Market Share Expansion as a Strategy for Boosting Returns in the Automobile Industry
Title: Decision-making in international business to maximize market share: A view of the Automotive Industry
Background
Growing numbers of business practitioners or theorists have hypothesised that expanding a company’s market share becomes a strategy for it to boost its return, while studies also seemed to have verified this notion. Billion-dollar losses are expected to be suffered by the automotive market, with a recovery likely to take many years (Bloom and Kotler, 2021). Yet organisations that reinvent their operations will thrive best in the future normal. In addition to COVID-19, the automobile industry has already experienced electric mobility, driverless cars, automated production, and ridesharing. It’s only worth asking what the “upcoming standard” would look like for the automobile industry given the pandemic’s impact on travel and the closure of overseas factories, decreased sales, and massive layoffs that have occurred. There have been some early indicators of this automotive future in recent months, but the biggest shifts in the industry are still to come (Hofstätter, 2020).
Concern has been expressed over a number of recent occurrences. For example, because of the COVID-19 problem, 95% of all German automotive-related firms have been forced to temporarily lay off their workers and pay them a significant portion of their wages via the government. The COVID-19 issue has enormous and unprecedented repercussions over the world. Many auto dealerships have been shuttered for a month or more in reality (Hofstätter, 2020).
Pandemic has accelerated car developments that had already started some years earlier. Web traffic and OEMs’ willingness to work with partners—automotive or otherwise—are two examples of changes that are generally positive. While some, such as the tendency to stick to one’s primary interests rather than go out, may have positive effects, Even though OEMs are now concentrating on the core, their unwillingness to consider other options might harm them in the long run. Automobile manufacturers may be able to obtain an advantage by rethinking their strategies in order to increase their global market share (Bloom and Kotler, 2021).
Challenges for Market Leaders
A firm that achieves a significant amount of market share opens itself to a range of dangers that its smaller rivals do not have to deal with as much. Corporations with a large number of market shares are more prone than small-share companies to be targeted by competitors, buyers, and government agencies for specific types of activities. Potential rivals might also create issues since they may believe that the firm with the biggest market share is the only one standing in their way of obtaining a percentage of the earnings generated in a certain sector. Clearly, some big automotive industries have achieved significant success in entering attractive areas that were previously controlled by a few or a few large businesses. Consumer or public-interest groups provide still another threat. A bigger market share is often associated with more public exposure; as a result, consumer advocacy organisations may pick the more recognisable corporations as the subject of their complaints, protests, and legal actions (Hofstätter, 2020).
Impacts of COVID-19 on the Automobile Industry and the Future of its Market Share
Organizational performance has some of the most significant issues in management research, but it is also the most important criteria in assessing organisations, their actions, or surroundings. This significance is represented in the widespread usage of organisational performance like a criterion for evaluating companies, their actions, or environments. The market share of an organisation has been used to evaluate its success in a significant number of cases. The accounting period in question was one in which none of the organisations wanted any losses associated with their commercial activities to be recorded. As a result, managers in the companies were compelled to make profits during the course of their operations and at the conclusion of the accounting period. An organization’s board of directors and senior management define its strategic direction, and it is up to managers to plan out how to get there. Managers must have correct information in order to make smart business decisions. In spite of receiving a significant number of information, the managers may not have made the optimal strategic choices for their companies (Alhawamdeh and Alsmairat, 2019).
Managers’ ability to make decisions is one of the most crucial responsibilities they do in any kind of business (Musso and Francioni, 2012). All forms of commercial organisations, big and small, for profit or non, private and public, rely on it as a core management activity to function well (Elbanna and Child, 2007). Strategic choices may be used to reposition or realign any organisation so that it can better “meet” its circumstances if they are properly executed. Good strategic decision-making thereby allows an organisation to maintain competitiveness, align internal systems with the external environment, and resist risks and challenges; but, owing to the immensity of these choices, a single, badly made strategic choice may cause the collapse of a company and result in corporate dishonour, large economic losses for shareholders, or even bankruptcy and decline in market share (Bulog, 2014). Managers’ participation in decision-making helps to develop a sense of belonging among workers and a cordial climate where both management and employees freely contribute to the advancement of the company’s performance and market share (Alsughayir, 2016)
Research Aims
The primary aim of this paper is to analyse how the decision making in international business leads to maximization of market share of the automobile industry.
Research Objectives
To analyse the relationship between decision making and market share
To seek examples of manner in which the automotive industry has been able to use this relationship in positive and negative manner.
To seek significance of effective decision making and how it helps in attainment of market share, thereby translating to be a market leader.
Rationale
It has been shown that manufacturing companies, in order to remain competitive in the market and increase their market share in the international market, must constantly update their product offerings in order to better meet the needs of their clients. Management should make more use of supply chain characteristics in order to keep up with the rising pace of product releases, which places greater demands on a company and necessitates greater efforts to deliver the new items successfully and efficiently. It is necessary to have the supply chain coordinated with New Product Development (NPD) choices in order to deliver goods at the desired cost, timeliness, and quality. In this way, the manufacturing company will be able to overcome issues such as (partially) unsuccessful product launches caused by inadequate inventory levels as a result of limited production capacity. And this will only be achievable if the enterprises have made successful decisions throughout the decision-making process. They are all tied to the goal of increasing the firm’s market share on the worldwide market to its maximum extent. The purpose of this research is to establish a relationship between decision-making and a rise in market share, in order to encourage businesses to place more emphasis on decision-making strategy, which will be critical in gaining market share in international business.
Market Share Expansion and its Associated Risks
Decision Making and Market Share
Strategic Decision Making
Decision-making is a process that takes place on a daily basis in a variety of settings, including households, schools, political and governmental organisations, business boardrooms, as well as executive offices. Organizational management and leadership, particularly those in positions of authority, are in charge of making major business and strategic choices (Hickson et al., 2013). Decision-making is defined as the process within which managers discover organisational issues and strive to fix them (Oduma and Ile, 2012). According to Harris (2009), decision making is the process of identifying and skillfully deciding from a variety of possibilities depending on one’s priorities. There are many different processes that are all intermediate stages between thinking and action that are the predecessors of behaviour that fall under this category.
Strategic decision-making aims to increase the chances of corporate success by planning for the long-term future of an organisation. As explained by Ashraf et al. (2015) as a kind of decision-making that is noteworthy in terms of actions taken, resources spent or precedent set when it comes to making a decision-making (in addition to other factors). When it comes to long-term goals and objectives, strategic decisions differ from operational and tactical ones. Strategic choices are defined by Mintzberg et al. (1976) as follows: A strategic decision-making process is characterised in part by the fact that the organisation often begins with just a vague concept of the answer and how it will be appraised when it is finally generated. In the end, a choice may only be made via a lengthy search including a recursive, discontinuous process that includes multiple difficult phases and a variety of dynamic factors (Alhawamdeh and Alsmairat, 2019).
