Journal of Intelligence Studies in Business

Journal of Intelligence Studies in Business

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Competitive intelligence: a case study on Qoros

automotive manufacturing
Hamed Ahmadiniaa and Muhaimin Karima
aÅboAkademi University, School of Business and Economics,
Turku,Finland; hamed.ahmadinia@abo.fi and m.karim@abo.fi

To cite this article: Ahmadinia, H. and Karim, M. (2016) Competitive

intelligence: a case study on Qoros automotive manufacturing. Journal of
Intelligence Studies in Business. 6 (2) 52-65.
Article URL: https://ojs.hh.se/index.php/JISIB/article/view/160

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 Journal of Intelligence Studies in Business
Vol. 6, No. 2 (2016) pp. 52-65
Open Access: Freely available at: https://ojs.hh.se/

Competitive intelligence: a case study on Qoros

automotive manufacturing
Hamed Ahmadiniaa* and Muhaimin Karima*

aÅbo Akademi University, School of Business and Economics, Turku, Finland

*Corresponding authors: hamed.ahmadinia@abo.fi and m.karim@abo.fi

Received 7 June 2015; accepted 8 July 2016

ABSTRACT In this paper, Qoros automotive manufacturing company, which is aiming at

expanding their market in Europe, will be analyzed. In this case, the challenges that the
aforementioned company has faced will be explained and some recommendations regarding
marketing, strategy, production methods and other related issues based on competitive
intelligence models like SWOT, Porter's Five Forces Analysis, ADL Matrix, and other related
theories will be provided.

KEYWORDS Qoros automotive, competitive intelligence, market analysis

1. INTRODUCTION and long-term partnership with their key

collaborative partners. These partnerships
Qoros Auto Co., Ltd. established in 2007 as a
play a vital role for the company to be a
Chinese automotive manufacturing company
creative, innovative and internationally
headquartered in Shanghai, China. The
recognized car factory that provides the
company design and produce different cars,
highest quality cars and services for their
which specialize in international quality,
customers1.
design, safety, and other remarkable connected
In order to have a better analysis of the case,
services. The company aims at hiring the most
we provide more information related to the
talented personnel either in the field of
company structure in the following parts of this
engineering or business to gain competitive
report.
advantages in terms of having the most
creative and talented people in their 2. BRAND
production and marketing teams. (Bloomberg,
The company sold their cars under four
2015)
main brand names: Chery, Karry, Rely, and
They are trying to offer the best products for
Riich2. The company embedded in their brand
the current markets by having such a creative
a changed driver progressive production
team. The company has two main offices in
method by which they try to drive the changes
Germany and China, with their
within an upward and progressive trend in the
operational hub in Shanghai. The company
car industry. In the company, they share
has several international partners such as
values such as that the technology that they
Bosch, Microsoft, Harman, and Neusoft-
are using in their production process must
Alpine. The main idea behind this is that the
make life simpler and better for their
company is trying to have world-leading
customers. They are trying to implement the
technology and use the best service companies
aforementioned spirit to be the first premium
to keep their competitive advantages in a close
Chinese car brand that provides the highest

2
1 http://www.qorosauto.com/en/Company "Chery's "Outstanding 4+1" Pattern Exhibits the
"Chinese Power"". Chery Inc. 2010-04-23.
 53
possible quality cars to make their customers rider. These facilities are available via a
feel that they are “living in a modern permanent 3G internet connection and a five
metropolitan lifestyle with a customer inch touchscreen monitor7. The main idea
experience that goes beyond driving”3. behind these bikes is more than having an
electronic engine; the new concept mainly
3. PRODUCTS
targets new technologies to offer a modern
The main products of the company could be navigation system and to be ready to ride in
categorized into small box-shaped passenger any off-road situations as well8.
vans, passenger cars, and high-performance
5. PRICE AND SALES
four-wheel drive cars built on a truck chassis.
These cars sell under either the Chery or Karry The company considers several developments
brands (Xing, 2002). The most significant in expanding their markets in various parts of
progress in these cars, compared with other Europe, to cope with the company vision and
chic cars, is that the Qoros 3 sedan has become long term target of the company to be
the first Chinese-developed car with a five-star recognized as a successful brand in the car
safety rating by Euro NCAP, which plays a role manufacturing industry. In this case, the
as a key competitive advantage for the Executive Director of Sales, Marketing and
company4. Product Strategy at Qoros Automotive Co
Moreover, the company is considered to be mentioned that “The value is not a matter of
the largest Chinese passenger car exporter and price, but mostly the combination of product
the tenth-largest Chinese car manufacture, and services in line with customer
since 2003 and 2012, respectively (The Global requirements” (Pietro, 2014). He also argued
Times, 2012). The assembly of the cars and that this value is estimated by the level of
their component manufacturing facilities are satisfaction that the company’s cars will offer
mainly in China and approximately fifteen to the buyers. For example, the price of their
other countries all around the world. Moreover, cars ranges from 22,470 to 28,900 USD for the
the main company location has two local R & D Qoros 3 City SUV, and 19,000 to 27,000 USD
research centers and the company allocate for the Qoros 3 Hatch9.
about 7% of their total income to the process of
6. FUEL
product development (Dyer, 2006). As a
significant development in their products, the Recently, most car manufacturing companies
company also designed and developed some are trying to offer new cars with alternative
hybrid and electric vehicles5. fuel powered engines. In this case, we consider
them to fall into seven engine groups: diesel,
4. TECHNOLOGY
gasoline, bi-fuel-CNG, bi-fuel – LPG, hybrid –
The company uses state of the art technology gasoline, battery electric vehicles (BEV) –
introduced by Microsoft to offer new stylish, owned batter, and BEV – leased battery
safe, international quality standard cars to the (Valeri, and Danielis, 2015). Qoros Auto Co.,
global market. The company, with this like other car manufacturers, offer cars with
collaborative production, introduced a new idea petroleum fuel engines; however, they recently
into the car manufacturing industry: the allocated considerable fund to their R & D
“connected car”. This term refers to using department to develop modern hybrid and full-
internet technology via various means such as electric cars. In this case a new technology
mobile phones and tablet, so that the user has called the “start-stop system or stop-start
the opportunity to access different driving system” is used in the recent products of the
services6. Apart from this technology they also company to reduce fuel consumption and
offer a new electronic bike, known as “Ebiqe”. emissions from gas as a new step toward the
It is an electric bike that offers several expanding process of green marketing in the
electronic facilities and applications to its company. Therefore, the car automatically

