Global Strategy and Local Needs in the Luxury Car Market Essay

1 Introduction Since the 1980’s researchers have been trying to understand what globalization is and how competitive advantage can be gained out of it. This study will look at this movement with a critical eye and reflect whether or not it is sometimes better to give local needs priority in management decisions. The purpose of this study is to analyse whether the â€Å"Global strategy, but local needs† assumption leads to success. The objective is to provide scientific evidence for this strategy, analyse different organizations’ strategies and provide a possible recommendation for the best practice. Globalization is a driver of luxury 1 but it is not the best solution to apply this approach in all strategic decisions. This paper will not only look at this strategic approach in general, but will try to focus in specific on the luxury car market. The luxury segment is a fascinating subject for scientific research, because it still provides possibilities for relatively fundamental research within its niche. 2 Although there is considerable literature about specific brands, there is a lack of systematic and scholarly work that â€Å"analyses the luxury car phenomenon itself. † 3 The importance of this segment has also been emphasized in Sergio Marchionne’s recent speech to the shareholders (appendix 7. 2). The CEO of the Fiat S. p. a and of the Chrysler Group LLC underlined that his strategy for the future of the Group is located in the premium4 car production. 5 The motivation of this paper therefore is to analyse the challenge Maserati will have to address and to arrive to some practicable conclusions. 1 Cf. Kapferer/Bastien 2012, p. 12. 2 Cf. Heine 2012, p. 6. 3 Cf. Berger 2001, p. 160. 4. Expression intentionally quoted to illustrate a later explained statement 5 Cf. Fiat S. p. a. 2012b. Definition and terminology 1. 1 2 Methodology The findings of this project are derived from primary, secondary and tertiary sources of information. The tertiary source was mainly the catalogue of the Deutsche Nationalbibliothek in Frankfurt. Another important part of the data collection contributed the Internet. Most data has been found with the search engine google. com and scholar. google. com and the homepages of the relative brands mentioned in the project. The biggest part of the project’s information was taken out of secondary sources such as textbooks, newspapers and specific literature. Finally, the annual reports of 2011 of selected brands have been consulted. 2 Definition and terminology 2. 1 Strategy â€Å"†¦ Strategy in corporate practice is an integrated concept with the objective of ensuring long-term survival in active interaction with the competition †¦Ã¢â‚¬ 6 In today’s everyday changing business environment all companies are forced to reassess their strategies, their structures and their processes regularly. But the answers to every strategic and organizational challenge is varying among industries. 7 Therefore first a summary of different general strategic alternatives will be presented. Afterwards a detailed analysis of the characteristic strategy in the luxury car market will be developed. 2. 2 Global or Local Strategy In this chapter both terms global and local strategy should be defined. Moreover the strategic challenge of a business to decide between both strategies should be analysed. 6 Cf. Kotler/Berger/Bickhoff 2010, p. 12. 7 Cf. Bartlett/ Ghoshal 1990, p. 17. Definition and terminology 3 Businesses have been international since ancient times and at its beginnings international business had simply the form of exporting and importing. Any business that carries out some of its activities across national boundaries can be defined as an international business. 8 In the 70s and 80s keywords as standardization, rationalization and centralization marked the new tendency towards globalization. 9 Globalization is a term that emerged in the 1980s/90s10 and that has become a buzzword in the 1990s. 11 Originally globalization was only an economic phenomenon that described the integration and merger of national economies, and the development of communication and production of knowledge, transportation and migration. 12 Today the extent to which the organization’s activities are spread across geographical regions has become a major consideration in the implementation of an organizations strategy. 13 A global strategy is the tendency of a company to a consistent strategy and adaptation to local circumstances become redundant. Global organizations gain competitive advantage overcoming national and continental boundaries. Therefore it was a widely held belief that there was the risk that the globalization would overrun all regional and national differences. 