COMPANY ANALYSIS REPORT: JAGUAR LAND

ROVER AUTOMOTIVE LTD. (JLR)

TABLE OF CONTENTS
Summary ............................................................................................................................................................................... 1
Introduction .......................................................................................................................................................................... 2
Products ................................................................................................................................................................................ 2
Of Jaguar Cars ................................................................................................................................................................... 2
Of Land Rover ................................................................................................................................................................... 3
Competition: First of Porters 5 Forces ................................................................................................................................. 3
Internal Strengths (SWOT) and Competitive Advantage ...................................................................................................... 4
Internal Weaknesses (SWOT) ............................................................................................................................................... 4
External Opportunities (SWOT) ............................................................................................................................................ 5
External Threats (SWOT) ....................................................................................................................................................... 5
3 Strategic Recommendations .............................................................................................................................................. 6
Continue expansion into emerging economies ................................................................................................................ 6
Increase focus on eco-friendly research and development ............................................................................................ 6
Avoid reaction to exchange rate ....................................................................................................................................... 6
Glossary of Terms ................................................................................................................................................................. 6
Works Cited .......................................................................................................................................................................... 7

SUMMARY
This report identifies Jaguar Land Rover Automotive Ltd. (JLR) as a profitable designer and manufacturer of mid/highend sports saloons and SUVs. After recording losses for many consecutive years, it has seen a huge improvement in
general performance since acquisition by Tata Group of India, recently taking a profit in excess of 1.5bn in FY12 (1).
It faces stiff competition from German firms such as Mercedes Benz and BMW, who operate in a similar sector, both
achieving 285% of JLRs unit sales for yearend 2011 (2) (3).
A SWOT analysis (Table 1) identifies a number of points referenced further on to recommend 3 major strategies JLR
could employ to maintain its record performance.

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Strengths

Weaknesses

Opportunities

Threats

Takeover by Tata Motors

has boosted investment
potential; 1.5bn by 2012
(4)

Half the performance per

employee of BMW as a
result of trade union
influence (5)

Rapid growth of BRIC

economies such as China;
at least 7% real annual
GDP growth since 1999 (6)

Few eco-friendly offerings

means rising fuel prices
may adversely affect JLR
sales

Successful new products

e.g. Range Rover Evoque,
51881 units sold by FY12
(7)

Lost previous owners

(Fords)
relevant
experience in the sector
after acquisition

Consumers
becoming
more
environmentally
conscious, loan of 340m
secured to conduct R&D
(8)

Powerful trade union

influence in the UK has
proportionally
greater
effect on JLR efficiency to
competitors

Weak pound boosts JLR

exports, drives revenue
increase of 37% from
FY11-12 (10)

Foreign partnership may

weaken brand image;
deter UK customers

Railhead terminal has

increased
distribution
potential (9)
Table 1: SWOT analysis outline

3 recommended strategies identified are as follows:

Continue expansion into emerging economies:

o 2012 Cherry PPP is an example of successful implementation (11).
o Potential to expand into India through Tata Motors Ltd.s distribution channels.
Increase focus on eco-friendly research and development:
o Become future fuels/eco-friendly automobile market pioneer (12) and exploit temporary monopoly
power by leveraging government grants and investment by Tata Group.
Avoid reaction to exchange rate:
o Do not sacrifice up-market brand image to achieve a temporary revenue boost which will be of
negligible long-term benefit.

INTRODUCTION
This report shall briefly analyse the market position and performance of Jaguar Land Rover Automotive Ltd. (JLR),
owned by Tata Motors Ltd., a subsidiary of Tata group conglomerate (13). It should also present 3 key strategies to
achieve the companys objectives in the future. Distinctions between Land Rover and Jaguar Cars (the main 2
subsidiaries of JLR) will be made where appropriate.

PRODUCTS
OF JAGUAR CARS
Jaguar Cars, founded in 1922, is one of the worlds
premier manufacturers of luxury saloons and sports
cars, such as their latest car: the F-Type (Figure 1), to go
on sale mid-2013 (14). Racing variants of most models
are available, e.g. the XKR-S, allowing access to the
lucrative performance car market with a sale price of
>79,995 depending on configuration (15).

