Reference no: EM132607047

Read the case carefully and give the answer to the below question. Answer should be from case.

During the 1960s and early 1970s, the Japanese car manufacturers entered the European market by targeting the low-cost/low-added-value sector, which they believed would not be defended by European manufacturers. Their 'no frills' products were seen as cheap and bought with few added-value expectations. The sales volume that this produced, and the experience gained from this market entry strategy allowed them to form a foothold into Europe and develop other, more profitable, strategies.

By the late 1970s and early 1980s, the improved quality and reliability of their products changed the perception of their cars to that of being as good as their European competitors. However, the Japanese cars continued to be sold at a cheaper price than their rivals, which allowed them to increase sales volume further.

Following their earlier success, the Japanese further advanced their position in the late 1980s by producing competitively priced cars that were more reliable and of better quality than their rivals. Competitors followed the Japanese and attempted to maintain their position by improving the quality and reducing the relative prices of their own cars.

By the mid-1990s, the main Japanese manufacturers, in common with other automobile companies, were seeking ways to differentiate their products based on providing extra features such as airbags, air conditioning and longer-term warranties. For much of this period the Japanese lead times for such innovations were less than most of their competitors'. However, by 2000, competitors were catching up and sustainable differentiation was becoming more difficult.

Toyota's Lexus model - which stands alone from the rest of its range and does not use the Toyota name - is competing against manufacturers such as Jaguar and Mercedes in the luxury market segment. Because, as a new entrant, it did not have the 'pedigree' of its competitors, advertising campaigns aimed to persuade buyers that they should be buying cars not on name, but on features.

Despite having high levels of labour productivity Nissan experienced falling sales and financial losses in Europe due to fierce price competition. Its product range was not seen as sufficiently attractive to hold market share or trade profitably. In March 1999 Renault bought a controlling stake in Nissan and embarked on a programme of product development.

Question

Analyse the changing business strategies of Japanese automobile companies by applying a suitable framework.