Industry Analysis : 5 (+1) forces Competitive positioning strategies Value proposition Value innovation CRRE Industry convergence Experiment blue ocean strategies, defining characteristics. industry success factors market growth and drivers Suggestions on structure of industry reconstruction through value innovation strategies In more details: (1) A thoughtful and complete 5+1 (Porters) force analysis: specifically state whether the power of, or threat from, each of the 5 forces is high, low, or moderate (or equivalent language)? Is there a determination as to whether or not this is an attractive industry that is realistically based upon the conclusions reached previously? You should also examine the industry outlook carry out the same analysis to predict how the industry will look like in the near future. (2) If the industry is judged to be unattractive are the implications for the competitive positioning, operations, and marketing of a company in it explained? The industry often constrains the range of possible generic strategies that firms can follow. (3) Has a specific recommendation been made regarding the value proposition of the company that is being analyzed relative to the value propositions of competitors and substitutes (competitive positioning)? (4) If appropriate: have industry convergence/value innovation types of opportunities been examined? (5) Given the intended competitive positioning of your company, did you identify operating and marketing implications and discussed what capabilities will be necessary to deliver the intended value proposition? (6) If the needed capabilities are not currently present, is there a compelling plan on how they could be developed? If the capabilities are present, is there an examination of what the company should do to maintain them, and what it must not do in order to maintain them?

Introduction & Industry Definition Car Seat Qatar (CSQ, www.carseatqatar.com) is a shareholding company that was established back in 2004 by three brothers as a prestigious car accessories showroom targeting luxury cars' owners who wish to modify their cars with world renowned brands. Modifications included alloy wheels, spoiler kits, exhaust systems, chrome accessories and tires. Qatar is much known of luxury cars and having the highest GDP worldwide makes it a good target for luxury cars accessories. CSQ had a difficult first year, which needed to keep pushing money in for continuing operations. However, with lots of advertisement and word-of-mouth communications, it made a very good second year. Since then it has been doing well until end of last year, where lots of rivals appeared in the market, which really affected the sales of CSQ. Back in 2004, CSQ was a disruptive business and a successful entrepreneurship idea. CSQ was positioned for luxury cars' owners who are willing to pay a premium to get genuine products. Lots of car accessories shops were available in Qatar at that time, but most were for normal cars, mostly Toyota Land Cruisers and Nissan Patrol, the most two cars available in Qatar. But none was targeting luxury cars. Khaled, the older brother and the GM of the company initiated new activities over the years. We first started mostly (90%) with accessories for Range Rovers, Porsche Cayyene and BMX X5 which were selling like crazy those years. In year 2007 he started a new line which dealt with engine tuning and increasing horse power for cars, a business which proved to be very successful in this culture, where lots of youth like to compete on the speed of their cars. In 2008, accessories for American cars 4x4 were introduced and with them, Khaled started a new series of advertisement with local newspaper advertising for new and old products. In 2009, bikes trend started to appear heavily in Qatar. Khaled came up with the idea of airbrush design, which makes the whole bike as a piece of art. This business was then extended to jet skis and high speed boats. With Airbrush, Khaled started to participate in motorbikes exhibitions, and was invited to multiple ones to show our pieces of art. Every line of business mentioned above created competition in the market. We had two of our salesmen who went out with customers and made similar business like us. They even used the same decoration of our showroom. Industry Analysis: 5 (+1) Forces Threat of New Entry HIGH Threat of rivalry (HIGH) * Concentration: the number of firms competing in the car accessories Bargaining power of suppliers LOW Bargaining power of Customers HIGH Threat of RivalryHIGH industry is high compared to the size of the market of Qatar. Not all of them though are competing directly with Threat of Substitutes LOW Availability of Complements LOW Carseat. Only shops dealing with luxury car accessories are direct competitors. Rest are not really considered when it comes to competition, because they all deal with different types of cars CSQ is not targeting at all. * Diversity of competitors: The industry is divided into two types of competitors: the major competitors (luxury car accessories shops) and low cost shops (that does the same look accessories with lower quality, mostly Chinese). One of them was a duplicate of our shop from a customer and one of our ex-employees, who knew many of our secrets. * Product differentiation: shops compete with each other through offering different qualities, promotions, guarantees and other benefits to get more customers to be loyal, but the overall product is merely the same in each company. Customers are willing to pay a price premium for the image of premium brands. They want to make a statement with their purchase of a premium products and it is this statement that the heavy marketing expenditures ensure. * Excess capacity and exit barriers: there is a high cost of leaving the market. Very high investment is already done since opening, including advertisement, decoration, participating in exhibitions, employees training, etc. * Cost conditions: Scale economies may encourage companies to compete aggressively on price to gain the cost benefits of greater volume. This industry is fiercely competitive. Such highly competitive industries earn low returns because the cost of competition is high and buyers are receiving the benefits of low prices. Threat of entry of new entrants (HIGH) * Economies of scale: The recent increase of competitors in the luxury accessories industry in this small market forces them to compete aggressively on price to generate business, which translates into small profits when the economy is booming. New companies though have difficulties making economies of scale and getting access to distribution channels. * Absolute cost advantage: CSQ has cost advantage over new entrants because they entered earlier. It can also result from economies of learning: CSQ is able to move down the learning curve because they are familiar with the way business is done. They already have access