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Parrot: Navigating the Nascent Drone Industry Case Solution & Answer

Parrot: Navigating the Nascent Drone Industry Case Solution

Introduction

Parrot was the first-ever company founded in 1994, which introduced the concept of drones in the market. Firstly the company was focusing on devices that were able to connect to telephones, car stereos, wireless headphones and smart flowerpots, but in 2010; the company decided to develop the concept of consumer drones.

In the beginning, drone’s per annum sales were profitable, but soon after 2015, when new competitors entered the market;Parrot’s drone sales started to decline. The biggest threat for Parrot was the Chinese firm DJI, because consumers were getting attracted towards DJI’s products, causing Parrot to have a recorded net loss of €83.9 million in the first 9 months of 2018.(MCDONALD, 2019)

Problem Statement

If Parrot wants to create a better position than its competitor and make its position stronger than it is now, then the company needs to examine that which particular market it should divert its focus on how it could-win that particular sector completely,for the long term benefits.

SWOT Analysis

Strengths

Various product lines:It helps is gaining a competitive edge in the market, because if a customer has varieties; he would be more inclined towards your brand. Parrot S.A provides wireless devices all over the world, including: Bluetooth, hands-free, multimedia, plug & play products, modules and chipsets for the automotive industry. So it is way more easier for Parrot to target various markets than other companies.

Privileged relationship with car manufacturers:Privileged relationship helps in having a better flow of supply chain. Better understanding with manufacturers helps you to be in their priority list.  Parrot Auto motive’s customers include carmakers, such as: McLaren, Volvo Cars, and Honda,which acts as the company’s strength because these manufacturers always prefer to buy Parrots’ products.

The leader in the hands-free kit market: Parrot provides a most innovative range of Hands-free to make every kind of customer satisfied, and due to being successful in achieving its foremost goal,i.e. customer satisfaction; Parrot is most likely to attract more customers.

High profitability and revenue:Because of a good relationship with the suppliers; Parrot can buy raw material at a lower cost, which enhances its profitability, enabling it to make more revenue. Low cost doesn’t mean that Parrot would ever compromised on its product’s quality as the company is well reputed for producing very high-end quality products.

Weaknesses

Poor brand image: Due to the entrance of much cheaper products, such asDJI’s drone; Parrot has had a great shock, as it was then getting perceived as an overpriced company, but it are slowly and gradually trying to get its lost position back.

Competitors: Having better competitors make your survival quite difficult, because it forces you to renew your product range to be better,but once you have a competitive edge over others; it would become easier for your product to sell.

Opportunities

Income level is at a constant increase: As of now, Parrot’s Income level is sustained at one point, but toaccelerate its profit level and to increase its income; Parrot is most likely to look for better opportunities.

Growing demand for new tech devices:As people are becoming aware of the new tech devices,its demand is increasing and with the increasing demand;there is an opportunity for Tech manufacturing companies to produce more in order to make more profit.

More laws to minimize the use of mobile devices while driving: The Government is introducing more laws to minimize the mobile’s usage while driving, so people are pursuing Bluetooth or similar devices that are fitted in cars by the companies.

Widespread use of Bluetooth: In the fast-moving world; people want more time saving equipment, which has created a space for Bluetooth devices, whose demand is increasing with time.

Threats

Government regulations: The government is increasing the number of rules and regulations, which is making it difficult for the company to cope up with all the requirements.

The rising cost of raw materials:With the growing inflation; the prices of raw material is rapidly increasing, which can have a huge impact on the overall production cost.

Less subcontracting for treatment of information:Fewer links with the informants of new demands may cause several problems in coping up with the market needs.

VRIO Analysis

Resource/

Capability

Value Rarity Imitability Organization Competitive Advantage/ Competitive Disadvantage/Sustainable Competitive Advantage
Employees Yes-Dedicated employees No-Easily Available Yes Yes-Hierarchy of the firm is strong and managing employees well Competitive Environment- Employees can leave the organization if they get better opportunities
Contracts with Key Suppliers Yes-strong outsiders links Yes-It takes a lot of time to get comfortable. No- only a few can have strong PR Yes- Maintaining relations quite strongly Sustainable Competitive Advantage- Once you build a connection it stays for a longer period
Marketing Yes-Strong Marketing skills No-Almost every competitor is marketing well Yes- It is easy to master marketing skills Yes- incorporating new strategies None
Distribution channel Yes- Strong Channel No- once you enter in business you develop a distribution channel No- it is easy to build connection but building strong and long term is what difficult Yes- maintaining relation is difficult None
Financial Resources Yes- enough resources No-competitors have a better resource Yes No- because the company is in deficit Competitive Disadvantage

 

Parrot has powerful resources such as: employees, short and long term contracts with key suppliers and strong marketing and distribution networks, which enables it to have a  has a competitive advantage over its competitors, as Parrot with its efficient managerial and organizational skills, is managing all of these resources and transforming-them into its competency. This is what is helping Parrot them to-expand its scope successfully.(Liné, 2021)

PESTEL Analysis

Political

In France, the companies usually face problems in investment returns due to frequent changes in the French government policies. This creates instability which directly impacts the overall probability of the purchase, and due to high political requirements i.e. trade restrictions; it is hard to participate in the foreign market as well. But, Parrot has successfully overcome all the problems and has maintained its position in the market.

Economical

French economy is highly developed and free-market-oriented, and in the past; France has worked on many economic growth plans. Currently,the interest rate of France is around 1.6%, which means it is profitable in terms of borrowing, as the cost of borrowing would be less. Considering this, if Parrot wants to expand its operations; it can take a loan with a low cost of borrowing, which it can utilize in its expansion to have further growth. But, France is a country with heavy tax duties so Parrot has to be meticulous in measuring all the criteria before moving ahead with loan application………………………..

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