Course : Master of Business Administration
Module Code and Title: PGBM146 Value Creation in Organisations Managing Operations and Marketing
Assessment: Individual Assignment
Word Length: 4000 words +/- 10%
Module weighting: 100%
The assignment must be submitted to Canvas as detailed below and contain:
This business report based is based on a case study organisation. The content of the report will demonstrate learning undertaken during the module and apply analytical models appropriate to inform business strategy on where value creation can be applied for competitive advantage.
The work based report must demonstrate coverage of the module learning outcomes:
K1. a critical understanding of operational and marketing theories, concepts and strategies and how these impact on value creation in organisations.
K2. a critical understanding of the contemporary challenges relating to value creation in a range of organisations.
K3. a critical understanding of the major decisions confronting managers in the management of value creation.
S1. relevant transferable skills relating to the cross cultural management of value creation in a professional context including: problem solving, creativity, communication, and working collaboratively.
S2. how to conduct research using relevant journal and business documentation
1. Your task is to research the market sector in which the case study organisation operates and produce a business report that delivers a critical evaluation of the value chain activities of the case study organisation. The report must identify opportunities for value creation in the marketing and operations management activities of the business and suggest how this will support the organisation in gaining competitive advantage within the sector. The report must use detailed and referenced analytical models, appropriate to the case study organisation.
2. The business report must cover the points listed below.
1. Carry out detailed research to provide you with up-to-date information appropriate to delivering a strategic level investigation on the case study organisation. The research information should enable you to carry out a critical evaluation of the business’s value added strategy reviewing the marketing and operations activities and analysing how these deliver strategic goals.
2. Demonstrate critical understanding of how the case study organisation co-creates value for customers through the integration of core aspects of marketing and operations management. This includes how value is created holistically through the market research, product development, prototype, supply chain, production, and diffusion into the related markets
3. Deliver a critical appraisal of the organisation’s practice to related marketing and operations management theory.
4. Synthesise suitable recommendations for the case study organisation to improve marketing and operations management strategy and deliver enhanced value creation and competitive advantage. Your suggestions for implementation must be supported by relevant theoretical underpinnings, research into the sector and application to analytical models.
In this assessment, there would be a significant understanding of the marketing in operations of Nissan Motor Co that is one of the leading names in the global automobile market. The focus of the discussion would be upon the marketing and operation of the company. The intention of the assessments to understand the manner in which the company derives its value that adds to the competitiveness of the brand in its respected industry operation. It is in this context that there would be an assessment of the environment in which the company operates using different models and tools. There would also be an understanding of the manner in which value is created by the company to offer recommendations for the future growth of the company.
2.0 Review of the business of Nissan
Nissan, as a leading name in the global automobile market, continuous its quest towards the optimisation of the product development and delivering innovative technology as part of the product offerings. The company has a stellar reputation for the creation of innovative vehicles and services. The company sells the vehicles under brands such as Nissan, Datsun and Infiniti according to the 2018 data; the company is the largest manufacturer of electric vehicles in the world with the Global sales extending over 320,000 units (Baur and Todorova, 2018).
2.1 Identify what Nissan does and where it is
As a global full-line manufacturer of vehicles under the three main important brands: Nissan, INFINITI and Datsun, the Global headquarters of the company is located in Japan that manages the operations in the four important regions: AMIEO (Africa, Middle East, India, Europe & Oceania); Japan, China and Americas. Ranked among the topmost automakers in the world, Nissan is considered to have is the foundation for the automotive innovation and the company holds the technology-intensive production philosophy that makes it the largest producer of electric vehicles in the world that is now being considered to be the future of the automobile market. One of the major turning points that have been instrumental in structuring the automobile production in Nissan had been the unique joint venture between Nissan and the French automobile company, Renault. Renault-Nissan Alliance had been instrumental in bringing back the Japanese Clan into world leadership in the automobile world (Koroleva and Zenkevich, 2016).
2.2 Key elements of success
The most important elements of the success behind one of the most recognised names in the global automobile market is the corporate vision of the company that is “enriching people's lives”. Company had always been given towards realizing what could be done for enriching the life of people and making social contribution. It is with such perspective that the success of Nissan can be attributed to the high R&D investments (Nissan-global.com, 2019). Moreover, sustainability has been the driving force for the success of the company considering that the company that enabled technology-related investments towards driving zero-emissions capabilities and development of electric and hybrid vehicles that the company considers should be done future of the automobile market.
