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Switzerland Business Organization and Environment Report
Switzerland is a federal republic in Europe. Business in Switzerland is appreciated with thrift, tolerance, punctuality and a sense of responsibilities by the Swiss. The culture of the companies in Switzerland varies depending on whether they are French, Italian or German. The business environment in Switzerland is very formal with organizations structured in a traditional vertical manner. The most economic sector in Switzerland is the manufacturing sector. This consist of the production of goods and services which include; the production of health and pharmaceutical goods, specialists chemicals, musical instruments, precision instruments such as watches among many more. The services include; banking, tourism, insurance and international organizations among many more. The business environment of an organization contributes greatly to the success and growth of a business. Adhering to the proper activities set to create a serene business environment is essential.
Switzerland has various motor manufacturing companies. One of the largest motor companies is KIA motors. KIA is a car manufacturing company that can trace its origin back to South Korea. This company is in great competition with the famous Hyundai motors. KIA owns a minority of more than 20 Hyundai subsidiaries totaling to more than 8.3 billion USD. The name KIA which was originally kia, means to come out of the east. The company was founded in December 1944 and grew and expanded to Switzerland. It began as a manufacturer of steel tubing and bicycle parts. The company went on to manufacture Korea`s first domestic bicycle in 1951. In 1957, the company went on to manufacture Honda licensed motorcycles and Mazda licensed trucks in 1962.KIA has created employment for over 12,000 vehicle development engineers and staff
Background to the Business Organization
In 1997, the KIA manufacturing company declared bankruptcy. The Hyundai Motor Company came to its rescue when in 1998 a year later reached an agreement with then kia to diversify by exchanging ownership between both companies. Now Hyundai remains the largest stakeholder in KIA motor company with a 51% ownership. However, KIA motors also have ownership in 22 different Hyundai Motors companies. In order to avoid a repeat of this event, KIA motors have come up with a strategy to enhance their sales and increase their overall profit. Some of these strategies include improving customer relations and coming up with new and improved products. The company has now set its target to sell a hundred thousand cars per year in the United Kingdom by 2020. This is a target that will place them way ahead of their biggest rivals who are Hyundai, Toyota, and Citroen. In order to achieve this target, there has to be proper planning and adoption of proper strategies.
The Background of Business Environment.
KIA has witnessed significant growth in strength of its brand in the recent years. This has been as a result of the production of a design-influenced product and the company-wide efforts to cultivate and produce a more emotional attachment to KIA and its vehicles. KIA has been branded by the 100 Best Global Brands as the 69th most valuable brand in the world. Kia is one of the fastest-growing brands in Europe and around the World. The company KIA is recognized worldwide by its customers for its vibrant, distinctive and reliable range of motor vehicles. KIA has had the opportunity to partner with the world`s most high-profile sporting events adding a momentum to the growth of its brand.
Kia Motors Europe is the European sales and marketing division of KIA Motors Corporation. The KME has been selling cars in Europe since the better part of 1991. When the company was launched in Europe it initially sold only the Pride supermini. This was a rebadged version of the late 1980s Mazda 121. The vehicle did well with popular buyers but sales descended towards the end of the decade marking the end of its production in May 2000.
KIA opened its first own plant in Europe in 2001 at a cost of approximately 1.7 billion EUR in Zilina, Slovakia. Since then, it has produced over 2.5 million units of KIA Cee`da, Kia sports age and Kia Venga as well as seven types of engines. Kia Motors announced increased sales despite the difficulties in the car market in the European area. According to the KIA motors Europe website, Kia has had its focus on “the pulse of Europe”. This it has done by delivering products and services as well as support to the rapidly growing number of Kia customers. The company offers its staff opportunities to make vital contributions to its vital operations.
The main mission for the KIA motors in Switzerland is to expand and grow even bigger. Their strategies will play a key role in achieving and maintaining the success of the company. It serves to show the present purpose of the company thus providing direction for the employees and staff. As earlier mentioned, the company aims at cultivating a more friendly customer relationship that will enhance their sales a part of the short-term plans. Some of the ways to achieve customer satisfaction include investing in after-sales services.
