automobile industry: the case of geely motors liesl martin & royce kuzwayo
TRANSCRIPT
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Automobile Industry: The Case of Geely Motors
Liesl Martin & Royce Kuzwayo
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Contents
CHINESE AUTOMOBILE INDUSTRY
GEELY AUTOMOBILE HOLDINGS LTD
VOLVO ACQUISITION
COMPETITORS, SUPPLIERS, CUSTOMERS
KEY SUCCESS FACTORS
CONCLUSION
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Chinese Automobile Industry
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Automobile Production Statistics
Source: OICA
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World Economic Outlook: Shift in Global Output
Structure of the world economy is undergoing a tectonic shift.
Source: World Bank, 2010.
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Political Economy Issues: Growth Competitiveness Ranking
Losing competitiveness due to structural and political factors and the strength of the currency
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Contents
CHINESE AUTOMOBILE INDUSTRY
GEELY AUTOMOBILE HOLDINGS LTD
VOLVO ACQUISITION
COMPETITORS, SUPPLIERS, CUSTOMERS
KEY SUCCESS FACTORS
CONCLUSION
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Geely Automobile Holdings Ltd
Hong Kong investment holding company, operations Hong Kong & China
Manufactures automobiles and automobile components through subsidiaries
12,282 Employees
Research, Production, Marketing & Sales
Brands: Free Cruiser, Geely Kingkong, Vision, Geely Panda
Produce under five key brand groups: Geely, Maple, Gleagle, Emgrand & Englon
6 Assembly manufacturing plants in China
Revenues Dec ‘09 CNY14,069.2 mill ($2,062.7 mill) 3 times 2008
Operating profit CNY1,252 mill ($183.6 mill) 2009 8 times 2008
Net profit CNY1,182.7 million ($173.4 mill) 2009 34.5% increase
8
(Datamonitor, 2010)
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Contents
CHINESE AUTOMOBILE INDUSTRY
GEELY AUTOMOBILE HOLDINGS LTD
VOLVO ACQUISITION
COMPETITORS, SUPPLIERS, CUSTOMERS
KEY SUCCESS FACTORS
CONCLUSION
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Volvo Acquisition
• Biggest overseas acquisition by a Chinese automaker• 100% ownership of Volvo and related assets, including
agreements on intellectual property rights, supply and R&D arrangements
• Planned production 300 000 Volvo’s annually• Double original Volvo production capacity• Mainstream European brand vs domestic economy car brand• Building a successful partnership between Volvo and Geely will
require a solid plan for post-acquisition integration
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Geely / Volvo Life-Cycle
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Competitive Strategy
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Contents
CHINESE AUTOMOBILE INDUSTRY
GEELY AUTOMOBILE HOLDINGS LTD
VOLVO ACQUISITION
COMPETITORS, SUPPLIERS, CUSTOMERS
KEY SUCCESS FACTORS
CONCLUSION
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Geely Competitors & Suppliers
14
Main:
•China Motor Corporation
• Dragon Hill Wuling Automobile
Holdings Limited
• Brilliance China Automotive
Holdings Limited
• Zhejiang Geely Automobile
Parts & Components Company
Limited
• Shanghai Maple Engine
Company Limited
• IAC Group (Interiors)
• Autoliv Inc (Airbags)
Competitors Suppliers
(Datamonitor, 2010)(Geely Annual Report, 2009)
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Geely Customers
15
Customer base is diversified and fragmented
All customer transactions below 10% of the Group’s revenue
2009 sales from the largest and 5th largest customers respectively between 8% & 2%
Distributor networks: 45 countries 5 continents
500 retail distributors 600 service stations 300 dealers
Beijing 2010: Geely Alternative Power Insect Vehicle
(Datamonitor, 2010)
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Contents
CHINESE AUTOMOBILE INDUSTRY
GEELY AUTOMOBILE HOLDINGS LTD
VOLVO ACQUISITION
COMPETITORS, SUPPLIERS, CUSTOMERS
KEY SUCCESS FACTORS
CONCLUSION
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Key Success Factors
Good relationships with Government
Expansion strategy
Adaptability
Gap analysis Similarities Differences
Geely was the only automobile company in 2009 awarded
“The State Technology Achievement Class 2 Award”
by Government for achievements in technological innovations
(Geely Annual Report, 2009)
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Contents
CHINESE AUTOMOBILE INDUSTRY
GEELY AUTOMOBILE HOLDINGS LTD
VOLVO ACQUISITION
COMPETITORS, SUPPLIERS, CUSTOMERS
KEY SUCCESS FACTORS
CONCLUSION
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GDP: History of low growth volatility, 1994-2009 (Standard Deviation)
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Conclusion
• The initial “Strategic Transformation”, new technologies and product launches strengthens the Group’s competitiveness positioning the company for further expansion.
• Important that they stay focused on their core business and not expand too fast too soon.
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Thank You
Questions?
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References
• Geely Annual Report. 2009. Geely Automobile Holdings Limited. http://hmdatalink.com/PDF/C00530/e00175(116).pdf
• Geely holdings limited http://www.marketlineinfo.com.ez.sun.ac.za/library/DisplayContent.aspx?R=DFE4AE0A-B587-4C04-8C21-2840BA1B6944&N=4294546488
• OICA http://www.oica.net/category/production-statistics/
• PingQing, L., HuaJie, S & Qiang, G. 2008. The Global Value Chain And China Automotive Industry Upgrading Strategy. Management Science and Engineering. 2(1), 11-19.
• Qin, F. & Huchen, X. 2006. The Management Strategy in GEELY Automobile Marching towards International Standard. College of Business and Administration Zhejiang University of Technology, P. R. China. 738-743.