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Table of Contents

SITUATIONAL ANALYSIS 3

ABOUT THE COMPANY 3

VISION AND MISSION 3
VALUES 4
SUSTAINABLE DEVELOPMENT POLICY 4
GOALS AND STRATEGIES 4

EXTERNAL ANALYSIS 6

ECONOMICAL FORCES 6
CURRENCY EXCHANGE 7
SOCIAL, CULTURAL, DEMOGRAPHIC, AND NATURAL ENVIRONMENTAL FORCES 7
POLITICAL, GOVERNMENTAL, AND LEGAL FORCES 8
TECHNOLOGICAL FORCES 8
INDUSTRY TRENDS 9
PORTER’S FIVE 10
EXTERNAL FACTOR EVALUATION MATRIX 11
NOTES TO EXTERNAL FACTORS EVALUATION MATRIX 12

INTERNAL ANALYSIS 13

MANAGEMENT 13
MARKETING 13
PRODUCTS 13
SALES AND DISTRIBUTION 14
PRICING 15
PRODUCTION 15
R&D 15
FINANCIAL ANALYSIS 16
OVERVIEW 16
FINANCIAL RATIOS 17
INTERNAL FACTOR EVALUATION MATRIX 19
NOTES TO INTERNAL FACTORS EVALUATION MATRIX 20
COMPETITIVE PROFILE MATRIX 21
SWOT MATRIX 22

STRATEGIC PROPOSITIONS 23

ALTERNATIVE STRATEGY #1 – RELATED DIVERSIFICATION, RETRENCHMENT 23

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ALTERNATIVE STRATEGY #2 – BACKWARD INTEGRATION 24

ALTERNATIVE STRATEGY #3 - INTENSIVE/MARKET STRATEGIES – THE BEST ALTERNATIVE
STRATEGY 25
IMPLEMENTATION 26
EVALUATION AND PERFORMANCE MONITORING 28

REFERENCES: 29
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JAGUAR LAND ROVER PLC

SITUATIONAL ANALYSIS

About the company

Jaguar Land Rover Automotive plc is a car automotive
company with headquarters in United Kingdom. The company
designs, develops, manufactures and sells cars under two
brand names: Jaguar -- premium sports saloons and sports cars
and Land Rover -- premium all-terrain vehicles, as well as
related parts and accessories. Company operates three manufacturing facility and two design
and engineering research facilities in UK. In 2012 company employed 22 650 employees
globally. The company owns a global sales and distribution
network. The main regional markets of the company are Europe
(excluding UK and Russia), North America, United Kingdom and
China accounting for 23%, 19%, 20%, 17% respectively of
annual sales in FY12 (JLR, 2012a).
Jaguar Land Rover Automotive plc is a subsidiary of Tata Motors which is in its‟ turn
a part of Tata group – an Indian business conglomerate. Tata Motors is India‟s leading
automotive company and the forth world largest bus and truck manufacturer by volume (JLR,
2012a).

Vision and Mission

Our vision is to deliver sustainability excellence. We are embedding this vision in our
business through:

 Long term profitable sustainable growth: investment in clean technology

 Innovative low-carbon vehicle solutions for our customers of the future
 Driving environmental innovation throughout our business
 Investing in our people, and creating sustainability change
 Dynamic partnerships with our supply chain, integrating life cycle assessment
into our processes
 Adding value to our local and communities
(JLR, 2012b)
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Values

Jaguar Land Rover plc as all businesses of Tata Group shares its‟ core values:
 Integrity
We must conduct our business fairly, with honesty and transparency.
Everything we do must stand the test of public scrutiny.

 Understanding
We must be caring, show respect, compassion and humanity for our colleagues
and customers around the world, and always work for the benefit of the
communities we serve.

 Excellence
We must constantly strive to achieve the highest possible standards in our day-
to-day work and in the quality of the goods and services we provide.

 Unity
We must work cohesively with our colleagues across the group and with our
customers and partners around the world, building strong relationships based
on tolerance, understanding and mutual cooperation.

 Responsibility
We must continue to be responsible, sensitive to the countries, communities
and environments in which we work, always ensuring that what comes from
the people goes back to the people many times over (JLR, 2012b).

Sustainable Development Policy

We are guided by our Sustainable Development Policy that outlines how we can make
a positive contribution to society and the environment. The policy commits Jaguar Land
Rover to act responsibly and ethically towards employees, shareholders, customers, suppliers,
dealers, society and the environment (JLR, 2012b).

