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Henri Sun Felix MIKAELIAN
INTRODUCTIONWho is Geely?
The first Chinese private automobile manufacturer
Not only a manufacturer, but also a R&D company
Not only it is a company, but also has schools
Not satisfied with the Chinese market, but reaching out to the global market
Geely has developed a range of strategies in order to compete with both international and Chinese brands
Automobile market in the world, size, increase rate ?
Automobile market in China, size, key players,increase rate ?
What is Geely’s business model ?
Geely history and Company Overview ?
Geely’s Competitors Analysis & SWOT Analysis (Cherry, Volkswagen, Toyota)
What are Geely’s product strategies?
What are the competitive advantages of Geely comparing to its competitors?
What are Geely’s marketing and product strategies in China?
EXECUTIVE SUMMARYKey Questions
PLAN
1) Introduction• Who is Geely ?
• Key Questions
2) Automobile Market Situation
• WorldWide
• In China
3) Company Overview• History
• Value Chain
• Business Model
• Key Figures
• Location
• Multi-Brand Strategy
• Integration
• Internationalization Strategy
• R&D Strategy
• Human Ressources & Education
3) Geely Strategy
4) Competition• Key Figures Comparison
• SWOT
• Porter 5 Forces
• Competitive advantages and
marketing solutions5) Conclusion
PLAN
2) Automobile Market Situation
• WorldWide
• In China
3) Company Overview• History
• Value Chain
• Business Model
• Key Figures
• Location
• Multi-Brand Strategy
• Integration
• Internationalization Strategy
• R&D Strategy
• Human Ressources & Education
3) Geely Strategy
4) Competition• Key Figures Comparison
• SWOT
• Porter 5 Forces
• Competitive advantages and
marketing solutions5) Conclusion
1) Introduction• Who is Geely ?
• Key Questions
AUTOMOBILE MARKETWorldwide
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
World passenger car production – trend | 1997-2012
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
-0.7%+4.2% +3.7% -3.4% +3.8%
+1.5%+6.2%
+6.6% -0.9%
-9.4%
+22.0%+2.9%
+6.5%
Units
+5.2%
2012
+5.2%
The production of passenger car is constantly increasing since the beginning of 21 century. A little downturn happened in 2008/2009 because of the financial crisis.
World passenger car production – international comparison | 2001-2012
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
Units
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
EU China Japan South Korea India USA Brazil Russia
AUTOMOBILE MARKETWorldwide
In 2001, EU used to be the first producer, followed by Japan and US.
During the last decade, production in EU and Japan has decreased, while US production is quite constant.
The production in China has increased dramatically, from 1M in 2001 units to 16M units in 2012, being now the first producer in the world
10,000,000
15,000,000
20,000,000
25,000,000
5,000,000
0
Passenger car production - international comparison (% share) | 2000 – 2012
2000 2005 2010 2012
EU* NAFTA Japan South Korea BRICUnits
39.3%
20.3% 20.3%
6.3%8.4%
34.1%
14.2%
19.2%
7.2%
15.8%
26.2%23.2%
8.7%
11.0%
14.3% 13.6%
6.6% 6.6%
35.2%
37.1%
AUTOMOBILE MARKETWorldwide
Since 10 years, we can see that the influence of emerging countries in the world production of passenger cars
increased from 8.4% to 37.1%
Passenger car production - world (% share) | 2012
SOUR
CE: A
CEA
- OIC
A –
2013
11.0% NAFTA
13.6% Japan
23.2% EU
24.6% China
South Korea 6.6%
Brazil 4.2%
Others 3.2%
Russia 3.1%
Europe - Others 1.0%
India 5.2%
Asia-Others 4.3%
AUTOMOBILE MARKETWorldwide
In 2012, EU produce 23.2 % of cars in the world China produce 24.6% of cars in the world
Together, China and EU produce half the cars in the world
Asia 35% China 19.2% Japan 6.6% India 4.0% South Korea 1.9% Asia-Others 2 3.3%
Europe 23.5%EU 17.5%EFTA 0.7%Russia 4.3%Turkey 0.8%Ukraine 0.3%
America 31.2% NAFTA 24.8%
USA 20.9%
MERCOSUR 6.4%
Brazil 5.3%
Others 10.2%
AUTOMOBILE MARKETWorldwide
New passenger car registrations - world (market shares) | 2012 New passenger car registrations - world (market shares) | 2012
The trend of market share is close to the trend of production. In developed countries, the number of car sold are decreasing, whereas it is increasing in other countries.