14 Though today we have evidence that there is no â€Å"global village† and that regional and national differences cannot be so easily neglected. On the contrary the majority of the apparently global organizations use local differences to gain competitive advantage. 15 Therefore numerous literature and research on the counter-rotating trend to globalization, the so-called localization, can be found. Localization in general means the adaptation to or consideration of local market conditions. Most of the research concluded that the two apparently contrary concepts do not mutually exclude but depend on one another: â€Å"Globalization can mean the reinforcement of 8 Cf. Campbell/Stonehouse/Houston 2002, p. 255. 9 Cf. Bartlett/Ghoshal 1990, p. 36. 10 Cf. Lohmeier 2008, p. 9. 11 Cf. Rohm 2010, p. 4. 12 Cf. Lohmeier 2008, p. 9. 13 Cf. Campbell/Stonehouse/Houston 2002, p. 254. 14 Cf. Lohmeier 2008, p. 10 15 Cf. Lohmeier 2008, p. 58. 4 Definition and terminology or go together with localism as in ‘Think globally, act locally’†¦Ã¢â‚¬  16 . Numerous literatures even deduce a new concept called â€Å"Glocalization. † Glocal strategies are strategies that provide evidence to global and local players, to respond advantageous and purposeful to globalization. They should assist global players to localize their activities where worthwhile and show ways and means to local players to make use of the global area respectively – in both cases without abandoning their global or local character. 17 2. 3 Bartlett’s and Ghoshal’s model According to Bartlett and Ghoshal there are three traditional strategic directions a company can follow. Tab. 1: The three strategic directions 18 Multinational Global International Strong local presence Cost reduction through Usage of knowledge and through respect of national centralized but worldwide competences of the HQ needs oriented activities through worldwide diffusion and adaptation 2. 4 The multinational organization The multinational organization according to Bartlett and Ghoshal is the archetype of the organization. At the beginning of the 1900th century this was the most diffused organizational model. As shown in figure 1 in the multinational organizational model the HQ is at the centre with many decentralized, interdependent and autonomous branches surrounding it. The specific needs of the local markets are encouraged and therefore they are able to react to local needs. Historically this organizational model was the one of many European companies that expanded into foreign countries. Several of these companies originally where family owned companies. Processes were based on personal relationship and 16 Cf. Pieterse 1995, p. 49 zitiert nach Lohmeier 2008,p. 53. 17 Cf. Lohmeier 2008, p. 64. 18 Cf. Bartlett/ Ghoshal 1990, p. 32. 5 Definition and terminology informal contacts rather than formal structures and systems. Therefore only elementary financial control was necessary. 19 Branch Decentralized federation: Many key assets, responsibilities and decisions are decentralized Branch Branch HQ Branch Personal control: Informal HQ – subsidiary relationship, simple financial control Branch Multinational mentality: Management considers overseas operations as portfolio of interdependant business. Branch Figure 1: Multinational organization 20 2. 4. 1 The international organization This organizational model has similarities to the multinational organization. However as shown in figure 2 the branches are more dependent on the transfer of information and knowledge from the HQ. The objective of this kind of organization is to transfer knowledge and competences in aspects such as technology or marketing to underdeveloped foreign branches. The national branches can adapt products or strategies, while the HQ determines innovation and processes. In comparison to the multinational organization model there is more systematization and control. According to Bartlett and Ghoshal the international organization model had its breakthrough in the post-war period. The international organizational model is the model for the typical American Management culture of empowerment and delegation. 19 Cf. Bartlett/Ghosal 1990, p. 73. 20 Cf. Bartlett/Ghosal 1990, p. 74. 6 Definition and terminology Branch Branch Coordinated federation: Many assets, resources, responsibilities and decisions are decentralized but controlled by HQ Branch Branch HQ International mentality: Management considers overseas operations as appendix to a central domestic corporation Branch Administrative control: formal management planningand control systems allow higher HQ-subsidiary linkage. Branch Figure 2: International organization 21 2. 