International Strategic Management Assignment Sample 2024
Introduction
Strategic management plays a significant role in companies to understand their areas of strength and work on it to gain competitive advantage in market. With intensified globalisation and competition in market, strategic management has been an essential part in any business for further expansion in international sphere considering external factors they are operating in.
This study focuses on SEAT who is aiming to come up with their MINIMO project of car sharing in Manchester, UK. This study sheds light on background of SEAT along with macro environment affecting it in UK. It also considers opportunities and threats SEAT may face in operating in Manchester, UK along with impact of city level and macro environmental factors on business decisions.
Background of SEAT and its project Minimό
SEAT is a Spanish car manufacturing company that was founded in 1950 with its headquarters in Martorell, Spain. This company has been under Volkswagen group’s since 1982 and offers its products and services in global markets like Europe, Middle East, Africa and Southeast Asia. SEAT has its main products as automobiles, electric vehicles and automotive parts with a production unit of 468,805 in 2020.
In 2020 SEAT had a net income of €384.2 million which provoked them to come up with a new mobility service in one of the most urban countries in world (seat.com, 2021). Their new project is the MINIMO project where they would give car sharing services to urban locals that prefer comfortable and private transportation on a daily basis.
This project is intended to be held in 2021 for which they have an option of two countries, UK and Australia and on the basis of their external factors in market demand they would be choosing anyone for implementing the project. Focusing on the macro environmental factors of both the countries and demand for car sharing services, SEAT has chosen Manchester to be the most effective one in terms of implementing their MINIMO project.
Strategic management and expansion in the international market SEAT in its new project has taken a decision of not selling private cars but to give car sharing services to people who want to get comfortable transport on a daily basis and can afford it. This has been an innovative strategy because of which they need a well populated city with a proper average income of all people to afford this service (Svennevik et al. 2020).
The project manager, engineers and other project associates have developed this automobile project focusing on mobility strength of Manchester keeping in mind its environmental factor. They have designed their project in such a way that it not only gives people transportation support but also to release the pollution stress from environment. With an increasing demand of public transportation in Manchester in 2019 and 2020, SEAT has gained a strategic alignment of “concept vehicle in 2019 Mobile World Congress”.
MINIMO’s main vision is to release pressure from public transport and introduce people to a new mode of transportation through car sharing. SEAT also included “station-based car sharing” and “free-floating car sharing” as major factors in the name of reducing traffic in urban areas.
Macro-environmental factors of UK
| Factors | Impact |
| Political | ● With a strong political influence and structured administration, UK is considered to be a politically stable country with administrations properly functioning and carrying out their duty (Svennevik, 2021).
● UK has enabled better foreign transport especially after Brexit as it has its own political power and business norms which creates advantage for foreign companies to invest and explore better business opportunities. |
| Legal | ● With establishment of Data Protection Act 2018 UK provides security to companies’ information as well as employee personal data (legislation.gov.uk, 2018). This also protects individuals in UK from data breaching and stealing of information by any third party without authorisation.
● The Employment Act 1996 has also helped employees to Get Equal Pay for Equal Work irrespective of any discrimination which have automatically enhance their standard of living. With better standard of living individuals in UK have better affordability to luxury car sharing services which gives SEAT an opportunity to expand its business and MINIMO project in UK |
| Economy (National) | ● U.K.’s national GDP rate is 8.5% which highlights its development in economic status in global standards (ons.gov.uk, 2020). With greater GDP rates in UK foreign companies like SEAT can invest more financial resources with an assurance of stability.
● However the inflation rates in UK has experienced a 0.75% increase compared to the previous year which leads to fluctuation of raw materials prices causing a disadvantage for foreign companies to open new projects in UK |
| Economy (Metropolitan) | ● In 2018 Manchester GVA at current basic prices was £22,500 million which grew by 3.6% as compared to 3.4% of UK making Manchester the fifth highest growing city of all UK core cities (manchester.gov.uk, 2020).