Figure 1: Jaguar F-Type (16)

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OF LAND ROVER
The Land Rover brand (which became a business entity in 1970) has long held a reputation for producing rugged and
dependable off-road vehicles, such as the highly versatile Defender (Figure 2) (17). However, starting with the release
of the Range Rover in 1970 they have expanded into the luxury SUV market (Figure 3), with the comprehensive off-road
ability being an order winner to many despite it being unnecessary in most cases (18) (17).

Figure 2: Land Rover Defender (19)

Figure 3: Range Rover Evoque (20)

COMPETITION: FIRST OF PORTERS 5 FORCES

In general, vehicles produced by JLR fall into the luxury
saloon/sports car or luxury SUV categories. A number of
automobile manufacturers compete almost directly with JLR in
these sectors, the largest of which are described in Table 2. These
figures represent the global oligopolistic market; there are
multiple region-specific variations. For example, in the USA,
Chrysler serve as the primary competitor to JLR, with 43,000 units
sold compared with JLRs 5,000 between Jan 12/13 (21).

Company

Unit Sales 2011

Sales Index
(JLR=100)

Mercedes
Benz

1,380,000 (2)

285

BMW

1,380,000 (3)

285

Audi

1,370,000 (22)

282

JLR

485,000 (23)

100

Volvo

449,000 (24)

92.6

Porsche

119,000 (25)

24.5

Table 2: Unit Sales for JLR's Competitors, '11

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INTERNAL STRENGTHS (SWOT) AND COMPETITIVE ADVANTAGE

Since acquisition by Tata Motors Ltd. In 2008, JLR has been able to take advantage of the $77.7bn capital
reserves of Tata Group, as of March 2012 (26). Confidence in the JLR brands led to a doubling of [the
substantial initial] investment to $1.5billion by Tata Motors Ltd. In February 2012, to finance development of
new models and accelerate expansion into developing overseas markets, e.g. the BRIC economies (4). This has
led to greatly increased business performance, see Figure 4.
The critically and commercially successful Range Rover Evoque (Figure 3), released 2011, has bolstered brand
recognition and proved to be the driving force behind the 33% Land Rover sales volume increase, see Figure 5.
Railhead terminal at Castle Bromwich plant near Birmingham provides a direct, high capacity link to
Southampton Docks, facilitating rapid delivery of high volumes of units to overseas customers, saving 60
million lorry miles per year (9).
400000000
300000000

Net Profit,

200000000
100000000
0
-1E+08

2007

2008

2009

2010

2011

2012

-2E+08
-3E+08
-4E+08
Figure 4: JLR Net Profit, '07-'12 (5)

FY'11

FY'12

Freelander

Defender

Range Rover

Discovery

Other

Range Rover Evoque

Figure 5: Land Rover Sales Composition, '11 & '12 (7)

INTERNAL WEAKNESSES (SWOT)

Low profit per employee compared with primary

competitors, e.g. Mercedes Benz, see Table 3. This
highlights inefficient use of available resources, hence low
productive efficiency.
Tata Motors Ltd.s experience lies in small cheap cars and
large commercial vehicles, so had little specific market
expertise to offer JLR upon purchase.

Company

Profit per Employee

FY11, (5)

Mercedes
Benz

177,000

BMW

146,000

JLR

73,000

Table 3: Profit per employee of JLR's 2 main competitors

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EXTERNAL OPPORTUNITIES (SWOT)

Exceptional
Chinese
macro-economic
growth is a strong
prospect for continued
expansion
of
the
company, with high
annual
real
GDP
increases (see Figure 6)
driving
consumer
spending power and
confidence. JLR sales in
China are already up
76% for FY12 thanks to
establishment of 201
NSCs.

14

Real GDP Growth Rate, %

12
10
8
6
4
2
0
99

00

02

03

04

05

06

07

08

09

10

11

12

Year
Figure 6: Real Chinese GDP Growth, '99 - '12 (27)

Exploit shift in consumer values towards eco-friendly cars, a sector which is likely to dominate the automotive
industry in the future as fossil fuel reserves are depleted. The European Investment Bank granted a loan of
340m to fund R&D to tackle this issue in their products (8).
A favourable exchange environment has increased product demand and revenue (up 37% from FY11) (7)
(10). This is an opportunity for JLR to increase its foreign market share.