4. 2 The global organization Global companies develop their products and strategies considering only one equal worldwide market. Product development, production and marketing strategies remain centralized. 22 As shown in figure 3 the most important characteristics of the classical global organization have HQs that are a centralized hub that severely controls the branches and a management-mentality that views the world as one economic entity. The main feature is the centralization of assets, resources and competences. The function of branches is reduced to sales and services. In some cases financial competitive advantage is gained outsourcing the production sites abroad. Compared to the multinational and international organizations the branches in global organizations have less power to develop or modify new products and strategies. Managers in global organization, especially those located in HQ, often are more concentrated on the global market and consider the market to be equal worldwide. They have no comprehension of the local needs because there is no exchange of information between HQ and the national branches. 23 21 Cf. Bartlett/Ghoshal 1990, p 77. 22 Cf. Bartlett/Ghosal 1990, p. 31. 23 Cf. Bartlett/Ghoshal 1990, p. 75 f. 7 Definition and terminology Internationalization pioneers like Henry Ford build up their production plant according to this model and the Japanese started their offensive in the 70s and 80s with this model. 24 Normally global organizations first where very successful in their home market and used this success then to expand internationally. 25 Branch Branch Centralized hub: Most of the strategic assets, resources, responsibilities and decisions centralized Branch HQ. Branch Operational control: Tight control of decisions, resources and information through HQ Branch Global mentality: Management considers overseas operations as channels for the supply to a unified global market Branch Figure 3: Global organization 26 2. 4. 3 The transnational strategy Bartlett and Ghoshal claim that the traditional directions do note lead to adequate results anymore. Global and international organizations look out for a centralized answer to a worldwide market opportunity. Multinational companies search local solutions. Therefore Bartlett and Ghoshal developed the assumption for a new approach to solve the challenge of increased competitive and changing environment: The transnational strategy. 27 Companies nowadays can only survive in the competitive environment if they succeed in developing simultaneously worldwide competitiveness, multinational 24 Cf. Bartlett/Ghoshal 1990, p. 75. 25 Cf. Bartlett/Ghoshal 1990, p. 31. 26 Cf. Bartlett/Ghoshal 1990, p. 77. 27 Cf. Bartlett/Ghoshal 1990, p. 33 and p. 90. Definition and terminology 8 flexibility and global learning capabilities. These are the main elements of the transnational model. 28. The transnational model is a symbiosis or rather compromise of the other three traditional strategic directions. It combines both kind of competitive advantages: Because the affiliations are seen as strategic partners they can better respond to local needs and global synergies can be positive side effects. In the transnational model local markets are respected, and the proximity to the market is mainly an instrument to react more flexibly on a global scale. 29 The distinction between multinational and transnational companies is the amount to which the HQs are directly involved in the management of the branches. While a transnational company often has a strategic centre that manages to a high degree all the global operations a multinational company does not coordinate directly its foreign activities but rather considers the branches as interdependent business. The transnational organization acknowledges that there are certain resources and competences such as finance or research and development that are better centralized in the HQ while other resources are more advantageous to be decentralized in the markets to spread the competences on a global level. 30 2. 5 The Luxury Concept and Definition. The concept of luxury is known since ancient times. Lucullus, a roman senator who was famous in the ancient Rome for his marvellous evening events and his love for beauty, delicacies and sensorial pleasures, can be considered inventor of the luxury concept. 