Solar Car
Opportunities
Rising prices of fossil fuels / EV battery
price is falling
Solar cars have the potential to
compete with conventional cars
Increase in the awareness of climate
change 🡪 push for clean technology
Solar panels have already been
incorporated into contemporary car
functions & design
Existing infrastructure for electric cars
can be adapted to solar technology
Threat
1. None of the manufacturers has
fully committed to producing a
family car
SWOT ANALYSIS
STRENGTHS
WEAKNESSES
The company has a name known throughout the world.
The company has a longstanding reputation for reliability and
quality.
The company is large enough and resourceful enough to take
risks.
The company has influence because of its size.
The company is resourceful enough to afford different staffing
considerations.
The Jefferson is small, manoeuvrable and cheap to run; suited to
a variety of markets; has excellent mechanical features
Sales of the Jefferson are low.
Marketing of the Jefferson has been poor.
The marketing department did not have thorough information
on the competition.
The Jefferson is priced higher than the competition and is
heavier.
The branding is not memorable, nor the product well branded.
Production is expensive.
OPPORTUNITIES
THREATS
There is a worldwide trend towards the purchase of small city
cars.
Petrol is expensive.
There is worldwide pressure to reduce global warming.
Increasing public awareness of the need for alternative clean
energy
Industries in the developing world, through globalisation, are
poised for strategic business partnerships.
Other countries have access to cheaper raw materials such as
steel.
Production costs in the developing world are lower.
The U.S. government does not give financial incentives for solar
industries, but other governments do.
The US has a strong union compared to other developing
countries.
Other countries (Korea and Japan) have more efficient and
advanced solar technology industries.
Korea and Japan have a history of more sophisticated and
contemporary marketing.
The Desired Outcome:
To achieve targeted sales and market share
in the global solar car market
Action Plan 1: Cost reduction & exploiting
reputation
Cost reduction
Restructure salaries in factories; recruit migrant labour and re-negotiate industrial
agreements with staff.
Lobby government for financial support in solar technology development.
Importing steel from a cheaper overseas source.
B) Exploiting reputation
Emphasise the association of the name Jefferson with the company’s name.
Promote the “solid” values implicit in the Jefferson name, incorporating this
further into the branding.
Underpin all promotions with the strong company name and reputation. Make
“reliability” the main theme.
Reduce the price to match the competition, made possible by the above
reductions in production costs
Action Plan 2: Outsourcing & Re-branding
Cost reduction through outsourcing
Introduce a system of international competitive bidding for Jefferson
production and distribution.
B) Re-branding of the current car
branding: change the name to Zumi and produce it in fluorescent colours.
pricing policy: undercut the competition solar cars, made possible by the
savings made through international competitive bidding.
promotions: integrate all promotions in order to reach a youth target.
Ensure there is a strong ‘environmental’ theme and an upbeat memorable
musical element
Action Plan 3: Mix strategy Cost reduction &
New Marketing
Mix strategy of cost reduction
reducing costs by re-negotiating wages contracts to include partly paying workers
in company shares.
inviting the production workers’ union to nominate a member of the board.
outsourcing the production of solar cells to Korean or Japanese companies;
importing steel and other components from a cheaper source.
B) New marketing
branding: new model to be called the Skink – it will be styled and coloured to
appeal to young single first-time car owners.
pricing: undercut the competition solar cars, made possible by the above cost
savings.
promotions: co-ordinated marketing which appeals to a young first-time car
owner.
Evaluation of Action Plan 1
This plan will provide lower labour costs to the continued production of the
car. The inter-cultural training may be useful in gaining a reputation as a
responsible corporate citizen. The lower profit margins suffered through the
lower price could be offset by increased sales and turnover due to the
competitive pricing. Also, if the labour cost reduction works, savings in
production will offset the lower pricing.
However, there might be claims of unethical exploitation of foreign labour
and union conflict over pay rates. This may result in conflict and bad
publicity. Lobbying government for financial incentives is unlikely to produce
fast results. The company’s name and reputation may not be enough to
attract a young environmentally aware audience’s attention in these days of
sophisticated marketing.
Overall this action plan is rather conservative and unlikely to be a great
success although it may be sufficient to achieve the desired outcome.
Evaluation of Action Plan 2
There may be long and expensive negotiations, and monitoring the international partners
could also be costly. In addition, there will be a risk that the company’s reputation could be
compromised by the international partners, or as a result of shedding staff locally.
Unfortunately, marketing will need to be coordinated among the successful bidders who
might be unreliable in a co-ordinated marketing effort and disbursements to the successful
bidders can have the effect of reducing net income.
Nevertheless, this plan could save on production and distribution costs through
international competitive bidding. The company’s experience and its expert public relations
partners might enable it to manage any issues. The innovative marketing changes would be
substantial and possibly risky. However, with well-experienced marketers and the current
climate of aggressive marketing and strong product differentiation, an approach such as this
should probably work. The lower margins suffered through the lower price may be offset by
increased sales and turnover due to the competitive pricing, more intelligent and creative
marketing, and also savings in production and distribution if the competitive bidding system
would prove to be cost-efficient.
Overall, this action plan is feasible and has a medium likelihood of being a success, though
without great financial return.
Evaluation of Action Plan 3
This plan is possibly a more radical action and will provide lower long-term
production costs. In addition, if new worker contracts are carefully
considered and fair, they can be mutually beneficial to both staff and
management. Outsourcing the solar technology functions to Asian
companies will make good sense if it is cost effective. The same applies to
importing other components. The innovative marketing changes are
substantial, but they are risky. However, with well-experienced marketers
and the current climate of aggressive marketing and strong product
differentiation, an approach such as this will probably work.
However, the immediate cost of development for the new car is likely to be
very high. On the heels of the Jefferson’s first solar car, this could be
considered inappropriate. The share schemes to pay workers and pay off
unions may simply cause conflict if the unions interpret this as exploitative.
Overall this plan is feasible and likely to succeed.
Conclusion
The best course of action is the third one. The company is large enough to
sustain new development costs, and the expertise it has already acquired in
building cars of this type can be applied to a new and better product line.
Some criticism can be expected of the share allocation and salary
re-structuring for employees. However, these have been seen to work in a
number of companies and, with careful planning, should be successful in
lowering labour costs.
It is recommended that for the company to be able to compete with cheaply
produced and aggressively marketed contemporary solar cars from other
markets, it needs to produce a distinctive and affordable model. This must be
backed up with a highly innovative promotional campaign.