Goals and strategies

Jaguar Land Rover has an ambitious growth plans for the future while committing to
the environmental friendliness and sustainable development. CEO of Jaguar Land Rover, Dr.
Ralf Speth stated in the company‟s strategy report: “We have ambitious growth plans to
establish ourselves as a global player in the premium automotive market over the next three to
four years; developing sustainable products that meet the needs of customers now and in the
future is vital to that goal. There is no single technical solution, so we have implemented a
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multi-faceted approach to improve our overall environmental performance. Our technology

road map, and advanced product development processes will enable us to respond to our
sustainability challenges whilst delivering our growth
plans” (JLR, 2012b).
To achieve these goals the company uses a mix of
market (intensive) strategies. The primary intensive
strategy exercised by the company is product development.
The company has been constantly increasing its‟ research
and development (R&D) spending to develop new products
and improve existing ones. Fresh results can be seen
through a series of successful launches of new products. In September 2011 the company has
launched the new model in Land Rover brand – Land Rover Evoque. The company also
announced a launch of new factory in Wolverhampton that will be working on the
development and production of new engines. In the year 2012 the company expanded its‟
Jaguar XF product range with new 2.2D XF with new more environmentally friendly engine.
Also new Jaguar F-type was shown at New York motor show in January 2012 (JLR, 2012a).
Besides product development the company is actively working on market development
as well. Jaguar Land Rover recognizes the importance of new growing markets. Sales in
Chinese market grew 76% at year 2012, and China is expected to be
company‟s largest market in 12 months. In March 2012 the
company signed the agreement with Chery Automotive to create a
joint venture to build vehicles for Chinese market. “The company
markets Jaguar products in 101 countries and Land Rover products
in 177 countries, through a global network of 17 national sales
companies („„NSCs‟‟), 82 importers, 63 export partners and 2,351 franchise sales dealers, of
which 585 are joint Jaguar and Land Rover dealers” (JLR, 2012a). Last year the company
established an NSC in China in order to sustain growth in this market and planning to further
increase the network of sales dealerships in the country. (As of March 2012, company has 104
Land Rover and 97 Jaguar dealers in China). Similarly the company is planning to grow its‟
presence in Indian market. The company established a CKD assembly facility in India (CKD
– complete knock down) that assembles cars from parts produced at other company‟s facilities
and shipped to India (JLR, 2012a).
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EXTERNAL ANALYSIS

Economical Forces
The analysis of economical forces will be narrowly focused on the main economical
events and trends that might influence automotive industry.
US continues its‟ recovery from the economic crisis and grew approximately 2% in
the year 2012 which is way better than Euro Zone or UK economies. The country continues to
exploration of domestic gas and oil in strive for energy independence. Industries that are
heavily intensive on use of energy will start to reallocate to US (Brett S., 2013).
In European Union the main economies will be balancing between recession and zero
growth. Continuous problems within the European Union economy will contribute to very
slow economic development. Joint Euro Zone debt will be increasing costs of borrowing in
German economy (Brett S., 2013).
In United Kingdom new actions are taken to loosen its‟ connection to European
Union which will have a big effect on European continent. The UK economy performed
worse than most of economies in European Union and situation is not expected to get better in
the nearest future. The brightest forecasts expect a 1% growth in the year 2013, and hopeful
consumer confidence will be restored a little bit as inflation falls (Shah V., 2012).
Chinese economy is bouncing back even though it is now mostly stimulus-driven and
primary biased towards state-owned enterprise and large industrial companies. Chinese
economy has the second biggest GDP in the world after US, but still remain a developing
nation. Nonetheless, China is far ahead of US in annual sum of finance available for global or
domestic investment. China‟s savings in 2011 were already twice bigger than in US – $3.6
trillion to US‟ $1.8 (Ross J., 2013). Chinese government recognizes the problem of China
being the worst environmental problem for the world and calls for increased emphasis on
clean energy and green growth (Bishop B., 2012).
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Currency Exchange
Jaguar Land Rover is a global company. The company sells its‟ vehicles in United
Kingdom, United States, Europe, Russia, China and many other markets; as a result, its‟
revenues are sensitive to the fluctuations in the currency exchange rates. Also, the company
sources a lot of its‟ materials from UK and EU which makes fluctuation between pound and
euro are important as well. Some of the company‟s debt was also issued in foreign currency
which brings additional risks.
Historical graph shows how big fluctuations
can be on the foreign exchange market on the
example of USD/GBP exchange rates. However,
even small fluctuation can be very dangerous for a
company with more than 4 billion pounds in annual
revenue. Deviation even in one percent can cost
company millions. It is very important to have a
good financial planning in such situations.
Appropriate hedging actions should be taken in US Dollar to British Pound Currency Exchange Rate
advance. One of the options is to engage in a contract
on a predetermined exchange rate in the future, or buy some currency options that can be
exercised in case there will be a need.

