Report based on a case scenario
Scenario:
Europe has been a global hub of combustion engine production but as the industry shifts to electric vehicles, China is turning itself into the battery workshop and cheap vehicles. This has had a huge impact on automotive manufacturers in Europe. The article published in Financial Times below provides a snapshot of the impact on the European automotive industry.
France’s new automotive subsidies are “paving the way” for Europe’s car industry to withstand the threat of an influx of cheaper Chinese electric vehicle imports, according to finance minister Bruno Le Maire. Under a package of measures outlined in May to support green industries, the French government will only pay subsidies for new electric vehicles based on the emissions of their producers. That will hit manufacturers from China, where the industry relies on electricity largely powered by coal. Speaking in Beijing, where he met Chinese leaders to discuss trade and investment this weekend, Le Maire said he was “not concerned” about the threat to Europe’s carmakers from Chinese electric vehicle imports. “I think with our new legislative decisions, we pave the way in Europe for a less naive approach, taking into account the level of emissions of the industry,” he said. European manufacturers are alarmed by Chinese advances in EVs, with the country taking the lead in battery production and its carmakers outselling western rivals in China’s domestic market.While Chinese EV sales are still at an early stage in Europe, they could reach 1.5mn vehicles by 2030, equivalent to 13.5 per cent of the EU’s 2022 sales, according to Allianz. For European carmakers, the simultaneous loss of market share at home and in China would have a severe impact. The groups face additional pressure from an EU policy requiring the phasing out of internal combustion engines by 2035. Under the new French law, which is due to be fully adopted by parliament by year-end, however, Chinese-made electric vehicles would probably not qualify for incentives, which are worth between €5,000 and €7,000 per car for new electric vehicles. “Each year I’m spending €1.2bn to support the green industry and to support the EVs, never mind whether they have been produced by industry which is emitting a lot of CO? or by industry that is emitting less CO?,” Le Maire said, explaining why he was changing the policy. “I’m determined to support the European car industry and the French car industry.” But Le Maire said he would welcome more Chinese direct investment in Europe’s EV industry. China’s XTC New Energy Materials recently announced joint ventures with French nuclear group Orano to produce battery materials. China’s EV leader, BYD, based in the southern technology hub Shenzhen, is considering building a factory in Europe, while China’s Envision is building a battery plant in the north of France as part of a partnership with Renault. “We expect to have more Chinese investments in France more specifically in the field of green transition and green mobility,” said Le Maire, who also travelled to Shenzhen on Sunday to meet the chief executives of BYD and XTC. Recommended The Big Read The Chinese carmakers planning to shake up the European market The finance minister, whose visit followed a meeting in China this year between Emmanuel Macron and Xi Jinping, on Saturday met vice-premier He Lifeng, who oversees economic policy. “We need China as a key partner for global growth,” Le Maire said. He added that the two sides had reached an agreement to resolve what France calls “regulatory discrepancies in the cosmetics sector”. French exporters are concerned that China’s regulatory standards may require them to hand over trade secrets, Bloomberg has reported. “The total amount of trade of cosmetic goods to China is around €3bn a year,” Le Maire said, noting that the Chinese market represented between 30 and 35 per cent of total revenues for many French cosmetic companies. “So I’m not talking about peanuts.” (Source: Leahy, 2023)
Looking to the scenario and context given in the article above, as a head of strategy in one of the leading automotive companies in Europe (Choose a global European Automotive company of your choice), the board of directors of your chosen company has asked you to carry out a strategic review of the automotive manufacturing company and provide a report that assesses its strategic developments, current strategic position and future strategic choices aligned with the UN SDGs. The report must address the following key aspects:
RECENT PAST (5-10 years):Strategic developments (600 words)
Research and critically analyse the strategic developments of the automotive company within the context of the industry to which it belongs over the past 5 to 10 years.
Choose the duration of time for the study most appropriate for understanding the key strategic developments that have influenced the long-term direction of the company to the present day.
Identify any changes in the strategy that the company has made during the period in question, critically analyse and evaluate how and why these changes were made
CURRENT: Strategic situation
Building on your analysis undertaken in section 1, provide a critical analysis and evaluation of the company’s current strategic situation at the time of writing which relates to the previous section.
- External Situation (Porter’s Five Forces)
- Internal Situation (RBV Theory and SWOT)
- FUTURE: Strategic choices
Recommend a limited range of distinctively different strategic choices of your own creation available to the company for the future.
Critically evaluate and assess the choices available leading to recommendations for the company’s strategic direction forward.
Make clear the assumptions you have made as a basis for the strategic choices and ensure that they take account of potential uncertainties and strategic changes
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