Introduction McLaren is one of the leading companies in racing and is holding a position just behind Ferrari in Formula One racing. McLaren though started as a racing company diversified its business to various fields and is now functioning in six different areas of business. McLaren is able to compliment each other with this diversification strategy and according to the management diversification is the key to McLaren’s success. As par of this strategy company has started to produce road cars for the first time from 2011. With its innovative experience in sports car manufacturing for over fifty years McLaren is aiming consumers who wish to own a piece of racing technology on their own. Precision engineering is made use of by the company in manufacturing of road cars and each piece is made with same effort and care as if it is a Formula One racing car. Company was able to overcome all barriers of mass car market with its technology and innovation. Success of McLaren is attributed to diversification of business which could not function better under any other management. 1 Overcoming market entry barriers in the mass car market McLaren is the leader in Formula 1 racing car production, but has entered road cars range for the first time. McLaren has entered a highly competitive industry with NP412 C with an investment of 800 million pounds as investment. Road cars industry is not only competitive but is highly established. Hence there were several market entry barriers for McLaren while entering this new market (McLarenNB, 2011). In order to overcome market entry barriers, McLaren targeted only high and luxury customers who want a piece of Formula 1 engineering for themselves. Investing such a huge amount in road car market is a big gamble for the company. But McLaren has best engineering available with it and it is this feature that the company has relied on in this new business (McLarenNB, 2011). McLaren has the experience in engineering innovations for more than 50 years and it is this capability and experience of the company that placed it on the podium of success several times. As the company is experienced in F1 technology prospective customers as well as market will expect most sophisticated and fastest road car range from the company. With its experience and determination McLaren tried to introduce their innovative capabilities in every stage of new venture. Optimized design of NP412 C is the result of this and advantage of Formula 1 innovations is made at every stage of production (McLarenNB, 2011). Precision engineering is the basis of all activities and this is applied at every stage of production. Narrow chassis of NP412 C is made of carbon fiber. This material is used in aerospace industry and it makes the chassis safer, stronger and light and thereby improves acceleration and handling. By applying this feature in its road car company has gained obvious advantages in the performance of its new car. Chassis used in NP412 C is called as monocell and using carbon fiber instead of aluminum prevents it from twisting even at highest speed (Curtis, 2012). Carbon ceramic disk breaks are used in this car. Precision engineering is applied in fixing every feature and even the engine of the car is build by the company in its own plant. McLaren during initial stage was able to produce only 10 cars a week. But with its new £40 million McLaren Production Centre (MPC) in November 2011company will be able to increase production to one car every 45 minutes. This will increase the production to 80 cars per week leading to 4000 cars a year. Mass production of this type will also help to reduce the price of car by half the amount. Thus using its innovation and experience along with precision engineering McLaren will be able to make a space among high end road cars (McLarenNB, 2011). Conclusion McLaren diversification strategy has been able to compliment each other and at the same can remain as separate entities as well. But together they are able to perform better. Corporate management was successful in deriving strategies beneficial for the success of organization. Each new diversification was helpful to each other and strategies were developed in this way. Corporate management of McLaren was able to add value to each business through diversification and McLaren group can not function better under another ownership. Company never had to restructure its portfolios for allowing uniformity. Each diversification helped the company to perform better in its field and market and entities were also able to support each other in their specific area of business.
Posted on: Sat, 24 Aug 2013 23:57:01 +0000
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