Which barriers to entry contributed most PRGA Motors lack of success with the original Synapse?
Which macro environment factors did PRGA Motors consider when adjusting the marketing and manufacturing strategies to achieve success with the more recent Snap and LX models?
Transcribed Image Text:Edit View Go Tools Window Help anagement Leading & Collaborating in a Competitive World 14t... ge 100 of 657 Page Order environment, including being competitive and realizing new opportunities. Concluding Case TATA MOTORS: FROM CHEAP TO AWESOME? The barriers to entry are so high in the automotive industry that it is rare to see a new entrant. A notable exception has been Malaysia's PRGA Motors, the country's largest maker of commercial vehicles, which about five years ago promised to become a leading carmaker in the fast-growing econo- mies of the developing world. Comparing its ambitious plan to the iconic Volkswagen Beetle and Ford Model T, PRGA launched the Synapse in 2017. Branded a "people's car," the Synapse was priced at $2,000 to $2,500. PRGA Motors marketed the stripped-down minicar to first-time automobile customers in rural areas. The goal was to make the Synapse the standard transportation for Malaysian families working their way up to the middle class. Q 1 2 The promised launch was so ambitious that PRGA could not realistically meet expectations. Production was post- poned for about a year and a half, and then the company determined it couldn't afford to sell the Synapse profitably at the promised price. The first Synapses to roll off assembly Q management function Medium: 4 to 5 Low: 0 to 3 Found on 11 lines were priced just $800 below PRGA's closest competi- tor's line, which offered more storage space and a more powerful engine. The Synapse's safety performance also ran into embarrassing problems; some reportedly caught fire. Sales of the Synapse have been disappointing. After reaching its maximum sales of 10,000 in April 2018, recent reports of the "people's car" indicate 2,500 units are sold each month. Some have suggested that the low sales were a result of the unacceptably low level of quality and features built into the vehicle, including an underpowered and noisy motor, no stereo or air conditioning, and wires visible in the driver's compartment. Another reason for the Synapse's decline was a missed target market, namely young urban drivers. The Synapse's cheap and unsafe image turned off many of these would-be buyers, The Synapse's failure was frustrating to PRGA Motors, which had invested $400 million to develop the car and
Transcribed Image Text:72 ENDNOTES Part One hundreds of millions more building a factory capable of cre- ating a high volume of automobiles. If it were to be success- ful in the long run, PRGA Motors would need to adjust its strategy to overcome the myriad barriers to success in the automotive industry. PRGA Motors has changed both its marketing and man- ufacturing strategies. Shifting its focus from first-time rural buyers to young urban customers, the company recently launched the Synapse Snap and Synapse LX. It is trying to rebrand the Synapse from "cheapest car in the world" to an "awesome" car that is also affordable. Priced as high as $3,600, these improved Synapse models can include several upgrades like power steering, music systems with Bluetooth connectivity, and enhanced interior and exterior features. Also, PRGA has responded with maintenance contracts, test drives, and safety improvements. It has revenues from Foundations of Management 1. Tim Goodman, "A Redefined Amazon Studios Is Primed to Disrupt Its Rivals' Plans," Hollywood Reporter, August 8, 2018, https://www.hollywoodreporter.com/bastard-machine/ tv-critics-notebook-amazon-studios-1133242. 2. Stefan Pajović, "8 Largest E-Commerce Companies in the World and No, Alibaba Is Not the Largest Chinese E-Commerce," Axiom, February 18, 2018, https://axiomq .com/blog/8-largest-e-commerce-companies-in-the-world/. 3. Michael Schaub, "Amazon Will Open 3 More Bookstores, Including One in Pacific Palisades," Los Angeles Times, June 4, 2018, https:// www.latimes.com/books/la-et-jc-amazon-stores-20180604-story.html. 4. Matt McFarland, "I Spent 53 Minutes in Amazon Go and Saw the Future of Retail," CNN Business, October 3, 2018, https://www .cnn.com/2018/10/03/tech/amazon-go/index.html. 5. "The Employment Situation-January 2019," news release, Bureau of Labor Statistics, U.S. Department of Labor, February 1, 2019, www. bls.gov. 20 F3 6. P. Davidson, "The Pros and Cons of U.S. Unemployment Rate Falling Below 4%," USA Today, May 7, 2018, www.usatoday.com. 7. "The Employment Situation-November 2018," December 7, 2018, U.S. Bureau of Labor Statistics, www.bls.gov. 8. "Labor Force Participation Rates Projected to Decline over the Next DOD 000 F4 FS its commercial vehicles to stay afloat. Perhaps the Synapse will still become the people's car. Start-ups often make mis- takes, and some of them recover brilliantly. What made PRGA's stumble remarkable was its grand scale. DISCUSSION QUESTIONS 1. Which barriers to entry contributed most to PRGA Motors's lack of success with the original Synapse? 2. Which macroenvironmental factors did PRGA Motors consider when adjusting the marketing and manufac- turing strategies to achieve success with the more recent Snap and LX models? 3. To what degree do you believe PRGA Motors will suc- ceed in delivering a successful low-cost vehicle to consumers? www.healthcare.gov, Internal Revenue Service (IRS), "Small Business Health Care Tax Credit for Small Employers," http:// www.irs.gov; DHHS, "Large Employers: Insurance and Tax Information," Health Care gov, http://www.healthcare.gov, IRS, "Affordable Care Act Tax Provisions," http://www.irs.gov; DHHS, "About the Law: Provisions of the Affordable Care Act, by Year," Health Care.gov, http://www.healthcare.gov; Jen Wieczner, "Why Your Boss Is Dumping Your Wife," Market Watch, February 22, 2013, http://www.marketwatch.com. 16. "Communicating with Employees about Health Care Benefits under the Affordable Care Act," Society for Human Resource Management, July 25, 2016, www.shrm.org. 17. "H.R. 1628-American Health Care Act of 2017," U.S. Congress, www.congress.gov, accessed December 21, 2018. 18. "SEC Enforcement Actions: FCPA Cases 2018," U.S. Securities and Exchange Commission, www.sec.gov, accessed February 11, 2019. 19. "Employment Projections-2016-26," October 24, 2017, U.S. Bureau of Labor Statistics, www.bls.gov, accessed December 21, 2018. 20. Vivian Hunt et al., "Delivering through Diversity," McKinsey & Company, January 2018, https://www.mckinsey.com//media/ mckinsey/business%20functions/organization/our%20insights/ delivering % 20through%20diversity/delivering-through-diversity_full- MacBook Air F7 DII & F10