Nissan has always been engaged in developing constantly new strategies that would help the Global production of the company. According to the new strategy formulated by the company, it is reducing the global production by 20% and also the product line up is expected to be reduced from 69 models to 55 models. Intention is that the focus of the company should be upon the C and D segment vehicles, sports cars and electric vehicles and the electric vehicles is being considered to be an important aspect of the new strategy of Nissan and it being estimated that Nissan would sell more than 1 million electric vehicles by 2023 end (Sergeev, 2020).
2.4 Business objectives
In the promotion of the sustainability strategies (Nissan Sustainability 2022) that are part of the business objectives of the company, Nissan had established the business objectives for 2022 as aligned with the initiatives for ESG (Environmental, Social and Governance) elements. The company, as part of its business objectives, is following a long term vision considering the opportunities and issues in the business operations and also the societal expectations in the future. With the key intention of entering the UK market, Nissan’s business objective is towards achievement of Sustainable growth and facilitating sustainable development of the society.
Figure 1: 2022 Goals of Nissan
(Source: Nissan-global.com. 2020)
2.5 Present business position
Nissan is now ranked 64th in the Brand Finance report and the brand value was estimated to be $8.66 billion, but Nissan had slipped 10 places in the report of the Brand Finance and the product recalls had been a major issue faced by Nissan (Nissan-global.com, 2020). Nissan had partnered with the expansion of the global market for risk-sharing and under the alliance with Renault, Nissan had been pushing itself to launch Ariya electric crossover as part of its initiative for electric vehicles.
2.6 Value addition in its process for creation of competitive advantage
For gaining competitive advantage, Nissan is eyeing on the Asian automobile market that has become the competing ground for the global automobile brands. Nissan Motor Co is planning sharply to enhance the domestic sales of the company in the Asian market as part of the strategic shift for achieving parity in the exports and local sales from India in the next five years. The vision is to derive at least 15% of the market share from the Asian market. 3.0 Market and Environment Analysis
3.0 Market and Environment Analysis
3.1 SWOT analysis
The SWOT analysis is effective for determining the environment in which the company functions and can be helpful for assessment of the areas of strengths and opportunities that reflect the value offerings of the company and the threats and weaknesses reflect on the areas for action (Gürel and Tat, 2017).
Good brand value, high R&D expenditure, expansive product, and partnership for the expansion of the global market are the key strengths of the company while the issue of product recalls is a major weakness noted. Growth in the automobile industry, increasing demand for the electric vehicles and alliance with Renault are key opportunities for Nissan and the threats are in the form of competition from rivals, fluctuation in the current world economy.
3.2 PESTLE analysis
The PESTLE framework is used for the assessment of the factors in the external environment of an organization that determines the success or failure of a business
Political factors: Brexit has been noted to have the greatest impact on the UK business of Nissan as noted in the case of Sunderland plant of Nissan as the carmaker employs over 6,000 people in the plant (Vda.de, 2020). The priority given to the British car makers, Brexit related political implication is most likely to shut the plant. This is also because the business model of the Sunderland's plant is heavily dependent on exports to the EU. Here, Brexit would increase tariff for the company (Hirsbrunner, 2016).
Economic factors: Currently UK is experiencing -7.8% growth rate in GDP due to pandemic and the unemployment rate is 5.1% (Tradingeconomics.com, 2021). Thus, a pressure in the automobile market is evident from the overall economic condition. The consideration of the Trump administration to raise the tariffs to 25% under the protectionist measures had been detrimental to the interest of the automobile sector as a whole in case of UK also (Swanson, 2018). Thus, based on the scenario, it is evident that Nissan is facing trouble to keep the plant operations in pace and an economic uncertainly is existing in the automobile industry.
Social factors: It has been noted that in 2016, 76% of the millennial have revealed their intention of switching to eco-friendly car and 50% have considered purchasing electric vehicles according to a survey conducted by Nissan (Murphy, 2019). Thus, the company is considering this opportunity of societal demand to improve its product for better demand generation.
Technological factors: There are new emerging technology that is now driving the automobile industry such as there is increased demand for fuel efficient cars, self driving technology, automation and use of Predictive Vehicle Technology that would drive technological innovation and greater investment in the R&D by the automobile industry. Nissan is considering the rising demand of these technologies in the country and thus have considered including these in the R&D segment for succeeding the future vision (Nissan-global.com. 2020).