In 2012, The main market is Asia, followed by America, and Europe. China represents 19.2% of new passenger car registrations in 2012
Annual production of passenger cars by international manufacturers
VOLKSWAGEN
TOYOTA
HYUNDAI
GM
HONDA
NISSAN
FORD
PSA
SUZUKI
RENAULT
B.M.W
SAIC
FIAT
DAIMLER AG
CHRYSLER 656 8921 455 6501 501 9791 523 398
2 065 2162 302 769
2 483 7212 554 059
3 123 3403 830 954
4 078 3766 608 5676 761 074
8 381 9688 576 964
AUTOMOBILE MARKETWorldwide
2012
Wolkswagen, Toyoya, Hyundai, GM, and Honda are the 5 main manufacturers in terms of production of cars. In 2012, Geely produces around 680 000 car units In 2012 Volvo produces around 230 000 car units.
Car Sales since 2003 (Millions)
0
5
10
15
20
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
AUTOMOBILE MARKETIn China
The Cars Sales since 10 years has been increasing, especially since 2007 with a higher grow rate, ignoring the economical crisis. In 2012, almost 20M cars were sold.
AUTOMOBILE MARKETIn China
Car Sales by Manufacturer in China in 2012 (Millions)
GM
Wolkswagen
Hyundai-Kia
Nissan
Toyota
Ford
Great Wall
Chery
Geely
PSA
0 1 2 3
0,4420,4910,5630,6250,627
0,841,18
1,332,812,84 PSA
4%Geely
4%Chery
5%Great Wall
5%
Ford
5%
Toyota
7%
Nissan
10%
Hyundai-Kia
11%
Wolkswagen
24%
GM
24%
Market Share by Manufacturer in China in 2012
GM, Wolkswagen, Hyundai, are the main 3 car manufacturers in China in terms of sales. (around 3M cars). Their sales growth rate is increasing on the last year. They are followed by Nissan and Toyota, but their growth rate has been decreasing on the last years.
GM and Wolkswagen represents half the Chinese Market Share, Hyundai, Nissan and Toyota represent a quarter of the Chinese market share.
CompetitionSuppliers Customers
Substitutes
New Entrants
Very high barrier for new entrants
Eco friendly electricity cars
Raw material = low bargain power
Engine, transmission = High bargain power &
profit share
COMPETITIONPorter 5 Forces
Consumer in China Consumer Abroad
Chinese consumer focus on social status
the car provides « ⾯面⼦子 »
!Quality, Authentitcity
Influenced by the trend, and prefer international well known brands
Authentitcity
Show off Design
New middle class young chinese salary better, tastes higher, can pay between 100 000 - 500
000 thousands RMB. In foreign countries, emerging markets consumer
who want cheap but quality cars (geely)
They wants affordable cars, but they want looks like high end cars.
COMPANY OVERVIEWSegmentation
PLAN
2) Automobile Market Situation
• WorldWide
• In China
3) Company Overview• History
• Value Chain
• Business Model
• Key Figures
• Location
• Multi-Brand Strategy
• Integration
• Internationalization Strategy
• R&D Strategy
• Human Ressources & Education
3) Geely Strategy
4) Competition• Key Figures Comparison
• SWOT
• Porter 5 Forces
• Competitive advantages and
marketing solutions5) Conclusion
1) Introduction• Who is Geely ?
• Key Questions
COMPANY OVERVIEW
1986 1994 2005 2008
MILESTONES
Entered the motorcycle
industry
Creation of Geely
(refrigirators)
Listed on the Hong Kong
Stock Exchange
Launched multibrand
strategy
2009
Most Honored Enterprise in
China
History
1997
Entered the automobile
industry
2010 =
• 2008 - Possible take over of Volvo Cars
• 2009 - Geely preferred buyer of Volvo
• August 2010 - The deal is confirmed
!• Volvo is still independent
• Geely wants to make Volvo cars in China and
access the E.U market
COMPANY OVERVIEWHistory
COMPANY OVERVIEWValue Chain
Raw Material
Out-sourced manufacturing
Car parts: Engine, transmission
AssemblySelf-manufacture Direct Sales ChannelAfter-sell service
(call center)
Outsourced after-sell serviceSelling Agents
Customers
KEY PARTNERS
KEY ACTIVITIES
KEY RESSOURCES
VALUE PROPOSITION
CUSTOMER SEGMENTS
CHANNELS
REVENUE STREAMSCOST STRUCTURE
COMPANY OVERVIEW Business Model
CUSTOMER RELATIONSHIP
Geely refers to its dealer network as 4S stores and also sells some models online. (Tmall)
Automobiles, motorcycles, engines, transmissions
Shanghai LTI Automobile Components (Joint Venture) - Taxi Cab!DriveTrain Systems international, a global transmission developer!5 overseas factories assemble Geely Models (Indonesia, Sri Lanka, Malaysia, Russia, Ukraine)!