Decision Making Process
When it comes to making decisions, managers and leaders need to be involved. An effective decision-making process will allow leaders or managers to brainstorm many options, analyse each one thoroughly, and choose the best answer for the problem at hand. In strategic management studies, that decision-making process is sometimes referred to as a succession of stages, phases, or routes. The following are some of the major roadblocks to accurately describing the subject matter under consideration in this decision: How to pay attention to outcomes rather than causes is shown via selective perception, recognising difficulties via remedies, and so on (Negulescu, 2014).
To arrive at a solution, Litherland (2013) goes through seven steps: describing the problem, identifying and constraining the components, designing feasible solutions, analysing the alternatives, selecting and implementing the best option, and creating a framework for control and evaluation. This is the strategy most often used by managers. When it comes to strategic decision-making, the last two decades have seen a significant shift in the area of strategy research (Elbanna, Thanos, and Papadakis, 2014). In a prior study, Barnard (1938) distinguished between “logical” or “non-logical” decision-making processes. “Identification,” “development,” and “selection” are the three stages of strategic decision-making identified by Mintzberg et al. (1976) (Lucena and Popadiuk, 2020).
As a result, performance is regarded to be a fundamental topic in the subject of strategic management since it is at the centre of every managerial activity and organisational architecture. In order to create and pick appropriate strategic decisions, it is vital that managers comprehend and establish strategies, which will ultimately lead to improved performance. In terms of theoretical constructs, “the achievements or results of an entity” might be defined as “the accomplishments or consequences of an entity” (Phillips and Mountinh, 2014). The way a business performs relative to other comparable companies in its sector, not just on conventional financial metrics of performance, but also on key non-financial indicators, may be characterised as a measure of its competitive advantage (Giampaoli, Aureli, and Ciambotti, 2019). The vast majority of studies believe that organisational performance is a complex, a multifaceted phenomenon that is dependent on a variety of factors (Eren et al., 2013).
The Significance of Organizational Performance and Strategic Decision-Making for Market Share Expansion in the Automobile Industry
Tesla: Effective Decision Making
The demand for all-electric vehicles is growing at an accelerating pace. Changes in automotive safety and pollution, technological developments, and changing customer expectations are all factors in this shift. The public’s acceptance and excitement for electric cars may be attributed in part to Tesla Motors Inc. (TSLA) and its creative business approach (Zucchi, 2021).
By bringing appealing mass-market EVs to market as rapidly as possible, Tesla founder and CEO Elon Musk aims to accelerate the widespread adoption of sustainable transportation. This has been accomplished by Tesla. The core of Tesla’s effective decision-making is based on this purpose (Tesla, 2013).
It was Tesla’s distinctive approach to entering the market that set the company apart. Although the company initially planned to make an affordable mass-produced electric car, it instead decided to focus on creating an attractive vehicle that would encourage people to buy them. As stated in a blog post by CEO Elon Musk, if Tesla had mass-marketed their first vehicle, they would have, but it was simply impossible for a startup company that had never built a car, only had one technological iteration, and lacked scale. In order to compete with gasoline-powered alternatives, they chose to create a sports vehicle since its price was likely to be prohibitively expensive no matter how it appeared (Tesla, 2013).
Direct Sales
Unlike other companies, Tesla doesn’t use franchised dealerships to sell its vehicles. Most of its company-owned showrooms or galleries are situated in major urban regions across the globe. Tesla believes that by owning the sales channel, it may gain an advantage in product development speed. Additionally, it improves customer satisfaction and increases sales. Tesla showrooms, unlike car dealerships, do not have to worry about conflicts of interest since they do not employ sales staff. Customers only deal with Tesla-employed sales and service personnel. As of the end of 2021, Tesla has 438 locations across the world, including showrooms, Service Plus centres, and service facilities (Tesla, 2022). For Tesla consumers, internet sales have made it possible to design and purchase a Tesla car from the convenience of their homes (Getoptiwatt, 2022).
The Bottom Line
Without a network of charging stations that can be accessed while driving, electric cars will not be widely adopted in the near future. To keep up with demand, Tesla plans to keep growing its system of Supercharger stations across the world. Tesla, Inc. did not invent the EV or the premium EV. When it comes to bringing exciting electric vehicles to market, Tesla has a proven business model. Another essential step was to build a charging infrastructure to overcome a major obstacle that prevents EVs from becoming widely adopted: the need to recharge when travelling long distances (Wu and Anderson, 2022). Tesla’s stock has risen dramatically since its initial public offering in part because of the company’s unusual business strategy, which involves keeping total control over sales and service (Suttmeier, 2019).
Tesla CEO Elon Musk has set an annual sales growth target of 50%, with the eventual objective of selling 20 million vehicles annually. Volkswagen AG and Toyota Motor Corp. are now the top-selling automakers in the world, with sales of more than a million vehicles each. Demand for electric vehicles is on the rise in numerous important areas. The Tesla Model 3 was Europe’s best-selling vehicle in any class, according to a study by consulting firm JATO Dynamics (Reuters, 2021). Tesla also looked to be making headway in addressing regulatory issues that were threatening the company’s operations in the People’s Republic of China. A new data and research centre has been established in Shanghai, according to the firm, in order to comply with regulatory regulations that data gathered from automobiles in China be kept inside the nation (Reuters, 2021). Tesla has a market capitalization of $1.064 trillion as of April 2022 (Companiesmarketcap, 2022).
This demonstrates how the business tycoon Elon Musk’s smart decision-making has grown the company’s market share in the worldwide market. As a result of this, Elon Musk has shown unique decision-making methods that have been critical to the growth and progression of the firm to the top of the industry. The slogan “We do not inherit the world from our forefathers; we borrow it from our offspring” was used in the marketing of the Model S. To reach the desired demographic, we chose a message that appeals to their emotions and morals. As a more cost-effective method of delivering its message, the corporation chose print media over other types of marketing. Magazines including as Car and Driver, Wired, Business Week, and Forbes were chosen because their readers match the demographic of the Model S. (Shao, Wang, and Yang, 2021). Full-page ads should be pulled out of one of the four magazines every month for three cycles in order to ensure that the Model S was advertised year-round. All these illustrate the successful leadership and decision making technique taken by Elon Musk that has resulted in better client base for Tesla in the worldwide market.
