Part 1: Industry Analysis
The Automobile industry
The automotive industry designs, develops, manufactures, markets and sells motor vehicles, and is one of the world’s most important economic divisions by profits. This analysis focuses on the industry, specifically, manufacturers of automobiles. There are five competitors in the StratSim environment: Firm A, B, C, D, and E. Industry sales in the most recent year were 4.3 million units, with expected growth in the next year. Within this industry, there are seven-vehicle classes: Economy, Family, Luxury, Sports, Minivan, Truck, and Utility. There are two new classes with potential – if properly marketed. These classes are the Alternative Energy Vehicle (AVE) and Delivery Vehicle. The Geographic concentration is the North, South, East and West regions.
Amazing Cars (Firm A) is the industry leader with sales of $20.5 billion, followed by Efficient Motors (Firm E) with sales at $20.1 billion. Firm A is not represented in the Luxury, Sports, Minivan, and Truck vehicle classes. However, Firm A has a huge advantage in the Economy Class, represented by the Alec vehicle, owning 63% of the market share.
Exhibit 1.1: Sales and Market Share for Firm A
Vehicle Class| Firm A Total Sales (000s Units)| Vehicle | Firm A Market Share| Economy (E)| 576| Alec| 63%|
Family (F)| 317| Alfa| 22%|
Utility (U)| 314| Awesome| 49%|
Firms A, B, C, D, and E all have at least three vehicle offerings in three different vehicle classes. Under represented segments within this industry are the Sports and Minivan vehicle classes, where Firm B and Firm C monopolize these segments respectively. The Economy, Luxury, Truck, and Utility vehicle classes all have two vehicles offerings each.
Exhibit 1.2: Sales and Market Share by Vehicle Class
Vehicle Class| Sales (000s)| Vehicle | Market Share| Sales (000s) by Vehicle| Economy (E)| 914| AlecDelite| 63%37%| 576338|
Family (F)| 1439| AlfaBoffoCafavDefyEfizz| 22%7%13%29%29%| 317101187417417| Luxury (L)| 291| BeautClimax| 59%41%| 172119|
Sports (S)| 141| Buzzy| 100%| 141|
AEV (A)| 0| | No Vehicles Introduced Yet| 0|
Minivan (M)| 181| Camini| 100%| 181|
Utility (U)| 640| AwesomeEuro| 49%51%| 314326|
Truck (T)| 677| DetonkaEstruck| 56%44%| 379298|
Delivery (D)| 0| | No Vehicles Introduced Yet| 0|
Outlook for Firm A
The Value Seekers, Family, and Singles are appealing segments due to their buying power. These segments’ purchasing trends are in the Economy and Family vehicle classes, where we currently own 38% of the market share, collectively. With lower ratings in technology capabilities for our Firm, there is an opportunity for minor upgrades to interior, styling, safety, and quality design to our existing high performing vehicle classes: Economy and Family. While being one of only two manufacturers of Utility vehicles, our Firm strongly believes there is a niche in the market for a Crossover vehicle. We would like to introduce a new product to an existing class. This product will appeal to the Value Seeker, Family, and the Single. The Value Seeker would benefit from vehicle larger than an Economy car, with the functions of an SUV, yet not pay SUV gas prices. The Family segment would also get more space than a family sized Sudan, with the capabilities of carrying larger cargo, and the safety and quality features that they value. The Single segment would benefit from style and performance, with the functions of an utility/truck vehicle. Overall, by making improvements to technology capabilities to the company’s top performing vehicles, we will only enhance our product and improve our sales. Introducing a new vehicle that appeals to the larger segments basic needs yet satisfying their wants, will help us to maintain our lead in this...