Morgan Motor Company

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Morgan Motor Company
An analysis on
Internal and external environment

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Table of Contents
Executive Summary .................................................................................................................. iii
1.0 Current Situation.................................................................................................................. 1
1.1 Current condition ............................................................................................................. 2
1.2 Strategic Posture .............................................................................................................. 2
2.0 Corporate Governance......................................................................................................... 6
2.1 Board of Directors............................................................................................................ 7
2.2 Top Management ............................................................................................................. 9
3.0 External Environment: Opportunities and Threats ............................................................ 11
3.1 Physical Environment: Raw Material ............................................................................ 12
3.2 Societal Environment ..................................................................................................... 14
3.3 Task Environment .......................................................................................................... 15
4.0 Internal Environment: Strength and Weaknesses ............................................................. 20
4.1 Corporate Structure ........................................................................................................ 21
4.2 Corporate Culture........................................................................................................... 30
4.3 Corporate Resources ...................................................................................................... 31
5.0 Analysis of Strategic Factors (SWOT) ................................................................................. 55
5.1 External Factors Analysis Summary (EFAS) Table: ..................................................... 56
5.2 Internal Factors Analysis Summary (IFAS) Table: ....................................................... 57
5.3 SWOT Analysis ............................................................................................................. 58
6.0 Conclusion .......................................................................................................................... 61

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Executive Summary
This Strategic Management report on Morgan Motor Company is a complete analysis
of Company‟s Internal and External environment. The main objective of the report
was to analyse the SWOT matrix of the company. In the first step, the company
mission, objective, current situation have been highlighted. Corporate Governance
featured the Board of Directors and Top Management of the company. In the External
environment analysis, raw materials for the automobile industry, STEP analysis for
the societal environment and Porter‟s 5 forces for Task Environment have been
analysed. In the internal environment, corporate resources, culture and structure have
been analysed in detail. Corporate Resources section featured the major activities of
Operation, Marketing, Finance and HR. The last section of the report deals with the
SWOT analysis shown in SWOT matrix. The report includes EFAS table and IFAS
table and the scores regarding importance of the factors and the company‟s response
to the particular factor. The report is based various data fetched from different
journals and websites which are referenced in the appended part. The objective of the
report is giving a reader a detailed glimpse about internal and external factors of
Morgan Motor Company.

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Morgan Motor Company: an analysis on Internal and External Environment

1.0 Current Situation

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Morgan Motor Company: an analysis on Internal and External Environment

1.1 Current condition
Morgan motor company is one of the most prestigious and superior car producer
companies in Europe. It designs and produces sports cars of classic and sophisticated
models with the maximum use of craftsmanship and quality materials. The production
factory is located at the Malvern link, Malvern, Worcestershire since the beginning of
the company in 1910. At present the factory produces around 1300 cars per year and
all the cars are assembled by hand. The production process has not been changed
much sticking to the ancient form of production. That‟s why the waiting list for a car
was around 10 years but now the waiting list has been reduced to less than 1 year
through some technological modification in production. But they consider this waiting
list as a pride and believes that those who can‟t wait long to gain a Morgan car, are
not worthy of owning a Morgan car.

1.2 Strategic Posture
Currently it sells Morgan cars around the globe except in South America. It has
dealership and service points in UK, Germany, Poland, Italy, Portugal, Spain, Greece,
Norway, Finland, Sweden, Romania, Turkey, UAE, Thailand, China, Japan,
Philippines, USA, Canada and South Africa. It currently produces cars of 8 models of
that antique designs and state of the art engines with 21st century updated look and
adjustments without major modification. It produces models of 3 wheeler, 4/4, plus 4,
plus 8, 4 seater, Roadster, Aero super sport and Aero Coupe. The latest car model is
going to be added by MMC is the new EVA GT.
The R&D sector has undertaken new projects to develop more appropriate production
process and better performance by the cars. The newly projects started by Morgan
motor company are

Magnesium project: To introduce magnesium alley as primary
construction material to reduce weight and improve structural
performance.



Morgan electric plus E: A purely electric demonstration vehicle.



EVA GT: To bring more fuel efficiency and more environment
friendly engine system.

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Morgan Motor Company: an analysis on Internal and External Environment

1.2.1 Mission:


To adhere to the royal heritage in production process and designing of the
cars: Morgan motor company is not willing to change its‟ ancient form of
production and design which is too slow and can produce a limited number of
cars. The company doesn‟t want to change it because they want to continue
with their uniqueness of hand made cars with aristocratic design. The
production process is complex and requires highly skilled workers. Workers
are trained for 3-4 years to ensure the maximum utilization of craftsmanship.
The company operates in a niche market and it differentiated itself from other
mass production car manufacturer. They think that if they change their
production process to gain efficiency, they will lose their uniqueness and they
will have to face more competitors to fight.



To provide superior and classic feel of real sports car to the customer:
The designing of the cars hasn‟t been changed so much. They produces cars
only of few (8) models with few modification to give a taste of the most
sophisticated and luxurious car. They use expensive and quality parts from
well-established outside suppliers like Ford, Fiat, and Austin Rover. These
critical parts are supplied in a standardized form to ensure that no major
engineering modification is required. Their designs have been of those old
classic models with the 21st century look.



Survive in the market for a long period: Morgan motor Company aims at
watching it running for a long period crossing 100 years of operation rather

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Morgan Motor Company: an analysis on Internal and External Environment

than focusing on growth in the market. It has a long desire to hold and share
its‟ heritage of handmade car and design with the people even after 100 years
of immense technological advancement and changes.
1.2.2 Objective:


To be the most prestigious car producer around the Globe with its‟ unique and
traditional production procedure and designing. At the very beginning,
Morgan motor sold their cars in the Great Britain. But gradually they entered
in the Global market and become one of the most luxurious car producers in
the world.



Expand in other continents gradually: The Company operates in most of the
countries of Europe. It started selling cars in all other countries except the
South America. It is now aiming at spreading its‟ royal touch to most possible
destinations around the globe.



Customer satisfaction through offering personalized Morgan car: This
unique service is for those Morgan car users who would love to buy
personalized Morgan car. In this way Morgan car is available of 3600 different
colours with a little extra payment. Morgan Company has attained better
customer contentment through this customized car production.

1.2.3 Strategies:


Market differentiation strategy: Morgan Motor Company clearly focused on
differentiated market as they have been producing the cars of unique design
and engines. They already created the aristocratic value of 100 years of handmade car producing that no other car company possess. Also as their
production rate was too low, they weren‟t competing with other mass
producing car companies. Because they intended to create a separate royal
group of Morgan car users.



KTP: Collaborative arrangement named „KTP‟ (Knowledge Transfer
Partnership) with Birmingham City University to develop capability for
concept design and enable new vehicle design. KTP was initiated to exchange
knowledge, new concepts, innovations and designs between the company and
the University.

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Morgan Motor Company: an analysis on Internal and External Environment



More investment in staff management rather than capital: The
management decided to invest more in staff to ensure more effective team
performance. They empowered the staff to create more value and superior
output but not to make any drastic changes regarding the production process
improvement or design.

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Morgan Motor Company: an analysis on Internal and External Environment

2.0 Corporate Governance

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Morgan Motor Company: an analysis on Internal and External Environment

2.1 Board of Directors
Morgan Motor Company is a private limited company. In the board there are 15
members. The list of board of members are given below1. James P. Gorman
Mr. Gorman is Chairman of the Board and Chief Executive Officer of Morgan
Stanley. He also serves as Chairman of Morgan Stanley Wealth Management,
a leader in global wealth management.
2. Erskine B. Bowles
Mr. Bowles has been a director since December 2005. He was named CoChair of the National Commission on Fiscal Responsibility and Reform in
2010. Mr. Bowles served as President of The University of North Carolina
from 2006 through 2010.
3. Sir Howard J. Davies
Sir Howard J. Davies has been a director since 2004. He is currently nonexecutive Chairman of Phoenix Group Holdings and a professor at
SciencesPo, the Paris School of International Affairs.
4. Thomas H. Glocer
Mr. Glocer has been a director since 2013. He served as Chief Executive
Officer of Thomson Reuters Corporation, a news and information provider for
businesses and professionals, from April 2008 through December 2011.
5. Robert H. Herz
Mr. Herz has been a director since July 2012. He served as Chairman of the
Financial Accounting Standards Board from July 2002 to September 2010 and
was previously a member of the International Accounting Standards Board.
6. C. Robert Kidder
Mr. Kidder has been a director since 1993 and was appointed Lead Director by
the independent members of the Board in 2006. He was non-executive
Chairman of the Board of Chrysler Group LLC from June 2009 to September
2011.
7. Klaus Kleinfeld
Mr. Kleinfeld has been a director since May 2012. He has served as Chairman
and CEO of Alcoa Inc., a producer and manager of primary aluminum,
fabricated aluminum and alumina, since 2010.
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Morgan Motor Company: an analysis on Internal and External Environment

