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Luxury product for South Africa

Pablo Gonzalez

on 31 October 2013

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Transcript of Bugatti

-South Africa-

Table of contents
Company overview
Porter´s 6 forces
Conclusion & Recommendations
6 Porter´s Forces
Pestel Analysis
Political Factors:
Economic Factors:
Social Factors:
Technological Factors:
Environmental Factors:
Legal Factors:
Threat of New entrants:
Power of Buyers:
Power of Suppliers:
Threat of Substitute:
Rivalry Among Existing Firms
Government Force
Ali Amer Azam
Pablo Gonzalez
Russell Cameron
Rattee Pondsungsun

Company overview
Thank you
French company established in 1909 by Ettore Bugatti.
Racing Soul: first racing victory in Le Mans in 1920
Racing-street cars
Legendary cars, high-precision engineering and design
Bugatti partners
Bugatti Products
Ranked most politically stable country in Africa

ANC Party dominated SA political landscape since 1994

67% of businesses are putting off investment until 2014 elections

Policymakers have introduced policies to encourage FDI

Economic growth decelerated to 2.55% due to rising inflation, structural problems and growing labour unrest

FDI falls down to 24% in 2011-2012

Strongest and most stable economy on the African continent with GDP of $384 Billion

Growing middle class in the world driven by an increasingly aspirational consumer base

Rapid fluctuations in the exchange rate

Multi-ethnic country with diverse cultures known as the “Rainbow Nation”

2010 Demographics: Black 79.4%, White 9.2%, Coloured 8.8%, Asian 2.6%

Public education system needs substantial improvements in infrastructure and teaching quality

Poverty and income inequality

South Africa thrives as unlikely market for luxury cars

Car manufacturers held a strike in 2013 due to low pay costing Billions in Rand

34% of South African adults use the internet

Prohibitively high cost of broadband internet

Nationwide broadband access by 2019

South Africa has developed an established, diversified automobile manufacturing base

Freshwater supply stretched to the limits

Government slow in implementing environmental policies and laws

Ranked 128th out of 132 countries in Environmental Performance Index

EU and state corporations investing more than €100 million towards road infrastructure

High corruption rate

South Africa’s import duty on vehicles currently stand at 25%

Product market regulations is fairly restrictive from global perspective

Low threat
Already Bugatti Veyron in Cape Town
Duty is 25% so car is affordable by the wealthiest people
South Africa has already Aston Martin
High threat
Bugatti sets the price
Premium price that not many people can afford
Not many cars with similar price or performance and technology
Low threat
No replacement for a luxury car
Could by a yacht or a private jet
Low threat
Can not negotitate price
Low to medium
Car industry is highly competitive
Volkswagen lose $6.24 million on every sale of Bugatti Veyron
Medium threat
Encourage luxury cars hence the low duty
Corruption a cause of concern for Bugatti to enter the market
Despite the drawbacks SA is still the most attractive country in Africa for Bugatti
Full transcript