January 30, 2024
Table of Contents
7 Things To Be Kept In Mind While Navigating Through Automotive Partnerships
Business expansion is the second phase of enhancing business, once you are done with the initial phase of advancing your business in a particular region. Among multiple rapidly rising industries, the automotive industry holds great potential and opportunities for the coming decade. When you are planning to expand in such a promising industry then some hurdles are surely going to make their way on your journey.
Here are some common questions that will surely come up in your mind when you are planning a joint venture for business expansion in the global market. So in this article, we will be discussing some common questions related to automotive partnerships and how business consulting would help you navigate through them.
Commonly Asked Questions Related To Automotive Partnerships
Let’s begin unraveling some of the commonly asked questions related to automotive partnerships which would make it much easier to achieve your business expansion goals.
1. Why invest in the Automotive Industry?
Secondary thoughts make a quick place in your mind whenever you are making any decision, so in such instances, you must have strong reasoning supporting the decision.
The automotive industry is a high-demand industry with a rapid growth in vehicle demand on a global scale, spread over a wide section of regions.
This plays a direct role in boosting the manufacturing ecosystem and employment opportunities in the given region, leading to government support and initiatives for business facilitation.
There is a technological shift in the automotive industry towards electric vehicles and self-driving cars, which makes it a prime investment hotspot.
With an extensive supply chain, the automotive industry minimizes the risk with the industry being diversified into technology sharing, logistics, manufacturing, and a lot more.
2. Which is the most efficient approach to penetrate the automotive market?
The answer to these questions varies on multiple factors ranging from target audience, business model, and segment you plan to target in the automotive industry. So here are a few approaches that would help you penetrate the global market.
Research
Penetrating a new industry without insightful market research is like going to a dark forest without knowing its depth. A thorough market research for a particular region with a series of parameters makes it easier for you to understand the scope of your business model in the target region.
Partner to Proceed
It’s better to partner with a local manufacturer, supplier, or technology provider rather than starting from scratch. Seeking joint ventures and transfer of technology business models stand as one of the best options for partnerships as investing in advanced technology or sharing advanced technology makes it much easier to make a name in the industry.
Keep a check on compliance
Hiring a consulting agency for business expansion is preferred as they would help you find potential clients along with a check on regulatory compliance. This would also resolve the issue of hiring talent as consulting agencies would connect you with experts in respective domains.
3. How to Filter out the most suitable partners for Automotive Partnerships?
To increase the chances of a successful joint venture, multiple factors have to be kept in mind while filtering a list of the most suitable market players for partnerships.
Define your partnership objectives
Defining a set of partnership objectives makes it much easier to filter out potential partners based on the value they would be adding to the joint venture.
Perform a SWOT Analysis
A detailed SWOT analysis of your business and your potential partner’s business would allow you to gain a comparative advantage.
Check the business portfolio
Check for the previous business deals and joint ventures of the potential partners, providing information on their market control.
Brand reputation
Seek detailed market research to identify the regions with maximum and minimum brand reputation/awareness and its benefit to your partnership objective. Check for references and case studies as they would provide Proof of the Work of potential partners.
Financial and legal background
Run a thorough check on the financials of the company along with any legal cases on the potential partner to ensure that it does not cause any adverse effect on the deal shortly.
4. What factors should be kept in mind to gain a competitive edge in the global automotive market?
Having a competitive edge makes it much easier to establish your business in any industry. But when it comes to the automotive industry, there are a series of factors that should be kept in mind and these factors are discussed below.
Technology
Partnering with a company that has advanced or high-demand technology would be a great opportunity to enter a specific market. A Transfer Of Technology (ToT) model of business collaboration would be a great choice in such instances.
Quality Assurance
Some companies are known for their impeccable product quality which helps them become OEMs (Original Equipment Manufacturers) and supply certain components to other market players. If the partner company is a manufacturer that has a great reputation in any such products like gate plugs, brakes, etc then it would be a great business expansion opportunity.