According to a research done by Morris Cohen, after sales services are a high-margin business, they account for a large margin of corporate profits. Some of the after sales activities include and are not limited to, maintenance , spare parts supply, telephone services, warranty guarantee, car washing and documentation services. The more the client is pleased with the services and the product the more they prefer. The employees should receive training on better customer relationship to improve the customer satisfaction. Some of the elements to consider are; being well groomed, showing concern and understanding the client`s needs, well spoken, and expressing kindness and humility to the clients.
The omega management group suggests that car manufacturers who have strived to enhance customer experience management have had major improvements in their industries in relation to profits made (omega management) as a way to encourage brand loyalty, dealers are advised to improve and enhance customer satisfaction. Since the car manufactures in Switzerland speak a different language worldwide, the manufactures should also input a translation icon in every of their vehicle to accommodate each and every user or buyer from a different country with a different language.
KIA has been in the business of advancing their car models over time. This strategy has worked out for the company as it has enabled them to maintain and enhance sales. Models like Kia Nitro, Kia Soul, and Kia sports space concept have gained more popularity because KIA has shifted its focus to manufacturing vehicles that have a sporty feel and appearance. The company also announced that come 2018 there would be a major change in the designs for models. The sports car design by KIA with an affordable price has enabled the company to generate an increase in its sales.
Kia Motors has advanced and specialized in the production of military vehicles with variants and other transportation equipment. Kia is also currently designing a Kaiser Jeep M715- type vehicle by the name KM450 for the South Korean Army on license from the U.S Government. In addition to this, Kia is also the owner of the former ex-Asia Motors factory at Gwangju. Kia has a global production capacity of 3.5 million cars per year. The company builds vehicles on flexible assembly lines which can manufacture several different models simultaneously to adapt to global changes in buying trends. The Kia cee`d launched in 2007 in Switzerland Europe was definitely a landmark and game-changing model for Kia. The vehicle was designed and built in Europe was the first serious vehicle contender to the established brands. Cee`da claimed fourth place in the Europe Car of the Year Awards in the year of its release. It won many of the Kia clients with its all-around ownership proposition.
The ability to manufacture both right and left-handed vehicles is an added advantage to the company in regards to increased sales. This move has enabled the company to also cater for the rest of the international customers who prefer the left-handed vehicles or whose country government require them to have such vehicles. KIA has also been able to embrace the new and advanced technology in the manufacturing of its vehicle. The company has a record of manufacturing locally in a number of markets to meet the specific needs of their local clients with assembly operation using the ‘car kits’ in Ecuador, Iran, Malaysia, Russia, Uruguay, and Vietnam.
However, with the intense new technology used also comes with a flip side. There has been recent concerned about the safety of the car features in the KIA models. Some customers of the KIA products have raised complains about the failing parking breaks while others are concerned about the car crash test results if at all they were approved. According to the Better Business Bureau, there are a few angry customers of the KIA motors company who raise concerns about the KIA Optima LX. The client claims the ignition had issues as it won’t turn (Better Business Bureau, 2017).
The strategic plan to better the company and improve its sales consists of improving the quality of the car back from the manufacturer as well as ensuring that the materials used in regards to embracing technology are standard and are careful not to reduce the strength of the car to endure a crushing impact. Introduction of an increase in the number of airbags should also be considered. Well, according to Lansbury and his colleagues, the car should come with four airbags regardless of an increase in the cost (Lansbury et al, 2004)
Porter`s five forces analysis
1. Competitive Rivalry-The major competition for KIA motors in Switzerland is the importation of vehicles from Hindi motors. The competition is relatively high as Hyundai has managed to cultivate a sizeable amount of good will from the Swiss population thanks to their superb products. On the other hand, the competition stem from the fact that majority of the Swiss consider KIA products a little more expensive compared to that of their competition.
2. Bargaining Power of KIA Customers-The Swiss customers has a higher bargaining power as far as KIA products are concerned. This emanates from the low switching costs they would incur in the event they decide to switch to the competitors of KIA. Another aspect that contributes to the high bargaining power of KIA customers in Switzerland is their access information that is of high quality. This means that they can compare prices that are offered by different industrial players.
3 Bargaining Power of KIA Suppliers-The suppliers of KIA in Switzerland has a high bargaining power. This emanates from the fact that they are not many. In this way, the suppliers can enter into some form of arrangement to their advantage.