8. Donald T. Nicolaisen
Mr. Nicolaisen has been a director since 2006. He served as Chief Accountant
for the U.S. Securities and Exchange Commission from September 2003 to
November 2005.
9. Hutham S. Olayan
Ms. Olayan has been a director since 2006. Ms. Olayan is a senior executive
and director of a private multinational enterprise, The Olayan Group, a major
investor worldwide as well as a leading diversified business in Saudi Arabia.
10. James W. Owens
Mr. Owens has been a director since 2011. From 2004 to 2010, he was the
Chairman and Chief Executive Officer of Caterpillar Inc., a manufacturer of
construction and mining equipment, diesel and natural gas engines and
industrial gas turbines.
11. O. Griffith Sexton
Mr. Sexton has been a director since September 2005. He is an adjunct
professor of finance at Columbia Business School and a visiting lecturer at
Princeton University, where he teaches courses in corporate finance.
12. Ryosuke Tamakoshi
Mr. Tamakoshi has been a director since July 2011. He is a senior advisor of
The Bank of Tokyo-Mitsubishi UFJ, Ltd., a position he assumed in June 2010.
Mr. Tamakoshi served as Chairman of Mitsubishi UFJ Financial Group, Inc.
13. Masaaki Tanaka
Mr. Tanaka has been a director since May 2011. He is Representative Director
and Deputy President of Mitsubishi UFJ Financial Group, Inc.
14. Dr. Laura D. Tyson
Dr. Tyson has been a director since 1997. She has been S.K. and Angela Chan
Professor of Global Management, Walter A. Haas School of Business,
University of California at Berkeley, since January 2007.
15. Rayford Wilkins, Jr.
Mr. Wilkins has been a director since 2013. He is former CEO of Diversified
Businesses of AT&T, where he was responsible for international investments,
AT&T Interactive, AT&T Advertising Solutions, customer information
services and the consumer wireless initiative in India.

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Morgan Motor Company: an analysis on Internal and External Environment

The members of the board of directors are not from Morgan family and all of them are
external board members. The board members in the Morgan Motor Company take
place in the decision making process and in the policy making of the organization.
The Board of Directors of Morgan Motor Company is from various fields and they
provide their knowledge, skills and connections in the betterment of the organization.
In the decision making process and in the strategy making process all the board takes
part actively and they suggest future direction to the top management.

2.2 Top Management
The top management of Morgan Motor Company consists of 10 key people. And the
list is given below:
1. Andrew Duncan- Chairman of Morgan Motor Company
2. Steve Morris- The Managing Director of Morgan Motor Company
3. Tim Whitworth- The Finance Director of Morgan Motor Company
4. Graham Chapman- The Technical Director of Morgan Motor Company
5. Gregor Dixon-Smith- The Supply chain Director of Morgan Motor Company
6. Mark Ledington- The Marketing Director of Morgan Motor Company
7. Jackie Pertwee- The Non-Executive Director of Morgan Motor Company
8. Jill Price- The Non-Executive Director of Morgan Motor Company
9. Lawrence Price- The Non-Executive Director of Morgan Motor Company
10. Craig Hamilton-Smith-The Non-Executive Director of Morgan Motor
Company
The top management along with the board of directors is responsible of all the
decisions that are made in the organization. The top management is involved in the
strategy making process. All the members of the top management takes part in the
operation process but the 4 Non-Executive Directors only take part in the decision
making process. The top management in the Morgan Motor Company is efficient and
skilled person who takes all the decisions ethically and in a socially responsible
manner and they also maintain a healthy relationship with the labor force to keep the
organization running.
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Morgan Motor Company: an analysis on Internal and External Environment

Top
Management

Finance

Aero Racing
HR
Accounts

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Technical

Supply Chain

R&D

Logistics

Design

Inventory

Marketing

Promotion
Sales

Distribution

Conference

Morgan Motor Company: an analysis on Internal and External Environment

3.0 External Environment:
Opportunities and Threats

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Morgan Motor Company: an analysis on Internal and External Environment

3.1 Physical Environment: Raw Material
Raw materials that are used in the manufacturing in the automobile in Morgan Motor
Company are given below:


Iron Ore, Magnesium Ores, Bauxite give Iron, Manganese and Aluminum
used for fabricating the body.



Silica is used to fabricate glass



Petroleum derived plastics



Platinum for catalytic converters



Wood as trim



Latex for rubber



Lithium-ion batteries are used in electric cars

Iron ore: the lower grade ochre ores are especially common in the hills surrounding
Winscombe and the Lox Yeo Valley. Ochre was being mined on Auxbridge Hill in
the 1920s, and old workings exist on Banwell Hill and on the northern side of
Sandford Hill. Iron ore is also imported from China, Brazil and Australia is higher
grades of metals at lower costs.
Silica is used to fabricate glass: The basic ingredient of silica glass is the silicon
dioxide which is found in nature especially in quartz and beach sands. Silica glass
powder is obtained by sintering a green compact in a diverse atmosphere. This glass is
used in Morgan cars as it‟s lighter than the previous version

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Morgan Motor Company: an analysis on Internal and External Environment

Petroleum derived plastics: Plastic is made of synthetic or semi synthetic organic
materials. The main components used to produce plastic are natural products such as
coal, natural gas, salt, cellulose and petroleum. Petroleum consists of thousands of
complex components and thus the crude oil needs to be processed. Propylene and
ethylene are extracted from the crude oil and placed in a reactor and combine with a
catalyst. Then other additives are added to create powdered polymer. MMC uses
thermoset type of plastic from the very beginning of its production. The main supplier
of the plastics for MMC is the „Automotive plastics‟ company. The amount of plastic
used in a Morgan car is very little only in the switch gear and some buttons. So, this
component is produced off the shelf and in mass amount. They don‟t put up much
energy for plastics.
Wood as trim: As the body kits are needed to be attached separately, ash wood is
much easier to be used in the frame. The frames come from the 1950s vintage roadster
which is called the Morgan wood shop. The chassis consists of both wood and
aluminium which is produced separately from main body shell. Complex panel is
created to produce panels of optimum weight and thickness which required multiple
panels and extended assembly lines. The wooden cassis is drowned in a liquid mixture
to prevent all further damage of wood.
Platinum for catalytic converters: A catalytic converter is used to convert toxic by
product into less toxic substance. Specific catalytic reactor is used for specific catalyst
installed. Catalysts are mainly consisting of ceramic structure coated with metal
catalysts which are Platinum, rhodium and palladium. Two types of catalysts are
available, oxidation and reduction catalyst. When NO and NO2 molecule contacts the
catalyst, it rips the nitrogen atom from the molecule to free the Oxygen as O2.
Currently twin catalyst system is being installed the Morgan cars.
Latex for rubber: Latex is a mix of organic compounds produced my plants special
cells called caticifers. The composition differs from plant to plant. Natural rubbers are
found from a single species of tree, Havea Brasiliensis. After processing the natural
latex, it becomes the rubber with numerous mechanical properties. It has tensile, tear
resistance, elongation and resilience. Other additives are also added to resistance to
heat, sunlight, oxygen and ozone. But synthetic rubber has taken place of natural latex
rubber due to its low cost but excellent properties.
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Morgan Motor Company: an analysis on Internal and External Environment

3.2 Societal Environment
Environmental factors for a company or an industry refer to variables and conditions
around that company and industry that affect its working and performance, but which
cannot be controlled. We can differentiate environmental factors from the internal
variables of factors that are under reasonable control of a company or industry. A
company cannot change or influence the environmental factors, but it does have fair
amount of control over impact of environmental factors on its performance. This
control is achieved by, understanding, anticipating, and responding wisely to
environmental factors by management of internal factors.
To understand, analyze and deal with environmental factors, we can use the Step
Analysis that classifies all environmental factors in the following groups.
1. Political-Legal
2. Economical
3. Socio-cultural
4. Technological
Some of the major environmental factors affecting automobile industry in each of
those groups are described below.
Political-Legal


Political climate in different countries producing buying automobiles
regarding policies on import, export and manufacture of automobiles and
automobile components. This will also include policies on allowing setting up
of manufacturing plants by foreign companies.



Stability of governments. This may affect the future conditions in a country.



Taxation policies.



Legal provisions relating to safety measures

Economical


The population figures and automobile buying capacity of people.



Level of economic activity that affects need for commercial use of
automobiles

Socio-cultural


Lifestyle and preferences of people, which impact their choice of types of
automobiles.

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Morgan Motor Company: an analysis on Internal and External Environment



Social norms that impact the decision to own and use automobiles versus other
means of transport.

Technological


Technology relating to automobile designs.



Technology of automobile manufacture.



Technological developments that may increase or decrease use of automobiles.

• Political Climate of
Different Countries
• Stability of
Government
• Taxation policy
• Legal Provisions
Relating Safety
Measues

• Lifestyles and
Preference of People
• Social Norms

PoliticalLegal
Environment

Sociocultural
Environment

Technological
Environment

Economic
Environment

• Technology Relating to
Automobile Designs
• Technology Relating to
Automobile
Manufacture
• Technological
Development

• Populations Figures
and Automobile
Buying Capacity
• Level of Economic
Activity

3.3 Task Environment
Porter's 5 Forces in the Automobile Industry
Porter's Five Forces, also known as P5F, is a way of examining the attractiveness of
an industry. It does so by looking at five forces which act on that industry. These
forces are determinants of that industry's profitability.
The five forces are:
3.3.1 The threat of new entrants


Economies of Scale: This means scale economies in the production. In the
auto manufacturing industry, this is generally a very low threat

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Morgan Motor Company: an analysis on Internal and External Environment



Product Differentiation: Corporations such as Bentley, Aston Martin and
Rolls Royce creates high entry barrier through their higher level of advertising
and promotion.



Capital Requirement: The need to invest a huge amount of capital resource
in the manufacturing facility.