● In 2020, average salary of individuals in Manchester was £38.5k which is comparatively higher from Trafford and Bury and gives a strong competition to Salford. ● In addition to this Manchester has a higher female average salary in 2020 which was £34.1k and male average salary £42.0k highlighting the affordability range of customers in getting luxury services (plumplot.co.uk, 2020). |
| Technological (National) | ● UK in its business sector has incorporated 4G and 5G technologies that benefited companies with better implementation of AI systems and technological infrastructures. In automobile industry implementation of AI systems have helped in better manufacturing and modification of cars.
● In 2018, UK invested £37.1 billion in Research and Development department which was equivalent to 1.7% of overall GDP (commonslibrary.parliament.uk, 2020). There has always been a steep rise in expenditure in R&D departments leading to better technological innovation and development of businesses with wider scope of foreign investment. |
| Mobility (metropolitan) | ● Manchester is a highly populated city in UK with equivalent road mobility in day and night. This city has a large number of urban people who are office goers and a very limited percent of the population lives in rural and countryside.
● Manchester every year successfully attracts a large number of foreign tourists highlighting it’s nightlife. This creates a need for a smooth transport facility in Manchester with constant mobility and better services. |
Table 1: Macro-environmental factors of UK and Manchester
(Source: plumplot.co.uk, 2020)
Analysis
From the above macro-environmental factor it has been identified that SEAT has a good opportunity in expanding its car sharing projects in Manchester UK as the city is subjected to strong legal administrations. With a good political scenario in the stable administration SEAT being a foreign con company has better opportunities to operate.
Data Protection Act 2018 in UK would help SEAT to keep their innovative project secrets secure (Madhusudan et al. 2019). With effective implementation of employment acts SEAT would find more potential target audience who are office goers and can afford car sharing transport services on a regular basis. With a strong GDP of UK and higher rates of average salary in Manchester it is easier for SEAT to manufacture cars for car sharing services and also enable people to afford it every day.
The main aim of SEAT is to reduce traffic congestion and pollution from such urban cities and introduce a new mode of transportation through their MINIMO project. However the inflation rate can to some extent affect the fluctuating price of raw materials for this automobile company creating a disadvantage for project implementation (Bocken et al. 2020).
Manchester provides a good customer base as there are very few car sharing services in this city and a wide range of potential customers who can get attracted to such innovative approaches.
Opportunities and Threats for SEAT in UK
Opportunities
While operating the MINIMO project in Manchester, SEAT can experience a large number of opportunities in terms of target audience, availability of resources and economic benefits. A better GDP rate of Manchester and economic progress in terms of average income of individuals signifies a strong and well-established economic market in Manchester, UK.
This has successfully attracted foreign investors like SEAT to come and expand their business in this market ensuring a better flow of cash in the country’s economy. In addition to this, people living in this country would have a chance of experiencing a better lifestyle with more luxurious services in terms of transport which would release the traffic congestion and ensure smooth mobility (Clemente et al. 2017).
SEAT has come up with a very new and innovative service for customers and therefore other automobile companies have not adopted it yet. This leads to no competition in the market thereby opening a great opportunity for SEAT to flourish them through its MINIMO project. Technological advancements and easy adaptation to innovation is another aspect that would benefit SEAT for international expansion in Manchester (Polydoropoulou et al. 2020).
Implementation of AI technologies, high-speed internet and better connectivity in Manchester have enabled people to book online car sharing services which would benefit SEAT in maintaining their communication with its customers.
Threats
The main threat that SEAT can encounter in Manchester in implementing their MINIMO project is fluctuating price of raw materials required for this automobile project. Increase in price of raw materials will automatically affect overall budget opening chances for bringing losses. Moreover in Manchester this would be a new type of service that customers would be exposed to which gives SEAT a 50-50 chance of profit and loss.
Madhusudan et al. (2019) stated that inflation rates have chances to bring severe risks to companies in terms of financial aspects. Increasing crime rates in UK, especially Manchester, can also create threats like damage to cars, rash driving, theft and burglary.
Impact of City-level and wider macro-environmental factor on business decision
The city level and macro environmental factors for SEAT have affected its decision making process of whether they would implement their MINIMO project in Manchester, UK or Melbourne, Australia. Focusing on national and metropolitan level factors, this company has decided to select Manchester as most suitable city for implementing their MINIMO project of car sharing service. According to the scores of attractiveness of external factors, Manchester scored 120 making it more attractive and as compared to Melbourne.
