 2

Market development is another strategic option or strategy that will be implemented by the organization for their growth and development as well as mitigating the risks. This strategic option will be useful for the organizations within the car dealership sector to increase the customer’s base and profitability (Moisander, Närvänen and Valtonen, 2020). In this strategy, organization will provide accessible services to the customers in the new markets. This strategy will be valuable for the chosen business because it helps in diversifying the operation, ensure admittance to more capital and market power. This strategic option will helps in gaining the competitive advantage to the organizations over their competitors. This strategy will be implementing by the organizations for the long-time frame. It will be crucial for ALD automotive to research the market before providing and promoting the services. Implementation of this strategy will be beneficial for the business because it helps in attract new customers, increase revenue margins and support the long-term growth of company. The geographical locations of ALD automotive for marketing development are China, Germany etc. To developing the market in new countries, the chosen organization will require huge costs. The organization will need to pay for marketing research, marketing channels etc.

The above mentioned assessment clearly exhibit that strategic option 2 will prove to be more beneficial for the firm. By investing funds in option 2, company will get high returns such as 549 GBP over other.

SAFe analysis table and recommendations

 The Scaled Agile Framework (SAFe) helps in assessing the strategic options in effective manner. Implementation of this model will be crucial for all the companies within the car dealership sector because it is a body of knowledge that involves organized direction on the roles and responsibilities such as way of upholding the values and plan as well as managing the work. Suitability, feasibility and acceptability are regard as core elements of this framework. Implementation of this model will be beneficial for the business because it helps in making the effective strategic decisions which ultimately positively impacts the overall operation. 

Market penetration and development are the best strategic options for the organization. Market penetration will assist the company in building the brand loyalty, eliminate price wars, pull customers from competitors, focus on volume sales, improve brand equity and capture the market share. On the other hand, market development will also aids the business enhancing the quality of services, attract new customers, increase revenue margins, build organizational resilience and support long-term company growth (Mansur, 2022). From the SAFe model it has been evaluated that, market development will the effective strategy or strategic option for ALD automotive as compare to market penetration. The board of director of chosen organization will develop the business operation by providing existing services to the customers in new markets. This strategy will be effective as compare to market penetration because it majorly focuses on ascertaining new markers to market the services. This strategy helps ALD automotive to determine the market where there is less competition because it helps in gaining the competitive advantage.

CONCLUSION 

From the above report it has been concluded that, it can be crucial for the business to evaluate its competitive position, determine macro-environmental issues and assess the strategic options to make the effective decisions. ALD automotive is using VRIO analysis to determining its strategic capabilities. It is crucial for the all organization to evaluate the macro-environmental factors with the help of PESTEL model and their impacts on the overall business operation. ALD automotive can implement the market development strategy to grow its business operation. This strategy can be beneficial for chosen business as compare to market penetration because it helps in attract more customers and increase profits. SAFe model can be useful for the companies to evaluate the best strategic option from various alternatives.

References

 Books and Journals

• Ackermann, F. and Eden, C., 2020. Strategic options development and analysis. Systems approaches to making change: A practical guide, pp.139-199.
• Alexandru-Ilie, B., Alexandru, P.D., Iulian, C.C. and Valentin, W.P., 2020. MANAGING ORGANIZATIONS FOR SUSTAINABLE BUSINESS DEVELOPMENT: INTERACTION BETWEEN VRIO FRAMEWORK AND McKINSEY 7S FRAMEWORK.
• Ali, B.J. and Anwar, G., 2021. Marketing Strategy: Pricing strategies and its influence on consumer purchasing decision. Ali, BJ, & Anwar, G.(2021). Marketing Strategy: Pricing strategies and its influence on consumer purchasing decision. International journal of Rural Development, Environment and Health Research, 5(2), pp.26-39.
• Khurram, A., Hassan, S. and Khurram, S., 2020. Revisiting porter five forces model: Influence of non-governmental organizations on competitive rivalry in various economic sectors. Pakistan Social Sciences Review, 4(1), pp.1-15.
• Mansur, D.M., 2022. Digital-based SME Innovation Development Strategy: Marketing, Entrepreneurship Insight and Knowledge Management. Golden Ratio of Mapping Idea and Literature Format, 2(1), pp.65-84.
• Moisander, J., Närvänen, E. and Valtonen, A., 2020. Interpretive marketing research: Using ethnography in strategic market development.
• Sheth, J., 2020. Business of business is more than business: Managing during the Covid crisis. Industrial Marketing Management, 88, pp.261-264.
• Online
• ALD autiomative,2024. About us. [Online]. Available thorough :< https://www.aldautomotive.co.uk/discover-ald-automotive#:~:text=We%20are%20the%20leading%20vehicle,in%20innovation%20and%20service%20quality>. [Accessed on: 16^th January,2024].
• ALD Automotive, 2024. ALD - An environmentally sustainable business. [Online]. Available thorough :< https://www.aldautomotive.co.uk/discover-ald-automotive/ald-automotive-uk/environmental-sustainability>. [Accessed on: 16^th January, 2024].
• Motor Finance, 2022. ALD reports 50% surge in net income during nine months of 2022. [Online]. Available thorough :< https://www.motorfinanceonline.com/news/ald-net-income-surge/>. [Accessed on: 16^th January, 2024].