Switching Cost: Since one production method is used in an organization, the
employees are reluctant to switch to any alternative method because it needs a
higher training cost.



Access to Distribution Channel: It is the ability to distribute the product in
the market and create demand. For example; Alfa Romeo has been out of the
US since the early 90s largely due to the inability to re-establish a dealer
network.



Government Policy: Governments can limit entry to an industry through
licensing requirements by restricting access to raw materials.

3.3.2 The bargaining power of buyers/customers


Number of supplier Companies: There are around 42 companies who are
manufacturing automobiles in the UK automobile industry.



Uniqueness of Supplied Product: In the UK automobile industry every
manufacturer is bringing some uniqueness in their product. Some are
producing economic cars and some are producing royal automobiles.



Availability of Substitute: In the UK automobile industry availability of
substitute is high, because there are 42 companies who are producing
automobiles and customer has a wide range of companies from which they can
choose their cars.



Threat of Backward Integration: A buyer in the automobile industry has the
potential to integrate backward by producing the product itself.



Purchasing Industries Purchase Behaviour: The buyers purchasing
behaviour is expressed in order to buy an automobile. The premium customers
are willing to spend more money on quality and aesthetics of the automobile
but the general customers want high quality in low price.

3.3.3 The threat of substitute products

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Switching Cost: Switching cost in the automobile industry is less in the UK
market. Because most of the buyers purchasing an automobile once they do
not tend to switch brand frequently.



Prices: Prices matter in the industry because buyers shift to the product which
is offering high quality yet having low price.



Access: Access in the automobile industry for buyers has become much easier
than it was in the beginning of automobile industry.

3.3.4 The amount of bargaining power suppliers have


Number of Buyer Companies: There are 42 automobile manufacturing
companies in UK who are purchasing raw materials for manufacturing
automobiles from number of suppliers.



Uniqueness of Product: In order to manufacture an automobile company has
to work with several suppliers and each of the suppliers supply single product.



Availability of Substitute: For the suppliers there are 42 companies where
they can supply their product and availability of the substitute is present in the
UK automobile market.



Threat of forward Integration: The threat of forward integration is present
in the automobile industry because supplier can integrate with customers to
produce the same automobile.



Purchasing Industries Purchase Behavior: In this industry the companies
gives order on large amount of products and purchases huge quantity.

3.3.5 The intensity of the competitive rivalry


Number of Competitors: We know that in most countries all carmakers are
engaged in fierce competition. Tit-for-tat price slashes, ad campaigns, and
product developments keep them on the edge of innovation and profitability.
Margins are low and pressure between rivals is high. In the UK market all the
automobile manufacturer watch each other carefully and tries to match any
moves with an equal countermove.



Rate of Industry Growth: The automobile industry has grown it sales around
30% in the last ten years it is expecting a 5.5% growth annually from 20102015.

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Product or Service Characteristics: An automobile can be unique in design
or price. And with many qualities that would differentiate the particular brand
from its competitors.



Amount of Fixed Cost: The amount of fixed costs in the automobile industry
is high because companies has to give salaries to the employees and pay for
the utilities they are using regardless of the selling of their product. The
companies have to incur these fixed costs whether they sell any automobile or
not.



Capacity: In order to increase capacity of an automobile manufacturer the
company has to build another manufacturing plant that will run at full capacity
to minimize cost.



Diversity of Rivals: The rivals with new and different ideas of competing will
likely cross each other‟s path and challenge other‟s position.

The Threat of new entrants
The Bargaining Power of
Buyer/Customer
The Threat of Substitute
Product
The Bargaining Power of
Supplier
The Intensity of Competitive
Rivalry

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Economies of Scale
Product Differentiation
Capital Requirement
Switching Cost
Access to Distribution Channel
Number of Supplier Company
Uniqueness of Supplied Product
Availability of Substitute
Threat of Backward Integration
Purcfhasing Industries Purchase
Behavior

• Switching Cost
• Prices
• Access












Number of Buyer Company
Uniqueness of Supplied Product
Availability of Sustitute
Threat of Forward Integration
Purchasing Industries Purchase Behavior
Number of Competitor
Rate of Industry Growth
Product or Service Characteristics
Amount of Fixed Cost
Capacity
Diversity of Rivals

Morgan Motor Company: an analysis on Internal and External Environment

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Morgan Motor Company: an analysis on Internal and External Environment

4.0 Internal Environment:
Strength and Weaknesses

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Morgan Motor Company: an analysis on Internal and External Environment

4.1 Corporate Structure
4.1.1 Resources:
Combination of tangibles and intangible assets of which control by the firm and it can
be used for conceive of execute its strategy. Resources include a so many things in it
like Morgan Factories, its products like Aero8 as tangible assets of the firm, while
firm‟s reputation among customers, team work among managers these all consider as
intangible assets of the firm under resources.Each Morgan is built entirely by hand.
All materials used during the manufacturing process are natural and processed true to
their properties. Firstly, there are different types of high quality raw materials are used
in producing Morgan cars.


Chassis: Each chassis of the cars is assembled by hand, whether it is the
aluminum bonded and riveted aero platform, the Classic galvanized steel
ladder chassis or the tubular space frame of the 3 Wheeler.



Wood: Wood is an essential raw material which is used to develop the main
frame of the body of the car. This is both the „coat hanger‟ in which holds the
bodies but also has natural crash deformability and vibration reduction
properties.



Aluminium: The aluminium body consists of a blend of panel beaten sheets
and Super-formed blown aluminium panels. Super-forming is an aerospace
process which Morgan were the first to pioneer in automotive manufacturing.



Human Resource: There are eleven people working within Morgan‟s
development department. The team is responsible for aesthetic and mechanical
design, CAD, homologation, electronics, managing ongoing production issues,
branding and marketing the vehicles.



Design: With the integration of Autodesk design and visualization tools,
Morgan is now able to rework and visualize new vehicles and components at
low cost with speed. The re-launch of the Morgan Plus utilized the same work
flow as above.

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4.1.2 Capabilities:
Capabilities are the subset of the resources like how company takes advantage of its
resources whether tangible or intangible. Capabilities alone enable firm to envisage
and implement strategy in to the company. This is the relation between resources and
capabilities of the firm‟s.


Handmade Cars: The link between traditional and modern follows through to
the physical car themselves. Each one is entirely handmade. However the cars
feature the very latest in chassis, engine and drivetrain technologies, along
with subtle driver assists, passive safety systems and superplastic aluminum
forming techniques.



Management: Efficiency is designed into to the organizational layout to
enable perfection. The directors and owners manage the company and receive
the components that are made off site.



Innovation: In order to compete and be noticed, companies need to be
increasingly innovative. In doing so Morgan attracts new markets and
reinforces integrity. For Morgan this innovation occurs largely in the early
days of conception and design.



Market Size: Morgan is a niche vehicle manufacturer operating in a global
market place. Its competitors often have enormous budgets or are propped by
substantial investors and are growing rapidly.1.2 million Cars are exported
from the UK annually. Of those most are luxury brands such as Bentley, Aston
Martin, Lotus, Rolls Royce, Jaguar, and Land Rover. These companies all
have significant backing whilst Morgan remains family owned.

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4.1.3 VRIO framework:
The VRIO framework, in a wider scope, is part of a much larger strategic scheme of a
firm. The basic strategic process that any firm goes through begins with a vision
statement, and continues on through objectives, internal & external analysis, strategic
choices (both business-level and corporate-level), and strategic implementation. The
firm will hope that this process results in a competitive advantage in the marketplace
they operate in. Here is the VRIO framework developed for Morgan Motor Company.

VRIO framework
Value

Rareness

Imitability

Organization

• Hand made cars.
• Primium brand image
• Satisfactory after sales
service
• Customized design
• Materials (Ash tree)
• Limited edition
• Reputation
• Design

• Experienced assimilators
• Labor based car production
• Design
• Rare materials
• Craft skill
• Unique cars

• Skilled workers
• Strategy Design
• Materials
• Friendly atmosphere
• Brand name

• Design materials
• Production materials
• Resource utilization
• Decision making
• Lead time

4.1.4 Competitive Advantage:


Durability: The resources of Morgan Motor Company are acquired from
various sectors. Engines of Morgan cars are now produced by BMW. The
other raw materials which are being used to produce Morgan cars such as,
aluminium for the body, wood for the frame, leather for the seat etc. are
quality and durable products purchased from authorized and reliable
organizations. So, because of all the raw material resources are purchased, so
the durability is high. On the other hand, the experienced human resource of
the organization is the key element of Morgan‟s success. But, the handmade
car concept is here not as much as durable because, there is a low number of
recruitment every year. In this situation the human resource is a less durable
element. The market size of Morgan Motor Company is a niche and the

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durability of the niche market is always higher. On the other hand, Morgan
Motor Company has a bunch of eleven qualified innovative designers who are
developing Morgan car‟s design. This capability of Morgan Motor Company
is durable.


Transparency: A capability that requires a complex pattern of various
resources is more difficult to comprehend than a capability based on a single
key resource. The capability of Morgan Motor Company is much complex
with various types of resources. So, the transparency for other competitors to
acquire the knowledge of making handmade cars is lower. Competitors can
only get to know about the materials used in producing the latest model of the
Morgan car while Morgan releases a new model only. Because of very high
information security and better security on the classified information, it is very
tough for the organizations to know about the resources and the capabilities.