EXTERNAL THREATS (SWOT)

Present lack of
160.00
eco-friendly
140.00
cars
makes
eco-awareness
120.00
and persistent
100.00
fuel
cost
increases (see
80.00
Figure 7) a
60.00
threat to JLR.
Further
40.00
increases may
20.00
compel even
the
0.00
predominantly
02
03
04
05
high-earning
JLR consumer
base to migrate
from JLR.
Partnership with Chery Automotive could dilute
perception of the classic British heritage of JLR, which
is a primary USP especially in the UK market.

Price Per Litre,

06

07

08

09

10

11

12

Year
Figure 7: Petrol Prices, '02 - '12 (8)

Country

Employees in
union, %

UK

27

Germany

19

Table 4: Trade Union Membership Rates (28)

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3 STRATEGIC RECOMMENDATIONS
CONTINUE EXPANSION INTO EMERGING ECONOMIES
It is imperative that JLR treats growth in the BRIC
economies as an opportunity, or its competitors will
swiftly establish a dominant market position. The 2012
PPP with Chery Automobile (Figure 8) (a Chinese state
owned corporation) is an effective implementation of this
strategy (29). Circumvention of state protectionist policies
such as the large import tariff on foreign vehicles of at
least 25% (+17% VAT) depending on engine size is now
possible (27). The powerful engines present in most JLR
models may have otherwise taken prices above
competitive levels.
There is potential to utilise Tata Motors Ltd.s established
distribution channels within India, which should be utilised
should rapid expansion into India be deemed prudent,
likely as a reaction to movement by a competitor.

Figure 8: Chery Logo (30)

INCREASE FOCUS ON E CO-FRIENDLY RESEARCH A ND DEVELOPMENT

As JLRs primary competitors have so far failed to claim a significant share of the eco-friendly/future fuel auto market,
this is a great opportunity for JLR to implement a market pioneer strategy (12). Implementation will have low
uncertainty because alternative fuels will eventually become entirely necessary, and the creation of a temporary
monopoly will lead to supernormal profits in the short-term, depending on speed of reaction by competitors.
JLR should establish a technological advantage by channelling available resources to R&D of future fuels and ecofriendly cars, such as the C-X75 concept, which investigates an electric jet propulsion system (31).
AVOID REACTION TO EX CHANGE RATE
The favourable exchange environment for JLR (1 GBP = 9.68 CNY) (32) is reducing the price of JLRs exports, and as a
luxury, up-market brand, JLR products have an elastic PED ratio. Theoretically price should be lowered to stimulate
demand and increase revenue and market share. However, a large opportunity cost would be incurred in this situation:
there is a risk of damaging the strong brand image possessed by JLR; currently a product differentiator. Therefore a
reduction in (the already reduced) price should be avoided.

GLOSSARY OF TERMS
A favourable
exchange
environment
BRIC Economies

Weakening of GBP compared with local currencies of major target markets

Acronym for the emerging economies of Brazil, Russia, India and China

Conglomerate

corporation consisting of several companies in different businesses

Differentiator

See USP

Market Pioneer
Monopoly

Company that takes the risk of being first to introduce a product into a market or sector
Definition of monopoly: A situation in which a single company owns all or nearly all of the

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market for a given type of product or service

NSCs
Oligopoly

Opportunity Cost

National Sales Companies

A market dominated by a small number of participants who are able to collectively exert control
over supply and market prices
The cost of passing up the next best choice when making a decision

Order Winner

The feature or selling point that makes a consumer choose a given firm's product over a
competitors

PED ratio

Responsiveness of demand of a good to a change in price. A ratio of <|1| is inelastic, >|1| is

elastic

PPP
Productive
Efficiency

Public Private Partnership: public and private sectors working together

When all resources are being fully utilised to minimise average cost per unit

Protectionist
Policies

When a government legislates against foreign firms to protect domestic industries. Import
tariffs are an example.

Sector

A distinct subset of a market, society, industry, or economy, whose components share similar
characteristics

Supernormal
Profit

Abnormal profit, also referred to as supernormal profit, is an economic term of profit exceeding
the normal profit

SWOT Analysis

Situation analysis in which internal strengths and weaknesses of an organization, and external
opportunities and threats faced by it are closely examined to chart a strategy. SWOT stands for
strengths, weaknesses, opportunities, and threats.

USP

Unique Selling Point

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