(600-001-1 4“ Templeton f Land Rover Vehicles: The CB40, a Project in Nimbleness and Flexibility Ths case was wren by Professor Robert Plant, Unversity of Mian, David Feeny, Templeton College. Unverst of Oxford, ond Hamid Mughal. Visiting Professor ar the Open Universiy Tres mended tobe used asthe bass for elassdicuszton rather thant illustrate ether effective or effective handling of @ management situation The case wus made posible be the co-operanom of Land Rove) Vehicles The case Iwruers are vers grate fo the management of Land Rover - particularly lan Roberrom, Dick Eland Robin Wilson = forthe help n creating the case ECCH Collection © 2000 Plan, Unverty of Mim, DFeeny. Unnerty of Oxford and H Mughal Open Univer600-001-1 CF 4% Templeton Land Rover Vehicles: The CB40 Project © If anyone says we know what is going to happen in the market n ten years time they will be wrong, no one knows. The auto industry 1s the most competitive in the world, every player 1s 4 potential threat and there are no secrets. The keys are a world class brand, close contact with customers over many years and the ability to build cars 10 an individuals specyfic requirements. If we deliver this customisation without the damaging hidden complexity then that is the Win-Win situation Ian $ Robertson Managing Director Land Rover Vehicles Solihull, U-K, November, 1997 Whilst the automonve industry in Europe was widely perceived as ripe forrestructunng, the purchase of the Rover Group by BMW in early 1994 took many industry observers by surprise, Rather than the expected rationalisation of like marques 10 achieve economics of scale, the £800 millions ($1 2 Billions) purchase was seen as an intnguing alternative strategy = the expansion of BMW into further high margin market niches through the acquisition of leading brands. BMW had noted the progress of Rover m restoring much of tt brand image an the previous decade, largely thanks t0 its alliance with Honda. Rover had struggled, however, under sts previous parent ~ British Aerospace - to gain the investment necessary t0 create and exploit new products. BMW ownership now gave Rover the opportunity to compete more aggressively in the premium end of the market for small cars. And best ofall, the Land Rover element of the acquisition gave BMW the ideal platform for addressing the burgeoning market for 4x vehicles in Europe and the USA. Land Rover at last had an opportunity to explott a world class brand name. But as newly appointed Managing Director. Ian Robertson knew that the company must also deliver the ‘quality, value and choice expected by customers while still operating on a smaller scale than the giants of industry © This case vas prepared by David Feeny, Fellow of Templeton College tn the Universty of Oxford, by Professor Robert Plant Research Associate, Templeton College, Oxford, and by Hamid Mughal, Visiting Professor atthe UK's Open University The ease sf intended as the bass for lass discussion rather than 10 ilustrateenther effective or ineffective handling of an administrative situation ‘The easewnters are very grateful to the management of Land Rover ~ paruculary Tan Robertson, Dick Ely, and Robin Wilson ~ for ther help in creating the cose600-001-1 Land Rover Company Background: 1948-1994 ‘The early years following the second world war were not easy for the Rover Car Company of England, Before the war their saloons were renowned as "the Doctor’ car” - strong, solid and sturdy, something you could rely on m an emergency. However. the lack of development during the war years had made the vehicles seem outdated. and they were not selling well m the overseas markets on which the government of the day placed emphasis for companies ‘wishing to gain access to scarce resources With Rover desperate for a new product to refresh their aged base, st occurred to Chief Engineer, Maurice Wilkes that a "home grown” version of his war time US Army Jeep might be the solution. Wilkes, like many contemporanes, found the four-wheel drive Jeep ideal for off-road work: but suffering from parts shortages and poor support, Hence the creation in 1948 of the first ‘Land Rover. unveiled at the Amsterdam motor show. ‘These first vehicles followed a very basic formula, a heavy-duty box section chassis and crafted aluminium body panels Aluminum was a pragmatic choice. There was a shortage of steel production capacity following the war, but aluminium was in relatively good supply because of the development of the arrcraft industry The chassis and body were combined with a proven I 6 litre Rover engine. At this stage the Land Rover was a standard design. achieving sales of 250,000 in its first decade, Looking to expand volumes for the 1960s, the company adopted @ ‘voice of the customer strategy, and responded with zeal to requests for variants of their basic product. ‘The requirements by customers were varied, including long wheel-bases, short whecl-bases, military carers, Army scout vehicles, ambulances, fire rescue, and forestry adoptions. Even so, by the late 1970's Land Rover found it no longer had the four-by-four market to itself. Inroads were quickly being made by Japanese competitors espectally im Asan, Indian and African Markets. The flexibility of the Defender senes (as it was now known) was increased still further im response. Higher specification models such as the County version included options such as upgraded cabin matenals, headliners, larger engines, heavier-duty springs and special badging The entry of the Japanese and other competitors made clear that the market for 4x4 was expanding and segmenting, and Land Rover's next step represented a radical change from the basics of Defender In 1970 1t introduced the Range Rover, a luxury vehicle for the customer ‘who wanted both on-road and offroad performance im comfort and style. The Range Rover was considered a highly desirable vehicle, but its success was restricted by limited tnvestment im market and product development. It was not launched inthe prime US market unul 1987 - one year before Land Rover ownership moved from one impecuntous parent (state owned British Leyland) to another (Briush Aerospace). Nevertheless, it still achieved the presugious "Four Wheeler of the Year" award in 1989, from Four Wheeler Magazine. As competition grew, it was clear that the market of the 1980s was segmenting sull further. ‘The Defender was regarded as too basic by the non-purists and the Range Rover too expensive for the new ‘leisure’ 4x4 market. Land Rover's next move was to produce a vehicle with the true off-road capabilities of the Defender, but with the refinements expected from an ‘estate car (station wagon) and the haulage capacity of a small truck In 1989 1t launched the Discovery at the Frankfurt Motor show. Boosted by the Discovery's showing in the Camel 50