Transferability: Transferability is the ability of competitors to gather the
resources and capabilities necessary to support a competitive challenge. Here,
it will take a long time for the competitors to get the resources used and the
capability acquired by Morgan Motor Company. The raw material collection
from those reliable organizations may be taken the only time in creating a
contract with them.



Replicability: The ability of competitors to use resources and capabilities to
duplicate a firm's success is called replicability. The most important thing is
any other competitors of Morgan Motor Company will have to spend a lot of
time to educate the engineers to learn how to assimilate cars and to develop a
highly innovative designer team like Morgan. But, in the case of handmade car
company like Bentley and Rolls Royce it will take a lesser time than the
others.



Resource Sustainability:
Resource sustainability indicates how sustainable the resource of the
organization is. Morgan Motor Company is actually holding sustainable
resources shielded by patents; geography, strong brand image and customer
preference. These resources and capabilities provide a sustainable competitive
advantage. So, in this case for Morgan Motor Company we can say that, the
organization has slow-cycle resources.

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Morgan Motor Company: an analysis on Internal and External Environment

4.1.5 Value Chain Analysis:
The value chain framework of Porter (1990) is “an interdependent system or network
of activities, connected by linkages”. When the system is managed carefully, the
linkages can be a vital source of competitive advantage (Pathania-Jain, 2001). In order
to conduct the value chain analysis, the company is split into primary and support
activities. The primary and secondary activities of the firm are discussed in detail
below.
Primary activities
The primary activities of the company include the following:


Inbound logistics: These are the activities concerned with receiving the
materials from suppliers, storing these externally sourced materials, and
handling them within the firm. Morgan is using high standard and high quality
materials. Morgan always keep improving their quality and they are
continuing using the aluminium and recently they bought the BMW„s engine
to make their cars better and faster.



Operations: These are the activities related to the production of products and
services. Morgan cars since the Company has established are made by hand
with ash-frame. This is what makes Morgan cars so special and valuable. All
Morgan cars are different from each other; they are made according the taste
of the customer. Comparing to other car manufacturers, to produce Morgan
cars takes much longer time, but this doesn‟t make to shorten their customer
waiting list and people are still keen to get Morgan car which can be made
according to their taste.

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Morgan Motor Company: an analysis on Internal and External Environment



Outbound logistics: These are all the activities concerned with distributing
the final product and/or service to the customers. As it is already described
above, because of Morgan car is made by hand, it takes much longer time than
other car manufacturers. The waiting time till Morgan car is finished is
between one and two years, but sometimes it takes much longer to collect the
car to its final face. Morgan has only one plant, but it has dealers all over the
world what makes much easier for the customers to get their car more
conveniently.



Marketing and sales: This functional area essentially analyses the needs and
wants of customers and is responsible for creating awareness among the target
audience of the company about the firm‟s products and services. Morgan
Company doesn‟t do many marketing activities. For many people the brand
still can be unknown. It is because of its low productivity, but their uniqueness
and brand still brings them enough customers. It is obvious from their waiting
list. Demand is much higher than supply.



Service: There is often a need to provide services like pre-installation or aftersales service before or after the sale of the product or service.

Support activities
The support activities of a company include the following:


Procurement: This function is responsible for purchasing the materials that
are necessary for the company‟s operations.



Human Resource Management: This is a function concerned with recruiting,
training, motivating and rewarding the workforce of the company. For Morgan
well trained and high skilled employees are very important as it is for many
Companies. As in many Companies Morgan also has the training programs to
develop their employee skills. As above mentioned there are around 163
employees in Morgan Company and all of them are in a good relationship with
each other. The heads of the Company is also trying to have a good
relationship with each of their staff member and to share their thoughts with
each other.

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Morgan Motor Company: an analysis on Internal and External Environment



Technology Development: This is an area that is concerned with
technological innovation, training and knowledge that is crucial for most
companies today in order to survive. Morgan consistently is improving their
product and technologies. For example: launching the Aero 8 model, and
purchasing the BMW„s engine to make their cars much comfortable and faster.



Firm Infrastructure: This includes planning and control systems, such as
finance, accounting, and corporate strategy etc.

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Firm infrastructure

Less number of employees
Highly experienced employees

HRM

Research on technology
Continuous development
Outsourcing

Technological development

primary activities

Figure: Value Chain Matrix
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Installation
After-sales

marketing
& sales
Less marketing
activities
High demand volume

outbound
logistics

Unique product
Customization facility
High lead time

operations

High quality
raw materials
& engines
from BMW
inbound
logistics

Shipping efficiency
Single production plant

Clear contracts
Highly talented employees with negotiation skills
Proper and quality material purchase

procurement

service

support
activities

Planning & Control
Finance & Accounting
R&D and Strategic decisions

4.1.6 Functional Analysis:
Morgan motor company is actually a manufacturing based company. According to the
theory Morgan maintains a functional structure. Though functional structure is for
several product lines but Morgan has only one product line. But for the large capital
expenditure Morgan has to maintain a functional structure. Morgan has four separate
divisions.
1. Finance- this division looks over aero racing costs, HR and Accounts.
2. Technical- looks over R&D and design of Morgan.
3. Supply Chain- Entire logistics, inventory and distribution.
4. Marketing- looks over promotion, Sale, Conference and Visitors.

Top
Management

Finance

Aero Racing

HR
Accounts

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Technical

Supply Chain

R&D

Logistics

Design

Inventory

Marketing

Promotion

Sales
Distribution
Conference

4.2 Corporate Culture
Corporate culture of Morgan motor company is very strong as an automotive
manufacturing. The strongly hold culture of becoming the rarest and making the car
totally handmade has made the company truly a top level product provider in the
industry. Company has been owned by Morgan family since it has been established.
Company has about 150 employees. The managers seat together with the employees
on a traditional tea break and talk with them, this is the way to know better all
employees and share their thoughts. For the Company it is very important to have
high skilled staff. Company is situated at the same place as it was since it has been
established, most of the employees have worked for the Company for more than ten
years, mainly the employees are from the same area and moreover they are from the
same family. All the employees have a very close relationship with each other. All
this makes the Company to have a different culture from other manufacturers.


Labor based
Morgan motor company is a totally labor based or labor intensive firm. Every
car is made out by hand crafted materials and the production process is solely
based on labor operation. The company uses very few machineries and it even
avoid modern airscrew drivers in place of screwdrivers.



Labor Union
In UK, the activity of labor union is very much for the benefits of the labor
and Morgan Motor Company labors are also part of it. The company doesn‟t
act against the labor union and it is maintaining a good relationship with the
labor union.



Strong Survival Mentality
The company has actually a very strong survival mentality. For the past 80
years, it is making car for the niche market and it still is making profit where
it‟s rivals had faced bankruptcy for several times. Morgan motor company also
is thinking to keep the business alive for next couple of centuries.



Steady Growth
Morgan motor company is now successfully making profit and growth in
sales. It is also making more unit sales and sales in the parts and accessories.
The company is trying to expand its business to other countries and recently it
has successfully gained a positive market share in United States of America.

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Low motivation for Supervisors
Morgan motor company is giving good amount of salaries and incentives to
the workers but it is not giving any extra incentives to the foreman or
supervisors for increased production. Therefore, supervisors are not feeling
encouraged to produce more in a particular production period.

4.3 Corporate Resources
4.3.1 Marketing
Market Position
Morgan is unique in a car industry. They consistently keep making the hand- made
and ash-framed cars. They do not have as much customers as other car companies and
its niche market is relatively small than others. Their output is also small in
comparison with other car brands. Morgan is not trying to change its cars to more
modern cars and to increase its production number; this is what gives Morgan its
uniqueness. If they start producing more modern cars and increase its output they may
lose its uniqueness. This does not mean that Morgan is consistently using the same
technology of producing cars as they used to, they are continually improving the
quality. Morgan is a niche operator and it does not compete with others. If they
moderate their production with increasing the output and produce more modern cars
they will face the competition with other car manufacturers. They are always staying
at the position they are now and keeping the same strategy, if they keep doing this
they will not have many competitors in the market. We can distinguish the total
market of Morgan Motor Company into two different sections. These different sectors
to justify the market type are described below.


Demographic Market:

Demographic segmentation is, basically, the market segmentation of Morgan Motor
Company has executed through the adoption of various demographic factors such as
age, gender, social class, etc, into consideration. It helps the Organization divided the
market into several segments or groups, each with a common variable, and point to
each of these groups to improve the performance of the Morgan Motor Company.
This strategy of market segmentation aims to understand the potential market, and

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take the necessary measures to ensure that the needs of a population group that are
met by Morgan Motor Company.
The target age demography for Morgan Motor Company is described as the people
above the middle age are granted. The cost occurred in purchasing Morgan car cannot
be carried out by most of the young or below middle aged people. On the other hand,
it takes time to deliver the product required to the customer.
Male and Female both are the target market of Morgan Motor Company. But, in most
of the cases males are the most potential customers for Morgan cars as male are more
likely to be attracted by the classic models of cars. Though Morgan Motor Company
is focusing in the R&D to develop new models like EvaGT to attract the below
middle aged male and female buyers.
Family size is an important fact to consider in buying Morgan cars. As most of the
Morgan cars are two seated, people having a small family with spouse are primarily
attracted to buy a Morgan car. The bigger families are less likely to have one.
Though social norms are not affecting on purchasing Morgan cars but social values
and status are the biggest fact to purchase a Morgan car. Again the point arises that,
Morgan cars are the signature of dignity and status. Most of the people are not
purchasing the car because of the high price. This premium price is charged with the
cars just because of the royal look and usage of the cars. People having higher social
status and more royal value are the primary and main market for Morgan Motor
Company.