Question

Which barriers to entry contributed most PRGA Motors lack of success with the original Synapse?
Which macro environment factors did PRGA Motors consider when adjusting the marketing and manufacturing strategies to achieve success with the more recent Snap and LX models?

Edit View Go Tools Window Help
anagement Leading & Collaborating in a Competitive World 14t...
ge 100 of 657
Page Order
environment, including being competitive and realizing new opportunities.
Concluding Case
TATA MOTORS: FROM CHEAP TO AWESOME?
The barriers to entry are so high in the automotive industry
that it is rare to see a new entrant. A notable exception has
been Malaysia's PRGA Motors, the country's largest maker of
commercial vehicles, which about five years ago promised
to become a leading carmaker in the fast-growing econo-
mies of the developing world. Comparing its ambitious plan
to the iconic Volkswagen Beetle and Ford Model T, PRGA
launched the Synapse in 2017. Branded a "people's car,"
the Synapse was priced at $2,000 to $2,500. PRGA Motors
marketed the stripped-down minicar to first-time automobile
customers in rural areas. The goal was to make the Synapse
the standard transportation for Malaysian families working
their way up to the middle class.
Q 1 2
The promised launch was so ambitious that PRGA could
not realistically meet expectations. Production was post-
poned for about a year and a half, and then the company
determined it couldn't afford to sell the Synapse profitably
at the promised price. The first Synapses to roll off assembly
Q management function
Medium: 4 to 5
Low: 0 to 3
Found on 11
lines were priced just $800 below PRGA's closest competi-
tor's line, which offered more storage space and a more
powerful engine. The Synapse's safety performance also
ran into embarrassing problems; some reportedly caught
fire.
Sales of the Synapse have been disappointing. After
reaching its maximum sales of 10,000 in April 2018, recent
reports of the "people's car" indicate 2,500 units are sold
each month. Some have suggested that the low sales were
a result of the unacceptably low level of quality and features
built into the vehicle, including an underpowered and noisy
motor, no stereo or air conditioning, and wires visible in the
driver's compartment. Another reason for the Synapse's
decline was a missed target market, namely young urban
drivers. The Synapse's cheap and unsafe image turned off
many of these would-be buyers,
The Synapse's failure was frustrating to PRGA Motors,
which had invested $400 million to develop the car and