3 http://www.qorosauto.com/en/aboutqoros/brand 6 http://blogs.microsoft.com/business-
4 http://www.caradvice.com.au/253375/qoros-3- matters/2015/03/04/automakers-innovate-connected-
sedan-first-five-star-euro-ncap-rated-chinese- cars-with- microsofts-tech/
developed-car/ 7 https://www.electricbike.com/qoros-ebiqe/
5 "China's fuel subsidy costs the world". Reuters. 8 http://www.qorosauto.com/en/newscenter/news/
2008-06-04. article41
9 http://www.carnewschina.com/tag/qoros/
54
shuts down and restarts the internal 1. One touch system as an innovative
combustion engine, and the amount of time the sales services for the customers, by
engine needs to spend ready will be decreased which they can be in touch with the car
and consequently less fuel will be consumed in service department of the company,
general10. register for an appointment with a
chosen company service center, and
7. MARKETING
have all the relevant information about
The company has different marketing the car’s current situation on-screen.
strategies in different parts of the world. On This system has several merits, such as
one hand, the Executive Director of Sales, time saving for servicing the car with
Marketing and Product Strategy at the less effort from the customer, which
company expressed that for European markets brings a new service experience to
they promote the Qoros 3 sedan, hatchback, them.
cross and now also the suburban utility vehicle 2. The product is covered by a 36 month or
and the station wagon. Furthermore, the 100,000 km warranty for all terms.
company has a gradual marketing plans to 3. Finally, the company implemented
introduce the Euro 6 TGDI and diesel engines special facilities to support their
onto the market. On the other hand, the customers, such as “roadside
company has a special marketing plan for assistance,” which is available via a
China. In this case, they are targeting the special phone number, 24 hours per day
starting development in metropolitan areas by year-round11.
having special partnerships with recognized
10. SUSTAINABLE BUSINESS MODEL
expert dealers. Through this collaboration the
company can provide technical support and IT The company has an especially
platforms for the management of the environmentally and user friendly business
information from both technical and customer model for its productions. The main idea of the
points of view (Montagna, 2014). company is not only to produce a brand new car
for the market, but the company also aims at
8. STRATEGY
producing a different one. For this, the
The recent marketing strategy of the company company implemented a new approach, which
announced at the 2015 Geneva International should be more user-friendly for the drivers
Motor Show indicated that “the company has a and should bring a better driving experience to
plan to export some selected models to Central them. Therefore, the company developed a new
Europe and the Middle East within 12-18 digital eco-system business model for their
months” (Gedalyahu, 2015). Furthermore, the value chain.
company representative argued that they are The business model has the following
going to expand their markets through a step- benefits to the customers:
by-step plan. However, their current target is
1. Provides interactive information in
to expand their market thorough their sales
the car without any stress for the
network in China. Not to be left behind, the
driver.
chief executive of the company mentioned that
2. Expresses any relevant information
another significant change in the long-term
to the driver through universal
strategy of the company is hiring more Chinese
gestures for all critical actions that
staff as local employees rather than having
don't require looking t the screen.
many costly international expert personnel
3. Easy access to any of the key areas
who are working as catalysts to market the
in the software such as navigation
company’s cars (Murphy, 2015).
and entertainment.
9. AFTER SALES 4. Simple and contextual information
(Villanti, 2013).
The company has three main after-sales
support methods for their customers, as In this part of the report we discuss the
follows: European automotive market, its size, key
players and current trends. It is undoubtedly

10 "Chery wins three awards including "Influential EV 11 http://www.qorosauto.com/en/aftersales-