Geographic Market:

The geographic circumstances of Morgan Motor Company can be clearly defined as
the major market of Morgan cars are in UK and US based. Though the organization
has agents in different parts of the world, they are actually focusing on these two
geographical locations. Behavioural aspects are the major cause of this focused
marketing concept.
The main target market which actually meets the characteristics of the niche market
for Morgan cars are mostly lives in United Kingdom and United States. UK is the
birthplace of Morgan cars. So, the reputation and the promotional activities are
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helpful in this area. On the other hand, United States has a huge population density
that is actually eager to have classic and unique cars like Morgan at their garage.
That does not mean that Morgan cars are not being sold in the other markets. Morgan
cars have a huge market which can be ranked after UK and US in UAE. People of
UAE maintains the social characteristics that Morgan Motor Company targets. They
les targeted area by Morgan Motor Company is those countries which are
underdeveloped or developing. Besides, Morgan Motor Company has less focus on
the nations having higher tax on car imports.
Besides, Morgan Motor Company has only 7 service centres around the globe from
where the customers can get the services and claim the warranties. This makes the
people from most of the countries being discouraged to buy a Morgan car.

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Product Life Cycle:
The Product Life Cycle begins with product development, during which time the firm
devises and creates a new product. The introduction of a new product onto the market
is typically characterized by very slow sales, which may grow only very slightly over
a long period of time. The growth stage in the Product Life Cycle typically involves a
rapid growth in sales as early adopters replace pioneers as the main consumer group.
The maturity stage in the Product Life Cycle is a key point for a firm because it marks
the turning point in the product's success. Morgan Motor Company in Product Life
Cycle takes Maturity stage.

In the introduction level of Product Life Cycle, there is the newly introduced model of
Morgan cars named Eva GT. Eva GT is a 2+2 grand tourer, and as such it is longer in
the body. The Eva GT has BMW N54 twin-turbo straight-6 producing 302bhp, this is
Euro-6 emissions compliant. Shown at Pebble Beach in clay in 2010 and went on sale
in 2012.
The new Morgan Aero Plus 8 is a classic body version of the Aero Super Sports and
Aero Coupe, sharing their bonded aluminum chassis, bodywork, suspension, and
engine. It was launched at the end of 2011. Price £86,000 and it is not available in the
USA stands on the growth level. There is another model stands on the growth and
simultaneously grabbing customer attentions. The Morgan Aero Super Sports is a
targa-roofed version of the Aero Max, sharing its bonded aluminium chassis and
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lower bodywork with the coupe. It was launched at the 2009 Pebble Beach car show
in California, Price £126,000 also stands on the growth level.
Morgan +8 just started its journey in the maturity. Faced with the decreasing
availability of large four-cylinder engines for use in their +4 models, Morgan began to
install the recently available Rover V8 engine in their cars in 1968, giving these cars
the model designation "+8". There are other two models also. First one is Aero 8.
During its customer production lifetime (2002–2009), the Aero was configured in five
official versions, (I, II, III, IV and the Aero America) with variations in styling,
engines, transmissions, braking and suspension. Another model is Roadster. In 2004,
Morgan came out with a traditional styled model to replace the departing Plus 8. The
new model, named the "Roadster" was powered by a Ford UK Mondeo V6 producing
204 bhp (152 kW; 207 PS).
Finally, in the decline stage there are the oldest two models from Morgan Motor
Company are standing. One is Morgan +4 and Morgan +4+. The Morgan +4 was
introduced in 1950 as a larger-engine ("plus") car than the 4–4. The +4 used the 2088
cc Standard Vanguard engine. A version of the +4, designated the +4+, was made
from 1964 to 1967 with a contemporary fiberglass coupe body. The light weight and
reduced drag characteristics improved the performance of the +4+ over the regular +4
in every aspect.

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Marketing Mix (4Ps):
Marketing mix is a concept of mixing the effective marketing elements in an efficient
way to create the highest value with the more affordable cost. Marketing mix helps
Morgan Motor Company to identify the current strategies and the strategies to be
taken for the future products to be produce and to market. Marketing mix mainly
circulated with four major factors in marketing. They are Product, Price, Place and
Promotion. These are also called the 4Ps of marketing. Here, for Morgan Motor
Company the product is classic and modern looking cars, the price is premium, the
places are identified by the actual market location and the promotion is a little bit
different than the rivals. The marketing mix factors which are recognized are
projected below in the Marketing Mix Diagram.

Product

Price

Place

Promotion

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•Consumers want a unique, valuable, reliable own transportation.
•Carefully hand-made and good materials can produce a car to meet the consumer
value.
•The look of the unique car was classic and now they are also producing modern
cars.
•Branding Strategy is dependent on customer satisfaction.
•The car is unique in its production process.

•The perceived value of the product is high to the customers.
•The hand-made car criteria gives a sensitive price point to choose.
•Customers are less sensitive about the price while purchasing Morgan cars.
•Morgan charges premium pricing attribute than the competitors.

•There are distinctive place utility is seen in Morgan cars.
•There is a little possibility of sales in many countries.
•The proper distribution channel is designed with Morgan itself, agents and service
centers.
•Hardly there is a sales team to monitor and increase sales simultaneously.
•The competitors in the distribution channel is very few.

•Morgan Motor believes in pull strategy but without extreme promotions.
•Promotional channels are mainly newspaper, online media and customers
themselves.
•Advertising strategy is based on the uniqueness and value of the product.
•The brand value itself promotes the product.
•There is uniqueness in promotional attributes than the rivals

4.3.2 Finance
Morgan motor company finances so many ups and downs in the past 10 years. The
company sometimes gets huge profit and sometimes it is submerged with a total loss.
In this report the income statement, balance sheet, Employee figures and audit opinion
is shown for two financial years 2009, 2010.
Income statement:
Income Statement

2010 2009

Revenues

£15,673,000

£17,281,000

Cost of Goods Sold (Cost of Sales

£11,553,353

£13,501,243

Gross Profit

£4,119,647

£3,779,757

Wages & Salaries

£4,828,771

£4,444,845

Payments to Directors
Depreciation

£654,692

£582,038

£218,794

£236,199

Operating Income (Loss)

(£252,890)

£167,141

Income Before Income Taxes (Loss)

(£386,140)

£119,979

Provision for Income Taxes
Net Income (Loss)

£252,525
(£386,140)

£372,504

Balance Sheet:
Balance Sheet
Current Assets
Cash and Cash Equivalents

2010
£7,373,260
£598,461

2009
£6,094,033
£14,941

Accounts Receivable

£1,276,766

£450,189

Inventory

£3,216,369

£3,290,729

Other Current Assets

£1,154,069

£1,265,670

Other Current Assets

£1,127,595

£1,072,504

Non-Current Assets

£6,069,087

£6,529,008

Property, Plant and Equipment

£2,684,450

£2,546,399

Intangible Assets

£3,384,637

£3,982,609

£13,442,347

£12,623,041

Total Assets
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Current Liabilities

£7,256,773

£5,871,216

Accounts Payable

£3,283,204

£2,978,191

£29,144

£503,524

Bank Overdraft

£2,037,718

£1,372,963

Other Current Liabilities

£1,906,707

£1,016,538

Non-Current Liabilities

£343,307

£211,707

Long Term Debt

£14,092

£211,707

Total Liabilities

£7,600,080

£6,082,923

Stockholders‟ Equity

£5,842,267

£6,540,118

Additional Paid-In Capital

£6,185,574

£6,751,825

Short Term Debt

Dividends

£72,000

Employee Figure:
Employee Figures

2010

2009

Total Employees

159

163

Productivity

£98,572

£106,018

Audit Opinion

2010

2009

Auditor

Rabjohns Llp

Rabjohns Llp

Audit Services

£21,500

£23,350

Audit Opinion:

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4.3.3 Research and Development (R&D)
Morgan motor company R&D is one of the best in automotive history. Driving
experience is the result of immense R&D work. Sitting in a Morgan and it fits around
the customer. It‟s the embodiment of „driving by the seat of your pants‟.
Morgan started designing new cars again as well as starting to race and win races
again - putting the brand back on the motor map. Racing is an essential testing
ground for the company, enabling to prove new technologies and components in a
cost effective way, for example, the suspension on the Morgan racing car is the same
as the suspension on the road car.
Morgan looked at opportunities for using technology transfer – such as super formed
aluminium – a process coming out of aero engineering with the result that the metal
needs less primer reducing bodyweight. Morgan also introduced smarter components,
such as bonded aluminium chassis launched in 2000 – Morgan was the first to launch
this technology and was followed by Jaguar and Aston Martin.
Matthew Humphries our Chief Designer is in tune with Morgan‟s DNA with a real
empathy and understanding of how to build on this to find new design routes for the
future. He‟s using wood and leather authenticity whilst respecting the natural qualities
of these materials and our performance attributes and aspirations.
Morgan is looking at door design at present as this has not changed much in
automotive terms since 1926 – want to think about all the different ways you can get
into a car with particular reference to the seals around the door. Once a concept has
been drawn up then it is put onto our CAD (computer aided design) platform.
Following this our design team start milling the prototypes with this being done
increasingly using Rapid Prototyping techniques in the future. We then submit car to a
„critical audience‟ – for example we‟ll take one out to a show Pebble Beach,
California, exposing it to demanding customers exhibiting it alongside the most
respected world brands in front of car designers.

