morgan motor company

Morgan Motor Company An analysis on

Internal and external environment

i | P a g e

ii | P a g e

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

iii | P a g e

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.

1 | P a g e

Morgan Motor Company: an analysis on Internal and External Environment

1.0 Current Situation

2 | P a g e


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.

3 | P a g e


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

4 | P a g e


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 hand-

made 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.

5 | P a g e


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.

6 | P a g e


2.0 Corporate Governance

7 | P a g e


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 below-

1. 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 Co-

Chair 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 non-

executive 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.

8 | P a g e


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.

9 | P a g e


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.

10 | P a g e


Top Management

Marketing

Sales

Conference

Promotion

Supply Chain

Logistics

Inventory

Distribution

Technical

R&D

Design

Finance

Aero Racing

HR

Accounts

11 | P a g e


3.0 External Environment: Opportunities and Threats

12 | P a g e


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

13 | P a g e


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.

14 | P a g e


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.

15 | P a g e


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.

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

•Populations Figures and Automobile Buying Capacity

•Level of Economic Activity

• Technology Relating to Automobile Designs

• Technology Relating to Automobile Manufacture

• Technological Development

•Lifestyles and Preference of People

•Social Norms

•Political Climate of Different Countries

•Stability of Government

•Taxation policy

•Legal Provisions Relating Safety Measues

Political- Legal

Environment

Socio-cultural

Environment

Economic Environment

Technological Environment

16 | P a g e


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

17 | P a g e


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 2010-

2015.

18 | P a g e


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

• 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

19 | P a g e


20 | P a g e


4.0 Internal Environment: Strength and Weaknesses

21 | P a g e


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.

22 | P a g e


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.

23 | P a g e


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.

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

VRIO framework Value

• Hand made cars.

• Primium brand image

• Satisfactory after sales service

• Customized design

• Materials (Ash tree)

• Limited edition

• Reputation

• Design

Rareness

• Experienced assimilators

• Labor based car production

• Design

• Rare materials

• Craft skill

• Unique cars

Imitability

• Skilled workers

• Strategy Design

• Materials

• Friendly atmosphere

• Brand name

Organization

• Design materials

• Production materials

• Resource utilization

• Decision making

• Lead time

24 | P a g e


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.

25 | P a g e


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.

26 | P a g e


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 after-

sales 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.

27 | P a g e


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.

28 | P a g e

Technological development

HRM

Firm infrastructure

procurementin

bo

un

d

log

isti

cs

op

era

tio

ns

ou

tbo

un

d

log

isti

cs

ma

rke

tin

g

&s

ale

s

se

rvic

e

support

activities

primary activities

Hig

h q

ua

lity

raw

ma

teria

ls&

en

gin

es

from

BM

W

Uniq

ue

pro

du

ct

Custo

miz

atio

n fa

cili

tyH

igh

lea

d tim

e

Sh

ipp

ing e

ffic

iency

Sin

gle

pro

du

ctio

n p

lan

t

Le

ss m

ark

eting

activitie

sH

igh

de

ma

nd

vo

lum

e

Insta

llatio

nA

fte

r-sa

les

Planning & ControlFinance & Accounting

R&D and Strategic decisions

Less number of employeesHighly experienced employees

Research on technologyContinuous development

Outsourcing

Clear contractsHighly talented employees with negotiation skills

Proper and quality material purchase

Figure: Value Chain Matrix

29 | P a g e

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

Marketing

Sales

Conference

Promotion

Supply Chain

Logistics

Inventory

Distribution

Technical

R&D

Design

Finance

Aero Racing

HR

Accounts

30 | P a g e

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.

31 | P a g e

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 handmade

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

32 | P a g e

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

33 | P a g e

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.

34 | P a g e

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

35 | P a g e

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.

36 | P a g e

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

•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.

Price

•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.

Place

•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.

Promotion

•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

37 | P a g e

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 £654,692 £582,038

Depreciation

£218,794

£236,199

Operating Income (Loss)

(£252,890) £167,141

Income Before Income Taxes (Loss)

(£386,140)

£119,979

Provision for Income Taxes £252,525

Net Income (Loss)

(£386,140) £372,504

Balance Sheet:

Balance Sheet 2010 2009

Current Assets £7,373,260

£6,094,033

Cash and Cash Equivalents

£598,461 £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

Total Assets

£13,442,347 £12,623,041

38 | P a g e

Employee Figure:

Employee Figures 2010 2009

Total Employees 159 163

Productivity £98,572 £106,018

Audit Opinion:

Audit Opinion 2010 2009

Auditor Rabjohns Llp Rabjohns Llp

Audit Services £21,500 £23,350

Current Liabilities £7,256,773 £5,871,216

Accounts Payable

£3,283,204

£2,978,191

Short Term Debt

£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

Dividends £72,000

39 | P a g e

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.

40 | P a g e

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.

41 | P a g e

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.

42 | P a g e

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.

43 | P a g e

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, hand-

making 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 three-

wheeled 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

44 | P a g e

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.

45 | P a g e

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,

46 | 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.

47 | 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

48 | 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

49 | 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.

50 | 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.

51 | 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

52 | 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

53 | 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

54 | 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.

55 | P a g e

5.0 Analysis of Strategic Factors (SWOT)

56 | 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

Scores

Comments

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

Image

0.30 5 1.50 Could help to gain

market

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

Morgan

0.40 1.00 0.40 Exact replica reduce

market

T2 Japanese competitive

Cars

0.25 2.00 0.50 Reducing market

share

T3 Suppliers high

Bargaining power

0.10 4.00 0.40 Will increase the cost

of Raw materials

T4 Waiting Cancelation 0.25 2.50 0.63 Waiting Customers

are never getting the

car

Total Scores 1.93

57 | P a g e

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

Scores

Comments

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

force

0.10 2.00 0.2 Labor cost

reducing

S4 High Customer Loyalty 0.15 2.50 0.375 Consumer

satisfaction should

be increased

S5 Strong Survival

Mentality

0.10 4.00 0.4 Very Positive for

the Company

S6 Unique Niche Market 0.25 1.00 0.25 Must be protected

and Kept


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

Process

0.25 2.00 0.5 Again Slows

Production

W4 High labor Bargaining

Power

0.20 4.00 0.8 Results high cost

and managerial

issues

W5 Less Diversification 0.05 1.00 0.05 Might not be issue.


58 | P a g e

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.

59 | 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

60 | 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.

61 | P a g e

6.0 Conclusion

62 | 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.

morgan motor company

Documents