Social, Cultural, Demographic, and Natural Environmental Forces

The social life is shifting towards online social technologies. Internet becomes the
main source of information, reshaping the consumption processes and marketing. Consumers
are now winning the voice in production. The customers of 21st century are demanding more
personalized products and more participation in the process of designing and creating
products. The consumption and production becomes mobile. Consumption happens anytime
and anyplace (The Economist, 2012).
In the recent years there were a number of natural disasters that hit the world.
Hurricanes, tsunamis and earthquakes shocked the world. On the biggest influence of natural
disasters on global economy is the disruptive effect on supply chains of big companies. With
the age of globalization and interdependence supply chains became complex and global.
Companies for years were looking for a best deal quality-price deals around the globe. With
big volumes transportation cost became relatively small, and many companies were locating
parts of their supply chains overseas. Since companies were often putting all the eggs in one
basket in terms of suppliers, they lost their flexibility, and when the disasters struck, many
companies around the globe were shaking (Fisher D., 2011).
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Political, governmental, and Legal Forces

With increased public concerns about environmental sustainability of the world and
public safety, more and more regulations are taking place regarding car manufacturing
requirements. In 2009 new legislation was passed committing all European manufacturer to
cut average CO2 emissions from new car to 130g/km by the year
2015. In addition industry is required to reduce emissions from
production processes by such legal documents as: EU Emissions
Trading Scheme, the voluntary UK Climate Change Agreements
and the UK Carbon Reduction Commitment. In addition to rules
and regulation related to emissions, there are a number of
requirement to electronic systems used in the car industry. For example, starting form year
2011 all new cars in Europe should have a Electronic Stability Control – a system that reduces
the risk of sliding of a turn is taken when the speed is too high. Starting from 2012 all new
cars should have Tyre Pressure Monitoring Systems in them as well. All these measures are
driving the cost of production up (SMMT, 2012a).
This year European Commission President Jose Manuel Barroso and president of
United States Barack Obama announced the beginning of the negotiation between EU and US
for creation of free-trade agreement between two partners. These negotiations will eliminate
trade barriers between two countries, boosting the economies and increasing trade. EU-US
trade is worth around 455bn Euros (£393bn; $613bn) a year (BBC, 2013).

Technological Forces
In our modern society the new age of robotics and smart machines have began already.
Such systems are already taking over some jobs and responsibilities that were done be
humans before. The use of robots allows using less skilled labor force in some industries or
highly educated but fewer labor. A worker doesn‟t need to know how to do the job anymore.
Now he has to know how to look after a robot that does the job (The Economist, 2012).
In an automobile industry technology is bringing change as rapid as it never did
before. With basic consumer expectations from a car are growing, companies need to innovate
constantly in order just to stay in business. The challenge is to make cars more comfortable,
more fuel efficient and more technologically advanced. Car is no longer just a mean of
transportation. Many technological features that might revolutionize car industry are already
in its‟ inception.
Vehicle to Vehicle (V2V) communication systems are being tested be Ford already.
Technology will allow cars to communicate with each other, calculate the location and
direction of other cars and take preventive actions in emergency situations. Self-driving cars
have been a dream of many for long time, but the possibility is closer that it seems. Google
have already tested the technology on more than 200,000 miles of public roads. The
implementation of such technology would significantly reshape transportation, safe time and
reduce car accidents. GM is doing research in this area as well, and some prototypes might
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appear on the car show in this decade already. Augmented Reality Dashboards (ARs) are
already in the process of development at BMW. ARs will allow to make windshield of the car
interactive, displaying car performance
metrics, GPS, and other information on it.
Mercedes is developing airbags that will
become proactive protection. Their concept
is an airbag that is launched under the car in
case of emergency brake. With higher
popularity of alternative energy become an
attractive technology that will allow to store
energy in the body part of a car. Toyota
went even further trying to develop body
panels that will capture solar energy and
store it there (Neiger, C., 2012).

Industry trends
As fuel prices remain high and
environmental concern growing, there is a
trend in car manufacturing toward the cars
that consume less fuel and produce less emission. Hybrids and cars using renewable energy
are gaining popularity (Liu, M., 2013).
Even though the world economy is in the process of recovery from the economic
crisis, consumers are still very cautious when it comes to big expenditures to buy real estate
or cars. There is a trend among consumers to hold their cars for longer period of time. Now
consumers are holding their cars on average for 63.9 month, which higher than last year for
4.5 months (Liu, M., 2013).
Another interesting trend is the slowed growth in used car market comparing to new
cars. Reduced supply of used cars drove the prices up, resulting the shift in consumption
toward new cars (Liu, M., 2013).
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Porter‟s Five
Rivalry among competing firms (high threat)
Globalization and trade created a fierce competition in the car manufacturing industry.
Environmental issues, big amount of competing firms, demand for innovation and many other
factors are driving manufactures to a lower prices lower cost structures in order to be
competitive.
Potential entry of new competitors (low threat)
It is hard to enter car manufacturing industry for following reasons. First of all, there is
a lot of capital needed to enter this market in order to build manufacturing facilities, develop
or purchase technology and build distribution channels. Also, high volumes of production are
needed to achieve economies of scale and be competitive on the market. Production cycle is
relatively long and requires a lot of capital committed to the production. Finally, there are
many governmental regulations to comply with in development of final product.
Potential development of substitute products (medium threat)
The main substitute to the car industry is public transportation; however, it doesn‟t
provide all the features and a dvantages that personal transportation has. The threat is higher
in long distance travels, as well as, in the cities with very intensive traffic. In the latter
situation public transportation can be more efficient mean time wise.
Bargaining power of suppliers (low threat)
Overall, the globalization and international trade is contributing to less bargaining
power for the suppliers. There are many companies that compete with each other in
production of parts for cars; thus, lowering the prices and making it easier for car
manufacturers to choose better price-to-quality ratio materials and parts.
Bargaining power of consumers (high threat)
In contrast, to bargaining power of supplier, the bargaining power of consumers is
very high. The reasons are also globalization, integration of the world‟s markets, many
competitors offering wide range of products. Even though price is not the most important
decision making factor, there are many more customer which car manufactures need to satisfy
in order to stay in business.
Conclusion
Overall, car manufacturing is a highly competitive industry, and being successful
requires a lot of skills and creativity. This industry requires big amount of investments to get
in, and it is hard to recalibrate machinery to other production; thus, it is costly to leave the
industry as well.
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External Factor Evaluation Matrix

