1.

INTRODUCTION

2. STRATEGIC POSITION

In the first part, it will be analyzed the strategic position of the collapsed Chinese electric
vehicle startup Byton using various tools and frameworks such as PESTEL, Porter's Five Forces,
VRIO.

2.1. MACRO-ENVIRONMENT ANALYSIS – PEST

In the PEST analysis table (Figure 1), the macro-environment of the company is analyzed
through Political, Economic, Social, and Technological factors. These factors help identify
opportunities and threats that may influence the company's operations both in the short term
and the long term.

Figure 1 PEST Analysis

POLITICAL

Research conducted by Liang (2022) show that the threat in the EV industry had high barriers to
entry in the years before 2015. However, after 2015, the trend of environmental protection
increased, meaning that policies pushed traditional automakers to gradually switch to electric,
bringing many opportunities for the EV industry. It is worth noting that favorable policies from
the Chinese government have attracted large amounts of capital and reduced barriers to entry
for a record number of new EV companies in the transition to electric vehicles.

ECONOMIC

Liang (2022) highlights that the push for zero-emission vehicles (ZEVs) through established
economic guidelines provides growth opportunities for EV startups. However, the industry's
capital-intensive nature and reliance on external financing make it vulnerable to economic
disruptions. The 2019 global downturn caused by the COVID-19 pandemic significantly strained
startups, highlighting the risks of economic instability.

SOICAL

Liang (2022) observes that China's 400 million-strong middle class represents a large and
diverse consumer market. This group's growing focus on sustainability, alongside rising incomes
and urbanization, drives demand for electric vehicles, creating significant opportunities for the
industry.

TECHNOLOGY

As reported by Liang (2022), by 2018, China held 25% of BEV patents and ranked second
globally in EV-related technology patents, showcasing its strong position in innovation. This
creates opportunities for advancements in electric vehicle technology and collaboration.
However, challenges such as short driving ranges, long battery charging times, and limited
charging infrastructure remain significant barriers to widespread adoption.

2.1. INDUSTRY ANALYSIS – PORTER’S 5 FORCES

Industry dynamics are shaped by factors beyond competitors, with five central forces highlighted
below (Liang, 2022).
Figure 2 Porter's 5 Forces Analysis
The rivalry among existing competitors EV market is highly competitive due to a large number
of players and rapid technological advancements. Established brands benefit from economies
of scale, deep brand recognition, and vast R&D resources, making it difficult for new entrants to
compete effectively.

The bargaining power of suppliers is high, due to suppliers hold substantial power in the EV
market, especially in terms of critical raw materials to produce pin. With China controlling a
significant share of global supply chains, EV manufacturers are highly dependent on a limited
number of suppliers, which increases the bargaining power of these suppliers. On the other
hand, the threat of substitutes is moderate because although alternative vehicles such as
hybrid and gasoline cars exist, strong governmental policies and incentives are driving the
transition to EVs. These regulations reduce the appeal of traditional vehicles, making
substitutes less of a threat. Zhang and Wen (2020) note that the operational cost advantage of
EVs, combined with incentives, reduces the market share of traditional vehicles, making the
threat of substitutes less significant over time.

The threat of new entrants in the electric vehicle (EV) market is high due to several key barriers.
Established companies benefit from economies of scale, where larger production volumes allow
for reduced per-unit costs. Liu and Cheng (2022) emphasize that this advantage makes it
difficult for new entrants to match the competitive pricing of incumbents. Additionally,
experience plays a significant role; established companies use their industry knowledge to
improve efficiency and build customer loyalty, while new entrants like Byton must invest
substantial resources in acquiring this expertise (Liu & Cheng, 2022). These challenges make it
harder for new entrants to successfully enter the market.

Buyers in the EV market wield considerable power, particularly in markets like China, where
consumers have numerous alternatives ranging from other premium EV brands to hybrid and
gasoline vehicles. The increasing number of available options increases consumers’ ability to
demand higher quality and better prices. In China, buyers often prioritize well-established
brands due to the importance of social status, making it difficult for newcomers like Byton to
build brand loyalty (Chiu & Kuo, 2021).

2.2. VRIO ANALYSIS

Based on the VRIO framework, an analysis of Byton’s key resources and capabilities reveals
both strengths and weaknesses. The elite management team, composed of experts from
globally renowned companies such as BMW, Tesla, and Apple, was a clear strength due to its
value and rarity. However, this team’s potential was not fully realized due to poor organization,
as internal conflicts and strategic misalignment hindered decision-making. Byton’s advanced
product (M-Byte), featuring innovative elements like a 48-inch dashboard display and biometric
controls, was both valuable and rare. Nevertheless, it lacked strong organization to transition
effectively from concept to market, and its technology was not inimitable, allowing competitors
to replicate its features. The emerging global brand reflected Byton’s ambition to integrate
cutting-edge digital innovation into its identity, but it failed to achieve rarity or differentiation in
a highly competitive market, resulting in competitive parity.

Byton’s investment in a high-tech automated factory demonstrated value and rarity in its
production capabilities, yet the factory posed financial burdens and suffered from
underutilization, reflecting weak organization and a lack of inimitability. Last but not least,
Byton’s timing of market entry was a critical weakness, as the company entered the market
late, allowing established competitors like NIO, Xpeng, and Tesla to dominate. This delayed
entry lacked value, rarity, and strong organization, resulting in a significant competitive
disadvantage. Through this, while Byton possessed several valuable and rare resources,
consistent organizational weaknesses and poor market timing limited its ability to sustain a
competitive advantage.

2.3. SWOT ANALYSIS

This section is ending with the SWOT analysis (Table 5), the OTs are coming from the analysis of
the external environment while the SWs are coming from the internal factors. The major
weakness of Byton originates from its "Timing of Market Entry", which significantly impacted its
ability to establish a strong competitive position in the electric vehicle (EV) industry.
Christensen (1997) on disruptive innovation, which emphasizes the critical role of market timing
for new entrants in emerging industries. Entering a saturated market too late, Byton faced
difficulty in gaining sufficient market traction, compounded by limited financial stability and
supply chain constraints

Zhang, T., & Wen, Y. (2020). Substitute Threats and Policy Impacts in the EV Industry. Environmental Policy and
Technology, 37(6), 195-210.

Liu, Y., & Cheng, M. (2022). The Impact of Government Policies on Market Entry in the Electric Vehicle Sector.
Environmental Economics and Policy Studies, 24(4), 211-229.

Chiu, L., & Kuo, S. (2021). Consumer Preferences and Market Trends in China’s Electric Vehicle Sector. Asia Pacific
Journal of Marketing, 29(1), 14-27.

Christensen, C. M. (1997). The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Harvard
Business Review Press.