Analysis of International Strategies
This paper analyzes the various techniques BYD has employed to improve its competitive advantage in local and international markets. BYD, over the years, has grown both internally and externally, increasing its financial and market base. Among the various business-level strategies available, BYD employs a differentiation strategy. Additionally, its corporate strategy is related-diversification to, whereas the international model BYD incorporates is the localization method. The unique methodologies and the distinctive benefits they have on the company are enumerated below.
Business-Level Strategies
BYD Company uses a broad differentiation business-level strategy in its operations. This technique is appropriate for businesses seeking a diverse customer base based on their individuality. Differentiation enables a business to stay competitive in the market on a basis other than pricing. Li et al. studied the effect of government regulations on EV acceptability by examining four critical consumer decision-making factors: the desire to buy, procurement time, environmental consciousness, and cognitive requirements (6). These researchers noted that performance parameters, not financial benefits, are the most influential factor in a user’s intent to buy an electric car. Therefore, despite BYD’s competitors manufacturing low-priced vehicles, the innovations with which BYD makes the EV vehicles attract consumers to purchase their commodities.
The other advantage of a differentiation model is that it capitalizes on a product’s distinctive characteristics. The effective manufacture and sale of EVs are contingent upon overcoming numerous obstacles, including the availability of products capable of autonomous substitution at a low price and the existence of efficient and simple-to-use infrastructure. Additionally, developing a business plan that capitalizes on the low cost of batteries has created a manufacturing infrastructure for EVs. BYD’s four battery varieties are LAB (lead-acid), Li-Ion; NiMH (nickel-metal hydride); and sodium, sometimes known as ZEBRA, Zero-Emission Battery different and recognizable to the business alone (Mahmud et al. 4185). As a result, companies have struggled to build comparable EVs.
Corporate-Level Strategies
BYD applies related-differentiation corporate strategy in its business operation. Related-diversification is a term that refers to a corporation’s strategic growth into growing marketplaces, domains, companies, and segments, which is typically prompted by responsiveness to increased competition in the industry. As discussed below, some of the benefits that BYD has enjoyed culminated in using this corporate strategy.
Higher Economies of Scale
Given the strong connection between the linked diversification and the firm’s activities, there may be cost advantage benefits associated with growing into the new field. For instance, the same equipment can be employed in the additional area, spreading the fixed cost of the technology over a greater range of commodities produced. The number of raw goods purchased increases, potentially lowering the cost per unit. BYD presently operates 20 plants worldwide, 14 in China and six in Russia, Syria, Egypt, Sudan, the United States of America, and Brazil Gyan et al. 1110). In Brazil, BYD established a CKD bus assembly park in the Campinas neighborhood of Sa Paulo, and its minibuses have been evaluated in Curitiba, Rio de Janeiro, Salvador, Brasilia, and Joinville Gyan et al. 1110). As a result, BYD experiences higher economies of scale by having a more comprehensive capital base.
Possibility of Resource Sharing Across Domains
One of the primary benefits of appropriate diversification is the capacity to pool critical resources across several sectors. As a result, BYD’s core resources and competencies can be applied in a new area, perhaps providing the firm with a competitive advantage over other enterprises that lack equivalent capabilities. In addition, there may be innovation and product characteristics that can be used in the new region. For instance, its joint venture with Daimler led to a cost-sharing in the manufacturing of DENZA, an EV in the Chinese market (Gupta et al. 10). This merger also boosted its overall profits in the Chinese market leading to higher demands for EVs.
International Strategies
BYD uses localization techniques in its international methodologies as it has proven to be beneficial. Localization of promotional materials entails more than simply transferring pre-existing conventional advertisement content into another language. It entails an in-depth examination of how social and economic conditions influence customers’ purchasing behavior. Globalization of marketing lowers the barrier to entry into new market segments. When BYD presents its business to a new marketplace, it may encounter many hurdles to entry. It could be a regulated market, constrained or rare routes of distribution; intense rivalry; or a lack of advertising and promotional awareness. For instance, due to the ongoing USA-China trade wars, BYD’s EVs’ entry is hindered (Itakura 78). Market adaptability is required in many nations, making localization of marketing a no-brainer. However, in other markets such as Brazil, market entry was easy due to the Brazilian government’s friendly regulations on foreign investments. Therefore, this has dramatically improved its customer base globally hence boosting its sales revenue.