to famous brands, favorable suppliers and experience. * Capital requirements: it is not excessively expensive to enter the car accessories industry, however, potential entrants will have to spend a lot of money on branding their products in such a way that the consumers see their products as being of equal quality or better. * Product differentiation: concerns brand identification and customer loyalty. Again entering companies must spend lots of money on advertising and promotions to gain levels of brand awareness similar to that of established companies. * Access to distribution channels: can be a barrier for new entrant because distribution channels have limited capacity. Companies are fighting to secure a space for their product. The threat of substitutes: (LOW) * Buyer propensity to substitute: the substitute to luxury car accessories shop is buying directly from car's dealerships, which is usually more expensive than this industry. * Relative prices and performance of substitutes: even though price might be lower by car accessories shops, performance and guarantee from car dealerships may be higher. The bargaining power of buyers: (HIGH) * Buyer's switching costs: buyers tend to favor the least prices even if they are somehow satisfied with dealing with CSQ. * Product differentiation: the products offered are homogeneous. Efforts to attract customers through enhanced services are the key of success here. In CSQ, in addition to our showroom products, customers can find whatever product available in the cyber market and we take care of bringing it in by our channels adding an agreed commission. * Buyers' information: the better informed buyers are about suppliers and their prices and costs, the better they are able to bargain. Because of the Internet, pricing information is easier to compare. Buyers have power over the industry most of the time because they will often search for the best deals. The bargaining power of suppliers (LOW) * Supplier competition: competition is low for suppliers in this industry. We have not noticed that any supplier would compete against another by knowing if CSQ sells both suppliers' products. * Labor: employees in this type of industry are moving a lot. It is becoming difficult to have local employees even with huge incentives. The availability of complements: (LOW) * this is accomplished by partnering with car service shops, like exhaust fixing shops, wheel alignment shops, body shops, etc. This gives confidence and encouragement to customers when they buy any of these accessories then told to visit these shops for installation with no charge. Critical Success Factors: There are some critical success factors for this industry which CSQ must consider in order to achieve a long term business objective. These long term business objectives can be summarized: To expand the business aggressively and offer above-average returns to shareholders. To become the leading, innovative accessories company within this market segments. These key success factors include but not limited to: achieving credibility (both with suppliers and customers) maintaining product quality standards (including offering guarantees) finding needed resources (trained employees, technology, correct location) performing additional market research to stay in touch with customer needs profitability and cost-effective operations; establishing a continuous improvement policy for reviewing and evaluating market needs; a financial plan that ensures enough cash flow and sales revenue to grow effectively; a plan to deal with downturns should they occur; systems and administrative policies to enhance employees do their jobs effectively. Strengths, Weaknesses, Threats & Opportunities The business strategy should address the following key strengths, weaknesses, threats and opportunities for CSQ: Strengths: Early entry to the local market Weaknesses: Cannot come down with prices exclusivity of well-known brands Very good trained staf Excellent location Getting low on cash because of huge increase in inventory to keep up with diferent brands and market needs Good customer relationships Need to relocate to larger premises Luxury car owners usually willing to pay premium Overdependence on few key staf imitated new products may move market in new directions Threats: Opportunities: low cost players may enter targeted market segment Economic slowdown could reduce demand Market segment is poised for rapid growth Market may become price sensitive Scope to diversify into related market segments Market segment's growth could attract major competition Value Innovation Creating a blue ocean to this industry might be the best way to improve CSQ business in Qatar. Getting out of competition and making it irrelevant by creating a leap value for CSQ and customers. This is achievable by industry convergence through value innovation which is demonstrated by the ERRC model. So CSQ to: Eliminate depending on standard items' sales. Keep eyes on new products on market worldwide and bring very limited number of products and start advertising that first customer can get it first or lose it, and use Accelerated product launches. More products of same disruptive item can be ordered separately with advance payment. Before the end of this item, another item or set of items will be in the way, waiting to be selling immediately. Reduce cost structure by reducing stock and inventory. Also reduce showroom and stores sizes. Rentals in Qatar make a huge part of operations expenses. This way rental costs can be reduced. Raise awareness of customers of new products and raise awareness that they either are the first to get the merchandise or lose, and this way, someone else will be having a fancier car than his. Also raise support of car brands accessories, extend links with key accessories centers, concentrate on very new products and raise level of loyalty and people's understanding of CSQ way of business. Create factors that add new sources of value like new partnerships with new suppliers. Also create a leap in value for both CSQ and customers by allowing customers to make their own choice and selection over the internet for example and CSQ orders the item for those customers with a certain agreed upon margin. Also create a marketing team that targets non customers who has luxury cars who has not come to shop before and entice them to come back more frequently. This way, CSQ can create a market space that, as yet, has no equals. Over time, costs are reduced further as scale economies kick in, due to the high sales volumes that superior value generates. Major Goals/Plan to Develop Competitive Positioning The following key targets shall be achieved by CSQ over the next 3-4 years: Achieve double current sales by 2014 Secure 60% of the luxury car accessories market segment by 2014 Employ extra qualified people by 2016 Have sales offices or agents in complementary key markets before 2016