Weighted
Key External Factors Weight Rating
Score
Opportunities:
Chinese market is growing 0.12 4 0.48
Indian market is growing 0.08 3 0.24
New technology wins customers 0.10 3 0.30
US-EU announced free trade zone 0.06 2 0.12
Consumers demand more customized products 0.06 3 0.18
Internet became the source of information, ideas generation and advertisement 0.07 2 0.14
Threats:
EU in recession or zero growth 0.04 4 0.16
Environmental regulations are getting more strict around the globe 0.09 4 0.36
Fuel prices are growing 0.08 2 0.16
Consumers are cautious when it comes to big expenditures 0.05 2 0.10
High competition in automobile industry 0.08 3 0.24
Currency exchange 0.03 3 0.09
Natural disasters disrupt supply chain 0.06 3 0.24
New players in car technology (Google and other IT companies) 0.08 1 0.08

Total 1.00 2.89

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Notes to External Factors Evaluation Matrix

EFE matrix summarizes and lists the key external factors, as well as, evaluates the company‟s performance on these factors. Jaguar Land
Rover received rating of 2.89 points while the maximum is 4. This is generally a good result, but the matrix provides real insights when
evaluated factor by factor. The company is doing pretty good in responding to its‟ external opportunities, especially regarding to growing
Chinese and Indian market, as well, as new technology and customizing products for its‟ customers. Nevertheless, it should put more effort into
taking the advantage from the future US-EU trade zone, as well as, it should use internet more as a mean of marketing and PR.
On the other hand, the company isn‟t doing as good in responding to external threats. World fuel prices are growing, and even though,
Jaguar Land Rover offers to its‟ customers some car models with great fuel economy, it still has many vehicles with enormously big engines that
consume too much fuel. Consumers are still very cautious when it comes to big expenses, but the company isn‟t very successful in beating the
price of competitors with similar products. Another key point to which company is not responding active enough is the entrance of new players
in the automobile industry – IT companies such as Google that are taking advantages of their technological possibilities implementing them to
the car industry.
There some threats, however, to which Jaguar Land Rover responds superiorly. For example, European recession should‟ve stagnate the
sales on this market, yet the company managed to increase its‟ sales in Europe up 27 percent which is more than significant achievement for a
luxury car producer in the market with recessional economic environment. Another example of successful reaction to external threats is the
environmental regulations which are getting more strict in UK, Europe and around the globe. Recently, China announced that it will regulate cars
environment friendliness more strict as well. Nevertheless, Jaguar Land Rover invests a lot in the technology and product development in roder
to fit all the strictest regulations.
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INTERNAL ANALYSIS

Management
After the purchase of Jaguar Land Rover plc by Tata Motors, management of the
company has been redefined. First of all, company restructured its‟ organizational structure
uniting two brands under one leadership and also created four new board-level executive roles
related to marketing and sales. The company invited Saab‟s executive sales director Adrian
Hallmark to be its‟ Jaguar global brand director. John Edwards, who was Land Rover UK and
Central Europe‟s managing director, was made global brand director of Land Rover.
Managing director of Land Rover, Phil Pophan, became Jaguar Land Rover‟s director of
global sales and service operations. Finally, Jaguar Land Rover‟s director of customer
services, Mike Wright, was given a role of executive
director of the group. All four positions are also
members of Jaguar Land Rover‟s executive committee
and report directly to the CEO, . Speth said about these
changes: "These new appointments and the new structure
significantly strengthen the marketing and sales
organization for the Jaguar and Land Rover brands
within the framework of one globally successful
company. The changes will also ensure that the voice of
the consumer is heard even more clearly at the most
Ralf Speth - CEO senior level in the business" (Bold, B., 2010).
Company also has many challenges meeting the new demands of the market. In 2012
the Jaguar Land Rover plant at Halewood was moved into 24 hours a day, three shift
production regime. Increasing demand on the new Land Rover Evoque triggered this change.
At a factory of this size (4,500 workers) such an action requires a lot of skill. HR department
successfully managed to negotiate the new condition with labor unions, supply managers
adjusted just-in-time delivery for the 24 hours regime. Factory successfully increased
productivity of the factory by 40-50%. Factory became more efficient since car manufacturing
is a capital intensive industry, and now machinery can be fully employed (Stevens, M., 2012).

