Introducing Alfa Romeo

into Canada
Dino Ibranovic 0356715
Joanie Li 1471346
Yousuf Ali 1471106
Neo Bai 1471177
Mirna Hanna 1471258

P720 Strategic
Management
Prof. Peter Vilks and
John Nashid

Table of Contents
Executive Summary.........................................................................................2
Company Background/History.........................................................................3
Statement of Problems....................................................................................3
Analysis............................................................................................................5
Brief History Overview..................................................................................5
Industry Overview.........................................................................................5
SWOT............................................................................................................6
Porters 5 Forces............................................................................................7
PEEST............................................................................................................8
VRIO............................................................................................................10
Competitor Overview..................................................................................12
Alternatives....................................................................................................12
Decision Criteria............................................................................................14
Implementation.............................................................................................16
Contingency...................................................................................................19
References.....................................................................................................21
Exhibits..........................................................................................................22

Executive Summary
Alfa Romeo, a company steeped in automotive performance history is
being evaluated for re-entry into the North American and specifically
Canadian consumer market. The company was founded in 1910, and has
been producing high performance vehicles to present day. To-date its sales
focus has been focused on the European market, with over 90% of units sold
in Europe. It was acquired by, then Fiat Group, in 1986 from this acquisition
a partnership was brokered between Fiat and Chrysler Motor Company in
1988 for exclusive rights to sell Alfa Romeos through Chrysler dealerships
from 1988 to 1995, at which time Alfa Romeo pulled out of the North
American market. In 2015, due to the recent partnership between Fiat and
Chrysler and the creation of Fiat Chrysler Automotive Group, Alfa Romeo is
returning to North America.
Three key problems have been identified that must be overcome for
Alfa Romeo to be successful in the Canadian market place and North
American market overall. The first is to develop strong brand recognition,
the second is to achieve market share in the North American and Canadian
market specifically, and finally the venture into Canada and North America
must prove to be profitable.
From the analysis, it is evident that as in Europe the North American
and Canadian market is fierce with competition. There are currently many
strong contenders in the market such as BMW, Mercedes-Benz, Audi and
other Fiat Chrysler Group subsidiaries.

But with the new partnership, the

potential for profits is great. From the SWOT analysis, the weaknesses and
threats point to a low market presence and strong competition, but the
strengths and opportunities show that there is room for success with the
launch of the brand with potential market share to be taken.
Four alternatives are being proposed, with the overall analysis pointing
to the initially opening two Alfa Romeo dealerships and sell through two non-

Alfa Romeo dealerships. This will allow Fiat Chrysler Group to capitalize on
existing customer base and to further grow and develop brand image
through the Alfa Romeo dealers. An implementation plan outlining the short,
medium and long term plans is described. A contingency plan is laid out to
analyze any shortfalls and how to best mitigate them.

Company Background/History
Originally, the company that would become the current Alfa Romeo
Company was founded in 1906 in France and known as Societ Anonima
Italiana Darracq (SAID). In 1910, it merged with an existing company from
Milan,

Italy

Anonima

Lombarda

Fabbrica

Automobili

(A.L.F.A.).

This

partnership continued until 1986 when it was purchased and became part of
the Fiat Group, now known as Fiat Chrysler Automobile Group.
The Alfa Romeo brand has had a strong sales history in Europe to-date.
But its success has been 90% based out of Europe. As such a strategy by
the Fiat Chrysler Automobile Group (FCA) CEO, Sergio Marchionne has outline
a strategy for the Alfa Romeo brand.

He wants Alfa Romeo to become a

competitive premium player in worldwide markets, much like Maserati, but

then less expensive and less exclusive.

His previous goal of 500.000

worldwide sales in 2014 has been revised twice, but it will be hard to even
return to 100.000 sales with just two volume models and one limited edition
sports car.
From this strategy, one of the first steps is to enter the North American
market, with Canadian market being entered at present. This is not the first
venture that Alfa Romeo has had into North America. In 1988, Chrysler and
Fiat, owner of Alfa Romeo, reached an agreement that named Chrysler to be
the exclusive distributor for Alfa Romeo in North America and easily allow
Chrysler dealers to sell Alfa products, which lasted until Alfa left the United
States in 1995.