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Followings are 2 models made by Morgan Motor Company R&D:


LIFE car
The Lifecar project has seen the development of a hydrogen fuel cell vehicle
involving a collaboration between Morgan and its partners at QinetiQ,
Cranfield and Oxford Universities, BOC and OSCar Automotive and part
funded by the DTI (now BIS). It‟s been designed to run optimally at cruising
speed making it cheaper and lighter than a conventional fuel cell. It‟s 45%
efficient, compared to 30% efficiency for a traditional petrol engine, according
to Car Magazine with the only emissions being water, heat and 22kW of
electricity.
Power is directed to four electric motors providing drive directly to the wheels
with the motors capable of recapturing up to 50% of the energy in comparison
with a 10% recapture for current applications. The regenerative braking
system provides stopping power equivalent to 0.7g and Charles Morgan
claims that the switch at low speeds between the regenerative brakes and
conventional hydraulic brakes is seamless.
The Morgan LIFE car can achieve 150mpg on a 250 mile range, reach 85
mph, and sprint to 62 mph in under 7 seconds. There have been some changes
to the original brief, making the car more practical, while retaining the
revolutionary features that made LIFE car unique. The use of sustainable
lightweight materials will ensure that not only is the vehicle fuel efficient with
a low carbon output, but that at the end of its very long life, it will be easily
recyclable.

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Morgan Life car 2
"This extreme hybrid with on-board power generation and electric motors at
its corners is the result of radical design innovation referencing our core values
and design DNA. It‟s beautiful, combining our signature wood laminates and
leather features and is performing really well in trials. Morgan has been
working on the LIFE car 2 concepts for a year and expect to have it on the
road in another two years. Working with graduate researchers from BCU
we‟ve been developing the electric motors software and a generator for the
new vehicle. It‟s a much focused small team but with access to a great deal of
knowledge in the UK Universities.



Aeromax
In 2006 Morgan built a one off car for Prince Eric Sturdza, designed by
Matthew Humphries and shown at Geneva the same year. Following an
enthusiastic reception and clear demand, Morgan built 100 cars all of which
have been sold. The Aeromax cost £2m in development, and was built on an
existing platform.
Having launched this new model the business sold 100 cars over 2 years
generating £9m in revenues and £2m in profits representing a 24% Return on
Investment. It raised the profile of the company and made possible the next
part of planned product development.

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4.3.4 Operations and Logistics
Morgan – makers of elegant, timeless motor cars, as English as strawberries and
cream – has just celebrated its 100th birthday. Its process of business transformation
and taking the next bold step towards supercars and hydrogen fuel cells is just
magnificent
Who would not want to own a Morgan? The classic sports car marque – the flared
wings, moulded bonnet, louvers and leather trim – that epitomizes a bygone era of
motoring. The Morgan Classic: at once the genteel, top-down country lane cruising
two-seater and the white knuckle, teeth-gritting racing machine with an enviable
winning pedigree. More recently, the seductive and sublime AeroMax and Aero8
series have extended the range, cars that have effortlessly transformed the essence of
Morgan into a very modern sports car body.
In any guise, they are beautiful, hand-built quintessentially English motor cars.
Morgan Motor Cars is 100 years old this year. The company was founded by H.F.S.
Morgan, a clergyman‟s son, who opened a garage and workshop in Malvern Links in
1906 and started serious manufacture in 1909 Morgan‟s long history is sprinkled with
events; new model launches – from the famous original three-wheeler, now
reproduced as a £2500 child‟s toy, to the brand new Aero Super Sport set for launch
in January 2010 – racing successes, stories, and famous people.
Mick Jagger joins Catherine Deneuve, Jean-Paul Belmondo, Richard Hammond and
even Miss Piggy among elite alumni of Morgan owners. The cars have appeared in a
host of films and TV programmes, including Moonraker, Monty Python‟s Flying
Circus, My Girl and The Trip. Several books have been published about Morgan cars.
In April, Princess Anne officially opened the brand new Morgan Visitor Centre, a
modern museum bedecked with memorabilia, photos, films and the inevitable gift
shop, housing a remarkable range of merchandise for „Moggie‟ enthusiasts young and
old. Steve Morris, Morgan‟s tireless operations director, is proud of the way the centre
came together in time. “It was touch and go before the opening – let‟s say we worked
a few nights that week.” The entire visitor centre was shop fitted by Morgan staff,
whose round-the-clock efforts Steve applauds – there are some clear benefits to
running a business with in-house carpentry skills.

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Redesigned, nimble production
Morgan Motor Cars Ltd is located in Malvern Link in Worcestershire, an area full of
hilly, twisty roads perfect for testing the steering linkage on an open top sports car.
The premises – 10 long purpose-built workshops built on a hill – evokes the image of
UK manufacturing as it used to be, in old buildings using traditional crafts, handmaking products of great workmanship and high quality. Today these old skills are
needed, but are married with advanced technologies, such as the use of super form
aluminium moulded sections – for which Morgan was a car industry pioneer in using
panel section moulds for its Aero cars –wood engineering techniques and technical
paint formulation. This is a cottage industry that has grown up, from its humble threewheeled roots to a company that can make over 700 cars a year and exports 65%-70%
of product to over 30 countries. The business has changed a lot, particularly over the
last 10 years, by implementing lean techniques, more training programmes,
developing an in house styling team and a better arrangement of the site, Morgan
reconfigured the whole factory, to better use the gradient of the hill to move cars.
Now cars move downhill from the chassis stage to final fit-out. Company used to
have to push cars up and down the hill, with less thought to the site design,
All of this along with a very demanding push to achieve the ISO 9001 accreditation
has enabled the people to be better equipped for the changing requirements in a
innovative design led Business.
Satisfying strong demand for a growing model range has required leaner business
practices, and there has been more production process analysis recently.
Morgan look at tact times to ensure better product flow through the business,
constantly reviewing the balanced work stations to ensure we get consistent
throughput. The whole business model has changed to enable delivery of an expanded
product range, to ensure we can still build 15 plus cars a week. The two main model
types, the Classic and Aero, have different assembly processes but the company‟s size
means that products can move from one workstation to another, when orders favour
one model more than another. There are no moving Assembly lines at Morgan, so
reconfiguring a production line section is easy. A skills matrix has also been

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developed to show management an overview of the compatible skills available to
switch to different lines, should orders dictate.
KTPs lead to in-house styling unit
Morgan now has another two KTP-derived students on the payroll. With KTPs and
KBPs, knowledge based partnerships; while the programmer lasts the students are
employees of the university. Morgan has run KTPs on styling, production engineering
and R&D. The design studio, which runs Dassault System‟s Catia V5 – widely
regarded as the car industry benchmark CAD modelling tool – and Autodesk Alias for
simulating finishes, was the last piece of the jigsaw for the firm‟s in-house R&D and
product design. It is given product design capability evidently, but as a business
Morgan can look at everything from stand design, branding, merchandising and
brochures.

Customisation, critical supply chain
Morgan has its own particular headaches. Kitting 20,000 parts a month from goods in
stores, most of which are outsourced, its supply chain is one. Supply chain is critical
to us. One can look at the typical SC philosophies, the manuals for running a business
that say „one should only have 50 suppliers for a business of this size‟ but there are
always realities that make it hard to enforce that. One may not be big enough to
demand these things. Morgan does a lot of work within our supply chain. Morgan
have a lot of line side components, the number of components we kit has grown with
the model variance.” Making 15 cars a week, Morgan‟s scale of business is such that
it doesn‟t always get the stock turn it would like, making it difficult to make standard
orders across the board.
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Component supply and storage has been complicated by the Morgan customisation
model. Customers can choose from myriad variants of body, engine size, paint colour,
dashboard and leather trim. But this has been simplified where possible to make it
easier for the business to deliver product. For the entry level Classic 4/4, the choice is
limited to six outer body colours, one interior and the car is standard. A customised
car range affects inventory. For example, four years ago the company had eight
dashboard variations. Today it has 24 variations, when including left and right hand,
MPH and KPH versions. With a heavily specified hand-built car, suppliers are key
and Morris singles out a few as being vital to Morgan‟s success.
Radshape Sheet Metal in Birmingham is a very good supplier to us, who‟ve been with
us for 10 years. Morgan have turned themselves into a big spend, crucial supplier.”
Glasurit, part of BASF, supply all Morgan‟s paint either directly as custom colour
formations or mixed on site in by in-house paint specialists. Super form Aluminium is
another key account, supplying the carmaker with all its preformed SPF aluminium
panels (see below). Is supply chain risk an issue in the recession? Morgan‟s biggest
supply chain risk is mainly from the biggest people who supply the mainstream
OEMs. The company deal with people who are supplying JLR, Aston Martin and
Bentley. If schedules have been cut sharply it affects these people, but Morgan have
not had as many problems as we envisaged. Forecasting last year we expected more.
Interestingly, supplies from Germany have been less reliable, with more interruptions
than forecast due to more short-time working and extended holidays at some German
companies. Morgan has felt it could be left last on the list for some companies that
supply to the bigger OEMs, which has been an issue.
Lean and professional development
Morgan is operating a lean program in collaboration with Birmingham City
University where the aim is to have all factory-based employees trained in lean
processes. It‟s an interactive program, Morris says. They take operators from different
areas of the business, mix them up and put them in groups of 12 in the same training
room. Staffs run through the program, finishing with a project that is certificated by
the university. The program uses all the main lean techniques applicable to most
businesses, tailored to Morgan, and then they try to make it as interactive as possible.
“It‟s not purely academic; they are looking at the real benefits of single piece flow,
45 | P a g e

and team-building etc. At the end of it, they do a project which assesses the tangible
benefits, so they can really apply the learning into something very relevant in the
workplace.
How a Morgan is made