Marketing
Jaguar Land Rover plc produces and markets two brands: Jaguar and Land Rover. The
products of these two brands are competing in different segments of the car market.

Products
“Jaguar designs, develops and manufactures premium luxury saloons and sports cars
recognized for their performance, design and unique British style” (JLR, 2012a). Jaguar
product range consists of three distinct lines.
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XK series are sports cars (coupe and

convertible). In this sector Jaguar competes with
some luxury sports car model of world recognized
brands such as Mercedes Bens, BMW, Audi and
Porsche. Jaguar position itself in this market as a
luxury model which actually costs a little bit more
than similar cars in this category (Golfen B., 2011).
The XF is the series that was launched in
the year 2008. XF competes in the category of
premium executive cars with model of brands like
BMW, Lexus, Audi and Mercedes Bens. Jaguar
XF is the best seller of the brand and huge
success. Since its‟ launch in 2008 it was named
“Best Executive Car” by What Car? magazine
every year consecutively.
The XJ is Jaguar‟s
largest saloon vehicle. It has a
long history with Jaguar, but
the design was redefined when
Jaguar Land Rover was bought
by Tata Motors. XJ competes
in the segment of large luxury
saloon cars with many well
established model of Mercedes Benz, Audi and BMW. There are also a few new entrants in
the segment: Porsche that was focused on the production of primary sports cars moved into
luxury saloon segment, as well as Hyundai that was yet a producer of budget cars, but
successfully introduced its‟ new luxury saloon Equus on the market (USNews, 2013).
The segments occupied by Land Rover are different. “Land Rover designs, develops
and manufactures premium all-terrain vehicles that aim to differentiate themselves from the
competition by their simplicity, ability, strength and durability. Land Rover‟s range of
products comprises the Defender, Freelander 2 (LR2), Discovery 4 (LR4), Range Rover
Evoque, Range Rover Sport and Range Rover” (JLR, 2012a).

Sales and Distribution

“The company markets Jaguar products in 101 countries and Land Rover products in
177 countries, through a global network of 17 national sales companies („„NSCs‟‟), 82
importers, 63 export partners and 2,351 franchise sales dealers, of which 585 are joint Jaguar
and Land Rover dealers” (JLR, 2012a). The company also entered into agreement with a
number of financial institution that will be providing financing services to its‟ costumers
(JLR, 2012a).
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“The company aims to increase its marketing and dealer network in emerging markets.
In China, the company has established an NSC to expand its presence in this key market and
plans to increase the network of sales dealerships across the country. At 31 March 2012, the
company had increased to 104 Land Rover dealers and 97 Jaguar dealers in China” (JLR,
2012a).
Jaguar Land Rover main markets are Europe (excluding UK and Russia), North
America, United Kingdom and China accounting for 23%, 19%, 20%, 17% respectively of
annual sales in FY12. The company expects that Chinese market will become the biggest for
them in the next 12 months (JLR, 2012a).

Pricing
When it comes to pricing of its‟ product, both Jaguar and Land Rover brands don‟t
differ much price wise from its‟ main competitors of the same class cars. The differences are
usually not more than 1-4% of final price which is not very sensible especially in the luxury
segments. With wide variety and similar pricing, sales become dependent on product
differentiation and marketing activities (Aol Autos, 2013).

Production
The company manages three main manufacturing facilities. All of them are located in
United Kingdom. The first one in Solihull is used for production of the Land Rover Defender,
Discovery 4, Range Rover and Range Rover Sport models. The second factory is located in
Castle Bromwich and manufactures the Jaguar XK, XF and XJ models. Finally, the third
facility is located in Halewood and produces Land Rover Freelander and Range Rover
Evoque. There are also two design and engeneering facilities at Gaydon and Whitley, UK.
The company is also going to invest 355 million British pounds to develop an engine plant
that will be located in Wolverhampton. In March 2012 company signed a joint venture
agreement with Chery Automotive to build a factory in China.

R&D
In the year 2012 the company spent 750.7 million British pounds on R&D about 220
millions more than previous year. The company‟s high investments in R&D are part of their
product development strategy as well as commitment environmental sustainability (JLR,
2012a). Company plans to hire additional 500 employees to its‟ R&D department in which it
already employs 5,000 people (The Financial Express, 2013). The company continues to
show the results of its‟ investment in R&D by launching new cars, such as Range Rover
Evoque as well as creating innovative engines. Last year company presented new Jaguar JX_e
– the vehicle with hybrid engine that reduced its‟ CO2 footprint 70% without influencing its‟
performance (SMMT, 2012b).
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Financial Analysis
Overview
The Jaguar Land Rover (JLR) shows excellent results under new management since
2008 when the company was bought from Ford by Indian based Tata Motors. The company
position itself toward product development and rapid growth. In the last year JLR again
showed its‟ amazing financial performance. Company increased its‟ trade volumes to 314,433
vehicles sold in the year 2012 – a 29% increase comparing to 2011. However, it is important
to notice that the growth was very disproportionate among two brands. While Land Rover
sales grew 37% hitting 260,394 cars sold, Jaguar brand sales increased only 2% and amounted
for 54,039 cars (JLR, 2012a).
JLR also generated record amount of revenue in the year 2012. Consolidated revenue
grew 37% in the last year amounted 13,512 million British pounds. Such grow was attributed
to increased demand for two brands, as well as stronger product and market mix.

