Business Studies

Manisha Panchal

MODULE TITLE: BUSINESS STUDIES

UNIT TITLE: INTERNATIONAL BUSINESS
TUTOR: BABS GISBORNE-LAND

By Manisha Panchal
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Business Studies
CASE STUDY ON JAGUAR AND LAND ROVER
The client
Jaguar Land Rover is a business built around two great British car brands with
exceptional design and engineering capabilities, Jaguar Land-Rovers manufacturing
facilities are in the UK. JLR employed over 16000 people in UK in their two product
development plants in Coventry and Warwickshire including 3500 engineers. Jaguar was
founded in 1992 and it is one of the most famous manufacturers of luxury and sports
cars, while Land Rover manufacturing since 1948 and their products have been operated
in defined segments. Now JLR is owned by Indias largest automotive company named
TATA motors. (JLR, 2014)
JLR sell cars in almost 100 countries, supported by 18 National sales Companies in major
markets, and importers in others. The Company derives a significant proportion of its
revenues from the United Kingdom, Chinese, North American and continental European
markets, and accordingly is exposed to any decline in demand in these markets. This risk
is mitigated by avoiding an over-reliance on any one market, and the Company has
achieved a balanced portfolio of circa 20% revenue from each of China, UK, US and EU
markets, and the balance from rest of world. A diversified portfolio will also be
maintained going forwards as the Company continues its international expansion, with an
increased contribution from high-growth markets such as India, Brazil and Russia. The
Company recognises and factors into its planning the risks inherent with increased
international operations including cultural differences, resourcing availability, political
and legal risks (such as obtaining permits and approvals), as well as financial risks such
as tax, exchange controls and restrictions on repatriation of fund.
(JLR, 2014)

Exchange and interest rate fluctuations:

The Company runs significant foreign currency exposures versus the Pound Sterling as its
reporting currency. Exposures arise in relation to the Companys sales distribution
(notably US Dollar and Chinese Yuan and to a lesser extent Australian Dollar, Canadian
Dollar, Russian Rouble, Brazilian Real, South African Rand, and South Korean Won) and
also its cost base, with significant sourcing from Euro suppliers. Currency risk can be
considered in terms of short term, operating risks, i.e. transaction risk where there may
be impact to the income statement from adverse currency movements. In particular, the
Company is exposed to a strengthening Pound Sterling since this would diminish the
sterling value of overseas sales. This transaction risk is managed at a cash flow level
through use of forward and option hedging instruments over a short - to medium-term
time horizon, adhering to treasury policy approved by the board. Currency risk can also
be considered in terms of longer-term, strategic risks, termed translation and economic
risks. In this case the Company may have a structural
Misalignment in the denomination of costs and revenues which make it subject to longerterm foreign exchange trends, beyond the hedging period. These longer-term risks also
present a competitive disadvantage compared to other automotive manufacturers that
enjoy a more favourable currency mix. To reduce these longer-term exposures the
Company is diversifying its cost base and better aligning with its sales profiles, such as
manufacturing in China and Brazil. Furthermore the Company has issued US Dollar debt
which serves as a natural hedge to US Dollar denominated sales. The Company is also
exposed to changes in interest rates given variable interest bearing assets and liabilities.
The Company does issue US Dollar and Pound Sterling denominated fixed coupon debt,
held to maturity and reported at historic cost. To better understand and manage both
currency and interest rate risk the Company monitors short and longer term economic
trends and conducts regular sensitivity analysis to assess potential material impacts on
the business. I think exchange rate is very important factor for any business like JLR as
JLR runs business internationally and their profit and loss depends on fluctuation of

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interest rates. Therefore, I think to sustainability of business like JLR interest rate is very
important. (JLR, 2014)

Importance of importing and exporting for JLR:

Jaguar Land Rover could see changes to its parts export and import flows in to and out of
the UK and Europe in the coming years as it expands production in overseas locations,
notably China. Growing exports of components could mean more balanced material flows
in and out of the UK, and the potential use of different consolidation points and seaports,
according to Andy Gallon, international manufacturing development manager. Gallon said
that the anticipated growth in overseas production could lead to a shift in the way that
the British-based carmaker manages its material exports.
Exports play an important role for JLR, influencing the level of economic growth in UK,
employment and the balance of payments. Lower transport costs, globalisation,
economies of scale and reduced tariff barriers have all helped exports become a bigger
share for JLRs income especially from 2010 it has increased constantly. Growth in exports
can create employment for car industry particularly in JLR. Also exports are a component
of aggregate demand and rising exports will help increase demand of product in JLR.
While importance of importing products from another country is cheap which lead to
more profit for JLR.
The carmaker, which is owned by Indias Tata Motors, currently has manufacturing
operations in a variety of markets including Turkey, Kenya, Malaysia, Pakistan and India.
The Chinese government has also recently approved JLRs plans to build a joint venture
factory in China with Chinese OEM Chery. The companys growth has led to consideration
for other markets as well. Jaguar Land Rover has ambitious to expand its manufacturing
footprint and increase production in market outside of Britain, particularly in China,
Gallon said. The carmaker also ships aftermarket parts to the nearly 180 countries in
which it currently sells it vehicles. Over 80% of JLRs sales are to overseas market and
china is biggest market for exporting JLR vehicles. It was 71% in 2012 about 72000
vehicles was sold and was increased over 90000 vehicles in 2013. (JLR, 2103)