Volkswagen – Failed Leadership
Decision-making is often regarded as one of the most fundamental jobs in which leaders are involved. The importance of ethics, authenticity, and values-based decision-making in business contexts is receiving more attention as a result of numerous high-profile incidents of unethical decision-making that have lately come to light. Social irresponsibility in many of the world’s most prominent corporate leadership roles has been exposed in some of the world’s best-performing multinational businesses, threatening not just customer trust but also the identity and reputation of the organisation as a whole. Discussions on cognition, emotional intelligence (EQ), and behaviour are facilitated by examining examples of inadequate decision-making. Another case in point is the Volkswagen Group’s (Volkswagen) controversy involving the use of an emission control cheating equipment (Hotten, 2015).
Volkswagen, a well-known global automobile manufacturer, was accused in September 2015 with deliberately changing emissions software installed in its diesel vehicles, according to the Department of Justice (Lotfi, 2021). Many people were perplexed as to why such a well-established and well-funded business would choose to take those risks after hearing the news. External influences had a big role in the choice to install fraudulent software, as well as inside the organisation. Understanding the competitive atmosphere and “culture of quiet” (Coffee, 2016) perpetuated by the automobile industry allows us to see how Volkswagen decision makers justified their choice by using heuristically formed judgement, therefore decreasing their sense of risk and increasing their perception of benefit. Decision to install misleading emissions software was based on known historical events, which were then assessed against the likelihood of negative repercussions. This decision by Volkswagen came before very similar contemporary efforts to falsify emissions testing, and the participants incurred very minor costs as a result of their participation (Financial Times, 2021).
When it comes to making leadership choices, internal and external factors impact them. They are also influenced by limited reasoning, heuristics or cognitive bias, cultural aspects, individual morals and ideals, and the autocratic or collaborative context in which they occur. Understanding the intricacy of decision-making, problem-solving, including conflict resolution may lead to a more in-depth examination of one’s own strengths and shortcomings in building strong, dependable methods for carrying out such leadership responsibilities and this may be beneficial. The amount to which reason and logic are applied to a particular set of circumstances is a significant determinant of effective decision-making.
Individuals may participate in immoral activity notwithstanding their own chosen ethics, according to the concept of bounded ethicality. Groups and individuals within highly dynamic, competing firms may exhibit inconsistencies in behaviour as a result of the stressors, demands, and influences placed on them. This is especially true when judgments are made that are at odds with one’s own ideals. Analyzing Volkswagen’s decision to engage in unethical tactics, as well as evaluating previous situations, may reveal indirectly immoral conduct, implicit attitudes, and other reasons and biases that blind leaders, allowing them to engage in unethical acts and commit other crimes (Murray and Enang, 2022).
Volkswagen’s market share in Europe has fallen to its lowest level before the financial crisis, illustrating the company’s backlash following the diesel emissions scandal. According to figures from the European Motor Industries’ Association, 875,380 Volkswagen-branded vehicles were sold throughout the EU between January and June, representing a slight rise of 0.8 percent over the same time previous year. In comparison, the total sales of all automobile manufacturers in the EU market increased by 9.4 percent to 7.8 million vehicles in the first six months of 2016 (Hayden and Bodie, 2021).
Sales at Renault increased by 15% over this time, reaching 585,689 automobiles total. Ford’s sales increased by 5.4 per cent, to 554,861 units. Sales of vehicles manufactured by General Motors-owned Opel, which is known in the United Kingdom as Vauxhall, grew 8.4 percent to 532,370 units. Because of this, Volkswagen’s share of the European market dropped from 12.1% in the first half of this year to 11.2% in the first half of this year, down from 12.1 percent a year earlier (Financial Times, 2021).
VW’s market share recently fell to 11.2 percent in the first half of 2010, marking the company’s lowest level until 2008, when it had a market share of 10.4 percent. Volkswagen revealed in September that up to 11 million diesel cars worldwide were equipped with software that allowed them to cheat in official emissions testing. The German automaker has been under pressure to compensate vehicle owners in Europe who have been harmed by the scandal, in order to equal the compensation it is providing to consumers in the United States. In addition to receiving up to $10,000 in cash, owners of diesel vehicles in the United States may have their vehicles either purchased back or repaired. Volkswagen has only promised to repair the affected vehicles in Europe. Furthermore, according to ACEA statistics, Mercedes-Benz surpassed arch-rival BMW to become the second highest selling premium brand behind Audi, which is owned by the Volkswagen Group (Financial Times, 2021).
The company is under enormous pressure to reduce prices and emissions while simultaneously enhancing the overall quality and safety of its vehicles. There is a lot of temptation to cheat because of this, and everyone who has been a CEO knows this. And it is for this reason that no one should drop a tear for Winterkorn. According to the New Yorker, considering that this was not, as in many other auto-industry crises, a case of a faulty part but rather an intentional corporate attempt to mislead customers and regulators, it was untenable for him to remain on the job, especially given his image as a hands-on, technically skilled micromanager: he either knew or should have known, and in any case, he must shoulder the responsibility. It has been shown in this case study of Volkswagen that poor decision-making on the part of a leader has not only resulted in a loss for the firm, but it has also offered the rivals with significant chances to recapture market share in both the national and worldwide markets (Jung and Sharon, 2019).
Simon Decision Making Theory
When it comes to decision-making, the Simon Decision Making Theory is a framework that gives a more realistic perspective of the world, where choices have an impact on prices and outputs. According to the theoretician, making a decision involves making the choice between two or more possible courses of action. It may also include making a choice between taking action and not taking action. In contrast to traditional thinkers, Simon contends that there is no such thing as a single optimum course of action or choice to make. As a result, there will always be a better course of action or option to take since one can never know all the facts. It is possible to get more clarification on this part of the theory by referring to the aforementioned case study of Tesla, in which the leader has no previous experience in the automotive sector and is not fully conversant with all of the relevant information. However, despite this, the efficient decision-making strategy adopted by him has been the highlight of the company’s performance, propelling it to the top of the industry in the current day and making it the market leader (Harappa, 2021).
The Decision Making Theory proposed by Simon takes into account psychological variables that traditional economics either disregarded or ignored completely. Internal elements like stress and motivation, among other things, affect an individual’s ability to deal with difficult challenges effectively. In a nutshell, judgments are made on the basis of limited rationality, which means that people act differently when there is risk or uncertainty involved. The concept of ‘satisficing,’ which is a mix of the terms satisfying and sufficing, is at the heart of the theory. It argues that, rather than concentrating on maximising profits, one should pursue goals or make choices that entail the least amount of risk and complexity possible (Mintrom, 2015). This element of the theory may be better appreciated by studying the above-mentioned Volkswagen case study, in which the corporation, rather of concentrating on risk and complexity, is more concerned with profit maximisation and market share expansion. In contrast, although the firm’s inadequate decision-making that resulted in the emission scandal increased the company’s earnings at one point, the final consequence has been that the company has been punished and that it has lost its position as the market leader, as seen by a fall in its market share from the statistics as discussed above.