SEAT has decided that Manchester is exposed to a larger number of urban people who have the potential of availing car sharing services on regular bases giving better profit benefits to the company. They have also identified that UK has a strong economy in terms of GDP and average income of people making it a suitable place for financial investments (Svennevik et al. 2020).
The technological factors have also compelled SEAT to decide on online connectivity where customers can easily book and share car services for transportation. Manchester is a city with a very busy street life and in order to ensure smooth mobility SEAT has come up with its car sharing services. It is not only innovative but also has the potential of operating with low competition in the market. The strong political scenario of UK has made it easier for SEAT to gain legal compliances in terms of security, employee benefits and licensing of the project.
Conclusion and recommendation
From this study it can be concluded that SEAT is a company that is coming up with MINIMO projects of car sharing in Manchester UK. SEAT is a Spanish car manufacturing company which has been acquired by Volkswagen groups. In 2021 SEAT is planning to expand their market in UK because of its highest score in environmental factors compared to Australia. Manchester is subjected to strong political influence and structured administration with the implementation of data protection act and employment act which contributes a large to economic GDP of UK.
These factors make Manchester an ideal place for foreign investment along with technological adaptation and a high urban crowd demanding comfortable mobility services. This creates a demand for shared car services so as to reduce pressure from public transport and minimise pollution caused from increasing numbers of private vehicles.
The study also concludes with opportunities and threats that SEAT might encounter while operating in Manchester along with impact of city-level and macro level factors on business decision making.
It can be recommended to SEAT to come up with a lesser number of car services in initial stage so as to see its popularity among audience and then slowly increase their business as per the demand. It is also suggested to check the driver’s identity documents so as to avoid chances of car theft, damage and burglary.
Reference List
Bocken, N., Jonca, A., Södergren, K. and Palm, J., (2020). Emergence of carsharing business models and sustainability impacts in Swedish cities. Sustainability, 12(4), p.1594.
Clemente, M., Fanti, M.P., Iacobellis, G., Nolich, M. and Ukovich, W., (2017). A decision support system for user-based vehicle relocation in car sharing systems. IEEE Transactions on Systems, Man, and Cybernetics: Systems, 48(8), pp.1283-1296.
commonslibrary.parliament.uk, (2020). About UK invested £37.1 billion in Research and Development. Available at: https://commonslibrary.parliament.uk/research-briefings/sn04223/#:~:text=Total%20R%26D,real%20terms%20increase%20of%2094%25[Accessed on 08 July 2021].
legislation.gov.uk, (2018). About Data Protection Act 2018. Available at: https://www.legislation.gov.uk/ukpga/2018/12/contents/enacted [Accessed on 08 July 2021].
Madhusudan, A., Symeonidis, I., Mustafa, M.A., Zhang, R. and Preneel, B., (2019). Sc2share: Smart contract for secure car sharing. In 5th International Conference on Information Systems Security and Privacy.
manchester.gov.uk, (2020). About In 2018 Manchester GVA at current basic prices was £22,500 million. Available at: https://secure.manchester.gov.uk/info/200088/statistics_and_intelligence/2162/economy[Accessed on 07 July 2021].
ons.gov.uk, (2020). About UK GDP rate. Available at: https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpmonthlyestimateuk/november2020[Accessed on 06 July 2021].
plumplot.co.uk, (2020). About Manchester average salary. Available at: https://www.plumplot.co.uk/Manchester-salary-and-unemployment.html[Accessed on 05 July 2021].
Polydoropoulou, A., Tsouros, I., Pagoni, I. and Tsirimpa, A., (2020). Exploring individual preferences and willingness to pay for mobility as a service. Transportation research record, 2674(11), pp.152-164.
seat.com, (2021). About SEAT. Available at: https://www.seat.com/company.html [Accessed on 04 July 2021].
Svennevik, E., (2021). Providers and Practices: How Suppliers Shape Car-Sharing Practices. Sustainability, 13(4), p.1764.
Svennevik, E.M., Julsrud, T.E. and Farstad, E., (2020). From novelty to normality: reproducing car-sharing practices in transitions to sustainable mobility. Sustainability: Science, Practice and Policy, 16(1), pp.169-183.
Know more about UniqueSubmission’s other writing services:
