Leading Indus try Suppfi'er Breezy Auto Parts has been supplying the North American automobile industry with carburetors, fuel injectors and air filters for more than half a century. With revenues of about USD 100 million a year, it is a significant player in the parts industry. Initially, it supplied carburetors and filters to each of the Big Three domestic manufacturers. When foreign car manufacturers entered North America to set up manufacturing operations, Breezy developed relationships with the newcomers. It redesigned some of its products to fit the foreign models. It also introduced electronic data interchange (EDI) to supportjust-in-time deliveries to all its customers. As a result, it successfully realized its original corporate vision of becoming North America's leading supplier of fuel injectors and air lters, a position it has occupied ever since. For the past thirty years, Breezy has counted on steady customers and steady revenues. Over the past decade, the cost of crude oil has increased, offset periodically by drops in oil prices. _ While these fluctuations will continue for the foreseeable future, it is increasingly clear that the cost of driving gas-run cars will increase. With this dynamic at play, the automobile market has undergone substantial change, with gas-guzzling models declining in popularity and hybrids and electric vehicles increasing their share of the market. Manufactures like Tesla have transformed the industry, and this has created a ripple effect on the businesses who have traditionally supported the auto industry. Breezy can no longer count on respectable profit margins. Sales are anemic, and because ofthe company'sfixed costs, tied to its manufacturing plant, profits are getting razor thin. To avert further deterioration, the company's CEO announced a Visioning workshop for senior managers. The objective is to conduct a PESTE (political, economic, social, technological and environmental) review of current trends, factors and conditions in the marketplace while subjecting Breezy to a rigorous SWOT (strengths, weaknesses, opportunities, threats) analysis. This is the first step in a process of revitalizing the company and its prospects, by developing a new vision and strategy. Observations and Analysis At the workshop, senior managers made the followrng observations - As a supplier to the auto market, Breezy is dependent on its fortunes, but has little inuence over broad trends such as gas prices or the pace at which car manufacturers decide to redesign their vehicles for fuel efficiency or install different sources to power their cars. That redesign process may take years. but Breezy has obligations now. Breezy already dominates the North American market for fuel injectors and air filters, so there is limited scope for expanding sales in a market that is already saturated So far, Breezy had focused on fuel injectors and air filters, something that it does better than others, and a product in which it has decisive competitive advantages. Movmg into new products would require RED and retooling, and it would have to be carefully coordinated with the redesign of automobiles for fuel efficiency and alternate fuel sources that is underway in the industry Key to Breezy's existing competitive advantage is the tight integration It has established With its customers by usmg industry best practices, such as justuin-time manufacturing and just-in-time inventory. Any future development shouid build on that foundation So far, Breezy had focused exclusively on the North American market. Because of its pievrous success and the overwhelming Size of that market, it has never felt the need to look for markets in other pans of the world Fiitaring the Options After reviewing the company's financial performance over the past few years, senior managers concluded that Elreezy had to expand its market if it was to sustain its profits There were two options on the table Option 1' Breezy could stick with the tried and true it could continue focusing on the North American market. working with its existing partners to develop products for the fuel efficient cars of the future. Alternatively, it could try to expand its product offering beyond fuel injectors and air filters into other auto pans The market for standard auto parts was already saturated, however. One manager suggested that Breezy could try to move into thp customized market, making specialized accessories for car enthusiasts Option 2: Breezy could try to develop new customers and new markets outside of North America. It was pointed out during the PESTE analysis that car manufacturing was growmg in countries such as BraZil and india Recently, India's Tata Company had announced its intention to develop a popular car for the indian market. Its target price for the vehicle was to be about USD 2500 a unit it was suggested that Breezy start developing the same close relationships With overseas car manufacturers that it had already established With their North American counterparts. The CEO assigned two teams to investigate each of these possibilities The teams are to prepare a detailed course of action for their assigned option, together With an analysis of costs and benets