The methodology chapter will assist the researcher in gathering data from a variety of sources, databases, or participants who were recommended to the researcher throughout the course of the whole research project. In this chapter, we will talk about the research methods and philosophies as well as the methodologies and procedures that have been included into this study project (Katahira and Yamashita, 2017). Additionally, it covers the use of multiple frameworks, such as those used in the research, as well as any other instruments or procedures that have shown to be beneficial in the analysis of the data, with adequate explanation for the methods chosen. The primary goal of the study is to examine the influence of decision-making on the maximising of market share in the automobile industry on a worldwide scale, namely in the UK.
A research philosophy is a collection of views about how information about a certain issue should be gathered, analysed, and applied. Epistemology, rather than doxology (what is believed to be true), is the term used to describe the many methods of investigation that have been devised throughout the course of history. In the end, scientific discovery is about transforming what people think into what they know, or from doxa to episteme. The positivist (sometimes referred as scientific) and interpretivist schools of thought in Western science have been characterised as the two most important schools of thought (also termed as antipositivist) (Basias, and Pollalis, 2018).
It is possible for positivists to analyse phenomena objectively, without interfering with their findings. To be helpful, they think that occurrences must be separated and that observations must be repeated. A typical objective in social science is to discover patterns and establish connections among many components of the social environment by manipulating reality by altering just one independent variable at a time (Park, Konge, and Artino, 2020).
Based on the previously seen and described facts as well as their inter-relationships, it is possible to make predictions about the future. “Positivism does have a long and illustrious history that dates back thousands of years. Any claims of knowledge that are not based on positivist thinking are simply dismissed as unscientific and so invalid in contemporary culture “(Porra, Hirschheim, and Parks, 2014). Alavi and Carlson (1992), in a survey of 902 IS research publications, concluded that all of the empirical investigations used a positivist methodology, which is indirectly supportive of this viewpoint. Along with the physical and natural sciences, positivism has had a particularly effective connection with mathematics. There has been a lot of debate over whether or not this positivist paradigm is totally fit for the social sciences. Several authors have argued for a more inclusive approach to IS research methods. However, this concept is pertinent to our research since Information Systems is considered a social science rather than a physical science, which is relevant to the current study. Despite this, we will not delve into deeper depth on this topic (Mkansi and Acheampong, 2012). Indeed, some of the issues encountered in information systems research, such as the appearance of inconsistency in findings, might well be related to the inappropriateness of the positivist paradigm for the domain in question. Some variables or elements of reality may have remained unstudied because they were previously deemed to be immeasurable under the positivist paradigm (Howell, 2012).
Interpretivists think that only via subjective interpretation and intervention in reality can anything be fully understood and understood. The interpretivist philosophy emphasises the need of researching phenomena in their natural context, as well as the realisation that scientists can’t avoid exerting an influence on the phenomena they investigate. They are aware that there are many possible ways to interpret reality, but they consider these interpretations to be part of the scientific data they are trying to gather. Neither positivism nor interpretivism has a more famous history than the other (Chowdhury, 2014).
(Source: Ryan, 2018)
For this particular study, which is concerned with the impact of decision-making on the maximixation of market share in the global market for the automobile industry, positivism is important because it will assist the researcher in carrying out the study in a holistic approach by collecting relevant data from a wide range of sources and participants. With certainty, it will aid in the formation of a convincing view about the decision-making process within the automobile industry, allowing them to obtain a competitive position in the market while also growing and increasing their market share. As a result, positivism will undoubtedly aid in the data collection procedure, allowing the research scholar to concentrate on difficulties and causes, as well as the decisions that the automobile sector will make in order to increase their market share. Furthermore, research relevant to interpretivism helps in the collection of information from a variety of participants and views, whereas research pertinent to realism aids in the collection of information that is based on belief or fact (Assarroudi et.al., 2018). Positive psychology is the most suitable research philosophy when it comes to the construction of a highly organised research project since it allows the researcher to gather in-depth information and generate meaningful findings for this study. However, since there will be no primary research undertaken in this study, the positivist philosophy will be used.
In order to meet the goals of this study, the researcher has determined that the most suitable strategy or approach for completing the whole study will be used in order to provide findings that are practical. The deductive and inductive techniques are the two most fundamental methodologies. The inductive technique is mostly effective for performing a flexible study in which the research questions may be addressed in a descriptive way, as opposed to a quantitative approach (Azungah, 2018). Alternatively, in highly organised research, the deductive technique is utilised to answer the research issue in a thorough way, allowing for the conduct of an evidence-based study to be carried out.
(Source: By researcher)
In this study, the researcher has selected a deductive technique to conduct out the experiments so that the research issue may be resolved totally and thoroughly via careful investigation. It is past time for the corporations to construct a system of effective decision-making strategy in order to raise market share, allowing the vehicle sector to generate a huge client base and, as a result, expand its presence in the market.
In general, there are three main kinds of research approaches, namely descriptive, explanatory, or exploratory, each of which assists the researcher to carry out a research study in a dependable and believable way.
(Source: By researcher)
Using these three kinds of research designs can benefit you in overall investigation of the study as well as the preparation of the study while collecting data. Descriptive research is a significant research technique since it focused on the how, when, what, or where types of inquiries – all of which contribute to addressing the research question – rather than on the what, when, and how questions (Panneerselvam, 2014). No attention is paid to the underlying reasons for the actions of the participants in the study. Explanatory design, on the other hand, aims to resolve the conflicts, repercussions, and causes that are brought about by the comparison of two variables. Furthermore, exploratory design aids in the effective resolution of research challenges via the establishment of a systematic design approach to problem solving. Furthermore, it strives to maintain a highly organised approach throughout the study.
In this particular research study, the researcher is using an exploratory research design in order to conduct a full investigation and answer the study topic. Furthermore, this research contributes to the exploration of the conceptual understanding of the influence of decision-making on the market share of the automobile industry in general (Kothari, 2019).
There are two types of research types that are typically considered when conducting a research study; those are quantitative as well as qualitative research types. Knowing the difference between the two types of research types can assist the researcher in conducting the entire study in an efficient manner.
In research, there are two separate methodologies that may be used to help complete a study and give it with a defined framework: qualitative research and quantitative research. It is the collecting of numerical data for the purpose of analysis that is concerned with the application of quantitative research. Aside from that, there are many other techniques for acquiring quantitative data, such as surveying, conducting experiments, and using questionnaires (Vehovar et.al., 2016). Instead of applying numerical data, qualitative research focuses on acquiring non-numerical information rather than using any numerical data itself. An extensive literature review was used to gather data in this quantitative analysis. At the same time the study issue was assessed in depth via a thorough literature assessment (Snyder, 2019).