31 Chevalier and Mazzalovo provide a definition as follows: A luxury brand is selective and exclusive and provides an additional creative and emotional value for the consumer. It is a brand that is giving the desirable attribute of being scarce, sophisticated and in good taste. It also has a slightly understated and aristocratic attribute. 32 28 Cf. Bartlett/Ghoshal 1990, p. 33. 29 Cf. Bartlett/Ghoshal 1990, p. 84 30 Cf. Bartlett/Ghoshal 1990, p. 84. 31 Cf. Heine 2012, p. 2. 32 Cf. Chevalier/Mazzalovo 2008, p. viii Definition and terminology 9 According to Kapferer and Bastien a luxury brand can be defined by six criteria:33 †¢ An extremely hedonistic experience or product †¢ The price is exceedingly higher compared to the functional value †¢ Tied to a tradition, exclusive expertise and culture ascribed to the brand †¢ Accessible only through controlled and restrained distribution †¢ Obtainable with tailored supplementary services. †¢ Indicating a social representation, making the holder or beneficiary feel special and privileged 2. 6 Luxury versus premium car market The concept of luxury is represented in numerous sectors of activities 34. In this study we will look into more details of the specifics of the automobiles luxury sector. According to Chevalier and Mazzalovo luxury automobiles are â€Å"those cars that consumer perceive as being very special and different from the others. †35 It is necessary to differentiate between the concept of luxury and the concept of premium. The term luxury vehicle suggests a vehicle with a higher quality equipment, better performance, particularly precise construction, comfort, higher design, technologically innovative, and features that transfer an image, brand, status or prestige. Often the image is strongly related to the country of origin of the product. Premium products are upper-range branded products with an increased price without the emotional characteristics like hedonism or myth. „Upper premium brands remain comparative, whereas luxury is superlative. â€Å"36 Suitable examples for this difference can be found in the car industry. While an Audi A6 or A8 are super-premium cars because of the excellent usage value they provide, an Aston Martin or a Lamborghini are luxury cars because of their rarity and the prestige of the name. 37 33 Cf. Kapferer/Bastien 2012, p. 47. 34 Sectors of activities of luxury: Ready-to-wear cloth, jewelry and watches, perfumes and cosmetics, fashion accessories, wines and spirits, automobiles, hotels, tourism and private banking. 35 Cf. Chevalier/Mazzalovo 2008, p. x. 36 Cf. Kapferer/Bastien 2012, p. 43f. ; Cf. Kapferer/Bastien 2012, p. 53. 37 Cf. Kapferer/Bastien 2012, p. 53. 10 Strategic examples One historic management error that underlines the difference between luxury and premium is the Jaguar case. When Ford acquired Jaguar in 1989 they invested a lot in technology and training of the Jaguar employees. Thanks to common platforms with Ford they tried to sell small Jaguars. But this strategy seriously damaged the image of Jaguar and loosing the feeling of exclusivity they lost the luxury status. 38 3 Strategic examples In this chapter the before described theoretic information should be put together into a strategic framework. The strategic examples that will be considered are the most successful competitors of Maserati in terms unit sales: Porsche, Audi, Mercedes and BMW (figure 4). The first step was to obtain an overview of the structure of these companies and to identify their dependencies among each other and with other organizations (appendix 7. 3). The second step was to identify certain characteristics of these organizations and to put them into a framework developed to identify their degree of globalization or localization (appendix 7. 4). Based on this information a picture of their strategic directions has been deduced (appendix 7. 5). Bentley 2,57% Audi 6,56% Maserati 1,81% Jaguar 3,06% Maserati Market 2012 Aston Martin 1,74% Ferrari 1,26% Lexus 0,09% Porsche 48,43% BMW 12,23% Mercedes-Benz 22,25% Figure 4 The Maserati market in Germany in 2012 (market shares) 38 Cf. Kapferer/Bastien 2012, p. 51. 39 Management Services Helwig Smitt GmbH, Hofgeismar. 39 Strategic examples 3. 1 11 Daimler AG Gottlieb Daimler and Carl Benz invented the automobile in 1886. 40 Today the Daimler Group integrates different car manufacturers such as Mercedes-Benz, Smart and Maybach. Cooperating with various organizations worldwide it has converted from a mainly domestically oriented exporting company to a globally operating one. The company is now well established not only in Europe but also in Brazil and Argentina and has established joint ventures also in China. 