Speed Race: Benelli and QJ Compete in the International Motorbike Arena Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Home >> Ivey Case Solutions >> Speed Race: Benelli and QJ Compete in the International Motorbike Arena

A SPEED RACE: BENELLI AND QJ COMPETE IN THEINTERNATIONAL MOTORBIKE ARENA

Introduction

Globalization has played a very important role for many companies in expanding their businesses into different regions of the world. There are many reasons for companies to enter into the global market, for example the local market have reached the point of saturation or there are no more opportunities for growth.

Companies have also enetered into the global market in order to reduce the cost of their product because in some countries labor is cheap. Consquently, companies that have entered into the global market are making handsome profit. Companies have multiplied their revenues after entering into the global market but there are some disadvantages as well. Companies may face many challenges like cultural, language and economical difference. It is very difficult to manage employees, who come from different culture.

Problem Statement

The Chinese group, Qianjiang Group was facing cultural difference, work methods difference, civil rules, fiscal rules and access to credit issues after acquiring an Italian company.

Problem Details

Qianjiang Group acquired an Italian company Benelli in 2005. Initially, things were going smooth but with the passage of time Qianjiang Group faced many challenges like cultural difference. Chinese had different way of doing business as compared to Italian companies. Qianjiang Group also had intense competition from Japanese companies in the Europe. In addition, it had invested large amount in order to increase efficiency and reduce cost but it was not helping out Qianjiang Group to penetrate into the European market.

About Benelli

Benelli was founded in 1911 and was known for repairing automobile and motorcycle at that time. Later, Benelli started to produce motorcycles and won many international awards and titles. Financial health of Benelli got worst in 2005 and the company was near to stop its production.

About Qianjiang Group

Qianjiang Group was one of the largest state-owned companies in China and it was formed in 1971. Qianjiang Group was one of the largest producers of motorcycles in the China and it was among the top 10 companies in China that had strong competitive power.

Qianjiang Group has gained quality standard certificates from many International organizations. Qianjiang Group had strategic alliance with many companies across the globe for example Qianjiang Group had relationship with AVL, Bluesky Design, Jiang Zuyun etc. It had 50% share of the Indonesian motorcycle market and it had acquired many companies like Benelli, Keeway Motor, etc. in order to penetrate into the European and North American market. Qianjiang Group was able to provide low priced motorcycle to its customers and it also had manufacturing plant in Indonesia.

Benelli had planned to enter into the racing activity. It was projected that Qianjiang Group would be able to provide bikes for MotoGP in coming years and would make new bikes for World Superbike races.

Q1. Assess QJ's situation in terms of Porter's five forces and SWOT

Qianjiang Group’s internal environment was analyzed through SWOT matrix. In the following section Qianjiang Group strengths, weaknesses, opportunities and threats have been analyzed in detail.

SWOT Analysis

Strengths

Qianjiang Group was a Chinese state-owned company and it was the largest producer of motorcycles in China. It had wide range of products to offer that include: generators, garden tools, power pump, etc. and 40% products were exported to different regions of the world. Qianjiang Group had the largest motorcycle manufacturing plant in the Asia and it was equipped with advance facilities (See Exhibit 1).

Weaknesses

Qianjiang Group could not penetrate into the European market and it had low market share in that market. Qianjiang Group also had low market share in the North America because there were large companies and consumers that were very loyal with Harley-Davidson. Qianjiang Group was not able to manage cultural differences in the beginning of the acquisition.

Opportunities

Several opportunities were available for Qianjiang Group in local as well as in the international market. Qianjiang Group had opportunity to build its own plant in Taiwan because political conditions had improved. It was projected that motorcycle would grow by 5.1% through 2012 in USA, UK, Germany, France, Russia etc. It was also projected that the motorcycle industry would grow by 19.9% in Brazil, Russia, India and China. Qianjiang Group had great opportunity to expand into those markets especially in Brazil where growth rate was 28.3%.

Threats

Japanese firms were the main threat for Qianjiang Group because their products were low priced in Europe and North America. Qianjiang Group was a Chinese firm and when it decided to enter into the European and North American market, many threats were there like cultural difference, etc.

Porter's Five Forces

Threat of New Entrants

Threat of new entrant was low because large capital was required to build motorcycle plant and it was difficult to get economies of scale in a short period of time...............

This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.

In 2005, the Qianjiang Group (QJ), large Chinese state-owned group, has acquired the Italian company Benelli expand their business in foreign markets outside Italy. Advantage brand Benelli was designed to provide core competencies for QJ, to compete in world markets motorcycle also features Benelli and know-how in the motorcycle and scooter engineering also helped QJ complete its product portfolio. After a successful start, many cultural differences related to the Italian business model and the Chinese company has become problematic. Problems arose in the integration of Chinese and Italian culture and to deal with a completely different way of doing business, and the company faces stiff competition from Japanese rivals. Despite the excellent press and large industrial investments aimed at achieving efficiency and lower prices, the penetration of foreign markets was difficult. "Hide
to Francesca Spigarelli, Ilan Alon, William Wei Source: Richard Ivey School of Business Foundation 16 pages. Publication Date: December 23, 2009. Prod. #: 909M97-PDF-ENG