Compare and contrast how international marketing differs from

marketing in domestic markets. Give detailed examples of how
differently JLR advertise and complete market research in their core
target market.
Domestic Marketing:
Domestic marketing means selling within ones own country. Typically, this is the first
area where companies seek to market their goods or services. Because the market,
customer needs, tastes, geography, demographics and distribution methods are likely
familiar, it is often the easiest place for companies to launch a product. The four Ps of
marketing which are product, place, price and promotion are often easier for companies
to determine within the domestic market.

International Marketing:
International marketing means to offer ones goods or services worldwide. Most
companies begin marketing their goods or services within their country, and expand to
the global market to capture greater market share and open up new avenues of sales. It

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is more complex, and must take into consideration numerous factors, including but not
limited to following factors. Demographic and physical environment should be assessed
in categories like population size, growth, distribution channels, etc. Economic
environment should be reviewed that goes around with the income and expenditure
activities, inflation, currency stability, etc. that will contribute for the new service or
products success. Social and cultural environment should be assessed that encompasses
a wide range of anticipations and assumptions with regards to the culture and social
differences. Legal environment should be considered which includes the limitations on
trade and tariffs, proper documentation and import regulations. Political environment
should be reviewed in which the governments system is included. International
marketing decisions requires months of research and high degree of planning and
formation of internal strategies, factors affecting strategies are target audiences,
spending and profit margins. Language and translations should be considered before
marketing globally as well as cultural differences.

According to me for successful business international marketing is necessary

because of globalisation. And for business like JLR has to use international
market effectively to grow their business all over.
HOW JLR ADVERTISE AND COMPLETE MARKET RESEARCH:
JLR advertise by social media, television, newspaper, by having famous celebrity and sign
them as a brand ambassador.
JAGUAR AND LAND ROVER is strengthening its engagement with the worlds foremost
technology businesses and academic bodies by leading a significant number of research
projects investigating a range of technologies from new materials to future powertrain
solution. They are involved in a consortium with MIT Agelab, DENSO and Touchstone
evaluation that aims to reduce the potential for driver distraction in future vehicles
human machine interface systems by developing methods for measuring the demands
made on drivers by the latest HMI technologies.
JLR does SWOT analysis as well. According to market research they know customers
demand and accordingly they manufacturing product.
At the moment one of the examples of JLR doing research to develop concept for a new
car which reduce the environmental and social impacts of their vehicle at every stage of
the life cycle, from product design to the end of the vehicles life. They finding ways to
reducing tailpipe CO2 emissions generated during use by our customers, as well as
reducing CO2 emission from manufacturing. They designing cars that use resources
efficiently and can be disposed of and recycled at the end of their life.
JLR had drawn up a five year environmental strategy in 2007. The BITC award celebrated
the significant achievement notched up by improvement programmes from that time,
both on the companys premises and in the wider society.
The first on the list was a 21% reduction in energy consumption per vehicle in the
manufacture of cars. The second was a huge 69% reduction in waste to landfill, an area
in which the company has high ambitions. When the environmental plan was produced
six years ago JLR looked as its waste streams to determine how materials could be reused. The subject has remained in focus ever since and the company now aims to cut out
waste altogether by 2020. Water saving, which exercises minds throughout industry
today, was a third notable success. The company has recorded a 10% cut so far but

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intends to go further. At its new engine management plant now being constructed in
Wolverhampton rainwater will be harvested for industrial use and re-use. It is also on
target to achieve an excellent rating from the BREEAM assessment for sustainable
buildings. Renewable technologies play a large part in the environmental strategy. Since
writing the plan the company has invested 4m in a solar power installation. The
resulting saving is an annual reduction of 540 tonnes of CO2 emissions. More
environmental benefits from innovations and new practices are now being sought for
introduction at all JLRs operations. For example, evaluating a variety of renewable
technologies including biomass boilers, the pumping of natural heat from the ground and
more solar power. The new range rover has been built with an aluminium body, making it
400kg, or more than a third of a tonne, lighter than previous models. The lower weight
results in a 23% reduction in its CO2 emissions.