(Source: Arghode, 2012)
The method that will be used in this study will be that of secondary research. This study will examine several pieces of literature on the topics of decision-making and marketing strategy in order to form a conclusion and provide a better response to the research goals. Secondary data is often used in this context in order to get a more in-depth grasp of the subject matter under investigation. It is possible to get an understanding of an individual’s subjective view on and grasp of their social surroundings via qualitative research, which is described below. Secondary research is used in this investigation due to the fact that it is the most relevant to the subject matter under investigation. A typical way of doing systematic study in the literature is to utilise solely data from already published literary works as a starting point, which is known as secondary data. The organisation, collecting, and analysis of sequence data are all necessary components of the study’s methodology in order to create reliable research results. For the purpose of achieving its objectives, this research will collect information from websites such as Google Scholar, government publications, and the website of the top automobile industries Arghode, 2012. A second round of testing and inspection has been performed on secondary data before it can be used for further testing or evaluation (Kumar, 2018).
Research scholars and government organisations may gather secondary data for a number of purposes, including scholarly research. Secondary data may be found in a variety of formats. For the current study to be successful, the researcher will need to collect and make publically accessible secondary data from a variety of sources. As per the authors, the secondary data collection strategy gathers information from a diverse range of sources, including journals and books, and also government publications. With the use of a thematic analysis, the collected material will be categorised into groups based on common themes across writers as well as areas of agreement or disagreement (Flick, 2015).
This investigation was based on information gathered from a number of secondary sources. A qualitative exploratory approach will be employed in this study, with a particular focus on depending on the opinions of other researchers. A comprehensive literature review will also be conducted as part of the research. A decision was made to adopt an interpretative research technique since the findings were based on earlier research, which was justified. Apart from that, the study’s most significant drawback is the absence of source data, that might have allowed for more exact findings to be reached. The material for this research was gathered from secondary sources. In order to get insight into other researchers’ viewpoints, it has been decided that a study of the literature should be conducted, with the ultimate objective of doing qualitative research as a result of the results. Ultimately, it was concluded that interpretative research will be preferred over original research because it would be more cost-effective because the results would come from studying other people’s work instead of from conducting original research. Interpretative research would also be more cost-effective because the results would come from studying other people’s work rather than conducting original research (Flick, 2015).
The examples of Volkswagen and Tesla demonstrate that good decision making may assist a firm in attaining a higher market share and that a lack of choice in decision making can result in the company not being able to pay its debts. In order to get the incomplete picture, it is not simple to sustain market share even with good decision-making since there are several obstacles that must be overcome.
The corporation with a large market share should also deal with antitrust measures launched by the government. The primary reason these authorities have made significant progress is because of the claimed existence of anticompetitive market structures, instead of waiting for proof that industry behaviour has been anticompetitive (i.e. predatory or collusive).
A number of recent lawsuits have been lodged against IBM, Xerox, the eight main oil firms, the four major cereal makers, and ReaLemon; in most of these lawsuits, the government has underlined that these businesses’ market shares are so huge that their competitors has effectively eliminated from the marketplace. It is possible to argue that these enterprises are now being punished for their achievements. In any case, they are all embroiled in high-stakes legal disputes, and they all face the threat of being dissolved or being forced to dramatically modify their business practises (Bloom and Kotler, 2021).
When a company’s daily operations are investigated so closely, it will be more difficult to hide its market share, but it may still be able to hide its profitability via the arbitrary distribution of fixed overhead. Many high-market-share corporations will suffer considerable difficulties as a result of government’s efforts to combat inflation via increased enforcement of current antitrust rules.
There are, however, two limitations to the concerns described above:
- The degree to which the firm is exposed to risk is determined by the decisions by which it has gained such a large market share. Consumers and the government might feel less antagonistic toward the firm, and rivals might feel less ready to damage it, to the degree that its success is built on continual innovation and/or reduction of prices and costs to buyers. These parties will be much more willing to compete it if its success is founded on the use of an expired patents, the bundling of services, or the tying up of a specific distribution route.
- The level of risk is determined by the resources available to the other parties. For example, if rivals are unable to finance counter-advertising campaigns or private antitrust lawsuits, the threat from them is not very significant. If the social backdrop has moved from one of broad company criticism to one of more conventional support of business activities, the likelihood of consumer and government involvement is not particularly high (Bloom and Kotler, 2021).
There has, regrettably, been little consideration of either the issues of market-share management that the firm with a large market-share is experiencing, or the remedies that the corporation should explore. While a lot has been written on how a business should go about increasing its market share, there has been little said on what a firm should do after it has achieved a significant part of the marketplace.
In most cases, corporations consider and plan not just in terms of sales and profit volume, and also in considerations of their portion of the market. Gaining market share is believed to help in the long-term profitability for the firm and increase their share in the international market. The Boston Consulting Group, for instance, has advocated that, in product sectors with a steep learning curve, organisations should focus on market share maximisation rather than immediate profit maximisation in order to maximise market share.
Despite this suggestion, researchers believe that an organization’s objective is not to just maximise market share, but instead to achieve the optimum market share. When a corporation has achieved its ideal market share in a specific product/market, a deviation in either way from the share will have an unacceptable effect on the company’s long-term profitability or risk (or both). A company that discovers that its current market share is far below the optimal level should make plans to increase market share; a corporation that discovers that its current market share has been at the effective point should compete to retain it; and a corporation that discovers that its current market share has surpassed the optimal level must make plans to reduce its current market share.
The risk associated with a corporation varies depending on its market share position. Companies with a small market share have a high amount of risk, which decreases as market share grows and then increases again at extremely high market share levels. Due to the fact that businesses with a small market share are often targeted by stronger rivals, they cannot afford proper marketing research and promotional expenditure, and they are particularly sensitive to rapid changes in customer preferences or spending, the risk of failure is significant. With growing market share, risk begins to diminish since a firm may do more market research, manage stronger information systems, employ more experience marketing professionals, and spend more money on marketing as a result of the increased resources available. A high share level results in a low degree of risk, but as the share level increases, the risk may begin to rise as a result of the increasing likelihood that the government, customers, and rivals may pick out and target the company specifically.
The vast majority of automobile businesses that do a market analysis accepted the fact that they have been running below their ideal market share. Not using their facility to its fullest capacity; not being able to develop a plant at the most affordable scale; and being unable to recruit the best staff are all reasons how ineffective decision making has resulted into the loss of the market share of the automobile industry. In summary, they believe that increasing market share would result in increased profitability without a corresponding increase in risk—in fact, it is generally associated with a reduction in risk, but this is not the case, as can be seen from the above illustrated example of Volkswagen, wherein the emission scandal has decreased the market share of the company, since many competitors were awaiting for the market leaders to make a small mistake that would give them the opportunity to increase the market share in the international market.
