TWA Parts Abridged Case Solution

1. What are the respective business strategies of Transworld Auto Part’s economy and luxury divisions? (You may want to think about how each division adds value to its customers and differentiates itself from its competition.)

The luxury and economy the divisions are both the most profitable segments of Transworld. Therefore, the business strategies they opt for both the segments are uniquely associated with their division. As both the divisions have a unique identity, hence, each strategy is designed specifically for the respective division.

Strategy for Luxury Division

For the luxury segment, TAP prefers differentiation techniques through innovation and technology. In contrast with competitors who focuses on frontline customer relationship, TAP in auto parts luxury, maintains its positioning by displaying itself as a pioneer of innovation. This indicates that the company’s main focus here is to put their effort towards new product designs which must be unique and introduce novel concepts. This way, the company can maintain its brand identity and leadership in the market and attain the attention of luxury OEMs (original equipment manufacturers). However, to maintain its image, the company needs to multiply the effort 2* times in the said domain.

Strategy for Economy Division

Most of the competitors of TAP are trying to approach a low-cost leadership strategy due to which the quality and longevity of products could be compromised. In the case of Transworld Auto Parts, the prime focus of their economy division is to bring sustainability and maintain quality by producing high-quality parts but with low lifetime prices, hence, utilizing a differentiation strategy for this segment as well. For this, the company makes sure that its customers are allowed to have access to superior rooms with the notion of durability. Moreover, the no requirement of exorbitant maintenance costs also adds value to the company. However, the main challenge the company might face in the repositioning of the division is to capture a certain reputation in the market and build a strong image as a reliable supplier in the manufacturing market.

2. What must each division do well to execute its strategy?

Suggestions for Successful Execution

It is crucial to look into the critical factors that must be followed by the Transworld Auto Part to execute the strategies well. However, clarification is needed here that Transworld auto part is a subsidiary, hence it relies on the parent company. Here, the parent company enforces certain goals and objectives toward its subsidiary so that it could be operated in continuation. Moreover, most of the targets enforced by the parent company towards the subsidiary are based on financial goals. In the case of TAP, 8% ROCE and positive cash flows are to be attained by 2011. It indicates that financial factors need to be considered and prioritized by the company. The necessity of reduced COGS is required over 3 years. After that, the utilization of capital assets (ideally 90% of asset-based) must be made in a better way.