Strategic Management Aspects in Magna International

Executive Summary

This paper is an interim report, outlining all major aspects of strategic management process of Magna International, Canadian automotive supplier, which will be addressed in the final report. Special attention will be paid to the history of Magna International, specificities of its strategic management, and recommendations for improving the effectiveness of currently deployed strategies.

Introduction

Magna International is a Canadian automotive supplier. Founded in 1957 and publicly listed in 1962, it expanded to become a global company with more than 155,000 employees and centers in 29 countries around the globe. The company conducts 317 manufacturing operations (Facts and History). Its major customers are Toyota, Volkswagen, Tesla, and BMW. Magna specializes in manufacturing driveline systems, GETRAG transmissions, metal-forming solutions, and fluid pressure and control as well as providing such services as advanced engineering (Products & Services).

Vision: core element of Magnas visions are respect for people, customer orientations, continuous improvement of performance, and living a zero defect strategy (Mission Statement).

Mission: To focus on continuous improvement of performance, developing electronic systems and components, which would contribute to fuel economy, foster safety of people and environment, and minimize pollution (Mission Statement).

Strategic Management Process

Planning Process

There are several planning programs: resources, budget, logistics, and performance. The director of planning and managers working at each plant are responsible for coordinating each of these programs.

Competitive Advantage

Magnas competitive advantage derives from continuous innovation of manufacturing facilities as well as international activities of the enterprise and acquiring assets abroad (Williamson et al. 236).

Organizational Culture

Fairness and care for people is the foundation of the companys organizational and corporate culture, which is referred to as fair enterprise. The focus is made on employee engagement and dedication as well as commitment to creating safe environment in the workplace and encouraging innovation and teamwork (Unique Entrepreneurial Culture).

Ethical Codes

Ethical norms are described in Corporate Constitution and Employee Carter. These documents identify the rules of behavior and norms of employee cooperation (Unique Entrepreneurial Culture).

Leadership

Leadership promotes employee equity and integrity at the workplace as well as fosters trust and communication among employees. Moreover, leaders believe in the involvement of outside directors in counseling due to its potentially higher effectiveness of provided services (Corporate Constitution; Our Operational Principles).

Financial Analysis

Magna International is a successfully operating company with total revenue of more than 36 billion dollars (32 billion dollars in sales). Even though the volume of sales is greatly affected by international cash transformations and company faced sales decrease challenges in 2015 compared to 2014, it managed to recover in 2016 (Magna 16).

Current Strategies

Internal

Strengths: international scope of operations, robust financial health, cooperation with the most influential companies in the automotive industry, global presence in 29 countries, and vast portfolio of offered products and services.

Weaknesses: dependence on companies operating in automotive industry, customer concentration, and focus on legacy.

External

Threats: being outperformed by other industry giants, high labor costs and interest rates, slowdown in the automotive industry, and currency headwinds.

Opportunities: acquisitions of related companies around the globe, expanding to developing market with vast demand, and cooperation with new customers.

Porters Five Forces: competitive rivalry high; bargaining power of buyers high; bargaining power of suppliers moderate; threat of substitutes moderate; threat of new entrants moderate.

PESTEL: political (stability in both national and overseas political environments): economic (financial health of the company); social (focus on employee dedication and customer-centrism); technological (strive for constant innovation); environmental (desire to decrease the negative influence on the natural environment and increased investments in sustainable development of the company); legal (having the internal constitution and code of conducts as well as compliance with national and international laws and regulations).

Factual Analysis and Strategic Review

As for now, Magna International is a successful company, managing to meet its objectives and operating in accordance with its mission and vision statements. The key of its success is customer-orientation as well as unique corporate culture. In addition, the organization recognizes the criticality of sustainable development and decreased negative influence on the natural environment, which makes it more attractive to customers. Moreover, creating strategic ventures abroad, as well as strengthening financial strategies, contribute to companys improved performance (Magna 4-5).

Conclusions & Recommendations

Regardless of the overall positive performance of the company, there are several recommendations for Magna International. First and foremost, it is essential to continue investing in innovation and sustainability in order to avoid the loss of customers and contribute to the further growth of performance and improvement of economic outcomes. In addition, the focus should be made on expanding globally in order to minimize the risks of being outperformed by influential rivals. Foreign acquisitions are as well advisable. Finally, because of the excessive dependence on clients, it is essential to pay special attention to increasing customer base as well as diversifying the portfolio of goods and services. Because of the risks of downturns in the automotive industries, expanding the range of provided services (for instance, consulting) is recommended.