It is necessary to establish share-building strategies that take into account a number of factors, including (1) the main market’s growth or stability, (2) whether the product is homogenous or highly differentiated, (3) if the firm’s resources are low or high in comparison to its rivals’ resources, and (4) if there are one or many competitors, as well as their effectiveness.
Product innovation has shown to be the most successful technique for increasing market share. Product imitation, her weaker sibling, may be acceptable for expansion in a rising industry, but it is unlikely to change established market shares.
Even in the face of these difficulties, the efficacy of decision-making on a variety of different grounds may assist the firms in preserving their market leadership. Further in this study, various aspects are examined and addressed in light of the above results, which may be beneficial to the firm in its pursuit of a significant market share.
The significance of market share does not merely rest in the fact that the company’s present share of the market is maintained. For one thing, as the industry matures, a company’s market share needs growth as well in order to remain competitive and profitable. To succeed in business, it is essential to grow company market share. This means taking a larger share of the market than you already have. The fact that the automotive company is growing at a faster rate than the average suggests that the companies are surpassing their competitors. Here are some areas where a corporation might concentrate its efforts in order to grow market share in international market with effective decision making strategies.
Customers might be attracted to new products and services in a variety of ways. One example is a valuable, innovative technology that a firm develops, launches, and continues to enhance before rivals get a footing in the market place. Consumers who are enthusiastic about the technology purchase it, utilise it, and are likely to become repeat customers. Customers who are new to the business, as well as consumers who are switching from another firm, may both benefit from innovative technologies and help a company grow its client base (Twin, 2022).
In addition to product innovation, manufacturing technique improvements, and marketing tactics may all be considered when looking to acquire market share via innovation. Throughout an organisation, there is the opportunity for high-value innovation to take place.
In order to acquire market share, it is wise to develop and reinforce ties with current clients by fostering their loyalty. Customers who are already loyal to a brand are less likely to leave for competitors when new items enter the market, for many reasons. Furthermore, word-of-mouth marketing, which is often offered by pleased and happy consumers, may help a firm expand its client base.
Take advantage of opportunities to interact with consumers that seek a deeper relationship and to deepen their good experience. An additional advantage is that this organic potential to welcome new consumers and expand market share may frequently occur without a company’s marketing expenses increasing in a way that is directly connected to the opportunity. Furthermore, dedicated consumers may sometimes contribute suggestions for improvements to the items they use and like (Kramer, 2022).
When a firm concentrates on recruiting and retaining skilled individuals, it concentrates on growing its market share. This is due to the fact that talented personnel may develop into motivated employees. This, in turn, has the potential to reduce costs associated with recruiting and training. Furthermore, highly qualified personnel that perform brilliantly at its jobs might enable a firm to continue its emphasis on generating excellent goods and increasing sales. To attract the finest employees, companies must provide competitive compensation and a comprehensive package of perks, which may include possibilities for flexible work hours and a pleasant workplace environment.
Companies that want to gain market share and control an industry may consider acquiring its rivals. A move of this kind really combines numerous techniques for increasing market share into a single action. When a corporation acquires a rival, it removes that competition from the market and claims the rival’s market share. It is successful in targeting client loyalty. Furthermore, it has the ability to instantly put into action the goods, services, and other strategic prospects that have been established as a result of the purchase. A firm that cannot purchase another because of financial restrictions may explore purchasing important workers to strengthen its own staff as well as the client loyalty that those employees bring with them.
Advertising that is both effective and regular provides a strong chance to acquire market share. Innovative branding and marketing via advertising may grab the attention of customers, strengthen relationships with current customers, and generate broad interest in the goods and services that a firm provides to the public. High-impact advertising, delivered in a variety of formats, may assist purchasers in understanding and aligning with a brand. It is important to maintain consistency across design, voice, or message, regardless of the advertising medium used, in order to create a powerful, favourable, and long-lasting impression. Also important is for businesses to ensure that their advertising is directed at the appropriate market group for their goods and services (Kenton, 2021).
Lowering pricing is an effective method for supporting a firm in gaining market share. Consumers’ interest and loyalty might be attracted by offering lower, more attractive pricing. This has the potential to raise the all-important sales that are necessary to expand market share. Also, in addition to lowering the real price of products, a corporation might consider offering promotional items such as discounts, as well as providing additional client perks. For example, incentives like as referral programmes and free delivery might help to drive more interest and sales in your product.
In every sphere of life, making the right decision is very important. The effectiveness of decision can help in getting the best out of a situation and the ineffectiveness of a situation could prove futile. Decision-making is thus deemed as a strategic measure that is adopted by the companies so as to ensure that they get the best out of any situation. This concept is reflected in the theme of strategic decision-making, which denotes the procedure of gaining understanding on the interaction of the decision, as well as, its impact on the company in context of attaining the advantage. The strategic decisions allows for the company to attain its objectives, as well as, its vision and mission. While making a strategic decision, the leaders of the company analyse the entire situation, weight in the pros and cons of such decision, and check the feasibility of it, before going ahead with any action basis such a decision, thereby following a proper decision making process. The strategic decisions thus reflect the notion of choosing between different alternatives. This could also entail finding the possible solution or alternative, where one is not present in the market, thereby pushing for innovations for solving the problem at hand. In essence, strategic decision-making is a careful calculation of the direction that is to be adopted by the company, so as to attain the goals set by it.
All the companies expect for the not-for profit ones, have the goal of being most profitable and in getting to the top position by being the market leaders. In this regard, there is a need for those on top of the company to ensure that the strategies that they adopt and the decisions that they make, are the ones that have been carefully analysed. This could require them to take help of the different professional or skilled individuals. For instance, where a company has to make a decision regarding entering the electric vehicle market, they would have to check the feasibility of such decision, basis the present and future competency of the company. This would also require discussion with the legal team to check whether such vehicles are permitted in a specific jurisdiction and the possible regulations that regulate such market. The engineers would also have to check the present capacity of their systems, and the possibility of modulating these systems to deliver electric vehicle. Most importantly, it would be crucial to check whether the market for such vehicles is available in the target market. There are thus ranges of factors that go into any decision of the company. A half-hearted approach could essentially prove futile.