41 However for the Daimler Group â€Å"the cultural inertia has been difficult to overcome, and global pretensions and traditional German attachments form a contradictory and unstable mix. †42 Therefore it is difficult to classify the group to Bartlett and Ghoshals model. The Daimler AG is rather a combination between the multinational and the global organization. Mercedes-Benz being historically strongly connected to its German roots has a centralized HQ, but at the same time its business units have been made self-responsible profit centres and procurement of materials is globally coordinated for each group of materials. Furthermore this has been intensified through local settlement of direct production, more consultancies and engineering in the branches, and also some development tasks located outside Germany. 43. Daimler is relocating its production sites into emerging markets, as for example the recently opened site in Hungary. This trend can be underlined by its decreasing production figures in Europe. They are currently reducing their production in Sindelfingen. 44 3. 2 BMW AG The BMW group may be the most German focused of the three companies. It is globalized in its objectives rather than in its activities. 45 Approximately 60% of the production of BMW is still located in Germany (figure 5). However BMW is one of 40 Cf. Daimler AG 2012, p. 4. 41 Cf. Lane 2001, p. 84. 42 Cf. Lane 2001, p. 85 43 Cf. Lane 2011, p. 84f. 44 Cf. Berens 2012, p. 17 45 Cf. Lane 2011, p. 86. 12 Strategic examples the most respected brands in the world. The explanations for BMW’s success are a strong brand character, a stable, family shareholding and a very German business philosophy. 46 It can be deduced that having local roots increases the perceived value of BMW. Producing nearly all its automobiles in Germany customers perceive BMW as an authentic product of German culture. BMW follows the same strategy of keeping the Mini production in England. 47 South Africa, 3,06% China, 5,65% Austria, 5,91% CKD, 2,16% UK, 11,23% US, 15,88% Germany, 56,11% Figure 5: Vehicle production of the BMW Group in the world in 2011 48 Therefore BMW can be classified an international organization according to Bartlett and Ghoshal’s model. BMW’s key competences are centralized but many other competences are decentralized. Thus BMW efficaciously implements the strategy of local assembling and local purchasing in countries with high customs duties on imports such as Russia, Thailand or India. However, under the terms of the distinction between luxury and premium products, the cars assembled in Thailand would not longer be defined as luxury products. They do serve to initiate customers into the brand, who then should develop the desire to purchase a ‘real’ BMW ‘made in Germany’. 49 BMW’s Management Meeting Place is a good example for the acquisition of knowledge in the HQ and then transferring it to the branches. First this discussion platform has been started in Germany and then it was transferred to locations abroad. The fact that this strategy works, and that behind BMW probably stands a 46 Cf. Kapferer/Bastien 2012, p. 67. 47 Cf. Kapferer/Bastien 2012, p. 78. 48 Cf. BMW AG 2012, p. 28. 49 Cf. Kapferer/Bastien 2012, p. 78. 13 Strategic examples strong team is underlined by the fact that BMW has been rewarded being â€Å"The World’s Most Attractive Employer† by a study conduced lately. In fact the employee attrition ratio at BMW has decreased continuously in the last 3 years (figure 6). 5,85 percentage of workforce 6,00 4,59 5,00 4,00 2,74 2,66 2,16 3,00 2,00 1,00 0,00 2007 2008 2009 2010 2011. Figure 6: Employee attrition ratio at BMW AG 3. 3 50 Volkswagen AG The Volkswagen Group maybe is the most advanced example of a conglomerate of successful car manufacturers. Among all the subsidiary brands the most significant ones are Volkswagen AG, Audi AG and Porsche AG, but there are also Bentley, Lamborghini, Seat and Skoda (appendix 7. 3). In fact Porsche owns 32,5% of the Volkswagen Group shares. Succeeding in managing a portfolio of so dissimilar organizations under one umbrella certainly makes the Volkswagen Group to a transnational organization according to Bartlett and Ghoshal. The cooperation in-between the brands of the Volkswagen Group are very well developed. One successful example of this approach is the common hybrid drive used in the Porsche Panamera, Cayenne and VW Touareg 51 . In addition the Volkswagen group has only little external cooperation mainly in the area of researching. The key competences remain inside the group. Becoming an integrated automotive industry is part of the group’s â€Å"Strategy 2018†. However, every single brand has its specific targets. Volkswagen’s target is to 50 Cf. BMW AG 2012, p. 39. 