GAZ Group Russia The Gazelle Light Commercial Truck Case Solution

Political

In the December of 2012, the congress indirectly helped Russia achieve the Permanent Normal Trade Relations (PNTR) which ensured that the country will be able to receive trade advantages in face of low tariffs. In addition to that, after eighteen years of negotiation Russia finally became part of the WTO due to direct efforts by the Congress which led to decreased trade barriers for local companies who wanted to enter the international market (Affairs, 2014). At that time these changes provide good opportunity for GAZ who was looking to expand into international markets of East Europe, Central Asia and Africa.

Economic

In 2013, Russia saw an increase in consumer spending but soon after in 2014 it saw a decrease by $115.52 billion. The growth projection for 2013 is 1.8%, which is less than that of the previous years’ 3.4% growth rate. Consumer and business confidence is expected to reduce slightly. Demand is likely to grow slowly in the domestic market (The World Bank, 2013). GAZ’s business depends highly on how the economy is performing. If Russia is expected to show slow growth in the next few years, then GAZ needs to explore other economies that have better growth rates to ensure growth of the business. 

Social

Until 2013, the population of Russia was seeing a rapid decrease in its population because of two reasons: firstly, people were immigrating to different countries and secondly, due to high death rates among the working population. Around this time, a recession also hit which caused low spending efforts by the population. As a result, the standard of living went down in the country. For GAZ this situation means low future revenue for the upcoming economic year because the population is seeing a constant decline along with low spending by the remaining (Polyanskiy, 2014).

Technological

Recently the development of certain batteries is taking place which focuses on reducing mass, material cost and increasing long life and durability for batteries so that they may run longer. So instead of using Li-ion technology, special pouch cells could be used which, even though come with high costs, lead to advantages for both the producer and the buyers. Secondly in order to manufacture cars with maximum fuel efficiency and high agility in driving, the auto industry has started to move towards producing light weight vehicles. Thus, for a company like GAZ which also focuses on domestic cars for its consumer can manufacture, it should focus on light weight cars which comes with reduced fuel, longer battery and better driving experience (Peters et al., 2014).

Environment

Automobiles and commercial vehicles have contributed to 90% of the air pollution in the city of Moscow. Additionally, Russia has lacked environmental regulations due to increased focused on growing its industries however, not the governments has been looking to regulate the past and current damages done by the automobile industries. Thus, for companies like GAZ, it is becoming important to notice the degrading conditions of the environment and increased public and government notice regarding this topic. For the upcoming sales of car, the should not only look to pay environmental taxes but also focus on upgrading the designs of their cars by upgrading them to bring less damage to the environment (Energy Information Agency, 2001). 

Legal

On September 2012 the government of Russia decided to put recycling tax on both new cars and used ones. The tax is charged on the scrapping cost of four wheeled and or more than four wheeled vehicles which include busses and trucks. The tax is both also for the locally manufactured vehicles and for imported ones. However, the tax is set higher on used and imported cars as a measure by the government to ensure safety barriers for the domestic auto industry. This tax is important because Russia’s entry into WTO reduces barriers for not just Russia’s entry into international market but also for competition to enter former’s domestic market. GAZ can take advantage from high tax on imported and used cars, but extra recycling tax might also add to its final cost of their products (MarkLines, 2012).

Valuable: Yes, this is a valuable competency as the company has the ability to produce quality vehicles in this segment that is desired by customers.  

Rare: Yes, it is rare. While expertise in passenger vehicles is common in market around the globe, this expertise in light commercial vehicles and light-duty trucks is rare.  

Imitable: This competency is difficult to imitate as it took GAZ over half a century to develop. Competitors cannot imitate this competency over a short period of time.

Organized: Yes, this resource is organized to help the company generate sales. It can also be further used by the company to grow in international markets.  

This expertise is a competency that provides GAZ with sustained competitive advantage.