Market share is something that denotes the percentage of market that is held by one company. The bigger the market share, the better would be the revenues of the company. This would also allow for the company to fulfil its obligations towards different stakeholders. This can be reflected in the manner in which the concept of CSR or corporate social responsibility works. This concept shows that the companies do not restrict themselves to earning profits, but also work on building the society and the environment. A company is thus socially and environmentally responsible. However, a deeper analysis of the concept shows that without the presence of profit, the company cannot do much. This is because to adopt environment friendly approaches and to give back to the environment, a lot of financial resources are required. The same is true for the social aspect as well. In order for the company to work for the betterment of society, for instance by adopting vocational training or organizing health camps, again financial resources would be required. These financial resources are majorly the monetary resource of the company, which are deserved from profits of the company. Profit comes from revenues, which if generated properly, would allow the company to be market leader. Thus, the base of any good act for the company is focused on the revenues the company makes.
Being a market leader ensures that the company has a good profitability. The company is able to earn profits due to the higher customer base it has. The bigger the market share that the company has, the more profits will be generated. One could contest that this would not be possible where luxury brands come into play, but the generic point of view would ensure this. Even within the luxury brands market, the fight for market share continues. The luxury brands to want to be the market leader even when it is within their market segment. Being a market leader allows the company to get to a wider customer base, create brand loyalty and be a point of reference for the competitors, as a learning point. As a market leader, the company can, not only dominate the market, but it can also lead the market in the direction it wants to. The market leader could thus push for innovations in the market, create new idea, bring new products, and potentially open an entire product category. A leading example of this is Apple Company, which has brought forth the products like smartphones and wireless earphones. At the time of these innovations, the competitors made fun of Apple for removing the utility of products and found flaws in these products. This situation changed within week when the ardent competitors of this company, like Samsung, followed the direction adopted by Apple.
The strategic decision-making is not only crucial from the point of earning revenues. It is also crucial for steering through the turbulent times. When faced with challenges and oppositions, the job of decision-makers becomes even more complex. They are required to deal with the challenge that the company faces, which might not be an easy thing to do. The strategies that are adopted by the companies, despite undertaking a deep research and carefully calculated situation, could backfire for any company. This is because of the eventualities or possibilities that either presented later on, or could not have been fathomed during the initial phase of decision-making. This makes it even more crucial for the decision-making to guide the company through such turbulence. In absence of resilient decision-making in such a scenario, even the best of the leaders, could fail. With failed leadership, the companies too fail. In addition, every decision, even when it leaves a negative impact, has to be navigated so as to maintain the market leadership. If, due to a hurdle, the decision-making by the top management were not channelled properly, the company would not remain at the top position for long. Furthermore, the company could also lose its position in such a case, resulting in loss of revenues, and an overall diminished position for the company.
For effective decision-making, the organization leaders have to deal with the complex and uncertain situation, and have to form such strategies that allow for mitigating the unknown unknowns, particularly because of the ‘Black Swans’ being rampant and timing being the key. There is ambiguity surrounding the decisions taken by the top management and the future cannot be predicted. Despite this, it becomes crucial for the top management to adopt such decision-making approaches that allow for the companies to fit into such complex situations, so as to ensure that the efficiency of the entire process is maintained. A strategic decision-maker would thus be able to deal with the highly interactive market by using those strategies, which reflect acute insights of the psychology behind behaviour of people.
Strategic decision making also allows for resource sharing and collaborations, which ultimately keep them in a competitive position in the marketplace. The strengths of one company when merged with the strengths of another, helps the companies in gaining competitive advantage. An example of this can be seen in the strategic alliance of Renault, a French automotive company, and Nissan, a Japanese automotive company. Both of these companies had a bad experience of forming such partnerships in the past, with the same resulting in business failure and divorces. This past partnership was Nissan-Daimler and Renault-Volvo. This partnership was formed in 1999 when both the companies were struggling in their respective markets. However, with their alliance, and with Mitsubishi too joining the club, the companies were able to do well.
The literature review focused on the perspectives of two automotive industry companies, to show the manner in which the decision-making has an impact over the company’s future, and ultimately on the market share of the company. The focus of this study was thus on Tesla and Volkswagen. In this regard, one could say that Tesla surpasses Volkswagen, particularly the manner in which the former has been able to take a lead in the electric vehicle market, and in the manner in which it is seen as a synonym of electric vehicle cars. To put this into perspective, one can look at the statistics. For the third quarter of 2021, Tesla reported that it made 241,300 electric vehicle delivers, while the same figure for Volkswagen was 122,100. The graphical presentation further highlights the manner in which Tesla has a major lead over the Volkswagen group (Mladjan and Markovic, 2019).
Source: (Kane, 2021)
As touched upon earlier, a resilient strategic decision-making would allow for the company to go through difficult times and still maintain their probability and market leadership. This is again reflected in context of Tesla, particularly in the post-COVID world. Even though the automotive industry continues to struggle in expanding to pre-pandemic levels, the company has been able to push forward its sales at a very high speed. This has resulted in Tesla setting up new and significant records. As a result of this, the market share of the company has quickly increased in the largest markets. Making reference to the industry data regarding market results for fourth quarter of 2021, the company reported improvement in its market share by more than 2.25% in US/Canada. For China and Europe, the market share of the company has been same as it had been for a few quarters, standing at 1.5% (Kane, 2021).
Source: (Kane, 2022)
Save for the year of 2020, the company has been able to increase its sales on a consistent and high rates basis, attaining its long-term objective of 5-% aggregate annual growth in context of the delivery of vehicles. With 2022 giving the company 50% or higher increment, the company would be able to get 4% share in US/Canada and more than 2% in Europe/Canada.
Source: (Kane, 2022)
The success of Tesla is clearly attributed to the effective decision making undertaken by its top management, particularly by Elon Musk. The manner, in which he has directed the company to the path of success, makes it a case study for a company like Volkswagen, where the leadership had to be jailed owing to emission scandal. The company not only lost its brand value, but also lost the faith of the consumers and other stakeholder groups. Volkswagen is a big company and with the resources that the company has, it can easily surpass Tesla in being the market leader. However, the decision-making in the company has been flawed. This is true even post the emission scandal, as Volkswagen continues to lag behind Tesla in terms of market share. When Volkswagen was telling the world that there had been a drop in its quarterly profits, Tesla was joining the trillion-dollar club was attained a landmark order from Hertz (Kane, 2022). At this very time, Tesla was also setting new sales record in the jurisdiction of Europe. This has also proven one point that dethroning the kind of electric vehicles, i.e. Elon Musk, is not easy. Even when Tesla sells just 5% of cars in comparison to Volkswagen, it has almost eight times its worth, showing the power of strategic decision-making. This also proves that with adoption of such decision making techniques, the company is able to dominate the market, irrespective of the category of product offered by the company. Hence, in the clash of Tesla vs Volkswagen, it is the strategic decision-making of Tesla that got to be crowned as the winner (Steitz, 2021).
