Renault Trucks Remanufacturing as a Strategic Activity Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

The External Analysis

There is no doubt that in the automobile industry, the trend of using remanufactured part was thriving in an incredible manner.

In the recent time customers, as well as local mechanics were found favoring the use of these remanufactured parts on a regular basis across the globe. The rising demand and outstanding cost benefits in the industry of all aspects forced the Renault Trucks to consider this area of producing remanufacturing parts which can be considered as new. It can be said that by focusing on the production of remanufacturing parts, Renault Truck has given a new life to its position in the industry and had generated several complications for its rival manufacturers and companies across the entire globe.

They make the external environment reasonable for themselves by working in an extremely effective way because they offered a complete range of remanufactured parts with the best Standard Exchange system and named as 100% Renault’s brand. One of the best things about this methodology was that they distributed these parts all the way through their local and international dealer network. Another vital part is that these parts were available within short span of time of around 48 hours. Like most of its competitors, Renault Trucks also guaranteed the same performance as the new parts and also came up with a strategy of offering a worldwide 1 year warranty of their different equipment’s and parts.

Porter Five Forces Model

The porter five forces model examines the market conditions with respect to the ease of doing business. It examines the extent to which different market forces are capable of driving demand and controlling profit terms for the companies in the market. It also determines the extent to which external forces may affect the performance of companies in the respective market.

Threat of new entrants is low

The overall threat of new possible participants in the automobile and specifically in remanufactured parts industry is low. This is because in order to enter this market, a company needs significant initial capital for investment in technology and certain necessary facilities like processing, assembling, warehousing, transportation and most importantly meeting quality standards. New entrants will face difficulties in installing plants since they need a huge amount of capital.

The bargaining power of buyers is high

The economic conditions, specifically across the Europe and relatively established financial positions of the buyers across the globe is departing towards betterment day by day. This means that they are becoming economically stable. However, it is a fact, people look for better prices before making a purchase. Due to greater competition from the local companies, which provide parts at lower prices and with a great deal of variety, the bargaining power of buyers is high.

Bargaining power of suppliers is medium

The bargaining power of suppliers is medium. The reason for the medium buying power is that these suppliers and companies both actually go for strategic alliances. Since the supplier is an important aspect to attain overall success, so a company always tries its level best not to lose that supplier so that the quality standards can be consistent. Similarly, a supplier, always tries its level best that its strategic alliance with a certain company should be aligned and run smoothly without any hurdle because when a supplier loses a contract so he will for sure face some serious losses in the market.

Degree of competitive rivalry is high

The competitive rivalry in the automobile and its remanufactured parts industry is high. The global market consists of large domestic competitors. These competitors compete head to head in the national as well as international markets. The main competing aspects are priced, variety and quality differentiation.

Threat of substitution is high

The threat of substitution is high because there are alternatives that are available in the market. People may consider buying absolutely new parts which would for sure be more beneficial in terms of performance and life. To be more fuel efficient and for somehow better outcomes people may look for new parts. Later on, this threat of substitute can become a medium because experts say that the industry can grow up to 20% within the next three years..............................

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