Smart_Car

| | Question # 1 What is Smart’s competitive advantage of smart car in Asia' 1.1 Renowned Safety Aspects Fixed with airbags, anti-locking brakes and catalytic converters are the core safety features of Smart in which these are found mainly in bigger and higher capacity vehicle. Even though small in size, deformable crashboxes in front and rear, steel-reinforced seatbacks, high seating position which move occupants away from danger zone in side impact and sandwich floor construction which allow the engine slide under passenger space in rear end collision are strong safety attributes which make Smart marketable which take away the negative perception that even a small car is still a safe car. 1.2 Small Size with Comfort Its size is useful in metropolitan cities in Asia where there are many fast growing cities and heavy urbanization happening currently. Being 20% smaller than subcompact vehicle, Smart is able to swirl well in dense cities traffic beside requiring small parking space where the growing cities are facing space shortage and high density traffic. Majority of Asian are physically small would made Smart as a suitable vehicle compare to Westerners in general. Even though it is small in size, it is spacious inside with state-of-art comfort. 1.3 Unique design and quality Its design which is funky and trendy attracts the young and new Asian markets which are the majority of the population currently. 1.4 Ability to Mass Customization The ability to manufacture the Smart vehicle of various combination of colors, accessories and packages supports the changing Asian diverse cultures and tastes of different growth level. Smart have 11 basic models from Smart City Coupe (standard features), Smart Cabrio (fully tailored to customer wishes which are funky, fun and fashionable), Smart Roadstar (compact and sportive besides driving enjoyment) and Smart Crossblade (exclusive for personal freedom and independence). These would fit various market segments well. 1.5 Environmental Aspect Smart car is environmental friendly and runs on petrol, electric or combination of two . It is designed to protect the environment is a good leverage to be marketed especially with the numerous natural disasters of high magnitude for the last couple of years in Asia. 1.6 Low Cost Maintenance and Restoration This fit well for some Asian countries who are newly emerging nations where there economic strength is not in full blown yet such as Vietnam and Indonesia. 1.7 Link with Renowned – Mercedes - and the Synergy Effect The symbol and link with Mercedes which possess core competencies of sound engineering and technologies enhance Smart’s values. Mercedes is well respected in Asian markets especially in Chinese populated nations such as China, Taiwan and Hong Kong historically. To them it signifies wealth and status. As such, Smart is more welcomed by the Asian markets which have a similar effect as Mercedes. Smart is able to synchronize well with established distribution channels of Mercedes who have been in Asian markets for many years. This would benefit Smart in term of distribution cost besides market knowledge. 1.8 Cost Factors The lower insurance and tax costs due to the vehicle low capacity would make cost lower to Smart owners. The current rising fuel cost would make Smart as a good choice due to its low fuel consumption. 1.9 Price Factor, Large Market Size which are Suitable The price is higher compare to other models of similar capacity but it should not be a deterrent for Smart to venture into Asian markets. Initially, Smart could attract their markets using the leverage of safety and other unique features and subsequently could go for lower and better pricing strategy upon achieving economies of scale of the large market size of Asia. The increase of growing income level of the Asian markets, with their vibrant economies, allow ownership of Smart cars be easily accessible. The high population in Asia possesses 2 suitable categories that fit well as Smart owners: A. Young age group and women (which comprise of more than 60% of the population in general for most Asian nations) B. Older age group who look for fresh attitude (which comprise of 10% -15% of the population in general for most Asian nations) 1.10 Free Trade Agreements The aggressive free trade agreements happening in Asia would spur growth for Smart. Smart is able to take advantage of this situation to penetrate and expand in Asia which are ready in many aspects. Conclusion Overall the pro factors outweigh the cons as far as Asia ability to allow Smart to grow. The customers are there. It is just the matter of getting the right marketing measures. Question # 2 Select any Asians countries for export. Do you think the car will be a success' Why or why not' (Use PESTEL analysis to justify) The selected country is Singapore of following analysis. The potential of success is there based on the evaluation as below: 2.1 Political Factors The country possesses a stable and business friendly government which is reliable, pro-active and responsive. Their continuous improvement attitude in dealing with threats and challenges encourage business growth. Corruption is well-controlled and Singapore is known to be in the top rank position for their transparency which makes business directions clear and would be able to drive Smart’s business development clearly. Having such a healthy environment would allow Smart to survive in this market. 2.2 Economic Factors Singapore economic freedom score of 87.2% ranks number two in the world, Its strong fundamentals help promote economy resilience. The country promotes free market economy at rapid pace, which gives rise to growth in other sectors, which have a repercussion in Smart business. Singapore has the highest GDP and is the only developed city in ASEAN. Its low unemployment rates consistently (year 2008: 2.2%; 2009:3%, 2010: 2.2%) gives its people higher purchasing power. This allows the people to consider a more esteemed level vehicle which Smart possesses. Influx of foreign talents and professionals into the Singapore could help hike up Smart ownerships since it is a brand which they have known from their home countries. As a country which is one of the strongest global financial hubs, access to vehicle financing would be made attractive and easier by the financial institutions which could support increase of Smart ownerships. 2.3 Social-Cultural Having a healthy growing economy which positioned their people in the social and self-esteem levels of Maslow’s Hierarchy, makes it possible for Smart to be considered in this market. The vehicle positioned as lifestyle and trendy matches well for Smart and its people parallel wise. A population of strong education-focused make them highly literate and very affluence. This makes them place high priority on safety which is one of Smart’s attributes. The people vibrant and adaptable characterized with willingness to accept new ideas and trends would leverage Smart to be marketed easily. 