The recent purchase of Chrysler by Fiat Group has enable the

organization to globally diversify the product offerings, which will allow for a
stronger company brand image and lead to a higher customer satisfaction.

Statement of Problems
With the reintroduction of the Alfa Romeo brand to the North American
market, several problems arise.

These key problems are the key success

factors that will be necessary for the brand to achieve success in the North
American market and carve out a market segment for itself.

By meeting

these key success factors, Alfa Romeo will be able to grow and become
successful in North America.

The following are the identified key success

factors identified for the Alfa Romeo brand looking to re-enter and develop in
the North American market.
The first identified success factor is to clearly and well develop the
brand in the North American consumers eye.

It is important to generate

brad awareness for the regular consumer, outside of the automotive

aficionado, to be considered as the next purchase. By developing our brand
clearly and driving it into the consumers mind this will have the positive
effect of driving sales and creating a profitable brand in North America.
Brand awareness is one of the top success factors necessary for any product
to become extremely successful, especially a sports luxury automobile.
Where it is the brand image, coupled with unique product offerings that
really differentiates itself from the competition.
The second identified success factor is achieving sufficient market
share to be a profitable venture.

By driving and developing brand

awareness, this in turn will drive and develop the market share held by Alfa
Romeo in the North American sports luxury automobile market.

Market

share is what ultimately will drive profits by selling a profitable number of

vehicles and will help drive product awareness and in turn brand awareness.

This is a relatively challenging task as the North American market is a

difficult one to enter because the North American consumer is relatively
averse to foreign brands initially.
The final identified success factor for the Alfa Romeo brand, is that this
initial venture will need to be profitable.

For Alfa Romeo to succeed as a

brand and grow, it must show the sales numbers in a timely manner and as a
result there must be profits. If this is not realized, the sign is that the market
is not willing to accept a new product and as such will not be successful in a
full scale venture into North America.

Since there is a limited number of

automobiles on sale in North America, the net profits will be large, but will
give insight into how well the brand will perform.
Therefore, from these three key success factors by achieving them,
Alfa Romeo will be able to grow and succeed in the North American market.

Analysis
Brief History Overview
Cars were always a luxurious product in Canada, a product that is only
owned by the rich for luxurious purposes, up until the 1950th when World War
II ended, and economic growth started to take place in Canada making cars
more affordable to more people. In the 1960 th, as economic growth increased
more, the automobile industry started offering cars with different sizes and
started offering sports cars, and accordingly some cars were priced more
than others, and some cars were more luxurious than others creating the
luxury car industry.

Industry Overview
The luxury car industry products is divided into 3 categories:
The small size/entry luxury cars
The midsize luxury car

 The large luxury car

The small size luxury car, including sport utility cars (SUVs) include brands
such as BMW 3 series, Mercedes Benz C class, Audi A4, Lexus IS. The small
size luxury car industry has increased by 4.6% from 2013 -2014. The highest
percentage increase in sales was accounted to the Lexus IS brand, a luxury
sport sedan, with a percentage increase of 278% (Appendix 1)
The midsize luxury car industry include brands such as Acura RLX/RL,
Lincoln MKZ, and Cadillac CTS. The midsize car industry sales has decreased
by only 1.7% from 2013 2014. The Acura RLX/RL brands account for the
highest percentage increase in sales, which is equal to 1170% (Appendix 2)
The large size luxury cars include brands such as Audi A6, BMW 6 and 7
series, Mercedes-Benz S-Class & CL-Class, Jaguar KJ, Lexus LS and Porsche
Panorama. Sales of large luxury cars have increased by 42.2% from 2013
-2014.

