Unit 5: International Business (Part E)
An Evaluation of the Strategies and Resources used by Jaguar in International Trade
Introduction
Jaguar is a UK car manufacturing company founded by Sir William Lyons. Their first car was produced in 1935 and they now produce a range of cars including electric cars and concept cars. Their manufacturing is based in Castle Bromich, which is in the midlands of England in the UK.
Strategies for operating Internationally
In 2008, Jaguar became a subsidiary business of Tata Motors. A subsidiary business is one that is owned or partly owned by a parent company. This increased the size of their overall company, gave them access to Tata’s assets and expertise and allowed them to use Tata’s global channels of distribution. This benefited Jaguar as their sales increased from 200,000 units per year to over 600,000 units per year in the first 10 years of that relationship.
Another strategy that Jaguar used to operate internationally is to use agents. Agents are individuals or organisations that represent a business in their imports and exports. Agents can help Jaguar to understand the local market, the regional laws and regulations, speak the language and manage their transactions for them. Jaguar refer to their agents as ‘International Key Account Managers’.
Jaguar has outsourced their logistics to DHL Supply Chain. Outsourcing means to hire a third party to conduct some of the business operations. In this case DHL are paid to manage the logistics of transporting cars to international markets. DHL Supply Chain specialise in logistics so can provide a good quality service and Jaguar can focus on their core competencies, in this case car design and manufacture.
Demands and Preferences of International Markets
The weather in different parts of the world has an impact on what customers want from a car. In places like Arjeplog, Sweden and International Falls, USA, temperatures drop to below -40C overnight whereas in Arizona deserts temperatures can reach up to 50C. This alongside other environmental factors such as terrain and altitude has meant that at Jaguar they have had to consider these factors in their design processes and recreate these conditions in their prototype testing. This can lead to higher costs but increased reliability of the vehicles and in turn customer satisfaction.
In the UK, drivers sit on the right hand side of the car and drive on the left hand side of the road. In many other countries such as European countries and the USA, this is the opposite. Therefore, in order to provide cars that meet the needs of many international customers, Jaguar need to produce both types of car.
Due to high incomes and customer preferences, there are high sales in the luxury car market in the UAE and other Middle-Eastern countries. As a result, Jaguar have prioritised their luxury and SUV ranges in their exports to the UAE. They also adapted their style of promotion and become the first brand to advertise on the Burj Khalifa which is an 829m building in Dubai. This would have drawn a lot of attention to the new F-PACE SUV they were promoting.
Evaluation of Strategies used by Jaguar in its Expansion to the UAE
According to CNN Travel, Jaguar are finding traction in their launch of EV cars in the UAE due to their image of luxury. This is a strategy called brand exploitation which means a business can use the benefits of building a strong brand in one market to launch their products into another market. Jaguar’s brand image of quality that they have been building for the past 80 years appeals to the car market in the UAE. According to Shingetsu Research, the UAE holds one of the largest shares in luxury cars around the world and sales are expected to grow quickly over the next seven years.
However, there are some drawbacks to using brand extension strategy to enter new markets. One being that if the product is not popular in the new market, it can damage the overall brand. Jaguar will be selling to customers with different tastes and preferences than they are used to and there will be different key competitors. This can lead to inadvertently conduction business activity that may give them a poor reputation.
According to construction week online, Jaguar have completed a regional headquarters in Dubai. This can be beneficial to Jaguar, because they may be able to avoid some of the protectionist measures they would have to face as an importing business. It also means that they can benefit from having a local workforce that best understands the local market. According to Construction Business news, there will be an engineering testing centre and a customer relations centre. This can lead to a better understanding of the customers and to fewer incidences of culture clash for example through differences in workplace etiquette.
However, there are drawbacks to setting up regional headquarters. One being the cost of setting up in a risky new market. Another being that decision making power needs to be handed over to the regional office. This can mean that Jaguar managers in the UK can lose some control over the brand.
According to the Jordan Times, Jaguar promoted their F-PACE using a 3 minute light show on the Burj Khalifa. This is the largest building in Dubai and the show attracted a lot of attention. This was an effective strategy for Jaguar because they were entering a new market with strong competition. They are also aiming to be perceived as a luxury brand and high spending on promotion can support that branding strategy.
However, according to Arabian Business, it costs over $68,000 USD for a 3 minute display on the Burj Khalifa. This can make this a very expensive strategy which can lead to a reduction in profitability if the promotional campaign is not effective in increasing sales.
Overall, Jaguar appears to have responded to the wants and needs of the UAE car market which is demand for luxury cars. Their promotional strategy supports this brand extension strategy and the opening of a local headquarters with help them to overcome any potential issues that could arise in terms of cultural differences both with consumers and within the workplace.
Research Log
About Jaguar - https://www.jaguar.com/about-jaguar/jaguar-business/index.html
Jaguar global - https://www.jaguar.com/about-jaguar/reliability/global-facilities.html
Jaguar and Tata - https://www.tata.com/business/jlr
Mergers - https://www.economicshelp.org/blog/5009/economics/pros-and-cons-of-mergers/
Jaguar Middle East - https://www.campaignlive.co.uk/article/jaguar-first-brand-advertise-worlds-tallest-skyscraper/1393420
DHL Supply Chain - https://www.logisticsmanager.com/dhl-supply-chain-to-restructure-jaguar-land-rover-operations/
https://edition.cnn.com/travel/article/ev-lab-dubai-rimac-c-two-spc-intl/index.html
https://www.gopromotional.co.uk/blog/brand-extension-advantages-and-disadvantages/
https://www.cbnme.com/news/construction-of-jaguar-land-rovers-new-regional-hq-in-dsoa-is-complete/
https://www.jordantimes.com/news/features/jaguar-f-pace-makes-its-middle-east-debut-burj-khalifa