Manufacturer of the Year"". Chery Inc. 2011-12-31. service/Overview
Archived from the original on 2 April 2012.
 55
important for Qoros management to analyze fitfully from a six-year sales period with
the European automotive market before noticeable deterioration in performance and
planning to penetrate it. This analysis will help quality. However, on the contrary, some
the company to understand the industry size, business analysts argue that the European
key players, opportunities and the current automobile market still holds the potential for
trends in product design and customer 6% annual growth in the passenger car
preferences. Having a proper analysis of the segment (Campestrini, & Mock, 2011).
industry and the pocket market of Slovakia will However, it is evident that the market and
help them understand their own position. The the consumers are changing. Three powerful
management can then assess their strengths, forces driving the change are shifts in
weaknesses, opportunities and threats. A consumer demand, expanded regulatory
proper analysis of the industry and self- requirement for safety and fuel economy, and
assessment has a better chance of producing a expansion of the availability of data and
more appropriate business plan. information12.
11. THE EUROPEAN AUTOMOBILE 12. SHIFTS IN CONSUMER DEMAND
MARKET
The consumers have recently shifted from
The European automobile market is the largest being extremely loyal to the brands and have
automobile manufacturing market in the started considering them to be a transportation
world. The European Union is the largest machine; so they are looking for more comfort,
automobile market with an annual passenger safety and sophistication in a competitive
car registration of approximately 13 million per price. This might not directly affect the sales
year by its manufacturers; close to one quarter but it has an effect on the consumers’
of all cars in the world are manufactured in willingness to pay. This basically indicates that
Europe. It is needless to say that the industry the customers have become more demanding.
also experiences fierce competition in terms of Customers are becoming more “value for
sales volume, market share and profitability. money” centric, where they want additional
The major companies also compete in terms of value for the additional expenses13.
design, technology, CO2 emissions and safety.
13. EXPANDED REGULATORY
In order to analyze this industry from Qoros’s
REQUIREMENTS
perspective we will focus on the passenger car
segment and exclude commercial vehicles. The Regulators are mandating the most safety-
objective of this phase of the report is to have a related facilities. For example, features in the
clear understanding how promising or cars, such as backup cameras are recognized as
otherwise the market is for Qoros. standard equipment on new models, adding
The European automobile industry is large further to costs. Globally, the regulatory bodies
and sophisticated. They boast about their have started being more concerned and are
cleanliness, safety and speed. The turnover giving substantial importance to the safety and
generated by the automotive sector represents security of citizens. As a result, they are also
6.9% of EU GDP. Hence it has ripple effects implementing stricter road and traffic laws and
throughout the economy, supporting a vast they require the vehicle manufacturers to
supply chain and generating an array of comply by producing vehicles that have
business services. Automobile manufacturers technology and designs that provide enough
operate some 290 vehicle assembly and safety. Moreover, they are concentrating on
production plants in 25 countries across CO2 emissions and imposing laws that force car
Europe. In total, 16% of worldwide passenger manufacturers to produce more environmental
car registration is done in Europe. However, friendly vehicles14.
there exists a big challenge in this particular
14. INCREASING AVAILABILITY OF
region. Unlike the US market, there has been
DATA AND INFORMATION
a decline in the sales figures for a prolonged
period of time. Russia experienced a sales drop Availability of information is creating a big
of 25% and the whole of the region is emerging change in consumer behavior. These days,

12 14 http://www.chinapartsfactory.com/2015-auto-
http://www.strategyand.pwc.com/perspectives/
2015-auto-trends industry-trends/
13 http://drmsriram.blogspot.com/2015/02/business-
special-2015-auto-industry.html
56
consumers are exposed to all sorts of manufacturers to comply more with
information about the car, its brand, price, sustainability issues. In order to create a
specifications, discounts, quality and greener environment and to reduce CO2
performance. All of these factors relate to the emissions, the governments are encouraging
automotive value chain and are interested in companies to manufacture hybrid and
collecting more customer and car data, but environment friendly cars. For instance, CAFE
uncertainty about how to use it is still standards in the United States that will go into
considered to be a matter of doubt. These effect in 2016 are planned to add as much as
driving forces are creating an impact on the US$1,000 to the production cost of a vehicle,
entire automobile industry. In order to manage according to the National Automobile Dealers
them and satisfy both the customers and other Association. However, the challenge is that
stakeholders, it is imperative to understand only a few of the automobile buyers are willing
how these forces are affecting the other to pay more for environmentally friendly
variables of the industry (Campestrini, Mock choices. Thus the cost pressure is falling
2011). heavily on the OMEs. This, however, paves a
path towards innovation. In order to make the
15. INCREASED ELECTRONICS AND
car more fuel efficient, the companies are
SOFTWARE CONTENT
reducing the weight of the cars. This is
In the past few decades the cost of software and dramatically evidenced by Ford’s decision to
electronics was only 20% of the entire cost allocate a considerable amount of steel with
while now it has risen to 35%. Now 90% of the aluminum to the 2015 version of its F-150
innovations and new features are contributed pickup truck.
by the electronic systems and new software.
17. NEW DEVELOPED PLATFORMS
Infotainment supplies an opportunity for
AND PLATFORM
OEMs and suppliers to differentiate their
MODULARIZATION
products. The latest Consumer Reports survey
showed that infotainment equipment was the The pressure of consumer preferences has
most difficult to deal with feature in 2014 for made car manufacturers become more
vehicles, making a proposal for a powerful responsive and flexible. In order to reduce cost
upside for companies that can arrange superior and to cater to the want of segmented vehicles,
systems15. The increasing popularity of the OMEs are adding a number of models at
infotainment and telematics is forcing the the same time, reducing the number of vehicle
traditional OEM and suppliers to change their architectures and thus improving product
business thinking and become more innovative commonality. Volkswagen, GM and many
and comply with the products and services of other companies are increasing their number of
the industry’s key players. Recently, platforms. It might initially increase the cost
developments in software are considered to be but the additional expense is outweighed by
as important as hardware innovations, and savings from the sharing of common
global competition also emphasises components between cars and platforms, and
nontraditional factors. Ever more vital increased volume.
software content has also accelerated the pace
18. THE CHANGING FACE OF RETAIL
of change in products and features. Whereas
the time frame for new vehicle launches is Along with the core product and technologies,
typically three to four years, the cycle for new the sales channels are also changing.
software iterations, often driven by Customers want a smooth purchase experience
interactivity with mobile devices, is measured including financing, insurance and all other
in months (Campestrini, Mock 2011). formalities. While most of them are interested
in taking a test drive some are looking for an
16. PRODUCT-MIX CHANGES TO COPE
instant purchase from the internet. Although it
WITH REGULATORY NEEDS
is an emerging sales channels, the dealers
Regulations and laws are becoming stricter prefer a sale through a test drive.
and more concerned about the environment. As Accommodating these shifting attitudes about
a result, the governments and other regulatory buying a car will require equal changes to
bodies are creating pressure on the car

