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CSP and Strategy Group presentation

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Piotr Lasota

on 25 March 2014

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Transcript of CSP and Strategy Group presentation

CSP and Strategy Group presentation

JCB Background
Going forward, JCB wants to be leading the market
Interpretation of Vision, Strategy and Goal
Conclusion
Vision - 'To produce the best, most innovative machines on the market while staying true to the needs of customers'
Sector
Heavy equipment and engineering - global construction and agricultural equipment manufacturer

JCB designs and manufactures a range of machines for the construction, agriculture and
material handling markets and sell machines globally through their distribution network.

JCB is the world’s third largest manufacturer of construction
equipment with 22 plants on four continents in addition to 16
strategically located parts centres designed to support customers
around the world.

The company employs more than 10,000 people around the world and
has 770 dealers with 2000 dealer depots
Unique Selling Point
working closely with customers
continuous development of skilled and competent workforce
encourage strategic supplier partnerships
ensure sustainability of structured quality assurance strategy
reacting with a sense of urgency on product development

Vision
Vision is to produce the best, most innovative machines on the market while staying true to the needs of customers.
Mission
Gain market share by continuously improving products, services and business processes enabling to exceed customer’s expectations and requirements.

Values
Professionalism

Global adaptability

Driving for sustainable value creation
Vision
Produce innovative machines
Help customers create more sustainable world
Consistent financial performance

Goal
To expand sales and increase market share in the next 5 years
Grow as number one in backhoe loaders and telescopic handlers
Consolidate JCB’s position as number one in the UK, Europe, India and Russia-CIS
Truly a global supplier of global products

Strategy
Achieve global market leadership
Increase brand value to a wider set of consumers
Invest in new products
Better price than competition, lower total cost of ownership to compete on cost basis
Win in Africa, increase capacity in UK-Europe, India and Russia-CIS
Increase warehousing capacity in around the world
Distribution system and supply chain is the competitive advantage
Engineering and Business academy to create a specialist work force

Strategic objectives
Optimise operations
Strategic Direction
Streamline operations
Prepare for market developments
grow organically
invest in new plant
New market
Increase warehouse capacity
Strategic initiatives
Optimise plant and staff utilisation
improve cost structure
Develop know how
Expand environmental business
Right size cost base in Europe
Invest in America
Build new plants
Build components in house
Invest in Africa
Invest in larger warehouse
Improve distribution
Biki Samuel
Tomilola Deji-Fowokan
Taff Gidi
Piotr Lasota
Ganesh Balasubramanain

1. Introduction

2. Recent Performance and Corporate Objectives

3. Business Strategy

4. Business Change Drivers

5. Strategic Initiatives

AGENDA
1. Caterpillar
2. Komatsu
3. Ingersoll-Rand 
4. ACE

Competition
Record financial results for 2011.
Turnover last year rose to £2.75 billion, 37% greater than the £2 billion
achieved in 2010 and more than double the £1.35 billion sales recorded
in 2009. Earnings (EBITDA) reached a record £355 million and
machine sales rose to 69,100 Units (2010: 51,600)

2012 was the best year in its 67-year history
Earnings rose to £365 million (EBITDA) on turnover which remained virtually unchanged at £2.7 billion.

In a global market which contracted by 10%, JCB’s machine retails
also rose slightly to 69,250, which means that once again
outperformed the market.
2013
Construction equipment market has generally been weak around the world, however a strong growth in agricultural equipment has off set the loss.
Financial Results
Revenues grow each year
Limited impact

Strong impact

Government
Spending

Infrastructure
Maintenance

Developing
Economy
Population
Growth

Construction

Power
Generation

Industrial

Farm
Machinery

Defence

Global growth

Sustainability
and
Climate Change

Environmental Analysis
PESTEL
Industry Analysis
Five Forces
Internal Analysis
Value Chain

