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Strategic Problem - Current Situation

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Strategic Problem - Current Situation
The company’s strategic shift from passenger car production to focusing on trucks and sport utility vehicles can be a double-edged sword because by reducing its presence in the passenger car segment, it is opening the door for new entrants and substitute products which are

12 already filling the void. Furthermore, the industry is mature and tends to be cyclical, which means that the market will eventually swing back in favor of passenger cars when fuel prices increase or when new technology enters the market, like the new electrified technology models already in production by its competitors. All in all, it is a significant departure from the company’s roots and it introduces major risks for the company and its stakeholders, because, while current market trends seem to validate the change, it is a shortsighted and reactive approach to a long-term problem. Briefly, the company faces three main challenges. These area significant increase in competition, the loss of market share with the consequential profit erosion.

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