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Autoglass: Business Strategy Analysis

Info: 3929 words (16 pages) Essay
Published: 17th Mar 2021 in Business Strategy

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Autoglass summary 

Present day Autoglass has its foundation in two separate organisations. One part was a small family business in Bedford started by Tony Bates called Windshields. The company became well talked about for its innovative approach. Back then windscreens were made from fortified glass, which could break when hit with plenty force. The other organisation was Autoglass its-self. Established in 1972, the company was initially based in Manchester providing service throughout the North of England. Autoglass was mainly branch-based though mobile technicians were also available. Then in 1984 a merge with Windshields happened turning into a nation-wide business across the country and increasing in mobile operation. The company was called Autoglass Windshield however, the latter name was later dropped keeping only the first one. Fast forward to today and Autoglass is the lead company windscreen replacement and repair in the UK. Its open 24/7, 365 days a year, serving over a million customers. Though Autoglass are successful, they are part of the Belron Umbrella who are the world’s leading vehicle glass and repair replacement organisation.

What is business strategy?

A business strategy is the combination of all decisions made and actions taken by the business in order to achieve business objectives, so a competitive position is secured in the market.

Strategy helps to address the following questions:

  • Where are we now?
  • What is the situation we face?
  • Where do we wish to be?
  • What business should we be in?
  • How did we get to this?
  • What went well/wrong?
  • How can our position be improved?
  • What options are available to us?
  • What may hinder us from achieving
  • How do our customers see us?

Autoglass previous objectives

  • To collect reliable and meaningful data in order to quantify and justify exploits as well as initiatives.
  • Look at ways to continuously reduce carbon emissions across operations including energy efficient technology for our taskforce and office blocks.
  • Constantly manage our waste by recycling our glass waste disposed on behalf of customers. We take in consideration approaches that are innovative in order to achieve this.

Autoglass Mission

Autoglass is committed to delivering first class service to every single customer as well as becoming first choice for glass repair and replacement across the world. The company is also dedicated to reducing accidents in UK and often launches campaigns to raise road safety awareness including the importance of driving safe.

Autoglass Vision

Autoglass would like to expand and be the leading provider of AI/touch windscreen manufacturing for all vehicles. The company has a strong understanding of the key role technology has played over the years. And has ensured to capitalise on it too. Recently, it has been announced by Autoglass that they have had a successful trial based on AI to aid in windscreen repair. The tool is already in use by customers, handling over 2000 images a week with more than 80% accuracy helping to determine what kind of service is required prior to book an appointment. More applications for technology are being taken into account, such as the use of AI to assess ADAS (Advanced Driver Assistance Systems) calibrations after a repair or replacement. Another tech that tool that is growing in population is Augmented Reality (AR) in windscreens. Many car manufacturers have already begun to build and integrate their new vehicles with this technology however, it will be more visible within the next years. It is Autoglass aim to be able to penetrate that market and increase their share without compromising their established reputation.

Autoglass core competencies

The business core ability is being able to replace or repair windscreen anywhere in the UK at any given time with the work carried out by highly trained technicians throughout the country.

Strategic intent

The intention for Autoglass is to stand out from its peers and continue to be industry leaders ahead of their competition.

Autoglass Strategy

The role of strategy in Autoglass is to provide clarity on how to generate more revenue by remaining market leaders. The company’s current strategy has been able to provide continuous success for the company however, in order to stay ahead and remain market leaders, Autoglass cannot afford to become distracted and be overtaken by their competitors. Hence why, an implementation of a new strategy will help proper the business further and ahead of their rivals.

Goals and objectives

  • To maintain the trust obtained from customer and remain a respectable organisation ensuring responsible behaviour.
  • To ensure that technicians are all ADAS trained
  • To invest in AR technology 
  • Building the business with great people who deliver great performance.

SWOT/PESTLE analysis

In order to understand how the macro environment could potentially have an impact on Autoglass, a SWOT analysis will be conducted. This is an important technique that gives the actual understanding about the current performance of organization. By using this technique, Autoglass management will be able to develop sustainable business strategy that will overcome the impact on weakness and threats that identified in SWOT analysis. Moreover, it will help to gain the information about the opportunities and strengths to consider them for developing the plan and meet the goals and objectives. In addition to this, SWOT analysis helps to evaluate the internal business function effectiveness and use of resources for developing the new business strategy to encourage the outcome of business.

Strength

  • Leading glass repair and replacement company
  • Serves at least 1 million customers per year
  • Has fleet of over a thousand technicians
  • Strong relations with most insurers in the UK
  • Multichannel
  • Repairs or
  • replaces and type of glass, make, model or age
  • Have a repair first philosophy.
  • High gross margins

Weakness

  • Competitors offer similar product promptly
  • Hardly advertised

There is no promotion on prices

Opportunities

  • Increased growth rate because few competitors are able to provide the same exact service
  • Introduction of new products

Threats

  • Changes to government laws could affect how the organisation operates

Another tool that can help examine the macro environment is a PESTLE analysis.