Starting at the top
There are six main build stages: chassis, assembly, sheet metal, wood,
machine, paint and Trim (Upholstery). The first stage, chassis assembly, is
done at the top workshop near the site entrance and the build stages progress
downhill.
What is obvious, and very satisfying, is that the factory has a very manual
operation throughout – there are no robots at Morgan. Classics and Aero
models have different build stations, but these can be switched at varying
stages of construction. The Aero8, for example, has a bonded rivet aluminum
chassis. When finished the completed car weighs just 1170kg – “the power to
weight ratio is phenomenal”. At this bare chassis stage, everything is
configured in the car – you can plug a laptop into the car and drive it away.
Full configuration, including checks for fuel leaks, driver train and engine
checks, is done at this stage as it is far easier to pick up here. Every car is
issued with a build book, containing a tracking document and quality
document, where every build stage has its own page. “This follows the car
right

through

the

factory to the dealer,
agent or customer who
picks the car up – a
full

record

of

everything that‟s gone
into it.” This system
was installed six years
ago and is part of the
continuous
improvement and lean
program at Morgan.

46 | P a g e

The Classic chassis station has a totally different set-up, due to the fact there is
a lot of configuration later on with the Classic, and it‟s not as advanced as the
Aero series cars at this stage – there‟s no wiring for example – so there are
more chances to access parts of the Classic as it is being assembled. As the
cars go through the production line they start to jockey together at different
stages, with some models overtaking others on lines.


Hand built coachwork
All the cars arrive at the body mount stage where the craftsmanship really
kicks in. For the Classic body frame, an all ash frame is made in the wood
shop; dip treated for rot outside, brought back in to be panelled by hand and
then mounted to the body.
It‟s a very time sensitive
stage. It‟s three days‟
work. As soon as they‟re
done they must be fitted
to the cars. Nearly all the
metal is aluminium – on
the AeroMax and Aero8
apart from the wishbones
and the discs the car is
almost

entirely

aluminium. The Classic
has a galvanized steel chassis, a stainless steel bulkhead and firewall, and
inner wings – beyond that everything is the same, ash frame panelled body and
aluminium. The Aero series wings are made from super plastic-form (SPF)
aluminium. “You take a sheet of aluminium, it‟s superheated to 450°C, you
blow it into a bubble and using air pressure from tools and heat it is stretched
over the steel form. You can get some absolutely stunning shapes.” The body
shapes are designed in-house, cast steel forms are made and the panels are
formed at Super form Aluminium in Worcester. Classics also use SPF for the
wings and cowls, but not body panels.
Super form is expensive but has passed the cost / benefit analysis, in that it
offers high quality and repeatability. This choice of metal is important to
47 | P a g e

Morgan to deliver cars that match their „light and fast‟ ethos, which Morris
says also reduces CO2 emissions making Morgan extremely environmentally
friendly. The Classic car uses a mixture of hand cut and Laser cut blanks
which are then very skilfully shaped and panelled onto the body frame, which
exemplifies the traditional skills of the workforce in contrast to Super form‟s
cutting edge technology.


Woodwork – or wood engineering:
It is the core strength at Morgan. Their ash frames are shaped using traditional
wooden presses and more modern bag press techniques. “A bag press is
essentially a vacuum bag. You produce a former, for the part, and the vacuum
literally sucks the wood down onto the former. It produces laminates with
immense strength – you
could drive a tank over
it,” says Morris as he asks
me to try and break the
moulded wooden piece.
Not a chance.
It‟s all about pressure,
while some ambient heat
is used to cure the glue.
This and clamp pressure techniques can produce some extremely complex
shapes. Morris shows me an AeroMax centre roof spine – beautifully
moulded, super-strong. It‟s based on an old leaf spring for carriages, and while
it isn‟t required as a structural part it has that structural property. “It gives us
differentiation in the automotive world – no-one else is using wood this way.”
The next stage, after the body mount where the wings and ancillary parts are
assembled, is where the Classic and Aero cars mix and jockey for work in the
same area. A car is rolled in, where Aeros are fitted with the body and wings
and goes straight to paint. The Classics has the body and wings fitted then it
has pre-drilling, wiring, a heater, oil pipes etc. all fitted here before going to
the paint line. Both models are painted after being assembled at the Body in
White stage.
Morgan can offer almost 250,000 colour combinations from its own paint
division. Post Paint, cars are fitted out with leather trim, windows, bonnets and

48 | P a g e

other auxiliary parts such as lights are fitted. Upon completion of the build
process the cars are all road tested, they then go through a full technical PDI
before having an under body protection. When this process is complete the car
then receives a full PDI in preparation for Dispatch to either the customer or
dealer.
Shipping:
Morgan ships via UPS, U.S. MAIL or FED-EX FREIGHT for larger items. Morgan
ships domestic and international. No COD's on parts sent by truck or international. All
shipments are F.O.B COPAKE, NY
Terms of Payment:
Morgan accepts cash, credit card (MasterCard, Visa, Discover, Amex), money orders,
or personal/company checks. All COD orders over $300.00 will be sent certified
check or money order.
Exchange/Core Items:
Certain items Morgan sells are rebuilt and require a core in exchange. All cores must
be in rebuild able condition as determined by the company. Items deemed non-rebuild
able or failure to return a core will be assessed a core charge.
Backorders:
When customer places an order, Customer has to let know if he desire items to be
placed on backorder. Morgan does not charge for backordered items until they are
shipped.
Returns:
If customer receives an item not as ordered or defective, Morgan will correct it to
customer‟s satisfaction. The parts must be as new and in the original packing or box.
No returns will be accepted after a period of 60 days. If the part is not to be
exchanged then a 20% restocking fee will be applied.

49 | P a g e

Warranty:
All parts sold by Morgan Spares Ltd. have warranties against defects in materials and
workmanship by the original manufacturer. Warranty on defective items will not
cover labour, failure of a related component or failure resulting from faulty
installation. Liability by Morgan Spares Ltd. on merchandise proven to be defective,
for any reason, shall not exceed the cost of the original component.

50 | P a g e

4.3.5 Human Resource Management (HRM)
Human resource management (HRM) is the management process of an organization's
workforce, or human resources. It is responsible for the attraction, selection, training,
assessment, and rewarding of employees, while also overseeing organizational
leadership and culture and ensuring compliance with employment and labour laws.
The operations and decisions of Morgan Motor Company are performed by 26 key
people.
Andrew Duncan is the chairman of Morgan Motor Company and Steve Morris is the
managing director. There are also 4 directors, 4 non-executive director and 16
managers. The 4 directors supervise 4 departments of Finance, Supply chain,
Marketing and technical. The 4 Non-Directors answer directly to the Managing
Director. There are 16 managers performing the role of Aero Racing, Accounts, HR,
Co Secretary, R&D, Design, Conference and Visitor Centre, Sales, Service, After
Sales, Manufacturing, M3W Build: Machine Shop, Chassis Build: Wood Processing,
Sheet Metal and Assembly, Vehicle Trim and Body Pain.


Tim Whitworth the Finance Directors looks over all the financial issues of the
company and permits the future investments on making cars and he also
supervises four departments, the Aero Racing, Accounts, HR and Co
Secretary. Mark Evans the Aero Racing Managers also supervises Service and
After Sales Managers.



Technical Director Graham Chapman is responsible for all the technical
activities in the company. He supervises the R&D and Design Manager who
work relentlessly to make modification and improve the product.



Gregor Dixon-Smith the Supply Chain Director looks after the raw materials
and resources that are used in making an automobile. He is responsible for the
permitting the raw materials and other resources that are necessary for making
an automobile.



Mark Ledington the Marketing Director who is responsible for all the
marketing and promotional activities of the company. He is working hard to
promote the automobiles Morgan Motor Company is producing and how they
produce the automobile and how they take care of each individual customer‟s

51 | P a g e

preference and make tailor made automobiles for the customers. Sales and
Conference and Visitor Centre Managers answer to the Marketing Director.


Tania Blonder the Manufacturing Manager performs the duties of the
manufacturing plant and she Supervises five departments related to the
manufacturing of the automobiles, the M3w Build: Machine Shop, Chassis
Build: Wood Processing, Sheet Metal and Assembly, Vehicle Trim and Body
Paint.