4. The threat of Substitutes-This force is moderate in the context of KIA motors in Switzerland. The combination of low switching costs, availability of substitutes in moderate quantity and low convenience associated with using substitutes serve to make the overall force moderate.
5. The threat of New Entrants –KIA motors in Switzerland enjoys weak force as far as the threat of entrants is concerned. This emanates from the high capital costs required to venture into the industry. Consequently, there are high costs associated with brand development that discourage potential entrants in the market.
The pestle analysis
Each and every organization has micro and macro-environmental factors that affect it. One of the external environmental factors (pestle) affecting the Kia motors company is the technological factors. Kia motors have embraced the new and advanced technology in the manufacture of vehicles. This has generated positive and also negative reaction from its clients. Some clients have raised concerns in regards to the safety of the car features.
Social factors also play an essential role in the external business environment. For a clients or customer to be able to purchase any product or service from a particular comoany, the company has to have excellent reviews and also top notch quality of their products. With the right attitude about purchasing the Kia motors customers contribute largely in the increased sales. Kia Motors Company has to ensure that their products are safe for use before placing the up for sale in order to meet the legal requirements. Tests such as car crash tests are conducted and approve before any vehicle by Kia Motors is placed up for sale. This is very crucial.
Data and Graph
In the year 2014, KIA distributed 77,525 cars in Great Britain. By the year 2015, the sales rose to 80,000. As a result, the company as mentioned earlier got encouraged and raised their target to 100,000 cars to be sold by 2018. This target is expected to arise stiff and healthy competition among KIA`s most competitive rivals such as Hyundai, Toyota, and Citroen who have been selling 81986, 94112, and 93,399 cars respectively in the last two years. Due to this, there has been a major annual revenue growth since 2009 to 2016. For long-term planning, KIA is expected to open outlets in different areas such as Nilai, and also India soon. The profit in sales is expected to rise significantly in areas such as India. This is due to their high population and also purchasing power. These, therefore, will be another key strategy in strengthening dominance and establishing a presence.
According to the statistics portal, KIA car sales in the United Kingdom from January 2014 to March 2017, were tremendous earning the company a rise in revenue sales (Statista, 2017). The statistics showed that between January 2014 and January 2017, sales peaked at over 16,000 units. In March 2017, KIA had another major improvement in sales surpassing its former peak sales with 18,801 cars sold in the UK.
KIA car sales in the United Kingdom from January 2014 to March 2017
Kim and Lee, suggest that KIA should plan to use experimental and analytical approaches when making planning decisions (Kim & Lee, 2017). A factor added to marketing initiatives and multimedia branding is the analysis of data in developing a proper business solution.
|Kia All Models 2014||Kia All Models 2015||Kia All Models 2016||Kia All Models 2017|
In conclusion, the Kia motors company as mentioned earlier is a fast-growing company that has had its roots set in South Korea and spread wide to Europe and all over the world. The company has had its challenges and almost dissolved due to bankruptcy but was rescued by its now competitor the Hyundai. In order to expand and increase in size, in terms of sales, the company has considered enhancing good customer satisfaction and educating its staff on this as well as creating after-sales services.
The production of new models using new and approved technologies has also been adopted by the company.KIA has also received a number of critics. The negative reviews on their new products and models from some of their customers have not discouraged them as this has been a lesson learned and the company has used this critic and bad review to better its products. The motor manufacturers have been able to register very high sales over the years worldwide against the stiff competition from their biggest rivals the Hyundai.
The business environment of any business is essential as it is an essential tool for the improvement of the business. The enhancement of the business environment is essential. This includes and is not limited to; enhancing customer satisfaction, improving working conditions for the staff, improving the quality of the products, and creating a healthy working environment for everyone. Setting reasonable targets and striving to achieve them is also an excellent way to improve and expand the business. The eco-efficiency organization suggests that through the development of more sustainable business practices, efficiency in operations will increase. With better use and conservation of resources, operations will be streamlined and costs will definitely reduce.
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Kia.com. (2017). Kia Motors Corporation. [online] Available at: http://www.kia.com/eu/company/kia-motors-corporation/ [Accessed 13 Dec. 2017].
Kia UK sales 2014-2017 | Statistic. [online] Statista. Available at: http://www.statista.com/statistics/385362/kia-car-sales-in-the-united-kingdom/ [Accessed 13 Dec. 2017].