Political

  • Various taxation policies could have an affect on how Autoglass operates its business

Environmental

  • In the recent years the weather has not been the best in England. This could pose a threat to Autoglass technicians trying to reach customer on time thus impacting the service.

Sociological

  • Since the government is encouraging people to be greener by swapping vehicles for bicycles or public transport, it could mean less vehicles being driven therefore less need for a repair or replacement.

Technological

  • Advancements in products such as ADAS (Advance driver -assistance systems)
  • Augmented Reality windscreens are talks of the near future

Legal

  • Regulation 461/2010 enables choice and convenience. What this means is that businesses owning fleets and single drivers are not restricted to whom or where they get their vehicle windscreen repaired or replaced.

Economical

  • Consumers are not purchasing vehicles the way that they used to. Should this trend continue, it could pose a threat to Autoglass as the business is focused around vehicle windscreen repair and replacement.

 

Strategic Positioning

Ansoff Matrix

Autoglass is the leading provider of windscreen repair and replacement in the UK. Over the years they have gained a large share in the market due to the service offered. As Autoglass continues to expand, it is in the company’s best interest to analyse their competitive advantage. To do so, Autoglass management can make use of the Ansoff Matrix.

The Ansoff Matrix is a strategic planning tool that proposes four alternatives and they are:

  • Market penetration- How to sell more products or service to existing customers.
  • Market development – This is focused on how to penetrate new market.
  • Product development – This is based on how to develop current products and or services.
  • Diversification strategy – How to navigate in the new market with new product or service to increase sales as well as customer base.

Since Autoglass increased market share derives from having the ability to serve over a million customers needing a repair or replacement, the company should focus on Market Penetration and Product development. For market penetration, management at Autoglass can seek to increase market share by adding a new service to the existing roster. This can be done by proposing free tire check with each repair or replacement in the winter months.

With product development Autoglass can introduce a new product such as AI windscreens into an existing market. Currently AI is being used to aid with the windscreen repair and replacements processing up to 2,500 images a week with more than 80% accuracy (Fleetnews.co.uk, 2018), helping to determine what kind of service is required prior to booking the appointment. There are already talks of augmented reality - intelligent car windscreens providing real-time visual information to drivers.

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The good thing about Ansoff Matrix is that it is quite easy to use and understand even to those with limited knowledge in the marketing department. Another advantage is that Ansoff gives the Autoglass the opportunity to observe all possible alternatives, so the right decision is made helping the company increase sale and profit. Furthermore, it analyses all the risk attached to each strategy as a result ensuring that the organisation is prepared accordingly. On the other hand, there is lack of focus on the competitors as well as lack of cost benefit analysis.

Strategic Capabilities

RBV/VRIN Framework

Resource-based view (RBV) is a way of looking at the organisation in order to help determine strategic resources that can be exploited so sustainable competitive advantage is achieved. Instead of looking at the competitive environment, RBV encourages the organisation to take into consideration at the available resources and potential within the business. Within RBV there are two kinds of resources: Tangible and Intangible assets.

  1. Tangible assets. Often these are physical things such as property, products and capital which can be bought with ease offering little competitive advantage as other businesses can acquire the same. Autoglass has a fleet of vans which is a tangible asset that any other company can attain too.
     
  2. Intangible assets. This implies to products and notion that carry no physical value, however, can still be owned by the business. Intangible assets could include things such as trademarks, reputation or intellectual property most of which are acquired over a period of time and is something competitors cannot purchase on the market often being the business main source of competitive advantage. For Autoglass an intangible asset would be their reputation for being able to replace or repair windscreens anywhere and anytime throughout the UK.

RBV can also be utilised in order to look at the VRIN framework. VRIN is short for Valuable, Rare, Imperfectly Imitable and Non-substitutable.

  • Valuable- This regards the resources that are available that bring the business value thus creating competitive advantage. In Autoglass case, it is the fact that they are UK leading glass repair and replacement services with over 1000 trained technicians available. And also, the company itself has become a household name in the UK which means customers are more inclined to make use of their services as they are very familiar with them.
  • Rare – This eludes to a business having a unique strategy that will enable competitive advantage over its peers. For Autoglass this would be the fact that they are part of Belron which operates globally. This enables them to receive financial backing should they want to venture into a new direction/market. They also have a dedicated R+D Centre that provides a one of kind accreditation to its technicians in the UK.
  • Inimitable This is when an organisations actions are difficult to imitate. For instance, with Autoglass serves over a million customers a year. This is because the business is open 24/7, 7 days a week throughout the year. This gives Autoglass a huge competitive advantage as their competitors are not able imitate this.
  • Non - Resource that cannot be replaced by any other resource. Autoglass hold a Certification of Quality Assurance which gives them and advantage over their competitors as they are sure of their workmanship providing a lifetime guarantee for as long as the customer still owns the vehicle.