Mercedes-Benz S-Class

&

CL-Class

accounts

for

the highest

percentage increase in sales, which is equal to 263% (Appendix 3)

On overall, the luxury car industry in Canada is thriving with an increase
in sales and in number of dealerships, and the top 3 selling brands are BMW,
Mercedes-Benzes and Audi. (Appendices 4 and 5)
Luxury cars are either sold directly to high end Canadian consumers
through show rooms or through dealerships.

The pricing structure varies

depending on the brand, yet all luxury cars are priced at a minimum of
$50,000.

SWOT
Strengths
Unique style of vehicles
Strong brand name

Weaknesses
Low presence in world markets
Low number of distribution and service
centers

Opportunities
Growing Canadian luxury sports vehicle
market
Competitive pricing
No Alfa Romeo cars sold in Canada for
past 20 years

Threats
Competitors have strong brand image
Competing in well-established market
Few buyers in that specific segment
Shorter Canadian Winters may cause
problem in sales

From a broader perspective, Fiat Chrysler Automotive, and more

specifically Alfa Romeo, displays many strengths and a few weaknesses. The
company ranks amongst the top car manufacturers in the world and is one of
the few truly Italian engineered vehicles produced. Alfa Romeo upholds
strong quality standards and is known for having the best craftsmanship in
the industry. The company is focused on growth and to diversify and enter
new markets. Furthermore, FCAs business goals are aligned with Canadian
and worldwide market needs. Sales in the small luxury vehicle market have
increased 4.6% in 2013 to 2014 and that trend continues in Canada. Alfa
Romeos brand has become bigger and better over the years, even though
they have not been the North American market for over 20 years. Proof of
this is when Volkswagen, FCAs direct competitor, eyed to purchase Alfa
Romeo in 2010. Other such potential acquisitions have been proposed but
FCA refused to sell the Alfa Romeo brand.

As far as weaknesses, Alfa Romeo has just recently entered one of the
worlds biggest markets, the U.S. Alfa Romeo is still not as active in many
markets outside of Europe. Sales in the European market have been slow as
well due to no new models coming out and changes in consumer
preferences. With the new 4C and 4C spider, Alfa Romeo and analysts are
predicting a turnaround for Alfa Romeo and FCA.
The growing Canadian market for luxury vehicles is a perfect
opportunity for Alfa Romeo to re-enter the Canadian market. Further, with

the launch of Alfa Romeos new models, analysts are expecting a rise in sales
for Alfa Romeo. FCA and Alfa Romeo will have to deal with the existing
competitors in the Canadian market which include the Porsche Cayman and
Jaguar F-Type, along with other indirect competitors such as the BMW M3 and
Mercedes-Benz C63 coupe.

Porters 5 Forces
Threat of New Entrants
The luxury car industry is booming due to increase in generation X and
the increase in disposable income. Thats encouraging the new entrants into
the industry. Also, since other automotive companies usually have the
economies of scale and the capabilities to do so, they are encouraged to
diversify their product offerings and offer luxury cars to make use of the
increasing trend. Accordingly, the threat of new entrants is high.
Bargaining Power of Buyers
Buyers are high end Canadian Consumers, and whether they buy
directly from showrooms or from dealerships, they are not price sensitive.
Also, when high end Canadian consumers purchase a car, they usually favor
a certain brand due to its quality, reputation and brand awareness making
the switching costs to other brands medium. Plus, the fact that the demand
for luxury cars is increasing is creating a seller markets. Accordingly, this
makes the bargaining power of buyers low.

Rivalry among Existing firms:

Competing firms are all making use of the increase in demand and making
fresh moves by adjusting their existing models or offering new brands to
capture market share and improve business performance. However, since
the demand is already increasing, this makes the rivalry among existing
firms medium.
Threat of substitutes
Substitute products for the luxury cars would be limousine services or
private jets. Substitute products, such as limousine services or private jets,
are more expensive than luxury cars and will not provide the same
experience for high end Canadian Consumers. Plus, they may require
additional learning or licenses making end users very uncomfortable using
them. So this makes the switching costs to substitute products very high.
Accordingly, the threat of substitutes would be very low.
Bargaining Power of Suppliers
Suppliers of the luxury cars are the raw material producers and the
manufacturers of cars. Since most luxury cars companies are vertically
integrated, or they already have economies of scales that allows them easy
access to raw materials, the bargaining power of suppliers is low.
Accordingly, this makes the luxury car industry a medium risk industry where
players have good chances to be profitable.

