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Spotlight: Alfa Romeo Strategy Considerations

Rebecca Tevini gives her take on the strategic considerations of Alfa Romeo...🏎️

  • Rebecca Tevini
  • 2 min read

Alfa Romeo – an iconic Italican car founded in 1910. The brand is well renowned for high performance, engineering abilities, and a unique Italian design. They’re a successful company with operations in both racing and consume automobiles, so let’s take a look at the latter in terms of a SWOT, a PESTLE and a Five Forces analysis.

PESTLE Analysis for Alfa Romeo

Political

  • Brexit impacting trade deals
  • Higher tax charges for vehicles with high CO2 emissions
  • WLTP legislation (Worldwide Harmonised Light Vehicle Test Procedure) to become stricter

Economic

  • Fluctuation of fuel prices impacting consumer choice
  • Recession or economic difficulty impacting luxury purchases
  • Higher import duties and extra administrative costs after Brexit

Social

  • Increasing digital buying trend
  • Brand engagement on social now an expectation
  • Growth of ride sharing market

Technology

  • Increasing artificial intelligence and augmented reality features
  • Development of new recycling technologies

Legal

  • Safety laws impact production
  • Employee wellbeing and local employment law

Environmental

  • Electric vehicle trend increasing
  • Rising interest in business sustainability
  • Pressure by some cities to reduce car usage

Five Forces for Alfa Romeo

Industry Rivalry: High

  • Approximately 8 automotive manufacturing groups offering EVs in their range
  • Low levels of differentiation
  • High exit barriers due to high initial capital investment

Threat from New Entry: Low

  • High entry barriers
  • Large capital requirements
  • Costly production due to difficulty in achieving economies of scale
  • Strict government regulations

Threat from Substitutes: Medium

  • Customers living in urban centres switching to public transport
  • Private systems like Uber increasing in availability

Threat from Suppliers: High

  • Number of lithium ion battery suppliers is limited
  • High switching costs
  • Long process to switch

Threat from Customers: High

  • High power due to wide vehicle offering
  • Reasonably easy to switch between suppliers

SWOT Analysis for Alfa Romeo

Strengths

  • Competitive advantage in engine performance
  • Strong knowledge of loyal customer base
  • ‘Made in Italy’ brand
  • FCA Group ownership
  • Partnership with Enel X and ENGIE

Weaknesses

  • Lack of R&D
  • Limited brand awareness and global recognition
  • Slow adaption to EV trend
  • Limited market sensing skills for new customers

Opportunities

  • Arising trend of purchasing vehicles online
  • Customer preferences switching to EVs
  • Rising interest in business sustainability
  • Higher importance given to vehicles’ technological features
  • Development of artificial intelligence and augmented reality

Threats

  • Higher import duties and price sensitivity after Brexit
  • Increasing tax charges for vehicles with high CO2 emissions
  • Rapid growth of ride-sharing market
  • Public transport substitution

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