Conclusion
This research was aimed at analysing the manner in which the decision-making in international business leads to maximization of market share of the automobile industry. This was done by undertaking a secondary research for this work, relying on qualitative data, where the already published material was analysed considering this was a desk based study. Adopting this method allowed for the already published literally work to be explored. Considering the pandemic times, this was the best alternative to undertake the research.
The research had three main objectives. The first one was to analyse the relationship between decision-making and market share. In this regard, an extensive research of the published sources helped in understanding that by adopting strategic decision-making, the companies are able to ensure their probability through increase of market share. Such decision-making also allows for a company to attain the market leadership position. However, undertaking such decisions is not an easy cup of tea. Making any decision requires a proper procedure to be followed, consultation with experts, and most important, weighing and comparing the available alternatives. The strategic decision makers are able to find new ways of doing thing, when the old ones do not seem feasible. This also allows for revamping the entire industry, as well as, helps in bringing innovation to any industry. In order for the company to fulfil its responsibilities, like the ones discussed in context of corporate social responsibility, it is crucial that it maximizes its market share as this allows in increasing the profits made by a company. Hence, it cannot be denied that decision-making and market share are related to each other, where the effective of the former, helps in increasing the latter.
The second research objective for this work was to seek examples of manner in which the automotive industry has been able to use this relationship in positive and negative manner. In this regard, a thorough discussion on Tesla and Volkswagen was undertaken. Tesla demonstrated the positive manner in which decision-making helped the company, whereas Volkswagen was used as a negative example of decision-making that proved that ineffective or inapt leadership leads to calamities for the company. Apart from the effectiveness of leadership of the two companies, the comparison was also drawn on the basis of innovation adopted by the two companies. Here, the focus point was the manner in which the two companies compared to each other on electric vehicles parameter. The statistical data presented in this work was a clear evidence of the manner in which Tesla has been able to surpass Volkswagen with ease. When one side of the coin reflected Volkswagen struggling in the present day, the other sign reflected how Tesla was enjoying its market lead in different markets across the globe.
The last objective of this research was to seek the significance of effective decision-making and the manner in which it helps in attainment of market share, thereby translating to be a market leader. Here again, reference could be drawn to the discussed literature, as well as, to the example of Tesla and Volkswagen used for this work. Hence, all the three objectives of this research were properly met, resulting in the aim of this research being attained successfully. That being said, it is crucial to mention the limitation of this work. Considering this was a literature work, the actual sentiment of the public for the two companies could not be collected. This presents an opportunity to be undertaken in the future, where the impact of the two companies in the mind of consumers can be explored. Apart from this, a comparison basis the data of different companies is also something that the present research could not detailed upon in this work. Hence, a more elaborative study could be undertaken in future researches.
To conclude, it cannot be restated enough that strategic decision-making is a significant tool for the top management, which can be used by the companies to channel and navigate their working. These working have to be undertaken in a manner that reflects careful and calculated analysis of the present and future environment. The manner in which the market changes, and the customers move, has to be calculated by the top management, before coming up with the strategies that are aimed at attaining the vision, mission and objectives of the company. Where the top management and leaders are able to focus on effectively dealing with conflicting situations or tough times, and are able to bring innovation to the market, along with following a proper decision making process, they can ensure that the company steers in direction of being a market leader. The prime example of this is Tesla and the manner in which it is dominating the electric vehicle market. Apart from this, an effective decision maker is able to form proper alliances, which can not only help them combat with their personal losses, but can also act as a pooling of different resources of different entities, resulting in profitability for such companies. The discussion of alliance of Renault-Nissan is an example of this.
Hence, it is recommended to the top management and leaders of the company that they use the decision-making in such a manner that the market share can be maximized. The different examples quoted in this discussion, particularly of the automatic industry, help in proving the same. For the companies running their business in the globalized world, the physical boundaries no longer separate them. This allows for the companies to gain a higher market share than the originating nation. Hence, the companies can strategies expansion to enhance their market share, and to enter new market for offering their products. However, this again requires proper planning by the strategic decision-makers to evaluate the prospects of such an idea. Hence, it can be said that effective decision-making is followed by capturing of market share. The companies who are able to do a good job at effective decision-making, are able to maximize their market share, as has been established in this work through the demonstration of market share vehicle delivery growth of Tesla.
It is crucial that this study also gives specific recommendations for the automotive sector, which may be advantageous for enterprises seeking to expand their market shares in international markets. Automotive aftermarket consolidation and cut-throat competition are well-known facts in the industry. Customers are now more likely to negotiate from cost and upwards, rather than from the stated price and downwards, making it even more critical to manage prices effectively. Customers, on the other hand, have greater expectations in terms of customer service than they had a decade ago. In order to manage inventory, profitability, and margins issues, many automotive aftermarket organisations are looking to their data.
Proper Inventory
The aftermarket must guarantee that it has the appropriate inventory at the appropriate place to meet customer demand on short notice. Then there’s the question of whether you’ll be able to deliver on time. Data and inventory management tools are now capable of making the difference between being competitive and failing to do so. When a corporation uses good inventory management software, it is able to automate inventory control, which reduces mistakes and expenses. Due to the software’s ability to keep track of which goods are in stock or on order, there is no need for ad hoc inventory counts. Instead, customers can see what products are available in real time, allowing you to save a significant amount of time. Sluggishly selling goods may be flagged by inventory management software, which checks important inventory data. This helps businesses retain consumers by ensuring they can deliver product on schedule.
Detailed sales reports
One of the reasons why many managers rely on their intuitions when making decisions is because precise reports are required in order to evaluate where cost savings might be made. Getting reports in this manner may be time-consuming and can result in miscommunications and the development of even more reports, which is problematic for an IT department that is already pushed enough. Not to mention the fact that conventional reporting from ERP systems may be time-consuming, resulting in reports that are no longer useful by the time they arrive at the desk.
For businesses that deal with automobile parts, there are several levels of data that must be included (or deleted) in order to make significant sales statistics. The variety of client types, product types or ranges, suppliers, and geographic locations in which the firm operates all contribute to the complexity of the business. Creating the correct reports the conventional way might be almost difficult for non-technical users, but with the aid of business intelligence, non-technical people can simply construct their own reports and dashboards.
Using Profitability to Drive Strategic Decisions
Understanding how to assess profitability will help organisations make better decisions about which projects or efforts to undertake. In the case of a low profit margin caused by a large scale pay rise, it may not be advisable to engage in a high-cost project that has no evidence of a significant return on investment (ROI). For those whose company’s profit margin is high as a result of recent cost savings through process efficiency now can be a good moment to choose a project that has signs of future profitability.
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