ALTESSA MOTORS (ERICA SCHMIDT IN CHINA) Harvard Case Solution & Analysis



Altessa Motors is a brand specialized in high-performance sports cars based in Germany. Altessa Motors started its dealership in China in 2008 where it began its operations by selling only 12 cars in the first year.In 2011, the company reached 6 dealerships and 80 vehicles were sold that year with a rapid growth in 2013. Approximately, 800,000 luxury cars were sold and the number increased to15% in 2012, however, these sales were of competitors which provided them the competitive edge in growing market. In that year, there was an increase in dealership to 12 centers and the company sold 800 vehicles which meant that according to the company’s policy, the country head office should be built when the sales of the cars reach 800, and consequently,the company hired 6 employees including Erica Smith who was the marketing specialist from Altessa Middle East and Africa. In 2016, China became World’s largest luxury car market which shows growth potential in the country.

Answer 1:

Erica Schmidt was the first marketing manager in China. She is an expatriate because she is marketing specialist from Altessa Middle East and Africa. Moreover, she is very competent as she won the student of the year award at her university which iswhy she assigned responsibility as theMarketing manager for a well-known brand.

From the HR perspective, there are some major concerns for Erica Schmidt in China. Moreover,staff turnover is very high at Chinese dealerships, as the industry’s growth is very high and employees are leaving the company as they are getting better offers from competitors.The challenge faced by Erica is to manage staff turnover in dealership due to the stability of the department.

As the competitive employees are leaving the company, this indicates that the company is losing experienced personnel in this growth phase of the market since Altessa Motors started with 3 dealership centers and has now expanded to 12 centers and will increase from time to time.Therefore,there should be less staff turnover to guarantee the company’s service levels if the management has to train the staff weekly.

However, the main concern regarding the training of employees due to high staff turnover is that the employees might leave after training, and that the training will be of no use for the company since the company will not get benefit from that employee rather the competitor will get the advantage.The company established its country office in China by identifying the growth potential in the market as there were sales of 800,000 luxury cars in China with the competitors like Audi, BMW and Mercedes-Benz earning half of the revenue. Moreover, the customers were not aware of Altessa Car due to low brand recognition in China, whereas it is predicted that in 2016, the sales of luxury cars in China will surpass the sales in the US market.

As there is same staff turnover ratio in the whole industry, therefore it indicates that the employees of the company are not loyal enough.Therefore, she should offer some incentive to the employees as the market is growing thus,the stability of the department is essential for the future growth of the company.

Internally, Ericka Schmidt aimed to find a way to communicate with employees as some of them spoke English as their secondary language but they spokein Mandarin with each other when not talking to Ericka. The situation does not seem to be better in the future as Chinese people would not accept the culture of speaking another language easily, it would take time, however conversations taking place in the office would decrease between her and the employees because every employee does not speak or understand English.This is a huge barrier in the communication of values and culture as Erica shifted from Middle East and Africa, since their cultures were entirely different from China as mostly people spoke English over there....................

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