51 Cf. Porsche AG 2012, p. 67. The Maserati case 14 become the global market leader by 201852. This underlines the global factor. On the other side Porsche’s target is to become â€Å"the leader of exclusive sports cars manufacturers†53. Audi finally has the target to become the â€Å"premium brand that delights customers worldwide† 54 . Therefore the group’s values and capabilities remain inside the group and with a broad portfolio of interdependent and specialized brands completely different target groups can be addressed. The Volkswagen Group leads the global tendencies of the considered companies. But the core strategic functions (e. g. R&D and design) remain mainly German. However the Volkswagen Group also recognizes the importance of knowing the local sources and therefore has implemented the C3-Sourcing program. Becoming technical, organizational and social laboratories foreign branches contribute to the integration of the whole group’s worldwide activities. Hence some Audi models that have the same platform as Volkswagen models are now produced in Volkswagen factories in China. This local adaptation is the key of success for Audi’s sales in China, where the top members of the communist party cannot own a car unless it is made in China, but at the same time it forces the brand to give up their luxury strategy and replace it with a premium one. 4 The Maserati case 4. 1 Introduction to Maserati The Italian sports cars producer with the trident on the logo has been founded as Societa Anonima Officine Alfieri Maserati on December 1st 1914 in Bologna. Maserati was originally founded as a family business, but in 1937 it was sold to the Orsi family. In 1968 it was sold to Citroen and finally became part of the Fiat Group in 1993. 55 Thanks to his big sister Ferrari, Maserati has been reconstructed and from 2006 stands alone now in the structure of the Fiat S. p. a. (see figure 7). Today Maserati’s headquarter is based in Modena and it has two production sites in the north of Italy. Furthermore Maserati is divided in regions (Europe, Asia Pacific, 52 Cf. Volkswagen AG 2012, p. 233. 53 Cf. Porsche AG 2012, p. 14. 54 Cf. Audi AG 2012, p . 131. 55 Cf. Wikipedia 2012a. 15 The Maserati case. America and Middle East) with national branches in each separate country (e. g. France, Germany, United Kingdom). Maserati is currently becoming more and more significant for the rest of the Fiat Group. The first strategic milestone of the so-called â€Å"2010-2014 plan† was the integration of the Chrysler Group in June 2011. Figure 8 shows the increase of 30% of the workforce through this merger, mainly in North America. * including 58,5% Chrysler Group LLC Maserati (100%) Fiat Group Automobiles* (100%) AUTOMOBILES Fiat S. p. a. Ferrari (90%) Fiat Powertrain (100%) Magneti Marelli (100%). COMPONENTS & PRODUCTION SYSTEMS Teksid (84,8%) Comau (100%) Figure 7: Structure of the Fiat S. p. a. Workforce 80 62,583 63,214 60 40 2011 2010 60,336 44,668 24,616 23,596 20 56 39,498 5,579 0 5,838 Italy Europe (excl. Italy) NAFTA Mercosur 4,894 other regions Figure 8: Increase of the workforce in the Fiat Group through the integration of Chrysler in 2011 56 Cf. Fiat S. p. a. 2011, p. 11. 57 Cf. Fiat S. p. a. 2012c, p. 30. 57 The Maserati case 16 The second milestone was the plan presented in February 2011 in which â‚ ¬ 500 million were invested for the relaunch a production site58. In this new pIant two new models will be produced: The new Maserati Quattroporte by the end of 2012 and the Maserati Ghibli in the second half of the year 2013. 59 Thereby Maserati plans to increase its sales: While in 2011 Maserati sold 6,159 vehicles worldwide, in 2013 20,000 units are planed and by 2015 a growth up until to 50,000 vehicles per year is projected. 60 The Maserati S. p. a. can be classified as a global organization. They concentrate their decision and strategy making in the HQ in Italy and product development, production and marketing strategies remain centralized. The function of the branches is reduced to the implementation and realization of sales, services and marketing activities. The reason is linked to the strong connection with the domestic country and the patriarchal organizational culture that has developed over the years. One cultural example for this approach is that usually in the branches employees refer to the HQ as â€Å"the factory†. And while until today Maserati’s production sites are located just in the domestic market, by the use of a common platform and production site with the Jeep Grand Cherokee in the United States for the new SUV model, Maserati will enter also in the global environment. 4. 