15 http://www.chinapartsfactory.com/2015-auto-
industry-trends/
 57
dealers’ processes, including investment in new and Japanese markets, which are dominated
technology16. by gasoline powered cars. On the other hand,
Apart from these forces responsible for the hybrid car registration is experiencing growth
above mentioned changes, some additional and reached a level of 1.4% in 2013. However,
historic data trends might also be important for it is still relatively low compared to the
Qoros in order to design strategy. In this phase Netherlands (5.7 %) and France (2.6 %). If we
we discuss the current trends in the industry look into the hybrid shares, brand wise, one-
and major concerns such as passenger car fifth of all new Toyota vehicles sold in the EU
industry size, price, market share and major were hybrid-electric. Plug-in hybrid (PHEV)
players, annual sales volume and sales trends, and battery-electric vehicles (BEV) make up
CO2 footprint and technologies. about 0.4 % of vehicle registration in the EU,
with notable differences among the member
19. NUMBER OF VEHICLES:
states. In the Netherlands, a stunning 4.1 % of
After a major decline in sales in 2009, all new sales were PHEVs in 2013, and another
registration of passenger cars steadied in 2012 1.4% were BEVs (Campestrini, Mock 2011).
and 2013 to 12 million, which is still 20% below The underlying reason for this shift in
the volume before the economic crisis. Before manufacturing is directly correlated with the
this crisis, the average volume hovered around government imposed CO2 based vehicle
15.5 million annually. For some countries like taxation scheme where vehicle that emit less
Spain and Russian, the dent was even higher; than 50 g/km of CO2 receive tax rebates.
50% for Spain and 25% for Russia. The historic PHEVs and BEVs accounted for 5.8 % of all
data says the market is more concentrated in a new car sales in Norway in 2013. And in 2014,
handful of countries. In total 75% of the total that market share further increased to 14.6%
new car registration is taking place in during the first half of the year (ICCT, 2014d).
Germany, France, UK, Italy and Spain and This makes Norway the world’s leading market
50% of the market is captured by the top seven for electric vehicles (in terms of market share,
brands. Germany holds the title of market not absolute number of vehicles). Underlying
leader, having 25% of the total new car reasons are, again, fiscal incentives provided
registration volume (Campestrini, & Mock, by the Norwegian government. However, it is
2011). worth mentioning that the Europe market has
20. FUEL CONSUMPTION AND CO2 experienced a sharp increase in gasoline direct
EMISSIONS injection (GDI) to obtain greater efficiency and
lower CO2 emissions. By 2013, the share is
Under the new EU regulations, 95% of the new assumed to reach 30%. The top brand of hybrid
vehicle fleet must comply with the 95 g/km cars is Toyota Prius. (Campestrini, & Mock,
target by 2020 (Campestrini, Mock 2011). 2013 2011).
was the first year in which the target of CO2 Ninety percent of the vehicles in EU-28 are
emissions from passenger cars dropped to 130 passenger cars and largely dominated by
g/km. From 2021, the manufacturers’ average Germany, France and UK, holding 60% of all
will be monitored. In percentage term, all registrations of new cars. Germany holds the
manufacturers are given a target of reducing largest market share with 25%. After a dent in
CO2 emission by 27% from 2015 to 2021 sales due to a government imposed scrappage
(Campestrini, & Mock, 2011). scheme, the country has remained stable at
21. TECHNOLOGIES around 3 million vehicles per year. For the first
time in years, vehicle sales in Spain increased
EU or Europe is yet to gain maturity in the again in 2013.
environmentally friendly hybrid car segment. The European market is very diverse in
There are significant differences among the terms of brands, with the most registered
member countries; Belgium, France, and Spain brand, VW, commanding only 13% of the
have diesel take-up rates of around 65%, while market. The top-five companies dominate
in the Netherlands the rate is much lower, about 65% of the market. The VW Golf remains
29%. Surprisingly, 53% of cars newly the most popular car model in Europe. It
registered in 2013 were powered by diesel, accounted for about 3.8% of all new vehicle
which is quite different from the US, Chinese sales in the EU in 2013. The biggest segment