2.4 Technological Factor The road and highway infrastructure are well developed and suitable for small size vehicle like Smart. The people are well versed with the advance technologies which make Smart, being a high technology vehicle, be easily understood and handled. 2.5 Environmental Factor The government and affluence people strongly support the comprehensive initiatives of green technologies which Smart possesses. Their parallel goal of concern for the environment reinforced Smart’s position which is an environmental friendly vehicle. Various agencies such as the Land Transport Authority(LTA) and Housing Development Board (HDB) have come together in promoting green environment and Smart was given full support and reciprocated. 2.6 Legal Factor The country possesses a system of controlling the vehicle population via COE (Certificate of Entitlement). Each new vehicle owner must purchase a COE prior to purchasing the vehicle. This system monitors the number of vehicle ownerships on monthly basis by a bidding system which is influenced by the vehicle capacity as one of the factors. The lower the capacity, the lower is the cost for COE. Smart being a low capacity vehicle is able to benefit from it which results in term of better pricing position. Foreign and domestic investors are treated equally would give Smart having a fair-level playing field in Singapore. There is no control on current transfer, payment or repatriation of profits would allow Smart to manage their finance efficiently for future potential business growth. Conclusion The success of Smart in Singapore is possible. The environment is conducive. The pro-factors outweigh the con-factors. I would agree to entering into this market. With the rising fuel and instability problems affecting oil price worldwide, owning a smaller vehicle is smarter choice beside the growing concern of the environment. Question # 3 Identify other target markets into which you would introduce the car. What sequence of countries would recommend for the introduction' The other countries suggested to introduce the Smart cars are of following sequence: 1. Hong Kong 2. China These 2 countries provide a market segment of similar behavior which is less complicated for Smart in many aspects. The reason for these countries is that both possess a growing and dynamic automotive industry which bear similar taste and cultural background which would make it easier in term of marketing Smart. In general, these countries are open to this renowned global brand as the people are willing and keen to accept western products and technologies well. These nations are at various stages of economic and social development in which Smart’s life cycle fit well across. The near understanding of the infrastructure system would allow logistics and distribution networks be well managed and systemized. Integrated marketing channels for awareness building could be synergized. Sales management could be synchronized at various stages of market expansion, coverage and product life cycle. Price positioning would be derived from the outcome of the various markets enter at different stages. Variation of packages to be offered to the different markets could be flexibly adapted and improved along the way and perceived well when entering the large market of China at the subsequent stage. A near common language beside culture makes market penetration much easier. Publicity and PR works will not be much different for these nations after deeper understanding of the market behavior. 3.1 HONG KONG Hong Kong is selected as the first country to enter due to its proximity to a larger market, China, which have many market similarities. Using Hong Kong as a starting point and stepping stone in order to gain more knowledge to prepare entry into larger market of China would be a good risk consideration. Hong Kong is ranked number one on the world in term of economic freedom with score of 89.7%. Its high degree of resilience during the global financial crises and dynamic entrepreneurship minimize instability which would not cause deep dent to Smart’s business. Its effective legal and regulatory frameworks promote openness and support global commerce. Its business freedom score at 98.7% couple with high transparency encourage formation of business and operations start up which give Smart smooth entry in the market. Its top corporate tax is at 16.5% which is fairly low would give Smart an edge to position themselves in term of product pricing. Foreign investors receive similar treatment as domestic investors and there is no limited on foreign ownership and no control in repatriation of profits would strengthen Smart’s financially in time to come. The country has strong interaction with China which strengthens many business linkages which could be carried on into Smart’s expansion plan into China later on. 3.2 CHINA China enjoys a double digit economic growth for many years. However its economic freedom score is at 52% ranked at 135 in the world. The government allows economic movements in response to market forces which resulted in China unscathed during the recent global financial crises and recession. Its trade freedom which score at 71.6% see China gradually opening its market to international trade but import license and restriction still prevail. The often non-transparency regulatory is one factor which affect the business environment. However, nationalization of foreign investment is prohibited by law. In 2009, a new rule which allows foreign partnerships in most of the sectors was implemented. Therefore entering into China market after Hong Kong gives Smart the chance to develop and master their abilities through their learning curve which have some similar elements. Domestic demands have been increasing intensely which see a strong potential for Smart’s demand to grow in China. The huge population size provides high consumer volume. Thus having a small percentage of growth would give a significant business volume to Smart. The above positive factors which outweigh negative is appropriate for Smart to consider entering into China. Key cities to start off in China should be Shanghai and Beijing which are highly urbanized with dense population and traffic. Smart’s features would be well accepted in these cities where people are more receptive and adaptable. Some disadvantages are the high logistic cost and geographic distance. However the Chinese government has been progressively improving their infrastructures. As such, Smart entry into China after Hong Kong will be in time to enjoy these benefits. Conclusion At the final stage, after China market is covered, consolidation of the two countries working aspect could be synchronized which lead to cost efficiency. Remarks This study needs to be enhanced with information on competition analysis. It is difficulty to obtain this data. It is pertinent to evaluate the competition environment prior to entering the market by gauging their success or failure elements and their potential effect in competing with Smart. Reference The data and details are extracted from the following websites: www.singstat.gov.sg/stats/themes/economy/hist/gdp2.html www.sedb.com http://www.heritage.org/index/country/