Nevertheless, in car manufacturing big revenues don‟t necessary mean high income. As
practice shows, high revenues can be associated as well with high losses. However, this is not
the case of JLR which had established its‟ record in earnings as well. Consolidated net income
for 2012 was 1,481 million pounds an increase of 43% comparing to the year 2011 (JLR,
2012a).
In the year 2012 Net Income of JLR amounted to 10,96% or its‟ revenues which is a
fairly good percentage in car making industry. Nonetheless, it is important to notice the
changes in this indicator over the years. In the year 2011 Net Income was 10,49%; thus, there
was even a slight improvement in the last year. Another important way to measure
performance is by comparing it to the competitors. Here as well Jaguar Land Rover shows its‟
excellence. In 2012 JLR‟s Net Income was 10,96% of its‟ revenue (JLR, 2012a). The same
year the margins of its‟ main competitors were lower. BMW‟s Net Income was 6,66% of its‟
revenue (BMW, 2012). Mercedes Benz‟s net income margin was 7,53% (Mercedes Benz AG,
2012). Finally, Audi AG‟ net income amounted to 8,92% of its‟ revenue (Audi AG, 2012).
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Financial Ratios
It is important in conducting financial analysis to calculate financial ratios of the
company. In order to see bigger picture, it is also helpful to compare the results with the
results of similar competitors. In following analysis financial ratios of Jaguar Land Rover
(JLR) were compared with ratios of its‟ competitors: BMW, AUDI and Daimler AG
(Mercedes-Benz).

Liquidity ratios are designed to show the ability of a company meet its‟ short-term
obligations. Overall, JLR shows healthy liquidity standards which are pretty much similar to
its‟ competitors. Current and quick ratios are neither dangerously small which would indicate
possible problems with meeting company‟ short-term obligation, nor they are too big, which
would indicate that the company holds too many liquid assets.

Leverage or also called solvency ratios indicate what structure a company uses to
finance itself. JLR has a moderate total debt to equity ratio for a car manufacturer. Roughly,
the company uses 2.5$ of debt to each dollar in equity to finance its‟ operations. The company
also has a healthy interest coverage ratio. It is smaller than at BMW but comparable to
Daimler. Overall, company is modest and careful in its‟ financing structure.
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Activity based ratios can be a good indicator of strengths and weaknesses in

operational activities of a company. JLR has good inventory turnover ratio of 9,02 beating
BMW and Daimler. This means that company is able to sell its‟ inventory faster. Also, JLR
beats its‟ competitors in asset turnover being able to generate $1,32 of sales from each dollar
of assets. Finally, company is very efficient with collection of its‟ receivables which is an

important factor for successful cash flow management, especially for a company with a long
product cycle.
Profitability ratios reflect the ability of a company to extract profit out of sales it
generates. Jaguar Land Rover shows exceptional performance in this area. Last year the
company managed to keep its‟ EBITDA margin higher than its‟ competitors even though such
big companies as BMW, Audi and Daimler suppose to be more cost efficient because of the
higher economies of scale they enjoy. Also, company shows exceptionally good returns on
assets and huge returns on equity of 50%!

Finally, Jaguar Land Rover showed great growth rate. In 2012 sales grew 36.88%
beating its competitors at least three times. Earnings before interest, taxes and depreciation
grew even more – 40,43%.
It cannot be said
that the year 2012 was Sales and EBITDA in millions pounds
an exception for JLR, 16000
but rather a continuation 14000 13511.7
of a recent trend. The 12000
company was showing 10000 9870.7
great growth in 2011 as 8000 Sales
well. Since 2010 sales 6000 6527.2
EBITDA
grew from 6.6 billion 4000 2057.5
pounds up to 13.5 1465.3
2000 420.8
billion while EBITDA
0
grew almost five fold – 2010 2011 2012
from 420 million to 2
billion pounds!
 Putilin A. 19

Internal Factor Evaluation Matrix

Weighted
Key Internal Factors Weight Rating
Score
Strengths:
Great financial standing 0.06 3 0.18
Strong Brand Names 0.06 3 0.18
Growth of Land Rover units sold (33%) 0.07 4 0.28
New factory in China 0.08 3 0.24
Great design and performance of the cars 0.08 4 0.32
Great R&D 0.08 3 0.24
Excellent management 0.07 4 0.28

Weaknesses:
Small range of products 0.10 1 0.10
Higher prices 0.08 2 0.16
Small growth of Jaguar Units Sold (5%) 0.07 2 0.14
Cannibalization of sales of Freelander by new Evoque 0.05 2 0.10
Jaguar XK units sold decreased (5%) 0.05 2 0.10
Small market share 0.10 1 0.10
Customers financing is done by other company 0.05 2 0.10