Conclusion
Having a well business, corporate, and global strategy is a vital aspect of any business. BYD’s techniques at various levels have enabled it to pursue new market environments and establish itself as a powerful automaker globally. Its successful entry into new marketplaces such as Brazil has enabled grow its financial base and increased demand for its electric vehicles. Additionally, corporate-level strategies have led to joint ventures with companies such as Daimler. Therefore, facilitating the transfer of knowledge and skills as seen in the merger through the manufacturing of DENZA EV.
Current and Future Challenges Facing BYD
The electric car sector is booming, driven by the increasing demand for zero-emission modes of transportation. Nevertheless, as demand expands for EVs, all manufacturers have faced the difficulty of failing to satisfy consumer expectations. The vast majority of consumers are unaware of how much R&D, expertise, and development are incorporated into EVs; this also inhibits a receptive response to EV malfunctions and restrictions. BYD Energy has a similar set of issues due to a bad market reaction to the limits imposed on electric buses in many countries in China and the United States. BYD buses in Los Angeles faced speed and distance coverage issues, as well as frequent stalling, resulting in unreliability (Rogge et al. 282). Notwithstanding the corporation’s opportunities to encourage clients on the advantages and disadvantages of electric vehicles, most people equate commodity failure with brand ineffectiveness, resulting in a bad image of the BYD bus name in most countries.
Apart from the negative press, BYD faces the threat of resource scarcity essential to advance technological advancement and research and development for commercial improvement and advancement. As businesses seek to broaden their product lines and obtain a competitive edge, the costs of research, technology, personnel, and commodities increase proportionately. For example, according to BYD Energy, the cost of designing and producing an electric vehicle is more than that of a conventional gasoline vehicle (Wu et al. 5). For firms like BYD who wish to expand into industrial, commercial vehicles, the cost of manufacture is prohibitively high, and the marketplace is not yet prepared for high-priced autos. In addition, BYD may be constrained in this area by a shortage of inventive and technical expertise capable of developing scientific and structural remedies to the limits of product lines.
The increasing competition also jeopardizes BYE Energy’s viability as all of the globe’s prominent automakers are pursuing diversification into electric vehicles as a means of securing potential markets in the global battle to combat climate change. In this sense, BYD faces increasing rivalry in both domestic and international markets, affecting market proportion, net sales, and long-term competitiveness. Likewise, the company faces competition from solar photovoltaic (PV) panels and renewable storage batteries.
Some of the recommendations that BYD seeks to cope with the above-mentioned future challenges are as discussed below. As more promising EV companies such as NIO, Xpeng, and Li Auto enter the Chinese market, BYD has failed to compete, relinquishing the top EV marketing position to Tesla (Saxena and Siddhi 57). Reluctant to be left adrift, BYD is now battling to reclaim its portion of the electric vehicle industry using its patented LFP blade battery structure. BYD is developing the planet’s first EV with a mileage of more than 600 kilometers using this novel cell-to-pack technology, which is not only perfectly secure and less expensive but also cobalt-free (Thompson et al. 7587).
Along with federal government benefits, several large Chinese urban centers promote fully electric and hybrid cars inside their jurisdictions. Generally, tax benefits are awarded to domestic manufacturers located in the city or region. According to Du et al. state municipalities should eliminate protectionism in the hybrid cars industry (61). Current regulations and reward schemes provide subsidies mainly to regions that manufacture vehicles, which may deter entrepreneurs from other Chinese provinces and multinational manufacturers. However, there are some indications that this is beginning to change. In the case of BYD, several city councils offer benefits to residents who purchase the firm’s BEV and PHEV variants. In Beijing, the e6 model is eligible for a municipal subsidy of US$ 8646 (Du et al. 63). Apart from the financial incentive, the Beijing municipality wants to raise the number of charging points in the metropolis from 20 to 100 to offer customers more charging spots (Du et al. 64).
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