Innovation is an immensely important function within an organisation which considers improving one's existing offerings in ways which enhances their importance as well as their value (Winterhalter, Zeschky and Gassmann, 2016). The following report is based on Jaguar Land Rover which is a British auto-mobile company, which deals in manufacturing as well as distribution of luxury cars. It covers innovation history of the organisation, its existing innovation performance and capabilities and the industry in 2018.
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Land Rover And Its Innovation History
An organisation as big as Land Rover is world renowned and is associated with innovating its products and services since the very beginning. The company has its roots even before 1950 and is continuing to grow as one of the most effective and strong companies in the world. To effectively showcase its innovation history, PESTLE analysis has been used which are external pointers influencing a firm and its functions.
This aspect undertakes how political stability and policies assists a firm in carrying out its business activities effectively. Back in 1947, the firm created its first vehicle using a Jeep chassis. To avoid using expensive tools, the structure of the car was made from light allow and off-cut fabrication was used for the chassis (The History of Land Rover, 2019). The UK government at that time was having a robust post-war period which created market gaps serving as an opportunity for Land Rover to launch itself officially in 1948.
This factor showcases economy's performance how it influences a company's operations. During 1960's the economic performance of the UK was quite shaky. However, it marked reduction in various aspects, for instance, relative competitiveness. The economy of the UK has always been a positive factor for innovation in the company. Moreover, such support from the economy allowed the firm to launch its Series IIA with higher diesel engine capacity and innovative 12 seater design,
All the social elements, such as cultural and demographic trends, customer demand, etc. are taken into account in this factor. Since its first car in Amsterdam Motor Show, Land Rover has always been customers' favourite. A crucial reason for the same is that it appropriately analysed market trends and tried to involve each market need within its products. The market trends of the country near 1970's were to drive vehicles with elegant design as well as effective capabilities. To achieve this, the firm introduced its 3-Door Range rover which was the very first vehicle delivering a permanent 4-Wheel drive. It had an innovative design as well which involved clamshell bonnet and split tailgate (Experience Land Rover, 2019).
This factor includes all the technological advancements which influences an organisation to adopt innovative practices and introduce innovation in their products (Van Lancker, Wauters and Van Huylenbroeck, 2016). Automotive industry has been subjected to technological advancements and Land Rover had always aimed at innovating its products as per new technical requirements in the market. The firm has evident instances where its technological innovations have changed the industry. This was remarked in 1989 where Range Rover became world's first vehicle featuring anti-lock breaks. In addition, it later introduced world's first Electronic Traction Control as well as Automatic Electronic Air Suspension (History of Innovations, 2019).
All the legal frameworks and procedures set out for a country determines the operations of organisations. One such aspect is intellectual property which protects a firm's original and innovative operations. The policies and legal structure of the UK has always been supportive to Land Rover which enabled it to produce effective designs and innovative frameworks. One such innovation is Hill Descent Control in the firm's Freelander which has been a breakthrough in off-roading vehicle technology (70 Years of Land Rover, 2019).
With rising awareness on environmental issues, each company is required to adapt its procedures and develop methods in ways which contributes to environmental sustainability and welfare. In 2013, Land Rover made the world familiar with Range Rover Hybrid which was specifically designed to reduce emissions and improve fuel economy (Great Performance, Capable and Eco-Friendly, 2018).
Land Rover's Existing Innovation Performance And Capabilities
Land Rover is one of those few companies which is widely respected and preferred by masses over other companies present in the industry. However, it is of vital importance that its existing innovation performance as well as capabilities are analysed. This would give an insight on its core strengths and weaknesses and how it could use its capabilities to seize market opportunities and reduce its threats (Biemans, 2018). To determine these factors, SWOT analysis is used to identify areas which are core strengths and weaknesses of an organisation and adequately identify its opportunities and therats.
Land Rover is a global company dealing in all sorts of luxury car segments. Moreover, the organisation has vital and effective strategies through which it is continuing to expand its operations globally and reaching untouched areas. Thus, its strengths, weakness, opportunities and threats are mentioned below:
There are various pointers within Land Rover which are its most effective strengths and could aid in the objective of firm to acquire a wider market. These strengths are mentioned below:
- Effective Brand:The firm has associated itself with Jaguar, which again is a leading company in the Automotive industry. In addition, both of these firms have been supported by TATA Motors, which is their parent conglomerate. Having associated itself with such big scale companies has enhanced its capabilities to competitively stay ahead in the market.
- Market Share:The firm as well as Jaguar have strong market presence in the world, particularly in the UK. With its robust innovation like using Automation and Hybrid Systems in their SUV's, the firm has managed to get an evident market share in the country.
(Jaguar share of car market in the UK from January 2016 to January 2019, 2019)
- Diversification:Although Jaguar Land Rover manages to effectively hold the position of one of the strongest companies in the world. However, there are still various facets which are required to be accomplished by the company. Present business environment requires the company to diversify and effectively introduce new product segments which is utmost necessary as per the market demands. However, the firm has faced difficulties in trying new segments which is a driver for innovation for the firm to completely eradicate this weakness.
- Negative Sales Growth:Jaguar Land Rover deals in premium car segment which has potentially grow in recent years. However, even with such growing global prospectives, the company has experienced decline in emerging markets like Asia Pacific regions for almost 18% (SWOT Analysis of Land Rover, 2019). The reason for the same is that within these markets, not every individual is willing to buy a luxury car and thus, it could be another driver for innovation within the firm
- Lifestyle Changes:With time, people as well as customer groups have witnessed various changes in trends and their lifestyles as per rise or pressure of various external factors. Currently, customers wants vehicles that give them utmost comfort, speed and most importantly, safety. Moreover, they want all these features in price which is convenient to them. Land Rover could create a new product or feature which would help serve all these demands of customers.