Total 1.00 2.52

 Putilin A. 20

Notes to Internal Factors Evaluation Matrix

Internal Factor Evaluation Matrix summarizes and rates all the most important Strengths and Weaknesses of the company. Since this
particular matrix happens to assign equal total weight to weaknesses and strengths of the company (0.5 each), the maximum possible score was
3.0 (Strengths are rated 3 or 4 and weaknesses – 1 or 2). Jaguar Land Rover‟ weighted score was 2.52. This matrix is useful in detecting the most
important points. Among the most important strengths of the company are: successful management of the company, growth of Land Rover sales
and excellent car design and performance.
However, it is also important to emphasize the most dangerous weaknesses. One of the most important weakness on this matrix is the
small range of products of the company. In modern automotive industry a lot is depended on the variety of choice a company can offer. Ability to
cover different segments enhances the ability of a company to keep its‟ existing customers and attract new. Jaguar brand offers its‟ customers
only three models, and two of them are models that compete in the same segment (XF and XJ are both in the saloon segment). Land Rover offers
slightly better range of products. It has five models. However, all of them compete in the segments of off-road vehicles or dual purpose which
causes additional problems by creating cannibalization of sales. Another important weakness is the small market share JLR has. By achieving
bigger market share and increasing sales, company will be able to spread its‟ fixed costs among more products, thus, decreasing average cost per
unit. Being able to achieve that will allow JLR to invest more in fixed costs such as marketing, R&D and new facilities.

Jaguar Evolution
 Putilin A. 21

Competitive Profile Matrix

Weighted Weighted Weighted
Critical Success Factors Weight Rating Weight Rating Weight Rating
Score Score Score
Jaguar Land Rover AUDI BMW
Product design 0.11 4 0.44 0.11 4 0.44 0.11 4 0.44
Product performance 0.10 4 0.40 0.10 4 0.40 0.10 4 0.40
Distribution Network 0.05 3 0.15 0.05 3 0.15 0.05 3 0.15
Positive Company Image / Brand 0.09 3 0.27 0.09 4 0.36 0.09 4 0.36
Cash Flow 0.05 3 0.15 0.05 3 0.15 0.05 3 0.15
Compliance with regulations 0.06 3 0.18 0.06 3 0.18 0.06 3 0.18
Customer financing 0.06 2 0.12 0.06 3 0.18 0.06 3 0.18
Market Share 0.08 1 0.08 0.08 4 0.32 0.08 4 0.24
Technology and R&D 0.10 3 0.30 0.10 3 0.30 0.10 3 0.30
Marketing 0.11 3 0.33 0.11 4 0.44 0.11 3 0.33
Advertisement 0.10 2 0.20 0.10 4 0.40 0.10 3 0.30
Product Range 0.09 1 0.09 0.09 3 0.27 0.09 3 0.27

Total 1.00 2.71 1.00 3.59 1.00 3.30


SWOT Matrix
Strengths
 Great financial standing
 Strong Brand Names
 Growth of Land Rover units sold (33%)
 New factory in China
 Great design and performance of the cars
 Great R&D
 Excellent management
 Compliance with all standards
 High profitability
 Cost control
Opportunities
 Chinese market is growing
 Indian market is growing
 New technology wins customers
 US-EU announced free trade zone
 Consumers demand more customized products
 Internet
Putilin A. 22
Weaknesses
 Small range of products
 Higher prices
 Small growth of Jaguar Units Sold (5%)
 Cannibalization of sales of Freelander by new Evoque
 Jaguar XK units sold decreased (5%)
 Small market share
 Customers financing is done by other company
 Advertisement
Threats
 EU in recession or zero growth
 Environmental regulations are getting more strict around
the globe
 Fuel prices are growing
 Consumers are cautious when it comes to big expenditures
 High competition in automobile industry
 Currency exchange
 Natural disasters disrupt supply chain
 New players in car technology (Google and other IT
companies)
 Putilin A. 23

STRATEGIC PROPOSITIONS
Information gathered, analyzed and summarized in previous sections was used to
derive a number of alternative strategies. These strategies were then also analyzed and the
best was selected.

