An analysis of the opportunities and threats posed by the environment results in the identification of the key focus areas for the expansion and growth of the company and also makes the company aware of the potential threats that can go against its growth plans.
* Globalization and access to innovative technologies: The current scenario of globalization provides access to newer markets and innovative technologies. Many countries provide a fruitful environment for wider market access and expansion of the target customer segment. Joint ventures and mergers and acquisitions are effective routes to enter new market and have access to specialized technologies and manufacturing processes that are core competencies of certain countries. For example, Germany is known for its advanced engineering technology. Tata Motors acquired Land Rover and Jaguar brands which provided the company the opportunity to market cars in the luxury segment. Tata Motors also acquired Daewoo Motor’s commercial vehicle business which expanded Tata Motors’ car market and access to technology
* Emerging markets and expansion abroad: Developing countries that have low income earning families i.e. people having low purchasing power can be targeted for selling the cheaper and robust commercial vehicles. This will boost the exports for low cost commercial vehicles. Nano, the poor man’s car has a huge market in the lower income group to cater to, it also gives competition to the motorbike segment where buyers can be attracted to buy a low cost car as compared to a bike * Emerging demand for environment friendly vehicles: There is an increased demand for the environment friendly commercial vehicle alternatives. It increases the existing market segment and provides growth opportunities in this niche segment
* High level of competition: There is increased competition for the luxury market in India from foreign companies that have begun to enter the Indian market such as Honda, Toyota, Ford and Mercedes-Benz * Sustainability and environmentalism: Though sustainable and eco-friendly vehicles are high in demand, the increasing price competition among the existing players can prove detrimental for the relatively costlier eco-friendly vehicles. The situation will get further worsened in case environmental regulations are tightened by the government
* Down turn of the world economy: As seen in the past few years, financial downturn in the world markets can have negative impact on the demand for the commercial vehicles both in the luxury and the price-sensitive segment. In case a foreign country faces pressure to survive the financial turmoil, the amount of money spent by the residents of that country will decrease leading to a fall in the demand for the commercial vehicles
* Increased material costs: Rising prices of materials such as steel and aluminium can increase the cost of production of the vehicles in India. Rising petrol and diesel prices will further increase the cost of the commercial vehicle which will negatively impact the demand for the product Therefore, the Indian commercial vehicle industry is a highly competitive industry that provides immense growth and expansion opportunities but have potential threats that can negatively affect the future growth plans of the Indian commercial vehicle manufacturing companies.
Courtney from Study Moose
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