Daewoo Case

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MSc Marketing & Strategy

“This work is submitted as part of the requirements for MSc in Marketing & Strategy. The work contained in this assignment is our own, individual and original work and has not been used in whole or in part for any other assessment on this or any other degree. We have read and understand the University rules on Plagiarism” Table of Content

| Abstract | 2|
1. | Introduction | 3|
2.| Analysis of the Case| 4|
2.1 | Dilemma Facing the Car Industry| 5|
2.2| | |
2.3| Customer-focused Approach| |
2.4| Sustainable Competitive Advantage| |
2.5| Other Sector Options| |
2.6| Brand Etension| |
3.| Conclusion| |
| References | |
| Appendix | |

Abstract

1. Introduction

The aim of this report is to critically evaluate the Daewoo’s 1995 UK automotive market entrance. After entering the highly competitive British car industry, Daewoo managed to achieve a competitive advantage by focusing on delivering effective customer service. We seek to understand why established car firms did not respond to customer needs prior Daewoo’s entrance and what strategies they could possibly adopt to outperform Daewoo presently. The report also takes a look at the innovations associated with the UK entry of the Korean car manufacturer and how they could sustain these innovations to retain and build on their existing market share. Possible brand extension strategies will be suggested for Daewoo to follow subsequent to the successful launch of the car. We finally assess other sectors where firms could achieve a competitive advantage by applying a customer-centred strategy.

2. Analysis of the Case
2.1 Dilemma facing the car industry
The industry is faced with two main choices when responding to Daewoo’s challenge. The first of which is to save resources and not respond based on the belief that Daewoo’s competitive advantage is not sustainable. Daewoo’s direct distribution strategy will incur increased customer service and logistics costs (Doyle and Stern, 2007) and the firm’s current aggressive promotional strategy will also affect their bottom line. Furthermore, the ‘post modern’ criticism of delivering such high service levels is that it is unsustainable due 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 option for responding to Daewoo’s challenge is to adopt defence strategies (Lambin, 2007). We feel that it is important to establish that there is no universal 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 however. The most appropriate mode of doing this would be through a combination of ‘position’, ‘flank’ and ‘pre-emptive’ defences (Lambin, 2007). Firstly, through a ‘position defence’, it would be recommended that manufacturers utilize their existing brand equities and customer base. Daewoo do not benefit 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 ‘Flank’ and ‘Pre-emptive’ defences would be recommended to address the threat brought about by Daewoo’s distribution strategy. An obvious way of doing this would be to imitate the strategy and meet or even exceed 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 Daewoo’s strategy would be a...
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