SWOT
Strategy
Strategy Formulation: Factor Analysis
Economic
Market Sentiment
Uneven global recovery (impact on demand manifested by low growth, spending cuts)
Continued growth in emerging markets offers potential opportunities for expansion
The cost of the capital needed to fulfil strategy

Social/Cultural
The changing structure of the population and lifestyle
Growth in Brazil and India as manufacturing centres
Economic uncertainty
Purchasing trends

Technological
Intellectual property
Developments in new technology enabling improvements to engine size, functional capability etc. pose both opportunities and threats

Environmental
Concern with sustainability and preservation of the environment involves added costs but also opportunities
Environmental standards

Legal
Intellectual property theft
Concern over treatment of suppliers, workers and the environment in less developed countries

Political
Global presence
National laws and tariffs
Rivalry
High Exit costs
High Fixed Costs
Brand value
New Entrants
Capital Required
New Markets (pre-determiner industry)
Diversified Portfolio

Suppliers
Raw materials
Regional Sourcing
Buyer power
Limited
Long life
Substitutes
No real substitute
Hedged by leasing
Five Forces Summary
Valuable
JCB ranked in the top 4
with a value of £2.75bn
Global presence and reach
JCB’s reach is
Unmatched in the
industry
Unique
Developing a product
that matches JCBs
Standard will come
at a high cost
Non-sustainable
JCB is most vertically
integrated in the industry
With a very big R&D
and technical team
Exploitable
JCB continues to expand
their global operations by
expanding their product
and market share through
multiple distribution
channels
Political
Global presence
National laws and tariffs
Industry Analysis - Strategic Leadership
Supplier value chain
Company's own value chain
Forward channel value chain
PESTEL
SWOT Analysis
Wide range of products for every construction need
Geographic diversification,

Presence in many countries both developed and developing

Has a huge dealer network and availability

Strong brand value/ reputation amongst construction and heavy equipment

Factories in UK, Brazil, North America, India or Germany

Widely recognised market leader and maintains a reputation for unrivalled customer service

Product innovation skills

Alliances - M&A, JV

Hasn’t yet diversified into related businesses

The current Eurozone crisis has affected operational efficiency

Competition means limited market share

Lack of patent protection

High cost structure

Lack of access to key distribution channels

Expanding product line to new geographic areas

Transferring skills to new products

Vertical integration

Openings to exploit new technologies

Growing industrial and farm equipment's in Asia

The recent launch of upgraded Backhoe loaders could bolster its sales

Warehouse expansion at different places will enhance their customer service

Competition from new entrants

Loss of sales to cost effective substitutes

Vulnerability to business cycle

Reduced buyer needs for product

Stiff competition from various players like CAT, Ingersoll Rand, ACE etc..

Weak real estate sector in Europe has lead to stagnant business in the Eurozone

Company
Strenghts
Potential
weaknesses
Opportunities
for future
External
threats
Brand value
Customer service
Wide product base
R&D
Extensive Distribution and
production networks

Production Backlog
Eurozone crisis
Competition
High Cost structure
Emerging Markets
Facility expansion
After-sales services
Mining/Shale
Global Stability
Government Regulations
Market Barriers
Currency rates
Strenghts
Weakness
Opportunities
Threats
Internal
External
SWOT Summary
Strategy Formulation: Change Drivers
Expansion into smaller class machinery
New product lines
Increasing demand
Increasing sales
Opportunity for market share
Diversity of production capabilities
Exploit the growth of mining and shale
New product lines
Opportunity for market share
Diversify portfolio
R&D
M&A, JV
Expansion into Africa (Growth market)
Huge growth in competition
Diverging population
Low revenue growth
Industry

Internal

External
Market development
Strategy
Financial Objectives
Period of growth
Opportunities in Africa and American Markets
Fierce global competition
Concentration and Differentiation strategy

Market leadership
Low cost of ownership
New products
Customer Care
Revenue growth of 5-10%
Building on provided insights, the corporate strategy can be summarised as follows
Prepare for growth
Full transcript