16http://www.strategyand.pwc.com/perspectives/
2015-auto-trends
58
of the market is the small and lower medium Not only is the automotive industry growing
segment, comprising almost 65% of the entire but so is the entire economy of Slovakia. The
industry while luxury cars are only 10% of the main driving forces are rebound investment
total. A steady hike, however, is being observed and an expansion in private consumption
in SUV and off road cars since 2009. After the supported by improved labor market
crisis in 2009 where most of the brands either conditions. From the end of the 1st quarter of
declined or stagnated, BMW and Audi continue 2015, the automotive industry in Slovakia
to have a positive upward trend. (Campestrini, started to grow, with 11% growth from 2012. If
& Mock, 2011). Qoros can successfully penetrate the EU
market and create a strong foothold there
22. PRICE
highly depends on five major forces. How the
Sales taxes in the EU are between 18% and market is behaving, how the major players
27%. In addition to the general tax, some are performing, how the consumers are
member states have also introduced a special behaving, how the regulations are changing
sales or registration tax for new cars. The price and how Qoros complies with these forces. It is
figures from 2001 to 2013 show that there has of paramount importance for the Qoros
been a steady growth in price. The luxury management to analyze the industry, its target
brands, Audi, BMW and Mercedes-Benz, are market and its competitors to design a well
the most expensive brands followed by VW and thought out strategy. Every activity Qoros
Ford. A positive picture is observed in the management undergoes should be backed by a
hybrid electric segment, where greener well-designed strategy that address the
vehicles are in a declining price trend current trends and market demands and has a
(Campestrini, & Mock, 2011). solution to those18.
In the following phase we will discuss is how
23. MARKET IN SLOVAKIA
Qoros can use competitive intelligence methods
Slovakia is a small country in Europe born in and techniques to respond to the dynamic
1993. It joined the EU in 2004 and the Euro market and plan their next attempts19.
Area in 2009. From 2001 to 2008, the economic
24. MARKET IN THE UK
growth of Slovakia was among the highest in
the EU, heavily fueled by foreign direct Another big part of the Europe market is the
investments especially in the automotive and United Kingdome (UK) automotive market. Of
electronic Sectors. The country has cheap all UK suppliers, more than 70% manufacture
skilled labor with low taxes and liberal labor their products in the UK. At present, about
laws along with a favorable geographical 80% of all component types required for vehicle
location. assembly operations can be procured from UK
The Qoros management has decided to first suppliers. The UK automotive supply chain
launch their product in Slovakia as a stepping typically generates £4.8bn of added value
stone to penetrate the European automotive annually. There are around 2,350 UK
market. Hence, learning about the Slovakian companies that regard themselves as
automotive market is as important as learning ‘automotive’ suppliers, employing around
about the European automotive market. The 82,000 people (2009 data). (SMMT, 2012).
Slovakian market started to grow more It is estimated that every job in the UK
drastically when it welcomed new plants, and vehicle assembly supports 7.5 elsewhere in the
production grew to over one million units. The economy. UK-based OEMs are actively
market comprises 70% of passenger cars. The committed to increasing local sourcing
downfall in the economy has maintained the practices to support new model programs and
market decreased of 4.7% from 2012. Skoda is facility expansion. The UK boasts a production
the market leading brand with 19.9% market of 1.6 million cars and more than 2.5 million
shares, followed by Volkswagen at 9.7%. Apart engines yearly. 1.58 million vehicles and 2.5
from that, the market has new entrants such million engines were produced in the UK last
as Hyundai and Kia, who have already year, and of these, 81% of the total vehicles and
managed market shares of 8.1% and 7.5% 62% of engines were exported. UK automotive
respectively17. is an important part of the UK economy and

17 http://focus2move.com/slovakia-car-industry-2014- 18 http://focus2move.com/slovakia-car-market-
outlook/ outlook-at-july-2012-skoda-wins-in-a-flat-market/
19 http://focus2move.com/slovakia-light-vehicle-sales/
 59
normally generates more than £55 billion in Volkswagen Polo. The lower medium segment
annual turnover, along with £12 billion in net is led by Ford Focus.
value-added to the economy. The automotive Overall, there has been an increment in the
industry is the UK’s largest sector in terms of usage of cars in the UK market. Compared to
exports by value. It generated £27 billion of 2011, 2012 experienced 0.4% more traffic on
revenue for the UK in 2011. On average, the the roads on average with a maximum spike of
sector exports to over 100 markets worldwide 0.9% in the south-west region. A recent study
and accounts for around 11% of total UK showed 12.6% of CO2 emission is caused by cars
exports yearly20. in the UK. Addressing that a concern in 2011,
Average new car CO2 emissions fell to a new UK vehicle manufacturers reduced energy
low of 133.1g/km in 2012, and have fallen by consumption per vehicle produced by 14%. In
over 20% in the last 10 years. UK automotive addition to producing ever more efficient
is at the forefront of the low carbon agenda, powertrains, manufacturers have designed
investing in R&D and new technologies that various innovations to help drivers save fuel
will deliver ever cleaner, safer and more fuel- and lower CO2 emissions. Stop-start
efficient cars. The automotive industry is technologies automatically cut the engine
subject to numerous national, EU and global when a vehicle is stationary. The engine is re-
laws and regulations, including those relating started by releasing the brake or depressing
to vehicle safety and environmental issues the clutch. Tire pressure monitoring systems
such as emissions levels, fuel economy and measure the pressure of each of the tires and
manufacturing practices. will give a warning through the dashboard
display if they become underinflated. Gear
25. KEY ENVIRONMENTAL
shift indicators show the driver the optimum
LEGISLATION
time to change gear (up and down) while
There are several recent environmental driving. Low rolling resistance tyres are
policies that are now impacting the automotive designed to improve the fuel efficiency of a
industry including: in 2009, legislation was vehicle by minimizing the energy wasted when
passed that committed European car the tyre rolls down the road. The new industry
manufacturers to cut fleet average CO2 tire labeling scheme indicates fuel efficiency
emissions from new cars to 130g/km by 2015 using a rating scale from A(most efficient) to G
and 95g/km by 2020. From November 1, 2011 (least efficient). The difference between an A
all new types of approved vehicles were rating and a G rating could be a reduction in
required to have electronic stability control fuel consumption of up to 7.5 % (SMMT, 2013).
fitted as standard and from November 1, 2014
26. QOROS AUTOMOBILE-
all newly-registered vehicles must also comply.
IMPLEMENTING COMPETITIVE
The highest selling car in the UK is Nissan
INTELLIGENCE MODEL TO
followed by Land Rover. The most popular
model is Ford Fiesta. UK car manufacturing ASSESS: STRENGTHS,
peaked in 1972 at 1.92 million units, and 2003 WEAKNESSES, OPPORTUNITIES
saw the highest car output in recent years, AND THREATS (SWOT)
totaling 1.65 million units. Although car Founded in 2007, Qoros Automobile, the
manufacturing levels have not yet matched Chinese car manufacturing company, has
pre-recession levels, full year 2012 figures decided to penetrate and gain a foothold in the
verify that UK car manufacturing reached its European automobile industry. It is worth
highest since 2008 and broke all-time export mentioning that several attempts to penetrate
records21. The volume of cars export to other the European market were made by different
countries exceeded 1.2 million units, up 8% on Chinese car manufacturers in the past few
2011. The highest registrations of new cars are years. However, most of them did not succeed.
observed in west midland followed by Scotland. Learning from the past, the Qoros
The supermini and lower medium segments management has crafted its strategy well
are the biggest segments, comprising 60% put considering all the probable pros and cons. In
together. The mini segment is led by Hyundai this phase of the report we will make a SWOT
i10 followed by Volkswagen. The supermini analysis in order to understand the current
segment is led by Ford Fiesta followed by position of the company and how it can plan to