Analyse the nature and role of the multinational company, JLR.

A company, have its facilities and other assets in at least one country other than its
home country and have centralised head office where they co-ordinate global
management.
JLR and TATA both are multinational companies because they both operate in many
countries as well as their home countries. This multinationals create jobs and wealth and
also improve technology in different countries, especially in developing countries. On the
other hand, critics say multinationals can gave undue political influence over
governments. For example, JLR manufacturing in BRIC like (Brazil, Russia, India and
China) economy countries which are developing countries. They create jobs in these
countries and improve technology of these countries.

Analyse the impact of European/political integration on JLR as a

business:
European Union isnt a government. It is a unified monetary body which tries to balance
economic and political needs of its 28 member countries, all of these countries are
independent fiscal and political entities. It has advantages of a large, unified trading area
but the disadvantages of political conflict between its members. It tries to overcome
these disadvantages through a series of trade agreements and negotiations. EU was set
up after the Second World War, to stop European nations to go against each other and to
end the frequent wars between neighbours which ruin their economies. (Automotive
industry and EU, 2014)
As a UK citizen we can travel freely and safely around Europe as UK is part of EU. It has
developed a single market through a standardised system of laws that apply in all
member states. EU gave free movements of goods, services and capital to UK which has
helped to reduce costs and prices for consumers to buy domestic products. Because of
free movement of labour also enables British people to live and work in Europe. Mutual
recognition of safety standards and rules has helped reduce costs for firms which has
encouraged the development of small and medium business which rely on low cost
exports. European Arrest Warrant made easier to track criminals across all Europe.
British exit from Europe is now a more real possibility than at any time since Edward
Heath took us into the Common Market in 1973.Business leaders are starting to sound
the alarm, warning that a British withdrawal even a mere vote on withdrawal
represents a serious danger to our fragile economy. As EU is one of the biggest parts

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where JLR exports their cars so if this happens JLR will have problem in their business.
Today much of the bloc is in recession and still suffering from an economic fever brought
on by the euro zone debacle. But in raw economic terms those trade advantages have
actually grown. The European Union is now a market of some 500 million people, thanks
to successive rounds of enlargement taking in first the newly democratic nations of
southern Europe and then the former Soviet satellites of Eastern Europe. The EU is the
destination for half of our exports. Lose access to those markets and the danger to our
exporters is self-evident. (JLR, 2013)
There are plenty of reasons why foreign or even domestic firms might be nervous about
investing in Britain while the country pondered whether to stay or leave and JLR will have
major impact on their business if Britain leaves EU.
www.independent.co.uk/news/business/analysis-and-features/analysis

Discuss the nature of distribution on an international scale. How does

JLR get the vehicles to its markets?
JLR transports vehicle mainly sport cars and jeeps across many counties in world. JLR
exports 80% of all vehicles made in UK. JLRs largest export regions are mainland
Europe, North America and China and almost 60% vehicles are exported here.
Distribution is managed with a systems approach and considers key interrelated
functions to provide efficient movement of products. The functions are interrelated
because any time a decision is made in one area it has an effect on the others. For
example, a business that is providing cars would consider shipping finished products via
air freight versus rail or truck in order to expedite shipment time. The importance of this
decision would offset the cost of inventory control, which could be much more costly.
Managing physical distribution from a systems approach can provide benefit in
controlling costs and meeting customer service demands.

Functions of Distribution
The customer service function is a strategically designed standard for consumer
satisfaction that the business intends to provide to its customers. As an example, a
customer satisfaction approach for the cars business mentioned above may be that 75%
of all custom cars are delivered to the customer within 72 hours of ordering. An
additional approach might include that 95% of custom cars be delivered to the customer
within 96 hours of purchase. Once these customer service standards are set, the physical
distribution system is then designed to attain these goals.
Order processing is designed to take the customer orders and execute the specifics the
customer has purchased. The business is concerned with this function because it directly
relates to how the customer is serviced and attaining the customer service goals. If the
order processing system is efficient, then the business can avoid other costs in other
functions, such as transportation or inventory control. For example, if the car business
has an error in the processing of a customer order, the business has to turn to premium
transportation modes, such as next day air or overnight, to meet the customer service
standard set out, which will increase the transportation cost.
Inventory control is a major role player in the distribution system of a business. Costs
include investment into current inventory, loss of demand for products, and depreciation.