Cost Benefit Analysis

Cost Benefit Analysis or CBA for short, is another tool that Autoglass can make use of in order to measure their strategic capabilities. It is a process that organisations use in order to evaluate decisions. Prior to making any decision, managers will conduct a CBA, so all potential cost and revenues are determined. The result of the analysis will conclude if a project is practical financially or whether the business should consider another project.

When it comes to Autoglass, they are in a good position to move forward with augmented reality (AR) as the benefits over runs potential cost. As they are part of the Belron company, Autoglass will have access to funds that will enable them to invest and start creating AR windscreen of their own.

Porters Five Forces

Porters five forces is a framework that identifies and evaluates five competitive forces that moulds every industry and helps finding out an industry’s strengths and weaknesses. It is often used to pinpoint an industry’s formation to clarify a business strategy.

Autoglass Porters Five Force’s Analysis

Threat of new entrants

Since the upfront cost of starting a windscreen replacement service is low, it is not difficult set up a business in this industry therefore, the threat of new entrants is quite high. There are many small businesses who operate through online platform such as Facebook or Gumtree. The only thing they will not able to compete against is the financial foundation that Autoglass has.

Bargaining power of suppliers

When it comes to bargaining power, Autoglass will have the upper hand as majority of their suppliers will be relatively smaller in size.

Bargaining power of buyers

When it comes to buyers and power of bargaining, consumers are advantageous because of various alternatives presented to them. They could opt for going directly to the car manufacturer to purchase their AR windscreen.

Threat of substitute products or services

Strong force. This is a strong force as they are many alternatives. Many others will offer the same service for a cheaper price. Autoglass need to ensure they are not undercut by their competitors thus they need to correctly price their service to avoid this

Rivalry among existing competitors

Weak force. This is a weak force as they are not many companies that can go toe to toe with Autoglass. Autoglass are the leading vehicle and glass replacement in the UK, this makes rivalry low although they need to stay ahead of their competitors.

Strategic Direction

In order for Autoglass to achieve newly set objectives, diversification can be implemented.

Diversification

Diversification is a strategy is practise where a business enters an industry or market which differs from its core operation. The reason why organisations diversify is:

  • To reduce the risk of being reliant on a singular income source.
  • To avoid fluctuation by producing goods/service that vary in demand cycles
  • To accomplish greater growth rate.
  • To invade the competitor core industry/market

Diversification can be classed under the following; Forward, Full, Backward, Vertical and Horizontal.

  • Forward integration happens when an organisation stays a step ahead in their process and becomes involved with things such as logistics, distribution and or transport. For Autoglass this could be in the form of distributing AR windscreen to car dealerships for a fraction of a price opposed to what original manufactures may charge.
  • Backward integration is the opposite of forward integration. Instead of taking a step forward, the business takes a step back in their processes and expands its activities to acquiring their own inputs such as suppliers of raw materials, machinery amongst others. When it comes to Autoglass, they can manufacture and supply their own AR windscreens rather than having to rely on external suppliers.
  • Full integration is when a company enters a new market/industry or introduces a new product entirely. This approach is seen as the riskiest as offering or new product/service to an unknown market can either go really well or fail. Hence why full integration takes a long time to accomplish. Autoglass could fully integrate by introducing windshield repair and replacement for airlines.
  • Vertical integration is the merging of two organisations that are at a different life cycle stage. Autoglass could merge with a tech company that specialises in Augmented Reality in order to evade spending unnecessary money outsourcing tech for their windscreens.  By doing this, Autoglass will have better access and control regarding the windscreen quality.
  • Horizontal integration is the merging of two businesses that are at the same level of life cycle. Though this is could be an option for Autoglass, it is not best suited as the company is already part of Belron. Merging with another business on the same level could cause harm than good.

Although most diversification are suitable for suitable for Autoglass, Vertical integration would be the better suited one. Since technology is at the forefront of daily life, it is imperative to make use of it in the business world. Autoglass has always been keen on taking innovative direction celebrating over 40 years in innovation. Merging with a tech company that specialises in AR could help Autoglass cut cost on research for augmented reality windscreens. Together combined with the company’s knowledge and eye for innovation, Autoglass could make the provision of AR windscreen more accessible to consumer at cheaper price.

References:

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  • Investopedia. (2019). How Cost-Benefit Analysis Process Is Performed. [online] Available at: https://www.investopedia.com/terms/c/cost-benefitanalysis.asp [Accessed 2 Mar. 2020].
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  • Roberts, G. (2018). Windscreen repair and replacement choice ‘good for safety’, says Autoglass. [online] Fleetnews.co.uk. Available at: https://www.fleetnews.co.uk/news/fleet-industry-news/2018/12/18/windscreen-repair-and-replacement-choice-good-for-safety-says-autoglass [Accessed 2 Mar. 2020].

 

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