20 http://www.cordantrecruitment.com/cordant- 21 http://blogs.matchtech.com/engineering/
focus/driving-the-automotive-industry automotive/beginners-guide-uk-automotive-industry/
60
overcome its threats and weaknesses and design center in Munich and engineering
capitalize its on its opportunities and facilities in Austria.
strengths. This competitive intelligence The hatchback introduced has twice the
method will help the company to narrow down power of VW Golf, the most popular brand in
its plans and implement appropriate business the EU. The sedan has a competitive price,
activities where necessary. considering the power and the features. The
price is around 20K, while a car with that
26.1 Threat
power usually prices around 27K. Apart from
Qoros, being a Chinese brand, will experience that, they designed unique connectivity with
heavy competition from the other key players an eight-inch touch screen and a cloud
in the industry. Brands like Volkswagen, BMW connected platform that enables customers to
and Mercedes Benz have been operating in the access social networks and book service
European market from the beginning. This appointments.
means the company needs to compete with the Qoros has integrated leading talent around
world’s greatest car manufacturers in their the world across all engineering, commercial
own market. This means the company needs to business functions and at all levels of
focus on product differentiation and out of the management. The management team has been
box marketing and communication plans. crowned by various automobile business
At the moment, the timing is not the most experts and veterans working for long periods
appropriate. The European market is in organizations such as Volkswagen, BMW
experiencing a slight decline, while the and Mercedes Benz.
Chinese market is also stagnant. This might The company has already achieved a 5 star
create a liquidity crisis for the company. score in the Euro NCAP safety testing in 2013,
Another threat is that, making radical which marks the first time for any Chinese
innovations in gasoline powered engines is not brand to gain this ranking.
easy. This implies that the company should They have also received the Red Dot Design
also concentrate on hybrid or green powered honor award. This means the cars and the
cars. brand are in the process of gaining more
acceptability and credibility for their end users.
26.2 Opportunity
Unlike other Chinese companies, Qoros is a
Starting business in Slovakia on a test basis venture between Israel’s richest man and the
was a smart move. This country can be quite a state owned Chinese automaker Cherry
big market. With 324 cars for every 1000 Automobile.
citizens, the market has yet to grow and Qoros It has advanced and modular architecture to
can take the opportunity. However, it will have enable the rapid development of a full range of
to face Skoda, which happens to be the top new models and variants and to allow for the
choice there. adoption of hybrid technologies.
The company has initiated an activation It is supported by major global suppliers
plan of describing the cars to its customers over including Magna Steyr, TRW, Continental,
a cup of coffee. This has somewhat positive Bosch, Valeo, Microsoft and Icon Mobile.
feedback. The conversion rate of Qoros is 6% to
26.4 Weaknesses
8% while the industry average is not more than
5%. Qoros could not make online purchases easy. It
There is a market for a social car. The new is rather complex and not user friendly.
customers require comfort, sophistication and This is due to too much emphasis on
digital connectivity. The Qoros cars have a engineering, and less effort in business and
digital ecosystem that allows the car to connect brand building. This refers to the fact that the
with the owner's mobile devices via an app and company made less effort in marketing and
features a touchscreen "infotainment" system. communications.
The biggest weakness that Qoros will face in
26.3 Strength
the European market is the deeply rooted
Qoros has a state of the art manufacturing social stigma against a “Chinese brand”. This
facility with the capacity of making 350,000 reflects the lack of trust and confidence in the
cars. They have strong experience in this brand, and thus the core product itself.
market as a player in the largest automobile
market: China. They also have a sophisticated After a detailed analysis of the company, its
desired market and its assessment, we will now
 61
discuss how we can use competitive smartest step at the moment. Although there
intelligence and its various methodologies to is an opportunity, the market may get price
create a dynamic strategy for Qoros. In this sensitive when it comes to hybrid vehicles.
part of the report we will discuss a few On the other hand, the EU Market, being a
competitive intelligence techniques that the mature one and Qoros being in a tenable
management of Qoros could use to analyze the position, the management must act a bit less
industry structure and competitiveness, aggressive. The company must gradually build
customer intelligence, growth path analysis its brand image, slowly and steadily. The best
and competitive strategy exploration. choice at the beginning might be to create a
comparatively smaller niche and build the
27. INDUSTRY STRUCTURE AND trust of that group. This would disseminate
COMPETITIVENESS positive word of mouth, which would
complement the international ranking scores
27.1 ADL Matrix they are awarded. Repeated communication
This analysis helps one understand how an about credibility and quality can help build up
industry’s maturity and competitive position the trust of the end users, which might
affect strategy. It compares two axes: industry mitigate the negative social stigma.
maturity (ranging from embryonic, growing,
27.2 Porter's Five Forces Analysis:
mature, to aging) and competitive position
(from dominant to weak). We also analyzed the case via Porter’s five
From the discussion of the European forces as a conceptual framework, which will