9 Factories in China!2 making plants of Volvo!
Chinese new young middle class willing for an average price car that look like an high-end luxury car
Foreign developing countries customers who are looking for a cheap and efficient car
Affordable price Safety Technology Luxury Look Quality Eco-friendly
Volume of unit sold Sales Worldwide Listed on Hong Kong Stock Exchange
Labor Force Material Logistics Management R&D Depreciation Other Costs
Product Quality Management of after Sale service system Five Star Call center, electronic based service Stronger Brand image
08
09
10
11
12 483 483421 611
326 710326 710
204 205Annual Sales
Volume
2008-2012
Annual Production Volume
2008-2012
08
09
10
11
12 625 000600 000
560 000420 000410 000
COMPANY OVERVIEWKey Figures
Both Annual Production and annual sales of Geely has been increasing between 2008 and 2012. Geely is still producing more than it sells.
9 x
18,5K x
14+ x
5 x
981 x
480K x
21%
4B
COMPANY OVERVIEWKey Figures
Factories in China
Workers
Brands
Car Models
Shops in China
Cars Sold in 2012
of cars are exported
Profit
37 x43 x
Agents abroad
Shops abroad
COMPANY OVERVIEWLocation
Shanxi
Beijing
Shanghai
Ganshu
Sichuan
Hainan
Zhejiang
Shandong
Hunan
Vehicule FactoryPower Train FactoryUniversityParts FactoryHeadquarters
PLAN
2) Automobile Market Situation
• WorldWide
• In China
3) Company Overview• History
• Value Chain
• Business Model
• Key Figures
• Location
• Multi-Brand Strategy
• Integration
• Internationalization Strategy
• R&D Strategy
• Human Ressources & Education
3) Geely Strategy
4) Competition• Key Figures Comparison
• SWOT
• Porter 5 Forces
• Competitive advantages and
marketing solutions5) Conclusion
1) Introduction• Who is Geely ?
• Key Questions
GEELY STRATEGYSummary
1. Multi-Brand Strategy
2. Integration Strategy
3. Internationalization Strategy
4. R&D Strategy
5. Human Resources & Education Strategy
6. E-commerce Strategy
GEELY STRATEGYStrategical Transformation
Geely (1997)
Emgrand (2009)
Gleagle (2008)
Englon (2010)
Volvo (2010)
New Mission
Producing the safest, most environment friendly and most
energy saving cars.
Geely cars everywhere in the
world
Old Mission
Making cars cheap enough for people to buy.
Geely cars everywhere in the world
GEELY STRATEGYStrategical Transformation
GEELY STRATEGY
Successfully change the image of “the cheapest car”
BYD CheryGeely
0%
25%
50%
75%
100%
2008 2008 2009
41%69%97%
33%
26%
1%
26%
5%2%0%
25%
50%
75%
100%
2008 2008 2009
27%22%12%
72%64%
56%
1%13%
32%
0%
25%
50%
75%
100%
2008 2008 2009
33%29%31%
31%33%32%
36%38%37% ≤ 4 万4-6 万≥ 6万
≤
Strategical Transformation
GEELY STRATEGY
Geely made a collective event stimulating the community in order to create a new car emblem for his brands. The total cost of the event was 3.6Million yuan
Strategical Transformation
GEELY STRATEGY
1997 2009
20102008
BRANDS
Multi Brand Strategy
EC7-RVEC7EC8
Personality, Style, Passion, Leisure, Fun
Core Value: “Creating for the Future”
GEELY STRATEGYMulti Brand Strategy
Classic, Rational, Mature, Family, Trust
Core Value: “Rational and Low Profile”
GX7
Panda
GC7
New Vision
GX2
New Free Ship
GEELY STRATEGYMulti Brand Strategy
King Kong Golden Eagle TX4 SC6
SX7 SC7 SC5-RV SC3
Solid, Strength, Excellence, Elegance
Core Value: “Chinese Wisdom, World Quality”
GEELY STRATEGYMulti Brand Strategy
EC7
OthersSC6
EC8SC3
GC7Geely PandaGeely KingKong
Free Cruiser
SC7
GX7/SX7Vision
Model Unit Sold %EC7 142,503 29,5%
Geely KK 78,444 16,2%Free C. 66,481 13,2%
SC7 45,569 9,4%GX7/SX7 30,793 6,4%
Vision 33,306 6,9%Geely P. 31,471 6,5%
GC7 14,948 3,1%SC3 12,952 2,7%EC8 12,771 2,6%SC6 11,377 2,4%
Others 2,868 0,5%Total 483,483 100%
Annual Sales by model (2012)
GEELY STRATEGYMulti Brand Strategy
S80 XC70 C70 XC90
S60 XC60 C30 C70
Environment, safety, design, excitement and quality
GEELY STRATEGYMulti Brand Strategy
Sales Volume 176999 cars
Sales Volume 155274 cars
Number of shops 297
Sales Volume 151210 cars
Number of shops 360