Environment factors: there is a greater level of persuasion of the twin goal of zero fatalities and zero emissions in the automobile industry, and many companies such as Nissan are participating in initiatives such as the United Nations Global Compact. However, due to the Covid-19 impact, there has been increased pressure of employee layoff such as 3,000 plant workers had been laid off in the plants of Nissan in Spain in 2020 (ETAuto.com. 2021).
Legal factors: Autonomous vehicles have been associated with 6,560 fatalities in 2018, according to a study conducted by National Highway Traffic Safety Administration (NHTSA), and 94% of the crashes had been attributed to human errors (nhtsa.gov, 2021). This had created the issues for the regulation of the autonomous vehicles and Nissan need to follow this for the development of car models and trials.
Based on the assessment it is evident that for driving the competitiveness of the company, Nissan would have to address strategies to minimise the impact of the political, legal factors and have to focus upon the economic, social and technology factors for enhancing the potential of the operations.
3.3 Porter’s 5 Forces
Porter's 5 forces analysis model is used as it is noted to be effective for assessment of the competitiveness of the Nissan in the automobile industry in which it operates.
Bargaining power of the buyers (low): considering the high costs of the products (luxury product), the buyers do not significant control, and moreover, the customers are fragmented as the cars are sold by the dealers (Vda.de. 2020). The product differentiation by Nissan has helped the company to maintain brand image and profitability
Bargaining power of the suppliers (low): the automobile products have detailed specifications, and there is demand for high quality parts from the trusted suppliers and based on the quality control, the bargaining power of the supplier increases. Suppliers increase the price of the immediate delivery of the products by Nissan. With the Covid-19 pandemic, Nissan had faced issues in supply chain management that requires to be addressed in the future (ETAuto.com, 2021).
Threat of the new entrants (low): considering that high standards of operation are set in the automobile company by Nissan and there are high costs of investment, new entrants face difficulties in competing with Nissan and its rival companies (Nissan-global.com, 2019). Moreover considering that the here is high capitalisation need and economies of scale takes time for profit generation and also that the switching costs of the consumers is high, the entrants find market entry discouraging,
Threat from substitute products (medium to high): considering the high product costs, the threat from substitute products is medium to high. This is because of the increasing preference of the commuters for public transport (Globenewswire.com, 2019). There are also loyal customers of brands such as Hyundai, BMW, Toyota and other competing brands and that limits the intention of the consumers to switch to the Nissan brand.
Rivalry of the existing players (high): the global automobile industry is extremely competitive, and Nissan faced competition from domestic and international competitors that have their individual consumer loyalty. The strategic alliance between Nissan and Renault had been able to enhance strategic benefits, and Nissan is attempting to enhance the market share through competing with Toyota in its market in lesser prices for gaining market share (Koroleva and Zenkevich, 2016).
This model has showed that the threat that the company has been facing in maintaining its competitiveness is the threat of the existing rivalry. Hence for developing the competitiveness, Nissan would have to develop a strategy that would help it to gain the market share of the competitors.
3.4 Marketing Mix
Marketing mix states a mix of actions, or strategies used by a company for promote the product or brand in the market and usually focuses upon price, product, promotion, Pplace, process, physical evidence and people.
This would give an insight into how the products, pricing, promotion and placement of the products impact the marketing and operations of Nissan. Product strategy: Nissan is one of the leading names in the automobile industry and has a huge product line up such as Nissan Micra, Nissan Sunny, Nissan GTR and Nissan Terrano. Nissan is considered to be the largest seller of the volume and budget cars under the Nissan brand (Nissan-global.com., 2019). Nissan Motorsport International Sport is the upcoming brand of Nissan that focuses upon the performance of the contemporary products.
Pricing strategy: Nissan had realised the need for keeping the pricing system of the products to be competitive, and this is not just for capturing the market share of the company in the automobile market but also for ensuring that the customer loyalty is maintained. However, Nissan also engages in premium pricing for products that are equipped with advanced technology, over the traditional cars (Themba, Razak and Sjahruddin, 2019). The prices of the Nissan products vary depending upon the engine configuration, technology use and safety features.
Place or distribution strategy: Nissan has a global presence and is present in 20 countries and has a scale in over 170 countries. The key luxury brand of Nisan, Nissan Infiniti brand that has its operation in North America primarily has its presence in over 15 nations and has about 230 dealers (Nissan-global.com., 2020).