automotive market and Slovakian automotive examine the level of competition within the
market we can conclude that while the EU industry.
market has reached maturity, Slovakia is still In the following part of this essay, the
in the growth stage. On the other hand, with position of the company compared to its
the SWOT analysis, we can state that in this competitors via Porter's five forces theory is
particular situation Qoros is in a favorable analyzed:
position in Slovakia but in a tenable position in 1. Buyer Power: As statistics show, for
the EU market. There are a number of example, in China the company could
challenges due to the social stigma against a sell only 7,000 models while the total
Chinese brand but it has got an outstanding number of sold cars in the same year
product portfolio with a five star rating and a exceeded 19 million units (Fusheng,
very positive conversion rate. According to the 2015); It is strongly suggested to the
ADL matrix, the management will have to company to allocate considerable funds
consider the European market and the to increase their production rate per
Slovakian market separately. Slovakia is a year. Therefore, they will be able to
growing market (324 Vehicle for every 1000 draw more customers to their products.
citizens) and Qoros has a favorable position, However, the company must keep the
the management will have to concentrate on an price of production as low as possible,
attempt to improve its position and push for a compared to other manufactures in the
market share. luxury car market to have the
In order to improve its position in the competitive advantages as to the
market, the management will have to craft highest cost for buyers to switch from
outstanding marketing and communication their products to those of the others
strategy. The aim of these activities will mostly providers. Moreover, eventually the
include attempts to reduce the social stigma company will be able to increase the
against Chinese brands and highlight the five number of cars sold per year. In this
star rating to increase credibility and trust. case, the company will be able to cope
They would have to remember that Qoros will with the market demands in terms of
be facing Skoda, which has been the favorite their state of the art cars.
brand for a long time with an enviable market
share. In order to acquire a market share, it is 2. Supplier Power: The main car
important to have some similarities and some manufactures operating in the
points of differences with Skoda. The European market that provide
parameters could be price, design or more competition are Volkswagen, BMW and
infotainment and electronic features. Going for Mercedes Benz. In this case, the
hybrid cars in this market might not be the company needs to provide specific cars
62
with state of the art facilities to cope their cars. In this case, the company
with the market demands in this really can have the merit of making it hard for
competitive market (Lanza, 2014). Also, their customers to find an equal
it is suggested to the company to substitution for their cars in terms of
allocate considerable finds to expand its productivity and user friendliness. For
public advertising and special plans for instance, it is expected that average
marketing its products. Not to be left fuel economy (CAFE) standards will be
behind, as a Chinese firm the company 54.5 miles per gallon (23.2 kilometers
should focus on both the quality and per liter) by 2025. Fuel economy is
cost of production to gain and keep its about maximizing the number of miles
position in the market as a brand new your vehicle can travel on a gallon of
international car manufacturer. In this fuel. The cost of fuel has a major impact
case, the company can achieve a on fuel economy. Consequently, it is
competitive advantage over these main really important for the company to
suppliers by focusing their strength and work on expanding such technologies in
control over businesses through high- their production line. In this case if they
tech cars as well as the lowest cost of can make the substitution for their cars
production. Finally, the cost of easily possible, then this will be a big
switching from one car manufacturer to strong point for the company.
another one for the customers will be
5. Threat of New Entry: By using some
really competitive for the company.
local raw materials provided in China
3. Industrial Rivalry: There is a (as a country full of natural and human
significant rivalry among the resources needed in car production) the
company’s cars and the other car company would make a big challenge
manufactures in terms of price and for a new entry into the car industry.
productivity. For instance, Qoros 3 Also, it is really good practice if the
hatchback will compete directly with company focuses more on the Chinese’s
VW’s Golf, while the sedan takes on the market which has a really big market of
German automaker’s Jetta (Tschampa, approximately 1.3 billion consumers,
2014). In this case, it is strongly which could impact the biggest
suggested to the company to focus more manufacturers and retailers in the
on expanding their products and state world. Furthermore, China’s huge
of art facilities in daily operations by population would bring a strong
hiring the most talented staff. competitive advantage for the company
Therefore, as the company has many against the most dominant players in
competitors that offer equally the outsourcing industry (Evans, 2014).
attractive products and services,
28. CUSTOMER INTELLIGENCE
keeping an upward trend in product
quality and facilitating the latest 28.1 Journey Map
technology will bring them more
“Customer journey maps allow you to walk in
competitive power compared to their
your customers’ shoes by traveling with them
competitors. This is because suppliers
as they interact with your company. When
and buyers will go somewhere else if
based on sound research, they provide an
they don't get a good deal from the
accurate outside-in view, focusing on desired
company. On the other hand, if none of
