The basic strength that has made Renault the market leader is their huge manpower, as discussed earlier they have employed 15000 people approx. A strong sales team across the Europe also contributes to their huge revenues as they have 1500 sales outlet only in France. Then their wide range of customers are across the globe that’s because Renault is now in around 80 countries. According to the case, they had one of the best delivery time, as the remanufacturing parts were delivered within 48hours across the international dealer network. Renault is also a high financially strong firm. As discussed in the case, the company hit $64million mark in revenue in 2000 when they sold 170000 units. This also gave them $19million of product margin. In addition to this, they were enjoying the $488million Revenue from just its parts business giving them a product margin of $192million. This overall Growth in sales has actually boosted their confidence for giving after new experiments.
The plan of changing their track from manufacturing to re-manufacturing paid dividends as it was liked by mechanics across the globe in auto industry. It is estimated that around nine million ton of waste is contributed by vehicle industry but after the remanufacturing, Renault was now producing less waste. They were now right on track to combat a global climate issue. Other factor that was going in their favor was the reduced cost on the remanufactured goods. Also, they were getting good demand internationally so they decided to focus on remanufacturing thoroughly. Remanufacturing actually gave them an edge over other competitors which strengthened their position in the market and now the competitors too had to consider re-manufacturing. As discussed earlier Renault also had an upper hand over others because of their fast delivery time, they were sending the repaired parts in 48hours. Fast delivery time meant that they were highly efficient and wanted to provide a good service. Other than this, they were giving the same one year warranty worldwide on repaired parts with the same enhanced performances.
The concept that says that there are five forces which determines the ease of doing business. It also determines who are the threats, what are the weakness and strengths of the company. The company heads then formulates a plan to further about their business. They develop a strategy on how they can make their business better and can make it less risky with more profitable outcome. They can decide on it if the new venture will be worth it or if the new product will give them good returns. They can also avoid mistakes by looking at their weaknesses. A company can determine the external factors affecting their business.
As the truck industry is too large and complex people don’t venture into this business. Hence, making the threat of new entrants low. The finance needed to enter the industry is too high, anyone would need a large amount of capital to invest in this business. The business gets complicated because they would need to invest in certain facilities such as:
- Large assembly line.
- Delivering the product.
- Meeting quality standards.
- Installing a huge new plant…………………
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