Promotion strategy: Nissan focuses upon the need for effectively communicating the core philosophy and to showcase its product features, on-road and off-road (Murphy, 2019). An integrated marketing communication mix including offline and online promotional advertisement is considered to be composing the promotional strategy of Nissan. Nissan uses television ads, print and radio advertisements for advertising the products (Rankingthebrands.com, 2019).
People: Customer service and organizational culture are the prime concern of Nissan. The Company has ensured better organizational culture maintenance with employee facilities. The training of employees is consumer oriented to enhance the service qualities (Nissan-global.com., 2020).
Process: Service delivery and the product delivery of the organization is effective for ensuring the standardization of vehicles and auto parts development from the end of Nissan.
Physical Evidence: Facilities development from the end of Nissan to ensure the service for the consumers has been taken into consideration (Nissan-global.com., 2020). The physical evidences has facilitates the Nissan organization to ensure brand image creation.
3.5 Market Segmentation
The marketing strategy of Nissan requires identification of the segmentation based on the buying behaviour of the customers. Nissan had been utilising demographic segmentation, and it has been noted that the customers of Nissan are heterogeneous and depends upon the different factors such as gender, income, age, values and lifestyle (Pan et al., 2017). Nissan usually targets high income group and consumers who prefer luxurious lifestyle. Usually, the millennial group, the working group in UK is the target consumers, so the age group that is targeted by Nissan is 20-35 years.
Another method of segmentation used by Nissan is that of geographic segmentation whereby the company offers product according to the area in which the company operates (The Economic Times, 2020). For instance, there are specific products that had being manufactured and marketed for the Indian automobile market as difference from the US market. For the market in the UK, the focus of Nissan shall be upon the electric vehicles and the hybrid cars with autonomous features.
3.5.1 Creation of Value
Value chain analysis
The value chain analysis model consists of the primary and support activities performed by organisations to turn the inputs into value-added outcomes for the external customers.
As noted in the support activities, initially, Nissan had a bureaucratic infrastructure, but after the alliance with Renault, it has become more efficient and competitive due to the combined administration system. The alliance had also lead to intensive changes in Human Resource Management, and in terms of the technology used, Nissan had been developing products in Alliance with Renault for the achievement of economy of scale. Supplier of the company had been reduced to 2 from 15 that had improved the cost of supply chain of Nissan (Nissan-global.com, 2020). The production cost had also been reduced as the same manufacturing plant is used as Renault's. The primary activities also include the inbound logistics, and it had been noted that most of the parts used in the Nissan products are domestically source and the shipping of the source parts is through direct truckload, and this occupy 70% of the inbound transportation expenditure (ETAuto.com, 2019).
The next aspects of the value chain is the operations of the company and operation management of Nissan includes the Operation Management Controllers for the scheduling of the in-house production, best operational engineering support is provided by the Material Handling Engineer/ Team. Supply Chain Management (SCM) Logistics Engineers package design and manage the procurement in the automotive logistics. And the scheduling of the admin officers and the in-house production is handled by SCM Controllers.
In the context of the outbound logistics, 70% of the vehicles of Nissan are completed in Japan and transported through sea. Wallenius Wilhelmsen Logistics (WWL) is the largest provider of Logistic service to Nissan and is responsible for handling the overall distribution of the complete vehicles for the company in the United States, Canada, Mexico and India (NiEUWENHUis, 2017).
Another function in the value chain analysis model of Nissan is marketing and sales. The marketing of includes the development and implementation of the media plans that delivers the brand launch of Nissan and create the brand awareness among the consumers. For encouraging the customers, popup coupons are also used. For instance, for the promotion of the Nissan LEAF that is 100% electric car by Nissan, Nissan had created electric taxi rank in London so that people can enjoy cheap taxi rides (Karczewski et al. 2019). For the maximization of the sales function, it had been noted that most units sold in the Japanese market (56,407 units). After-sales services is also an important function in the value chain model and Nissan offers backup services for all the vehicles and the service team of the company has updated information for ensuring proper advice to the consumers and there is also an exclusive membership to the private registered Nissan owners called the NASCAR gives 24-hour road assistance, towing service and on the spot repair service. Another aspect of the after-sale service is the e-booking service appointment (Nissan-global.com, 2020).