outcomes from the customer’s perspective.
the other companies can provide the
You’ll see what customer needs are at each
same quality cars as the company is
interaction, how well you meet them, and
providing, then the company can have
where opportunities for improvement lay.
enormous strength in the market.
With this understanding, these are 10 points
4. Threat of Substitution: As is any company contemplating, planning, or
mentioned in the “Industrial Rivalry” already undertaking a customer journey
section, the company must put more mapping initiative should consider:
emphasis on their production • “Be clear on what you want to
technology and their products’ state of accomplish: Having a precise
the art technology, as well as strategy.
productivity and user friendliness of
 63
• “Know whose journey you are goals. Hence it will have to be quick and
mapping: Being more customer centric simple yet effective”22
and using their point of view.
The reason this competitive intelligence
• “Talk to your people: Gather
method will be instrumental for the Qoros
information about customers from the
management is that, as a new entrant in the
front end employees.
market, it is imperative for them to understand
• “Talk to your customers: Clear,
the core customers’ needs and wants. Without
transparent and frequent interaction
a thorough knowledge of customer preferences,
with customers and potential
this company can never achieve its goals.
customers.
• “Must-haves: The most important 29. COMPETITIVE STRATEGY
matter in this process; understanding EXPLORATION
what the need of the customer is. What
29.1 Innovation Ambition Matrix
are the “must have” attributes they are
looking for? The innovation matrix in competitive
• “Nice-to-haves: This part discusses intelligence is often called an Ansoff matrix23.
the wants of the customers. How they This model helps an organization to
think and feel and what are the understand where to compete and how to
features they consider to be “nice to compete. This model consists of three
have” and are willing to pay for. innovation horizons and three levels of
• “The importance of design: This is a ambition.
customer analysis tool to gather In this matrix, when the organization is
information and turn it into operating in an existing market with its
intelligence. So designing this entire existing products the strategies can be a line
process to be simple and easy to extension or optimization of the existing
understand is very important. This will products. This strategy can be useful for Qoros
ensure more qualitative data, which while maintaining business in China. China is
can be very vital in product designing. the largest automotive market and Qoros can
• “Socialize and share: This study concentrate more on optimizing its existing
needs to be communicated throughout brands/products by introducing new series of
the organization with a pivotal aim. its existing models of the hatch back and the
First, all employees must have a clear sedan. They might also consider revitalizing
idea about the target customers and the market of the electronic bike they
what they want and need. Second, it manufacture.
will keep all the employees on the same The second horizon consist of an adjacent
page when giving the customers any market with existing business. This is Qoros in
service. This helps an organization to Slovakia. Since it is a new market and there
be more customer centric and are opportunities to grow, the management
responsive. will have to consider expanding with their
• “Take action: This is not a customer existing brands. Here more focus is needed in
entertainment tool. So after proper marketing and communication in order to
analysis, actions should be taken in create awareness and buzz.
order to fill the gaps and implement However, Qoros’s long term plan is to enter
improvements where necessary. the European automotive market, which is a
• “Avoid analysis paralysis: Too much new one for the organization. This market has
analysis not only wastes time but can strong players, hence there will be entry
also dilute the aim of the study and can barriers. In order to overcome these hurdles,
shift the focus. The aim of this too is to the company will have to develop
find out what’s most important to breakthroughs. The management will have to
them–bringing the data (and your consider that this market is not necessarily
customers) “to life” as they pursue their price sensitive, so low pricing might not help
and will rather damage the brand image. In
this case they will have to add features to their

22
http://www.mcorpcx.com/customer-journey- 23 http://www.strategyhub.net/2012/05/
mapping-10-tips-for-beginners/ framework-of-week-81-innovation.html
64
products, which will be unique and at the same products that will give them a new experience.
time they will have to be competitive in price. The idea of the café was brilliant and can have
Along with this, proper communication about a positive outcome since vehicles are high
the brand, its safety and its features should be involvement products. So, along with
continuously communicated through proper improvements in technology and design, the
channels. company should also engage different
regulatory authorities to test their quality and
30. CONCLUSION
safety levels. Later these testimonies will be
From the overall discussion we can observe instrumental for building trust in the
Qoros is planning to penetrate the biggest consumer’s mind. Regular communication of
automotive region in the world that has fierce the brand would mitigate the bad reputation of
competition amongst famous brands like a “Chinese brand”. These strategies might not
Volkswagen, BMW, Ford and Mercedes Benz. get them an immediate piece of the market
The market overall is huge, hence it still has share but they can create a niche market and
the opportunity to grow (6% annually) in the Qoros can then capitalize on that.
passenger car segment. It is not price sensitive
but it has a very demanding customer pool. 31. REFERENCES
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