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There are different types of inventory control systems that can be implemented, such as
first in-first out (or FIFO) and flow through, which are methods for businesses to handle
products.
First in-first out, or FIFO, is a method in which the new products coming into the
warehouse replace existing products of the same SKU so that merchandise is cycled and
does not expire or become old as more recent production is available. Flow through, on
the other hand, is product that does not get processed in the warehouse.
Transportation: The choice of transportation carriers that affects the price of products,
delivery performance and the condition of the goods when they arrive. This all will affect
customer satisfaction. In shipping goods to its warehouses, dealers and customers, the
organisation can choose among five transportation modes like rail, road, water, pipeline
and air. For digital products, firms can use an alternative distribution mode internet.
http://www.drjaybadiyani.net/content/commerce/c23content.html

How JLR gets the vehicles to its market:

Jaguar Land Rover is one of the success stories of British manufacturing. With
headquarters in the UK, it is the countrys largest automotive business, with over 25,000
of our 26,000-plus employees working there.
Jaguar Land Rover operations are currently split across five sites with three vehicle
manufacturing plants two in the West Midlands at Castle Bromwich and Solihull, one
near Liverpool in Halewood and two advanced design and engineering centres at
Gaydon and Whitley in the Midlands. The company is looking at expanding its production
with an engine production facility in the UK and another manufacturing plant in China to
address the emerging Chinese market.
It is across these five sites that Jaguar Land Rover produces the vehicles that sell into 178
countries, thus satisfying the demands of the companys dealers around the world. These
figures make Jaguar Land Rover one of the largest exporters by value in the UK, with
more than 80% of the vehicles produced being sold abroad.
Jaguar Land Rover is also continually investing in these sites to make sure the demand
and appeal is constant. We are the largest investor in automotive research and
development and engineering in the UK, with continued expansion at our sites having
resulted in a steady increase in jobs. Each of the companys five sites is thriving as
demand for new Jaguar Land Rover vehicles continue to rise.
http://www.jaguarlandrover.com/gl/en/innovation/production-operations/

Analyse trends in international trade, markets and employment and

how JLR use these to develop their sales.
Trends are what allow traders and investors to capture profits. Whether on a short- or
long-term time frame, in an overall trending market or a ranging environment, the flow
from one price to another is what creates profits and losses. There are four major factors
that cause both long-term trends and short-term fluctuations. These factors are

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governments, international transactions, speculation and expectation, and supply and
demand.

Major Market Forces

Learning how these major factors shape trends over the long term can provide insight
into why certain trends are developing, why a trend is in place and how future trends
may occur. Here are the four major factors:
1. Governments
Government hold much sway over the free markets. Fiscal and monetary policy
has a profound effect on the financial marketplace. By increasing and decreasing
interest rates the government and Federal Reserve can effectively slow or attempt
to speed up growth within the country. This is called monetary policy.
If government spending increases or contracts, this is known as fiscal policy, and
can be used to help ease unemployment and/or stabilize prices. By altering
interest rates and the amount of dollars available on the open market,
governments can change how much investment flows into and out of the country.
2. International Transactions
The flow of funds between countries impacts the strength of a country's economy
and its currency. The more money that is leaving a country, the weaker the
country's economy and currency. Countries that predominantly export, whether
physical goods or services, are continually bringing money into their countries.
This money can then be reinvested and can stimulate the financial markets within
those countries.
3. Speculation and Expectation
Speculation and expectation are integral parts of the financial system. Where
consumers, investors and politicians believe the economy will go in the future
impacts how we act today. Expectation of future action is dependent on current
acts and shapes both current and future trends.
4. Supply and Demand
Supply and demand for products, currencies and other investments creates a
push-pull dynamic in prices. Prices and rates change as supply or demand
changes. If something is in demand and supply begins to shrink, prices will rise. If
supply increases beyond current demand, prices will fall. If supply is relatively
stable, prices can fluctuate higher and lower as demand increases or decreases.
JLRs worldwide workforce grew to an average of 24,913 in 2013 (a 19% increase since
2012, when the average headcount was 20,887). The growth supported product
programme development and increased volumes. Through training and induction
programmes across the business, new employees were able to add value as soon as
possible. JLR use these to develop their sales.
Develop the HR vision and strategy to support business goals through to 2020.
Continue our focus on leadership development, with an emphasis on
breakthrough performance delivery.
A revised performance management process to support delivery of business goals
through individual and team achievement of critical stretch objectives.

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An enhanced talent management process to deliver leadership and

functional capability, which drives individual development, succession
planning and talent pipeline strategy.
Further strengthening of core relationships that support the delivery of
business goals.
JLR launched a new Team Talk Online portal for production workers, which
provides them with business updates alongside information on employee benefits,
training and development.

https://fas.org/sgp/crs/misc/RL33577.pdf
http://www.just-auto.com/

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