Alternative Strategy #1 – Related Diversification, Retrenchment

Strategy formulation: 1) To sell stringently developing Jaguar brand to company
that has more success in marketing and sales in that segment. 2) To start manufacturing
environmental friendly heavy trucks and construction machinery under the Land Rover
brand for international market.
Advantages:

 New products

 Diversification of risks

 New customer segment

 Higher Revenues

Capacity for success:

 Strong brand name

 Excellent R&D

 Demand for more environmental friendly machinery and trucks

 Excellent management

 Financial Capacity

 Value of Jaguar brand

Disadvantages and possible limitations:

 Unfamiliar business

 Long implementation time

 Big investment
 Putilin A. 24

Alternative Strategy #2 – Backward integration

Strategy Formulation: To acquire main producers of parts for the company located
in the UK and start production of part in the new manufacturing facility in China.
Advantages:
 Lower costs

 Lower prices

 Better quality control

 Shared R&D costs

Capacity for success:

 Financial capacity

 Excellent R&D

 Demand for more lower prices

 Excellent management

 Financial Capacity

 New manufacturing facility in China

Disadvantages and possible limitations:

 Unfamiliar business

 Suppliers aren‟t only oriented on JLR as its‟ customer

 Putilin A. 25

Alternative Strategy #3 - Intensive/Market Strategies – The Best

Alternative Strategy
Strategy Formulation: Pursue the mix of intensive strategies: market penetration,
product development and market development.
Market Penetration strategy seeks to increase market share of the existing products on
existing markets through greater marketing effort. The proposition is:

 To increase advertisement expenditures and use new advertisement channels

 To find new sales channels

 Change pricing strategy

Product Development strategy seeks to increase sales by improving and creating new
products. The proposition is:

 Introduce new product ranges for Jaguar and Land Rover

 Introduce new hybrid engines for new and existing products

 Introduce new technology

Market Development strategy seeks to increase sales by advancing into new geographic
markets. The proposition is:

 Increase presence in China and India by establishing sales channels in all big cities.

 Grow the market share in developing markets of South American countries, South
African Republic and Russia
Advantages:
 Higher Revenues
 Economies of Scale
 Higher brand recognition
 New customer segments
Capacity for success:
 Strong brand
 Excellent management
 Production capacity (new facilities in China)
 Financial excellence
Disadvantages and possible limitations:
 Lower prices might decrease profitability for first couple of years, until increased sales
won‟t allow for bigger economies of scales and lower costs.
 Putilin A. 26

Implementation
Establishment of Long-Term objectives:
Financial:
1) By 2017 sales of 72 billion pounds (keep with the growth rate of 2012)
2) By 2012 EBITDA of 10 billion pounds (keep with the growth rate of 2012)
3) In 2017 1 million vehicles sold (keep with the growth rate of 2012)
Strategic:
1) Three fold increased market share in existing markets (US, UK, EU) by 2017
2) Four fold increased market share in the developing markets (China, India, South
America, Russia)
3) Introduce three model ranges
Specific implementation strategies:

 To increase advertisement expenditures and use new advertisement channels:

o Internet: Social networks, blogs, video channels such as Vimeo or Youtube
o Movie presence – new Jaguar and Land Rover cars should appear in the
movies that are shown in cinema theatres worldwide. Adopt strategy of Audi
that for the last years flowed cinema industry with the presence of its‟ cars
increasing brand awareness and advertising new models.

 To find new sales channels:

o Increase effort on corporate contracts in key markets
o Participate in government tenders in key markets

 Change pricing strategy:

o Lower the prices at least to the level of main competitors
o Develop price discrimination opportunities for corporate and governmental
tenders

Product Development strategy seeks to increase sales by improving and creating new
products. The proposition is:

 Introduce new product range for Jaguar to compete in the Lower Medium segment
(BMW 1-series, Audi A3)

 Introduce new product range in Jaguar to compete in low-price roadster segment

(Porsche Boxter)
 Putilin A. 27

 Introduce new product range for Land Rover to compete in the Multi-Purpose-Vehicle
(MPV) segment

 Introduce new hybrid engines for new and existing products

 Negotiate the cooperation with Google to test its‟ technology on the UK and EU
markets.
Market Development strategy seeks to increase sales by advancing into new
geographic markets. The proposition is:

 Increase presence in China and India by establishing sales channels in all big cities.

 Grow the market share in developing markets of South American countries, South
African Republic and Russia
 Putilin A. 28

Evaluation and Performance Monitoring

After the implementation, the strategy will be evaluated several times in different areas:
financial objectives, customers, product and service, operations and processes.

Area of Objective Measure or Target Time Responsibility

Frame-
work
Financial objectives
1. Sales Top management / Sales and
72 billion pounds 2017
Marketing
2. EBITDA Top management / Financial
10 billion pounds 2017 management / Production and
cost management
3. Volume Sales and Marketing /
1 million vehicles sold 2017
Production management
Strategic objectives
1. Market share in Top management / Sales and
Three fold increase 2017
US, UK, EU Marketing
2. Market share in
China, India, Top management / Sales and
Four fold increase 2017
South America, Marketing
Russia
Production
1. New model for
R&D / Production / marketing
Lower Medium First sale 2014
and sales
segment
2. New model for
R&D / Production / marketing
low-price First sale 2014
and sales
roadster segment
3. New model for
Multi-Purpose- R&D / Production / marketing
First sale 2014
Vehicle (MPV) and sales
segment
4. Facility in China Launch 2013 Production
5. New hybrid First models R&D / Production / marketing
2014
engines and sales
 Putilin A. 29

Information was gathered from the sources listed in the following list. Financial and strategic
analysis was conducted by Anton Putilin

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 Putilin A. 30

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