A strategic management paper on Viking Cars Incorporated

• Main Author: Del Castillo, John
• Format: text
• Language: English
• Published: Animo Repository 2001
• Subjects: Automobile industry and trade > Philippines; Viking Cars Inc.
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/3907
• Institution: De La Salle University

The industry is characterized by low threat of entrants because of high barrier to entry, intense rivalry among competitors and high pressure from substitute products. The industry has the following opportunities: (1) the reliability of the supplier (exporter) in continuously sending quality cars (2) the status of Volvo Cars, Inc. in the luxury car industry, particularly the large car segments (3) and the great probability that the large car industry will recover from its downtrend once the economy improves. the industry has the following threats: (1) political instability (2) losing good work force to foreign companies (mechanics for aftersales) (3) the dollar exchange rate and (4) new government policies, taxes. Viking Cars Incorporated (VCI) with main office address at 2272 Pasong Tamo Ext., Makati was established in October 5, 1994 and organized by two respected business groups headed by Peter D. Garrucho Jr. and Nordic Industries with an authorized capital stock of two hundred ten million (P210,000,000.00). Its principal purpose is to deal, distribute and sell motor vehicles as well as to provide service and repair for the same and supply machineries, equipment, parts and accessories for the sale, service and repair of the motor vehicles. This joint effort was forged primarily in order to establish Viking Cars, Inc. as the authorized dealer of Volvo Cars, Inc. in the Philippines. VCI's strengths are: (1) continuous supply of quality cars (2) product and brand reputation (3) the company's capability to meet its short-term liability and (4) VCI has been comparatively keeping ideal inventory levels since 1998. VCI's weaknesses are (1) losing trend that is being established (2) dependency of the industry upon foreign exchange rates (3) inability to finance operations from the funds received/turn around (4)somewhat inefficient utilization of assets and (5) low return on equity rate. Proposed Vision: To become the most demanded premium car brand in the Philippines through massive information campaign about product excellence and quality service to the customer above all else. We dedicate to improving human life worldwide by providing quality,safe and reliable cars while maintaining a social responsibility to the environment. Proposed Objective: Corporate- To maintain market leadership in the lar car segment in the automotive industry in terms of obtaining 40% market share by the year 2001. Financial- To improve operations in terms of breaking even in 2001. Corporate strategies: (1) minimize impact of price increase from the peso devaluation in relation to the dollar by taking advantage of the weakening of the Kroner (2) expand total market by tapping into new institutional users such as first-class hotel transfer services and (3) intensify product promotion by utilizing the print medium to take advantage of the slow down in promotions of competitors. Functional strategies: Marketing- Product/Service: (1) continue to offer quality cars and emphasize safety, durability and design exclusivity feautures and (2) improve aftersales service by ensuring parts availability and scheduling. Price: (1) keep price increase to reasonable levels if need be and (2) try to retain price levels for as long as it is feasible. Place: (1) Maintain just one conservatory, the Makati Office. Promotions: (1) intensifying promotions by utilizing print medium using copies dealing with the various features of the car brand (2) increasing the competency of the sales force to talk convincingly about product features and (3) pro-active seeking of the institutional users. Finance: (1) strict monitoring cost and expense, especially those pertaining to non-operational aspects or non-essentials (2) increase debt servicing so that other charges could be minimized (3) negotiate for substantial discount in FOBs (4) negotiate with the exporter to pay in Kroner and (5) implement strict collection of accounts receivable. Management Information System: (1) continue with the intranet system that links the company with the exporter firm in Sweden. Human Resource Development: (1) to recruit and select qualified people using as basis, job specifications (2) to orient and re-train people to update them on relevant trends and developments (3) to pay them competitive rates and extend to them perks that would in turn make them loyal to the company (4) to regularly appraise their performance so that company could have strong base for decision (5) to provide advancement possibilities to qualified personnel and (6) to support and aid personnel in their professional concerns. Strategy Implementation: Shared Values- The current shared values of VCI and the supplier (Volvo Sweden) is to improve human life by providing quality, safe and reliable cars. Structure- The existing structure is vertical (top to bottom) but the way they do things is more of a flat organization wherein communication between ranks is very open. Systems- The existing system is capable of implementing both backward and vertical integration systems. Style- The general management style currently prevailing in the company is empowerment. The managers are given the freedom to arrive at a certain task in the manner they see fit to achieve a goal. Staff- In terms of qualified personnel, the firm has a handful. Through the years, the firms VP's, managers and supervisors have acquired the necessary skills and training to handle the tasks that is required of them. Skills- The company's skills include developing excellent customer for life relationships with they buyers. This includes prospective buyers, supplier (Volvo Sweden) and its own people. This is important since the automotive industry is not bent mainly on selling cars but building relationships that will last a long time.