Strategic Analysis of

BYD
Anuj Gandhi
Michael Pottratz
Chong Zhang
Di Zhang
Xuemin Hou
Lu Yang
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Introduction:
BYD Automobile was established in 2003
under the leadership of Wang Chuanfu
In a span of 8 years it is the sixth largest car
manufacturer in china

The parent company of BYD Automobile is

BYD Co Ltd .
Vision :To be the leading car manufacturer
in 2025

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 Support from Chinese

government
The holding company has to be
a Chinese company

Political

Sociological

Huge population but less space

and hence public transport is
of extreme importance
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Economic conditions around

the world are weak and car
sales have declined in the last
one year

Economic

Technological

Inadequate power lines

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Core Competence :
lithium ion technology,
System integration,
Project management

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Distinctive
Competence :
Low cost
High quality

Competitive
Advantage:
Low cost labor,
lithium ion scale of
production

K e y R e s o u r c e s a n d Val u e - A d d e d F u n c t i o n s

Very High

High

Modest

Low

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Non-global
distribution

Lithium ion
battery

Lithium

Financial Performance:
Liquidity Ratios
1.4
1.2
1
0.8
0.6
0.4
0.2
0

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Current Ratio

Liquid Ratio

Financial Performance
Profitability Ratios
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%

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Net Profit Margin

Return on Equity

Return on Total Assets

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Strength (Internal)
Distinctive competence and
competitive advantage :
lithium-ion technology and
manufacturing
Human Resources: Low cost
Labor

Weakness (Internal)

Opportunity (external)
Political: Government policy
support.
Socio-Cultural: Increase
population tax oil supply
Buyers: Commercial ZEV
Entry: Scale of economy

Threat (external)
Economic: Artificially low
Yuan
Technology: Current electric
grids cannot satisfy ZEV
demand
Supply: Lithium supply
Substitute: consumer ZEV

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Financial: limited working

capital
Core competency:
automotive engineering
Outbound logistics: no
global distribution network

The BCG Growth-Share Matrix

High

Future
B2B battery
pack

eBUS

Probability of Technology Success

100%

B2B
batter
y pack

eBu
s
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$80M

70

60

50

40

2
30 0

B2C
consum
er
electric
cars
10

Reward(ECV)

Key Points :
Current electric grids cannot satisfy
consumer ZEV demands
Lack of global distribution network
Lithium is a key component for BYD
which Is the differentiator
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Declining financial performance

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Phase 1
Corporate Strategy

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Sale of BYD
Consumer
Automobile(B2C)

Reorganizatio
n

Global
Strategy
Joint
Partnership

Increase in
cash

Lean
organization

Win-Win
situation

Phase 2
Competitive
Strategy

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Focus on
Electric
Busses
production

Sell electric
busses to the
Chinese
government

Phase 2
Low Cost Strategy

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Increase
in Cash
from sale
of BYD
Automobil
e

Acquire
lithium from
Afghanistan
New
production
facilities and
equipment's

Large
volume
and low
cost
lithium ion
battery is
produced

Arenas
Low cost Lithium Ion Battery
Worldwide
Electric Busses for public
transportation in China
Staging

Vehicles

Buy low cost lithium

Agreement with Chinese
government for selling
electric busses
Increase in the production
facilities of Lithium Ion
Battery

Economics

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Lower cost for

production of Lithium
ion battery (Higher
margin)
Subsidies provided by
Chinese government
for electric busses

Sell BYD
Automobiles
Joint Venture with
Afghanistan
Government to
obtain Lithium
Internal
Development

Differentiator

Low Price for making the

electric Busses
Volume Production of
Lithium Ion Battery
Quality of Products

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