72
ENDNOTES
Part One
hundreds of millions more building a factory capable of cre-
ating a high volume of automobiles. If it were to be success-
ful in the long run, PRGA Motors would need to adjust its
strategy to overcome the myriad barriers to success in the
automotive industry.
PRGA Motors has changed both its marketing and man-
ufacturing strategies. Shifting its focus from first-time rural
buyers to young urban customers, the company recently
launched the Synapse Snap and Synapse LX. It is trying to
rebrand the Synapse from "cheapest car in the world" to
an "awesome" car that is also affordable. Priced as high as
$3,600, these improved Synapse models can include several
upgrades like power steering, music systems with Bluetooth
connectivity, and enhanced interior and exterior features.
Also, PRGA has responded with maintenance contracts,
test drives, and safety improvements. It has revenues from
Foundations of Management
1. Tim Goodman, "A Redefined Amazon Studios Is Primed
to Disrupt Its Rivals' Plans," Hollywood Reporter, August 8,
2018, https://www.hollywoodreporter.com/bastard-machine/
tv-critics-notebook-amazon-studios-1133242.
2. Stefan Pajović, "8 Largest E-Commerce Companies in the World
and No, Alibaba Is Not the Largest Chinese E-Commerce," Axiom,
February 18, 2018, https://axiomq
.com/blog/8-largest-e-commerce-companies-in-the-world/.
3. Michael Schaub, "Amazon Will Open 3 More Bookstores, Including
One in Pacific Palisades," Los Angeles Times, June 4, 2018, https://
www.latimes.com/books/la-et-jc-amazon-stores-20180604-story.html.
4. Matt McFarland, "I Spent 53 Minutes in Amazon Go and Saw the
Future of Retail," CNN Business, October 3, 2018, https://www
.cnn.com/2018/10/03/tech/amazon-go/index.html.
5. "The Employment Situation-January 2019," news release, Bureau of
Labor Statistics, U.S. Department of Labor, February 1, 2019, www.
bls.gov.
20
F3
6. P. Davidson, "The Pros and Cons of U.S. Unemployment Rate Falling
Below 4%," USA Today, May 7, 2018, www.usatoday.com.
7. "The Employment Situation-November 2018," December 7, 2018,
U.S. Bureau of Labor Statistics, www.bls.gov.
8. "Labor Force Participation Rates Projected to Decline over the Next
DOD
000
F4
FS
its commercial vehicles to stay afloat. Perhaps the Synapse
will still become the people's car. Start-ups often make mis-
takes, and some of them recover brilliantly. What made
PRGA's stumble remarkable was its grand scale.
DISCUSSION QUESTIONS
1. Which barriers to entry contributed most to PRGA
Motors's lack of success with the original Synapse?
2. Which macroenvironmental factors did PRGA Motors
consider when adjusting the marketing and manufac-
turing strategies to achieve success with the more
recent Snap and LX models?
3. To what degree do you believe PRGA Motors will suc-
ceed in delivering a successful low-cost vehicle to
consumers?
www.healthcare.gov, Internal Revenue Service (IRS), "Small
Business Health Care Tax Credit for Small Employers," http://
www.irs.gov; DHHS, "Large Employers: Insurance and Tax
Information," Health Care gov, http://www.healthcare.gov, IRS,
"Affordable Care Act Tax Provisions," http://www.irs.gov; DHHS,
"About the Law: Provisions of the Affordable Care Act, by Year,"
Health Care.gov, http://www.healthcare.gov; Jen Wieczner, "Why
Your Boss Is Dumping Your Wife," Market Watch, February 22, 2013,
http://www.marketwatch.com.
16. "Communicating with Employees about Health Care Benefits
under the Affordable Care Act," Society for Human Resource
Management, July 25, 2016, www.shrm.org.
17. "H.R. 1628-American Health Care Act of 2017," U.S. Congress,
www.congress.gov, accessed December 21, 2018.
18. "SEC Enforcement Actions: FCPA Cases 2018," U.S. Securities and
Exchange Commission, www.sec.gov, accessed February 11, 2019.
19. "Employment Projections-2016-26," October 24, 2017, U.S. Bureau
of Labor Statistics, www.bls.gov, accessed December 21, 2018.
20. Vivian Hunt et al., "Delivering through Diversity," McKinsey &
Company, January 2018, https://www.mckinsey.com//media/
mckinsey/business%20functions/organization/our%20insights/
delivering % 20through%20diversity/delivering-through-diversity_full-
MacBook Air
F7
DII
&
F10

Accepted Answer

In the competitive automotive industry, companies face various challenges and opportunities when…

Which barriers to entry contributed most PRGA Motors lack of success with the original Synapse? Which macro environment factors did PRGA Motors consider when adjusting the marketing and manufacturing strategies to achieve success with the more recent Snap and LX models?