Efficiency, stability, and cost minimization
These three factors play a major role in the longer run as an efficient supply chain, stable market demand, and a cost minimization strategy make it easier to increase profits in the longer run.
Competitor Research and Pricing Strategy
Seeking reliable and efficient competitor research for the leading industry players would provide you with insights into the concentration of competition in the market. With a well-planned marketing strategy, your product/service would boom in the market and provide expected or surpassing outcomes.
5. What are the most common known challenges while entering foreign markets?
Some common barriers would be experienced in any market suitable for your business expansion goals. Some of these challenges are listed below which would keep you prepared for the market uncertainties.
Language barriers and cultural differences
There is a visible cultural shift when you are planning to expand your business in global markets. Along with cultural shifts, there is a language barrier which could be a hurdle in achieving your business goals.
Regulatory Compliance and Cross-Border Supply Chain Management
Regulatory compliance varies in each country to some extent, so you must make sure that your legal team goes through regulatory compliance thoroughly before seeking business expansion. Also, cross-border supply chain management becomes a challenge as it requires a series of permissions and efficient infrastructure for facilitation.
Currency Exchange and Intellectual Property Protection
Intellectual property includes your copyright, trademark, patent, and other similar things and it becomes a cumbersome task to protect your intellectual property. So a proper understanding of intellectual property law makes it easier for investors to reap the economic benefits. You must also check for a sound financial infrastructure as currency exchange and tax policies make a visible impact.
6. What alternatives are feasible other than Joint Ventures?
If you are seeking feasible and reliable options, other than joint ventures, which would achieve your goal of business expansion, then here are some options for you.
Licensing Agreements
In this form of partnership, you can use the copyright, trademark, and patent licenses of a particular company for a given period.
Transfer Of Technology
In this form of partnership, you can share the technology and resources with your business partner to achieve your common business objectives.
Strategic Outsourcing
In this form of partnership, you can source particular products or raw materials from other companies which would be cost-effective.
Merger And Acquisition
In this form of partnership, two companies (operating in similar or different domains) come together to accomplish common business objectives and acquire a larger market share. Some companies even acquire other ones, making it a subsidiary unit.
7. How to seek global partnerships in the automotive market?
When you are stuck with your business expansion ideas and seek expansion in the global markets, then the struggle to find reliable global partnerships comes into play. Here are some things to be kept in mind to seek global partnerships in automotive markets.
Identify Target Regions
Based on the domain of your business expansion, you should seek out insightful market research of the regions with the highest potential. With a list of potential target regions, you can further the process by seeking out probable partners.
Build a network
Networking is the first step in business expansion. You should focus on connecting with industry leaders on social media handles. You can even hire a social marketing agency that would help you enhance your social media presence and develop lucrative proposals for your probable business partners.
Connect with a consulting agency
In such instances, connecting with a consulting agency consolidates all your requirements in one place. A consulting firm has a dedicated team to develop market research and a customer approach strategy. They would further help you with a massive distribution channel and a list of interested clients by streamlining B2B meetings. Further, they would assist you in creating a social media presence for your business and connecting with industry professionals. It is a win-win for all requirements.
Conclusion
In the given article we did go through a lot of questions and processes which have to be kept in mind when you are planning business expansion. In such instances managing all of this work by yourself would end up having a lot on your plate. Hiring a consulting agency would connect you with a team of experts which would help you to achieve your goals easily.
Verkko Group is a consulting firm with experience in facilitating business in multiple domains, mainly automotive, FMCG, Railways, and a lot more. With an active presence in 14+ countries, Verkko Group stands as a one-stop solution for your business expansion requirements.
Frequently Asked Questions (FAQs)
There are multiple key leaders in automotive market including Ford, Toyota, Suzuki , BMW and lot more. Some companies form joint ventures and other strategic alliances for business facilitation.
The target people for automotive industry are categorized based on multiple factors including age, demographics, annual income and lot more.
A joint venture is evaluated on multiple factors including the terms of negotiation and the ROI by both sides of the alliance.
Joint ventures are so successful due to multiple factors including combined goals, coordinated execution and well negotiated deal.