40.000 - 230.000
RMB61.000 - 210.000
RMB37.000 - 130.000
RMB
Number of shops 324
Sales Volume 42 000 cars
6.1%
Number of shops
240.000 - 620.000 RMB
GEELY STRATEGYMulti Brand Strategy
TOYOTA : 5 different brands
GEELY STRATEGYMulti Brand Strategy
GEELY STRATEGYIntegration Strategy
Vertical Integration
Transmission
Raw Materials
Labor Force
DSI acquisition (2009)
英国锰铜公司 (2013)
Geely owned Schools
Horizontal Integration Volvo
Geely, Shanghai Huapu and The British manganin company (2013) signed agreement to produce together english taxi
2013 : Geely purchased the The British manganin company and owns 100% shares of company
First event
Second Event
1st meaning : Now Geely has exclusive production 2nd meaning : Now Geely can lower prices
GEELY STRATEGYInternationalization Strategy
1. Import & Export
2. Offshoring
3. Outsourcing
4. International M&A
5. International
Financing
1. Domestic low-end Market is saturating, new opportunities in less developed country
2. Lower labor and material costs
3. Improve the brand image
Strategy Reasons
GEELY STRATEGYInternationalization Strategy
Performance Figures
07 08 09 10 11 12
101 908
39 600
20 55519 350
37 940
21 079
Export Sales Volume (Unit)
3rd export car manufacturer
in china
GEELY STRATEGYInternationalization Strategy
Top Export Destinations in 2012
Russia
Iraq
Saudi
Ukraine
Iran
Egypt
Chile
Sri Lanka
Cuba
South Africa
Turkey
Others 9 4221 0361 258
1 9662 6642 7442 829
4 16512 835
15 16322 882
24 924
GEELY STRATEGYInternationalization Strategy
EC7
34%
Other
1%SC7
6%EC8
6%
Geely KingKong
24%
Free Cruiser
19%
Geely Panda
11%
Top Cars Exported Abroad in 2012
GEELY STRATEGYInternationalization Strategy
GEELY STRATEGY
Education
R&D
Labor Force
DSI Acquisition Transmission
GEELY STRATEGYEducation and R&D Strategy
Brand Image
1850023003
GEELY STRATEGYGEELY STRATEGYE-commerce Strategy
Geely
PLAN
2) Automobile Market Situation
• WorldWide
• In China
3) Company Overview• History
• Value Chain
• Business Model
• Key Figures
• Location
• Multi-Brand Strategy
• Integration
• Internationalization Strategy
• R&D Strategy
• Human Ressources & Education
3) Geely Strategy
4) Competition• Key Figures Comparison
• SWOT
• Porter 5 Forces
• Competitive advantages and
marketing solutions5) Conclusion
1) Introduction• Who is Geely ?
• Key Questions
Year 2012
Production 5 771 789 ? 9 909 440 625 000
Total Sales 9 070 000 740 000 9 748 000 581 908
Sales in China
2 810 000 560 000 840 000 480 000
Export 180 000 101 908
COMPETITIONKey Figures Comparison
STRENGTHS
OPPORTUNITIES THREATS
WEAKNESSESR&D
Internal Management
Integration and cost saving structure
Contributing to better price service system
Cost advantage to foreign brands
International Operation and financing channel
New trends in car market, such as new power, with government support
Acquisition of DSI, Manganese Bronze, Volvo Multi-Brand Strategy
Growth in the international Market for Chinese Brands
Low market share compared to being the first
Low public awareness compared to high promotional cost
Low end image hard to change
Disadvantage in tech, image compared to foreign brands
Low financing support
Large investment and strategy change brings uncertain effect, due to the difficulty in changing its brand image (multi brand strategy
Risk of expanding too fast in the foreign market
Absence of foreign after-sell service
Core competitiveness, clear positioning
International structure and integrated strategy should follow up
COMPETITIONSWOT
PLAN
2) Automobile Market Situation
• WorldWide
• In China
3) Company Overview• History
• Value Chain
• Business Model
• Key Figures
• Location
• Multi-Brand Strategy
• Integration
• Internationalization Strategy
• R&D Strategy
• Human Ressources & Education
3) Geely Strategy
4) Competition• Key Figures Comparison
• SWOT
• Porter 5 Forces
• Competitive advantages and
marketing solutions5) Conclusion
1) Introduction• Who is Geely ?
• Key Questions
Thanks for your attention !