Four Directors, Non-Executive Directors and Tania Blonder the Manufacturing
Manager directly answers to the Managing Director of the company Steve Morris.
Andrew Duncan, Steve Morris along with the Directors, Non-Executive Directors is
responsible for all the decisions that are made in the organization.
The executives at Morgan perform a variety of duties. Mark Aston the works manager
personally deals with the service departments and warranty claims and the sales
manager Derek Day writes to each new customer to receive feedback regarding their
cars configuration. He has to write 600 such letters to the customers and replies to
processes.
The Cultural Web identifies six interrelated elements that help to make up what
Johnson and Scholes call the "paradigm" - the pattern or model - of the work
environment. By analysing the factors in each, the companies can begin to see the
bigger picture of their culture: what is working, what isn't working, and what needs to
be changed. The six elements are:


Stories



Rituals and Routines



Symbols



Organizational Structure



Control Systems



Power Structures

Company has about 150 employees. The managers seat together with the employees
on a traditional tea break and talk with them, this is the way to know better all
employees and share their thoughts. For the Company it is very important to have
high skilled staff. Most of the employees have worked for the Company for more than
52 | P a g e

ten years, mainly the employees are from the same area and moreover they are from
the same family. All the employees have a very close relationship with each other. All
this makes the Company to have a different culture from other manufacturers.
In Morgan Motor Company, there is a clear evidence of the structure of the company
not being organized. In addition to this the unwillingness of Peter Morgan to change
the production pattern and sticking to the ancient form of production could have
hindered the progress of the organization. The old pattern of production carried a
series of drawbacks namely too much expenditure and increased time period to reach
the target. This behaviour of not being open to change is related to a world with set
cultural beliefs, values and concepts that are expressed and reaffirmed through a
variety of dominant or root metaphors. The basic matrix structure led by Peter
Morgan consisted of four sections namely production, sales and marketing,
information technology, design development and technology. The basic coordination
mechanism that was adapted was of mutual adjustment. However in spite of all the
difficulties faced the MCC has succeeded in changing their view by becoming an
open environment.
The Development Team
There are eleven people working within Morgan‟s development department. The team
is responsible for aesthetic and mechanical design, CAD, homologation, electronics,
managing on-going production issues, branding and marketing the vehicles. The
department is small but the benefits are clear: Morgan is in charge of all decisions
from concept to production and launch. The small and dynamic team all has the
opportunity to showcase their ideas, with the ability to truly influence the end product.
Close interactions between different professions creates a broader understanding of
the whole work flow. Most importantly, this close contact means, with the right tools,
the team can be fast - Taking new ideas from conception to birth in a fraction of the
time. Prototypes aren‟t sent off to be tooled or evaluated by a separate group. The
team members simply walk on the shop floor to get the onsite craftsmen and women
to replicate their design accurately using precise drawings, traditional manufacture
methodology and natural ability.
Workers in the Morgan Motor Company receive a basic wage along with the
production bonus. Although this bonus may encourage some departments to step up to
53 | P a g e

productions but the total output of the cars does not increases, because of the plant
bottleneck holds up to one or two operations. Furthermore, foremen are not paid any
bonus, so they have little interest to encourage productivity.
Like most of the manufacturing organization in the United Kingdom the labour force
of the Morgan Motor Company is unionized. The labour force of Morgan Motor
Company is dedicated to the firm but they do not always accept changes. This strict
adherence to the tradition may contribute the cost and nature of the Morgan
manufacturing process, although the relations with the labour union are excellent.

54 | P a g e

5.0 Analysis of Strategic Factors
(SWOT)

55 | P a g e

5.1 External Factors Analysis Summary (EFAS) Table:
Following is the External Factor Analysis Summary (EFAS table) based on the
external environment of Morgan Motor Company.
External Strategic Factors Weight

Ratings Weighted Comments
Scores

Opportunities
O1 Reducing Waiting List 0.25

3

0.75

Reducing waiting list
would gain more
customer satisfaction.

O2 New Plant

0.10

4

0.40

New plant may
increase productivity.

O3 Attractive Brand

0.30

5

1.50

Could help to gain
market

Image
O4 Dealers Worldwide

0.30

2

0.6

Strong Distribution

O5 Customer Relation

0.15

1

0.15

For more customer
Satisfaction

Total Scores

1.0

3.40

Threats
T1 Chinese replica of

0.40

1.00

0.40

market

Morgan
T2 Japanese competitive

0.25

2.00

0.50

0.10

4.00

0.40

Will increase the cost
of Raw materials

Bargaining power
T4 Waiting Cancelation

Reducing market
share

Cars
T3 Suppliers high

Exact replica reduce

0.25

2.50

0.63

Waiting Customers
are never getting the
car

Total Scores

56 | P a g e

1.93

5.2 Internal Factors Analysis Summary (IFAS) Table:
Following is the Internal Factor Analysis Summary (IFAS Table) Derived from the internal
environment of Morgan Motor Company.

Internal Strategic Factors

Weight Ratings

Weighted

Comments

Scores

Strengths
S1 Efficient Production

0.15

1.00

0.15

Production should
be more efficient

S2 Unique Design

0.25

5.00

1.25

Must be kept

S3 Highly Skilled Labor

0.10

2.00

0.2

Labor cost
reducing

force
S4 High Customer Loyalty

0.15

2.50

0.375

Consumer
satisfaction should
be increased

S5 Strong Survival

0.10

4.00

0.4

the Company

Mentality
S6 Unique Niche Market

Very Positive for

0.25

1.00

0.25

Must be protected
and Kept

Total Scores

1.00

2.625

Weaknesses
W1 Slow Production

0.30

2.00

0.6

Fast Production
might be necessary

W2 Outdated Equipment

0.30

3.00

0.9

Slows Production

W3 Outdated Production

0.25

2.00

0.5

Again Slows
Production

Process
W4 High labor Bargaining

0.20

4.00

0.8

Results high cost
and managerial

Power

issues
W5 Less Diversification

0.05

Total Scores

1.00

57 | P a g e

1.00

0.05
2.85

Might not be issue.

5.3 SWOT Analysis

The SWOT matrix is derived from the calculation of EFAS and IFAS table.
Strengths
1. Efficient Production: Morgan operates in low cost facility where they
produce high value cars. The production is efficient. The company could be
more efficient if the labor cost is reduced.
2. Unique Design: The design of Morgan is unique. No other car company has
such design concepts which creates high demand in the market.
3. Highly Skilled Labor: The labor force of Morgan Car Company is highly
skilled and they and they give a unique finish to the car.
4. High Consumer Loyalty: One segment of total customer is highly loyal to
Morgan Motor Company and they don‟t switch to any other car.
5. Strong Survival Mentality: Morgan has a strong survival mentality and that‟s
why the company is operating for over a century.
58 | P a g e

6. Unique Niche Market: Morgan has unique small market who are crazy to
have the product of the company.
Weaknesses:
1. Slow Production: Producing a car takes a long time for Morgan and even it is
more than 2 years.
2. Out-dated Equipment: Morgan uses old equipment to produce which are
sometimes 50 years old technologies.
3. Out-dated Production Process: Morgan is using same production process
from its birth which could be changed for productivity.
4. High Labour Bargaining Power: Morgan labours force possesses high
bargaining power as they are part of the labour union.
Less Diversification: The models of the car have very less diversification
where competitors are implementing more diversification.
Opportunities:
1. Reducing Waiting List: The Company can take limited order for any
particular model. This will reduce the waiting list and the customers don‟t
have to blindly wait.
2. New Plant: Morgan could make another plat on any other country and it
would capture more market and generate more profit.
3. Attractive Brand Image: Company possesses a highly attractive brand image
and logo which could be used for different purpose and could generate profit.
4. Dealers Worldwide: Morgan motor company has 42 dealers and they could
build a network of worldwide dealers.
5. Customer Relation: Personal touch always increases the loyalty of customers
and Morgan could maintain a very warm personal touch.
Threats
1. Chinese Replica of Morgan: Some local car manufacturers of china is
making exact replica of Morgan cars and Chinese Govt. is not taking any steps
to prevent them from making the cat copy

59 | P a g e

2. Japanese Competitive Cars: Different Japanese car brands like Mazda,
Lexus, Nissan is making good value and aristocratic cars which are gaining
market share in UK.
3. Suppliers High Bargaining Power: Morgan use expensive raw materials for
manufacturing cars and suppliers anytime could charge more for the raw
materials.
4. Waiting cancelation: Morgan took order from the customers but due to high
demand they sometime refuse some customers. It creates harassment and
company may lose customer loyalty.

60 | P a g e

6.0 Conclusion

61 | P a g e

Morgan Motor Company (MMC) began as a family company and has remained that
way over the years. Decisions were largely driven by steady demand for their luxury
product. Traditionally, decision-making was premised on production quotas that kept
supply slightly behind demand. While the company made a profit, it was not enough
to sustain the company in the long term due increasing costs caused by inefficient
methods of production. The key area for improvement was strategic planning based
on detailed and accurate information.
MMC could gain valuable information about its environment through SWOT
analysis, which could be used to inform strategic planning decisions. The company
survived difficult circumstances (e.g. World War II) and demonstrated its ability to
diversify through the manufacture of munitions. Another key strength is the global
demand for their differentiated product. Its domestic and international appeal creates
an important opportunity to further expand its global customer base. However, the
potential threat associated with this opportunity is uncertainty in a number of
dimensions in MMC‟s “general environment” (Samson & Daft, 2009). Economic and
political and legal factors in other countries could potentially impact on MMC‟s sales,
as was the case in the late 1960s where strict emission control regulations caused their
US market to collapse. In this instance, domestic demand absorbed its impact and
highlighted the importance of maintaining a diverse client base that could absorb the
impact of any environmental changes.
A sales and marketing department that is production led is ineffective in improving
revenue and achieving the aim of increased profits. Additionally, this production led
sales creates an artificial view of demand for its product.

62 | P a g e

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