Saic Motor and Mg Motor

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- Supplier Power

Traditionally, suppliers of companies within the auto industry have had very little bargaining power. For example, if one supplier were to perform below an automotive company’s standards, several other options existed and the supplier could be easily replaced. The suppliers are people who provide SAIC Motor with parts or machinery to enable them to manufacture their cars. A strong established relationship between SAIC motor and MG Motor suppliers is key to company’s success as it ensures raw materials or machinery can be delivered as and when SAIC need it. Globalization and reduced volume from traditional US automakers are contributing factors, as are high material and labor costs, which have hurt the financial condition of domestic automotive suppliers” (Levy).

- Buyer Power

The buyer are people who are willing to purchase the products and services of SAIC Motor in UK. This could be through dealerships and well as other car manufacturers who may wish to use MG engines in their cars. they began seeking alternatives; namely foreign auto makers (The Industry Handbook: Automobiles). (Appendix 3)

- Threat of substitutes

These are the alternatives to cars. Potential substitutes could be public transport, such as buses, trains, bicycles, motorcycles and etc. However due to the nature of cars it could be said that this would pose with some risk. Because in cars industry have so many types of cars. Potential customer who may be looking for a high performance vehicle could be swayed by motorcycles as an alternative. President Obama’s administration has reserved $8 billion of the controversial stimulus package for the Department of Transportation to develop such trains (USA Today).

- Competitive rivalry

Most foreign competitors have been able to obtain lower raw material and production costs while maintaining equal, if not better, quality of their product. The current market has been fueled by an attraction to European and Asian automakers and car models. There has been new consumer interest in fuel efficiency, which has created a void in the demand for larger gas-guzzlers like trucks and SUVs and an increase in demand for fuel technology. (Anon, 2014)

Conclusion

In conclusion to the study above, PEST analysis and Porter’s 5 forces argued that UK economy had reached a transition point. SAIC Motor must shift from competing on lower inputs costs. As from the Political problem, SAIC Motor have to think twice for the bad news SAIC expansion plan to Europe since there will be no EU benefit provided for UK in the future.

It also recommended the SAIC Motor and MG motor to invent to new hybrid car to save the environment and it is good for environment from the new invention.

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Appendix 1

The recent high-profile failure of the British automobile manufacturer MG Rover has given rise to a huge deal of political and popular criticism, not least surrounding the role in the debacle played by the firm’s board of directors. The directors’ activities as “unethical” or just plain “greedy”, there is a lack of influential voices willing to claim that these individuals did anything that could actually be termed “unlawful”. The legal bases on which Rover’s directors might face official reproach for their conduct is a fact that has recently been highlighted by both the Financial Reporting Council and MG Rover’s official administrator Price Waterhouse Coopers (Blind spots over Rover, 2005). However, a narrow range of serious liabilities and the risk that directors should be vigilant against when making strategic decisions regarding the allocation of the firm’s resources at “crisis point”. The controllers of in insolvent company may be found to face dishonesty prejudiced the right or interests of any of the firms creditors. The criminally liable to a financial or even custodial penalty for fraudulent trading under s.458 of the Companies Act 1985.

Appendix 2

- According to SMMT (2015), UK car market experiences the longest ever period of growth.

- The new car market grew 12.0% in February 2015 with 76,958 cars registered achieving a year-on-date rise of 8.3%.

- 36th consecutive month of growth marks UK’s first three straight years of increases. Fleet buyers drive demand with registrations up 19.9%.

- For MG Motor yearly growth 2014 compare to 2015 years-to-date sales MG Motor have increase 7.03% but the year compare since February 2014 till February 2015 the sales of MG Motor have increase 34.04% (SMMT, 2015).

Appendix 3

SAIC MG

SAIC MG

SAIC MG

SAIC MG

All Models

All Models

All Models

All Models

2012

2013

2014

2015

January

107

31

138

135

February

103

9

47

63

March

236

41

361

662

April

16

13

221

308

May

49

13

241

June