2 Maserati’s strength 4. 2. 1 The cooperation with the Fiat Group Being part of the Fiat Group is strength and weakness at the same time for Maserati. Through the cooperation with the other brands of the group, Maserati can benefit from economies of scale and scope. E. g. particular engines for Maserati are developed and produced in the production site of Ferrari. Another example is the collaboration with Jeep that will allow the new Maserati Levante to share the expertise of Jeep in building SUVs. 61 Moreover the fact that the production of this new Model will be relocated to the United States will finally transform Maserati from a purely domestic manufacturer to a global player. 58 Officine Automobilitische Grugliasco. 59 Cf. Fiat S. p. a. 2012c, p. 34. 60 Cf. Wehner 2012. 61 Cf. Baedecker 2012. The Maserati case 17 4. 2. 2 The luxury image Maserati as a brand itself and the Maserati products are stereotypes of luxury. Maserati is like none of its competitors a unique iconic and superlative brand that stands for an extravagant Italian lifestyle and sportiness. It profits from its long-time racing experience and expertise in building extremely performing engines. Additionally some parts are tailor made and its products are positioned in an upmarket pricing class that does not correlate with the functional value they provide. Moreover until today the units sold are rather restricted and therefore it is still a rarity to see a Maserati on the road. Thus possessing a Maserati is to a high degree socially representative and makes the owner feel special and privileged. Maserati is a myth and continuous to benefit from this legend. 4. 2. 3 Driving performance Another very strong characteristic of Maserati is its driving performance. Driving a Maserati is an overwhelming driving experience from the very first moment you switch on the engine. The expertise in building extremely performing engines is definitely a strength that should not be underestimated. „Hearing a Maserati’s V-8 engine scream on the way to its 7200-rpm redline is an experience gear heads will cherish. â€Å"62 4. 2. 4 The people that work for Maserati The people that work for Maserati are fundamental assets. A mixture of experienced and long-established employees on the one side and on the other side young, motivated and talented staff are the most important ingredient for the team that is able to face the current challenges. Maserati’s employees identify with the brand to a high level and therefore live for the brand. E. g. in the HQs in Modena are hanging poster with the slogan â€Å"I am Maserati†. 62 Cf. Floraday 2011. The Maserati case 4. 3 18 Maserati’s weaknesses 4. 3. 1 The image of the Fiat Group As mentioned above, being connected to mass-market brands like Fiat and Chrylser could affect Maserati’s luxury status. This is primarily related to the image of Fiat’s quality standards. The fact that some components are commonly introduced in both, Maserati and Fiat, could severely damage Maserati’s reputation. 4. 3. 2 Progress and technology Except for its engines, Maserati is not using the most advanced technology in his cars until now. Competition from other car manufacturers is very strong in this context (e. g. Porsche or BMW). Therefore this is a threat especially in those markets where technology and innovation are very important factors in the consumer buying behaviour process (e. g. Russia or Germany). Moreover while other manufacturers have already developed new propulsive forces e. g. the new Daimler electric fleet63, Maserati continued only the evolution of traditional fuel and diesel engines. As the petrol price rises also this threat is increasing. And depending on the trend of the environmental regulations in Europe and in the rest of the world, this lack of development could become an increasing challenge for the next future of Maserati. 4. 3. 3 Dealer network Another threat is the necessity to improve and expand the dealer network. There is a clear need to increase the distribution capillarity by appointing additional dealers. Moreover, there is also a need to transform the existing dealers bringing them to focus their activities and organizations on the brand. Dedicated sales, after-sales and marketing forces will be key to this transformation. E. g. most of the Maserati dealers sell also Ferraris and should adapt their staff with personnel dedicated exclusively towards Maserati. 63 Cf. Daimler AG 2012, p. 41. The Maserati case 4. 4 19 Maserati’s opportunities 4. 4. 1 Industrial opportunities With its current models range (Quattroporte, Gran Cabrio and Gran Turismo) Maserati is represented in the core segments.