Orbital Corporation Limited – Assignment Help
Company Overview
The company Orbital was first came in to existence in the 1960s, Orbital Corporation Limited mainly operates in the auto components industry, with its headquartered in Perth, WA along with some of its facilities in Melbourne Orbital has gone through some structural changes twice before its current structure established in 1990.
The company main mission is mainly concerned on the research, design, manufacture, development, and testing of the company’s new CNG engines along with its other related technologies. At present the company operates worldwide to the motor vehicle industry. Orbital can be considered as a leader in alternative fuel technology, which is very highly accepted by both the automobile and motorcycle industry. Orbitals main customers and competitors are further highlighted under the Target market analysis, which will give a clear picture of Orbitals strengths and weaknesses.
Due to its technological advancement the company has been able to get the approval of the Australian Government, such approval from the government has helped the company in innovating and in the development of eco green cars. Hence the obtainment of federal grants for this purpose, the company is now also part of The Industry Innovation Council`s website, that mainly show Australian innovation to foreign markets (Orbital Corporation Limited 2010).
According to the report released by the Federal Chamber of automotive industry (2010), “the overall Australian automotive industry mainly accounts for approximately six per cent of the total value added in manufacturing and almost one per cent of Australia’s gross domestic product”.
According to the figure given in the fact sheet of the outlook for the automotive manufacturing industry was 3.1bln, that is also the overall value of Australian automotive exports for the year of 2009. Where as the total amount spent on the motor vehicle and the motor vehicle parts manufacturing industry was $798million.
In coming years the company is constantly trying to strengthen its exports for its CNG engines and other spare parts, as well as the company is also focusing on markets closer to home, that can be targeted by introducing new technologies in the market. According to Terry Stinson who is the CEO of Orbital stated in Corporate Web page 2010, that the overall CNG market is growing globally especially in Asia where CNG is rapidly growing as a lower cost alternative fuel of choice for many of the lower and middle class people. In Europe, Italy leads the CNG development system, with significant growth projected in the coming years.
Potential to Increase Exports
India along with other Asian countries can be considered as the growing market for CNG engines, If orbital wants to lead the CNG market, the company has to expand its commerce in Brazil, China and India (Orbital Corporation Limited 2010).
Mr Simon Crean, who is the Australian Minister for Trade 2010, stated “India, at present represents a market of 1.2 billion people and on such basis it provides a substantial set of opportunities for Australian business exports’.
As reported by Thottam, J (2009), Ratan Tata, who is the chairman of Tata Sons, the holding company of Tata Group, mentioned that the Indian Car Manufacturing industry will have a production of half a million Nanos per year, that will exceed the production of Japanese car industry.
If the overall CNG demand continues to grow on the present rate, than it can be expected to export minimum 250,000 Orbital CNG engines to India and can be sold as part of a corporate relationship with Tata Motors.
Considering that Tata has a 74% share of a multimillion dollar Indian market the potential to offer the Orbital CNG engine throughout the Tata range would exponential increase exports for Australia at the same time keeping in mind the demand for CNG would be much higher in the coming years.
India’s domestic automobile industry grew 12.8% in 2005-06 reaching 10 million units and the domestic passenger market grew 7.5% to 882,094 units (Surfindia 2010), where as in 2004 the passenger car market witnessed the growth in the top 12 passenger car producing countries. (Surfindia, 2010).
According to Vikas Sehgal, of Booz & Company claims that the overall Indian car market, now 1.7 million units, is expected to grow to 3 million by 2015 (Athavale 2009). Figure A shows industry turnover almost doubled from 99-00 to 04-05.
At present only 16% of the Indian automobile market is based on the passenger vehicles (Refer figure B). However with the increase in the buying power of the middle class by 30-40 million annually and rising household incomes (refer figure C) market share is shifting further towards passenger vehicles (SIAM 2010).
Accelerating Household Income in India
Average household disposable income
According to the current figures, if India continues to produce cars on the same average it is expected that soon India will overtake Germany and then Japan in 2012. It is also forecasted that by 2050 every sixth car globally will be by the Indians (Scribd 2010).
India at present is generally considered as the sixth leading country in the world for CNG vehicles (refer figure D).
Figure D
|
Country |
Approximate Number of CNG Vehicles |
|
Argentina |
1,690,000 |
|
Pakistan |
1,650,000 |
|
Brazil |
1,510,000 |
|
Europe |
812,000 |
|
Iran |
611,500 |
|
India |
354,000 |
|
Columbia |
251,700 |
|
China |
200,900 |
|
Bangladesh |
150,000 |
|
USA |
150,000 |
|
Ukraine |
120,000 |
|
Russia |
95,000 |
|
Bolivia |
84,100 |
|
Egypt |
81,400 |
|
Venezuela |
44,100 |
|
Canada |
12,100 |
Source: Gas Vehicles Report May 2009
The demand for the CNG engines or any other alternate for the fuel system is growing throughout India. According to the Times of India 2009, CNG conversions in Surat doubled in June and July of 2009.
This huge increase in the demand of CNG can be attributed mainly because of the low running costs CNG provides. Figure E shows CNG costs about half that of petrol.
The regional transport office in Surat generated a report in which it was very clear that the registration of CNG vehicles nearly doubled in 2009, at the same time it has also been forecasted that the conversion rate will continue to be the same in the next coming years (The Times of India 2009).
At present the overall Indian CNG market accounts for 3% of the total vehicle market in India, if it will continue to grow with such pace, than based on the projected 7.5% annual growth of the motor industry in the next couple of years, the Orbital CNG market will grow by 44%.
According to Austrade the overall competition in the transport industry of India is being actively encouraged (Austrade 2010).
At the same time the Ministry of Finance in India claims that the government of India holds a vast potential for overseas investment and at the same time the Indian government is actively encouraging…foreign companies to invest in the Indian market (Finmin 2010). According to UNCTAD World Investment reports India as the second most attractive location for foreign direct investment for 2007- 2009 (Indiaonestop 2010).
Extent of competition
Due to the rapid advancement in the CNG car market and constant growth in its demand many players have entered the Australian and other market, creating some competition for the local manufacturer of CNG engines.
Advanced Engine Components Ltd (AEC), which is also based in Perth, has strategic alliances and good positive terms with various vehicle manufacturers worldwide developing CNG powered engines for vehicle integration.
On the other hand Teleflex GFI of Canada and Landi Renzo of Italy are been able to have alliances with Volkswagen for CNG engine development. Whereas Fiat uses compatriot Tartarini Auto of Italy for any CNG engine works it requires (Wikipedia 2010).
Competitors key strategies
AEC has two specific key strategies;
-
Its ability to be able to modify engines according to customer’s needs
-
Expand into new markets
Landi Renzo key strategies include;
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Eco-sustainable mobility which is more in demand now
-
Been able to expand globally into new markets
Though all these competitors have access to international markets and already have strategic alliances with few car manufacturers but none of them manufacture CNG engines, instead they provide a service of design and engineering to vehicle manufacturers. As such no distribution is required by these organizations.
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