Wednesday, April 26, 2017

How Subaru defines its company scope uniquely

Subaru is a Japanese automobile manufacturer which belongs to Japanese transportation conglomerate Subaru Corporation (formerly known as Fuji Heavy Industries (FHI)). The company has a clear and simple statement of strategy which is called” Confidence in motion”. Confidence means Subaru will always manufacture cars with confidence so that customer can fully trust the quality of its product. And “in motion” means Subaru never stop in pursuing the new technology and will always focus on technology innovation.

The products positioning of Subaru seems very different compared to conventional successful cars company. The company knows its business boundary very clearly. Subaru never produces a car merely with a stylish looking and luxury interior, which can attract potential customer effectively. In contrary, engineers and product designers on Subaru pay more attention to the quality of production, advanced technology and driving performance. The scope of business precisely aims to those potential customers who like cars and driving and focus on quality.

The differentiation strategy and unique company scope bring Subaru several benefits which are as follow:
  • Because of the relatively small size of Subaru company comparing to other conventional large car companies like Toyota or Volkswagen, Subaru don’t have an adequate market power to directly compete with the large car companies. Additionally, Fuji Heavy Industries as an aircraft manufacturer begin to produce cars relatively later, which means when Subaru enter the market the civil cars market was mature enough. So the barriers like the scale of economic to threat Subaru is also a reason to make Subaru implement unique strategy scope and differentiate its product. Only in this way can Subaru enter the precise market segment to gain the profit. Nowadays, according to the market survey data, sales of Subaru ranks in top 10 among car companies. Considering the small size of Subaru, we can say that the strategy of Subaru is successful.
  • When Subaru trying its best to differentiate its products with other car companies, there are nearly no perfect substitutes to compete with products of Subaru. Through this method, Subaru can effectively improve its pricing power. And because of the unique feature of Subaru cars, like agile driving performance or integrated new car technology, the price sensitivity of customers towards Subaru cars is decreased. So the premium of Subaru cars can be relatively higher. And the company can make more profit through the product differentiation.
  • An explicit business scope and strategy can make Subaru allocate a large part of human resource and capital to develop the specific kind of product. The technology innovation of Subaru largely relies on its explicit development strategy. At 1971, Subaru creatively introduced four wheels drive technology into sedan car. The boxer engine and symmetrical AWD still stand in a leading position in today's car technology.

We can see from Subaru’s experience that have an explicit and clear business scope and position your product precisely is important for a company to survive in a competitive environment, especially for the relative small company. But for the big size conglomerate, I think abundant product line is absolutely a better choice.

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