Based on the assessment of the value chain analysis, it has been noted that all the activities in the value chain assist the generation of profits for the company and are considered to be important aspects of the marketing and operational functions of the company.
Constraints and capacity within the system to add value (operations management theory)
3.5.2 Operations Management and marketing
For the assessment of the marketing and operations of Nissan, it is important to use theories that help in determining the areas that are significant to the current operations and the future planning of Nissan, Using the BCG matrix, an appropriate understanding of the marketing and operations management can be understood (appendix 3). The principle working behind the BCG theory is that it is helpful for controlling capital and deciding upon the contribution of any product line as part of the operations management and its success marketing.
Question marks: The product in this unit are also called problem child and they have high market growth, but the market share is low and in order for them to evolve into the stars, there is a need for heavy investments. One of the affiliated business sectors of Nissan is the Marine business that is a question mark as it does not have a strong share in the market, but it is part of the product diversification and the growth rate is also high (Thomas and Maine, 2019).
Stars: has both high market growth rate and also market share, but they require high investments for retaining the high market share. The infinite cars are part of the star business unit and the adoption of new product development strategy to become the world leader in the production of zero-emission vehicles also falls in this category (Iora and Tribioli, 2019). The production of the electric vehicle would also dominate the automobile market, and currently, the operations of the company are directed towards electric vehicle production.
Cash cows: this business unit as part of the operations of have a high market share but the growth rate in the market is low. The place of such products had been established in the market, but there is no need for further investments. The products in this business unit help Nissan in earning profits and cater to the R&D expenses as part of the operation management (Thomas and Maine, 2019). For instance, Nissan is the largest maker of forklifts in the world and also the passenger cars write the revenue generation, but because of the intense competition, especially in the production of passenger cars, the rate of market growth had declined for Nissan.
Theory of marketing and operation such as the configuration theory states that organization of the marketing activities need to be in a way that it fits the implementation requirements of the business's strategy and enhances performance. It is evident from the assessment above that since production of the electric vehicle would also dominate the automobile market, Nissan is focusing upon the electric vehicles as it fits the requirement of the business strategy for enhancing the performance.
It has been noted from the finding of the SWOT analysis that one of the significant issues being faced by Nissan is with the market saturation and the intense competition that the company is facing. Specifically, in the context of Toyota, there has been intense issues faced by Nissan in capturing the marketing share and the growth rate of a closest competitive. For addressing this issue, there would be a need for either product development or expansion of the geographic segmentation of Nissan. India is being considered to be an important market for the automobile industry considering the demand for the automobile and Nissan and Datsun brands would require expanding the dealership network for the optimisation of the flexible manufacturing and strengthening the R&D facilities for future growth in the Indian market.
Considering that there are stringent regulations related to noise level, fuel economy as noted in the SWOT analysis findings, it would be recommended that Nissan should formulate a long-term plan for that enable sustainable growth and financial stability. There would be no need for reducing the fixed cost through the rationalization of the production capacity and the investment need to be directed towards autonomous vehicles, self-driving cars and hybrid cars. With a focus on such products, that should be a transformation plan for ensuring steady growth instead of focusing upon sales expansion. There would be no need for closing down plants that are not operating well, such as the plants in Barcelona for the optimisation of the operation management.
To conclude, it can be stated that the focus of Nissan for the competitiveness and the growth is upon sustainability in terms of environment and financial sustainability. Value is driven from the focus of the company upon the R&D investments on the electric vehicles that is been considered to be the present and future of the automobile market as noted in the SWOT analysis findings. This shows the long-term vision of the company that makes it stand out from the competing brands. However, it cannot be ignored that the company is operating in an intensely competitive environment, and it would have to constantly make changes in its strategies and look for new Geographic market to be explored for its product offerings. Porter’s five forces analysis had revealed the threat from rivals is highest for Nissan and PESTEL analysis had reaffirmed the need for the company to address the legal, environment regulations and use advanced technology as part of the business strategy.
Figure 2: brand value of Nissan
(Source: Most valuable car brands worldwide by brand value 2020 | Statista, 2021)
Figure 3: sales performance of Nissan in 2019
(Source: FISCAL YEAR 2018 SALES PERFORMANCE AND FISCAL YEAR 2019 SALES OUTLOOK, 2019)
Figure 4: BCG matrix of Nissan
(Source: Pilorget and Schell, 2018)