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This report has been commissioned for the Board of Directors of Orbital Corporation Limited. The purpose of the report is to investigate the possibility of expansion of its new CNG engine in the identified Indian motor vehicle market. Recommendations are included for the launching of the new product through the best market penetration strategy to produce a competitive advantage and new revenue stream for Orbital Corporation.
The report is limited by the inability of the consultants to obtain detailed confidential information on the CNG engine manufacturing process and involved costs specifically withheld by Orbital.
The report analyses the following areas and includes:
- How internationally competitive alternative fuel is specifically a CNG engine
- The international competitiveness of Orbital Corporation and their CNG engine through the use of the Porter Diamond Model
- Relative market attractiveness of the Indian motor vehicle market
- Relative competitive Position of Orbital Corporation
- A recommendation of the best fit strategy for Orbital to undertake
- A list of required management issues to consider and implement.
Information is presented in a formal written structure with discussion points and includes data in the form of graphs and tables where applicable. Data has been obtained from a various number of references as can be seen in the attached reference list. However it includes data from websites, newspaper articles, statistics from both Indian and Australian private and public entities including the Department of Foreign Affairs and Trade. Discussions have also been held with Orbital employees and Australian engineers.
The company was established in the 1960s, Orbital Corporation Limited operates in the auto components industry. Headquartered in Perth, WA with facilities in Melbourne the company structure changed twice before its current structure was established in 1990.
Orbital’s mission is focused on the research, design, manufacture, development, and testing of its new CNG engines and its related technologies. Orbital operates worldwide to the motor vehicle industry. Orbital is a leader in alternative fuel technology which both the automobile and motorcycle industry willingly embraced. The main customers and competitors are further discussed in the Target market analysis.
Orbital has the approval of the Australian Government in order to innovate and development of green cars worldwide. Hence the obtainment of federal grants for this purpose, Orbital is also part of The Industry Innovation Council`s website, used to show Australian innovation to foreign markets (Orbital Corporation Limited 2010).
As revealed by Federal Chamber of automotive industry (2010), “the Australian automotive industry accounts for approximately six per cent of the total value added manufacturing and almost one per cent of Australia’s gross domestic product”.
The overall value of Australian automotive exports in calendar year 2009, as reflected in the Fact Sheet of the Outlook for the Automotive Manufacturing Industry, was $3.1 billion, of which $1.3 billion was automotive components (See table 1). In addition “the motor vehicle and motor vehicle parts manufacturing industry spent $798 million in 2007-08 on R&D”.
Orbital needs to consider the strategic management issues (SMI) to ensure the success of this venture. There are numerous issues which it will encounter however the following are key issues that need to be overcome.
- Project management and relationship team – Given licensing is an unfamiliar mode in the operations of Orbital a new team will need to be established to manage the negotiation and establish a relationship. New staff will need to be employed that have experience and knowledge in this type of operation. It would be preferably that the new employees also have knowledge and experience in the Indian market operations and culture.
- Training Group – As the motors will need to be serviced Orbital will need to establish a training team for the initial training of Tata’s technicians. All technicians will need to have a sound knowledge of the new Orbital engine to diagnose and resolve problems that may occur.
- Tracking engine sales – Given the licensing agreement will require engine sales to be recorded Orbital will need to establish a reporting tool for both their access and that of Tata Motors.
- Orbital will need to engage legal experts who specialize in Indian law. Given the agreement will be subject to Indian law Orbital needs to ensure that it provides them security in both the Indian and Australian judicial systems. Without this either party may be able to exploit the contract at the other party’s expense.
- Tata’s local Indian suppliers will need to be examined by Orbital to ensure that they can produce all required parts to an acceptable standard to ensure the engines reliability and lifespan. If this is not completed the integrity of the engine could be compromised and jeopardize the success of the project.
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