- Technology:UK is a nation with effective access to technology. In addition to this, Jaguar Land Rover spends a lot of amount in their R&D which channelises their efforts to bring in new innovations and technologies in use. With rise in Automation as well as Artificial Intelligence, a whole new spectrum has been open for the company to deliver its utmost advanced features or products in the market.
To enhance these opportunities and limit the weaknesses, it is imperative that Jaguar Land Rover indulge into bringing new innovative products or features that enhances its scope for future improvements and assists in maximising its capabilities.
One such innovation is “Safety Integration System (SIS)”, which could be a new feature which the firm could implement in its new vehicles. With enhancement in artificial intelligence, the company could develop a system that would provide immense safety to its customers and would fulfil their technological demands. Within this system, the firm would be using AI to denote bystanders and other vehicles in case there is an emergency situation within the car. The system would be activated with a single button and windows, as well as the windscreen would be tinted from the outside denoting problem inside the vehicle. Moreover, to further enhance the safety, Autopilot systems would safely stop the car by the side where the emergency could be dealt with.
Such innovation would help the company in reducing their weaknesses, and grabbing each opportunity present in the market.
- Intense Competition:Automotive Industry globally is one of the most growing industries which has effective players and market leaders that have shaped up the industry with their innovative product designs and advanced technologies. However, with such large market, competition also increases which again, is a driver for innovation for a company like Jaguar Land Rover. The biggest competitive firms in respect to Jaguar Land Rover are Mercedes Benz, Audi, BMW Group, Porsche, etc. (Jaguar Land Rover's Competitors, Revenue, Number of Employees, Funding and Acquisitions, 2019). All these companies are high on innovation in luxury car segments and it requires Jaguar Land Rover to bring in innovative new products within the market.
- Brexit:In 2016, a referendum was held regarding UK leaving the European Union and as per majority of votes, UK exited the union. The impact of this event is quite widespread and severe on the nation and on each large-scale company. Unstable policies by the government as well as decrease in value of pound are serious threats for Jaguar Land Rover.
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The Industry In 2018
Automotive industry within the UK as well as globally, has observed advanced and effective innovations recently (Talukder, 2016). Moreover, it is one of the fastest evolving industries globally. There are very new aspects which have shaped businesses under this and opened up broader markets in terms of technology and innovation. To adequately understand it, Porter's Five force analysis has been used which would help in determining industrial attractiveness.
Porter's Five Force Analysis
- Customers' Bargaining Power:
Currently, the UK market has transformed into a more customer-centric market. Businesses in industry are producing features and products according to customer preferences. Usually, these individuals, organisations or even government possess the power to distance themselves from products whose prices are perceived as high by them. Moreover, there are vast number of buyers who acquire vehicles and services by automotive industry and thus, this power is high within the industry.
- Supplier's Bargaining Power:
Similar to customers, suppliers too are large in numbers. Various components such as frame, brake systems, electrical systems, etc. are supplied to manufacturing companies within the industry. Profitability of businesses in these industries depends heavily on the suppliers' components. However, switching costs are quite high and it is not certain that specific quality would be provided with enhanced pricing by these customers. Thus, this power within the industry is moderate.
- Substitutes' Threats:
These products are those which could be used in the place of existing offerings. For vehicles by manufacturing companies within the industry, substitute products are public transports. However, various studies and analysis have emphasised on the fact that millennials are preferring public transport over cars which is quite a threat for companies within automotive industry (Why Millennials Are Buying Fewer Cars Than Older Generations, 2019). Thus, threat of substitutes is high in Automotive Industry.
- Threat from New Entrants:
Automotive Industry is quite expensive and it is very tough and a complex activity to enter this industry. This is because businesses require a huge investment and appropriate suppliers and management team to survive and grow in this industry. Moreover, after events of Brexit, investment within the UK has dropped to more than 46% which further increases the complexity for investment in the UK automotive market (U.K. Auto Industry Already Feeling the Brexit Pinch, 2019). Thus, the threat of new entrants for existing businesses is low in the industry.
- Existing Competition:
Various firms are established market leaders within the industry and are widely renowned. There are almost 8 firms that incur more than 90% of all the revenues globally. Moreover, almost 50 auto parts organisations. Have 80% revenues globally. In addition, globalisation is a factor which has risen more competition within the industry. Companies like Audi and Lamborghini compete with each other in terms of innovation, design and performance and this competition is quite high within the industry.
Thus, it could be concluded from above mentioned information, that innovation is quite is a necessary element to take a business forward. PESTLE analysis helps in determining external factors which influence functions of a company, whereas, SWOT Analysis assists in identifying inner capabilities and weaknesses. Lastly, Porter's Five Force Analysis aids in gaining an in-depth knowledge about the industrial attractiveness and each aspect within an industry which is crucial for the businesses to manage their businesses.
Books and Journals
- Biemans, W., 2018. Managing innovation within networks. Routledge.
- Talukder, M., 2016. Managing innovation adoption: from innovation to implementation. Routledge.
- Van Lancker, J., Wauters, E. and Van Huylenbroeck, G., 2016. Managing innovation in the bioeconomy: An open innovation perspective. Biomass and Bioenergy. 90.pp.60-69.
- Winterhalter, S., Zeschky, M.B. and Gassmann, O., 2016. Managing dual business models in emerging markets: An ambidexterity perspective. R&D Management. 46(3). pp.464-479.