DHistory: Saab is an acronym for Svenska Aeroplan Aktiebolaget. The company was founded in Sweden in 1937 for the purpose of building aircrafts for the Swedish Air Force during World War II. After the war ended, Saab entered the automobile industry and relocated to Trollhattan where they are still located today. Saab is well diversified producing products in five different business units: Aeronautics, Dynamics, Electronic Defense Systems, Security and Defense Solutions, and Support and Services. Saab was acquired by General Motors in 1990 who then sold the rights to Spyker Cars in 2010. Target Consumer:
Saabs’ target market is labeled as “postmodern individualists” who create their own style rather than following others. These individuals are considered well-educated and usually live in urban areas. They seek a car that is simple, delivers quality performance, and provides outstanding safety. The car driving experience is built around the idea of providing pleasure for the driver. Saab’s main markets include Sweden, United States, and the United Kingdom. Competitors:
Saab competes with many well established brands and companies in each of its main markets. The Volkswagen Group which owns; Audi, Bentley, Bugatti, Lamborghini, SEAT, Skoda, and of course Volkswagen is one of Saabs’ numerous competitors. They also compete with BMW, Volvo and Daimler AG who makes Mercedes. Saab has been struggling to revive slumping sales in the US market for some time. Their lack of ability to create a distinctive design and finding the right price tags are some of the reasons they have found it difficult to compete as a luxury brand. Industry Analysis:
The automobile industry as a whole has taken a hit since the global economic downturn and has created an uphill battle for Saab ever since. In 2008 the Swedish government had to provide financial assistance to both Volvo and Saab due to the automotive industry crisis.
These events have taken a toll on Saabs output and performance within the industry. In February of 2009 General Motors, Saabs owners at the time warned that Saab may fail should the Swedish government not intervene again. Struggling to maintain a stable financial intake Saab was forced to close down its manufacturing plants and again seek financial aid outside of the company. Saab’s capacity to preserve a stable imagine as it moves forward is critical to future success in the competitive automobile industry. SWOT Analysis:
After taking a look at Saab’s strengths, one of its strongest is its ability to innovate. As stated earlier, Saab offers a variety of products ranging from military defense, aeronautics, civil security products, and automobiles. Saab has demonstrated several first mover advantages throughout its history. For instance, Saab created the first car standardized with fitted seatbelts in 1958. More recently, they introduced cross-wheel drive in 2008. In general, Saab emphasizes safety in the production of its cars, satisfying its customers by creating a safe vehicle is one of Saabs key strengths.
A few other strengths include brand loyalty as well as foreign brand strength. With strengths also comes weaknesses, and one of Saabs biggest weakness is its small market share. Its automobiles are only marketed in select countries and to a certain consumer. This is probably a key reason why the company has been losing sales, causing them to recently halt production due to insufficient funds owed to their suppliers. This has been leading to work stoppages along with Saab missing sales targets. This can drastically hurt the company’s brand image and further damage sales in the future. Saab is also caught in the middle of prices with competition.
Majority of its cars are not priced towards the lower or upper bounds in the market. Forecasting Saab’s opportunities in the future all does not seem to be lost. If Saab is able to establish a form of credit and investment from outside resources, the company can get back on its feet. Saab’s main focus now should be to move into new markets and attempt to capture market share. With recent news and talks of securing money from Chinese investors, Saab should act on this opportunity.
By partnering with the Chinese, Saab will have access to the Asian markets which can potentially generate new market share and sales. They also have the potential to gain manufacturing innovations which can lead to cost savings as well as technological advancements. Saab is still a company with many threats however. If Saab is unable to capture market share, it will be difficult for them to recover. Key Issues:
As mentioned earlier, Saab Automobile was forced to stop making cars because of a dispute with their suppliers about payment. The vice president of global sales at Saab hoped the issue would be resolved within a week so the carmaker could get the needed parts and resume vehicle assembly. This incident was the result of Saab’s component makers halting deliveries and demanding payment. Saab did not have the cash to pay their suppliers, so a loan was needed. It is important for a manufacturing company to maintain a good relationship with their suppliers.
Saab was unable to do that and it hurt the production of their cars. Innovation is also important for Saab, they should continue to innovate new safety features and improve the performance of their vehicles to achieve a competitive edge. Recommendations:
Since the major issue for Saab right now is lack of liquidity, the first recommendation for Saab is to get more funding from the European Investment Bank. Bringing a new Russian bank could be a good idea and building trust to enhance investment. Unfortunately, Saab’s financial plan is quite dependent on the government policy which makes it more difficult for Saab to be flexible in its decision making. It is very important that
Saab maintains better communication and trust with its suppliers to increase a good reputation and a basis to demand longer deadlines for payment. In addition, there might be some operational issues or supply chain unbalance, which could be the cause of lack of leadership. This could be the result of their illiquidity. In this case, this is now high time for Saab to actually look over its operation and whole procurement process, apply lean manufacturing, and figure out the root of the problem.