PEEST

The PEEST analysis is a useful tool for understanding the Canadians

automobile

market.

It

concentrates

on

the

Political,

Economic,

Environmental, Social and Technological factor of macro environment. It

points out the potential of the market, gives overviews of industry trends and
helps find position for companies.

Political Factors
A company should consider all the legal issues, laws and regulations in
which the company survives. Canada is well known for its stability of
governments and harsh requirements on the safety aspects. All imported
cars must go through Canada Motor Vehicle Safety Standards.
On the other hand, the tax policy is quite straightforward. Based on
Canada Border Services Agency (CBSA) and transport Canada requirements,
5% of duty have to be paid and another 5% of GST afterwards.
Environmental
Canada has an uneven population distribution that south area has a
high density while the north is rather low. Subarctic and arctic areas are
mostly inhabitant due to extreme weather and ice-covered soil. Sports cars,
designed for speed racing on F1 games will may suffer a lot from long
Canadian winter. That is also the reason all-season sports cars such as Acura
TL and Audi A3 are welcomed in the Canadian market. Therefore the main
market for luxury sports car is tightened to the south and hard to extend.
Economic Factors
Canada is one of the wealthiest countries in the world that the
education is of high quality and the standards of living are pretty high as
well. The Median total income, by family type is $74,540 in 2012.
In general, Canada has a mature market of luxury cars and a stable
increase annually. The luxury vehicle market set yet another sales record in
2014 with 187,786 units and for the first time accounted for 10 percent of
the overall Canadian market. Under pressure of oil dependency and currency
alternation, prices of luxury cars in Canadian market are increasing from the
year 2014.
Social factors

Luxury cars are booming in Canada thanks to the increasing number of

high net-worth individuals. Those segments, consist of 3%-5% Upper Class
and 2%-4% percent lower-uppers, are basically older people with high
disposable income and young people with inherited savings. Since cars are
considered as status symbol, features that will differentiate from other
luxury car brands, especially technology and driving experience will help
build up the brand.
New immigrants play an important role in the luxury car market.
Demographically, Quebec has good recognition of European luxury car
brands. Immigrants in BC are better affordable to the luxury cars. The
research stats that BC has the highest increase of sales at first quarter of
accounts for 11.2%, while Quebec ranks the second with 9.3%.
Technological Forces
R&D division of the auto manufactures is extreme crucial to fulfill the
customers demands. It is viewed that companies are working hard to make
better engines, handling, safety, and reliability to excel other luxury brands.
Canadian car dealer attract consumer with safety and fuel-efficient driving
engineers to put a lot effort on these areas to keep competitive.
Besides, companies are introducing low pricing luxury car with the
similar technologies and techniques into Canada to attract more customers.
Many more models are designed to fulfill all need by all uses and all genders.

VRIO
Value
Due to financial backing of Fiat Chrysler, Alfa Romeo has the resources
and capabilities that enable the firm to respond to environmental threats and
opportunities. With an approximate value of FCA of just under $20 Billion,
FCA has the ability to fuel Alfa Romeos growth. Since finance is one of the
biggest issues that companies like Alfa Romeo face, FCA can help make Alfa

Romeo successful depending on how the financing is used and the strategic
choices that Alfa Romeo management make.
Rareness
Competitors have similar capabilities but Alfa Romeo is more rare and
unique in the market. Many experts point to Alfa Romeos out of the box type
designs for the reason why Alfa Romeo has trouble reaching sales targets
and succeeding in the market. With Alfa Romeos new 4C, the company has
decided use the latest technology and carbon fiber parts in order to compete
with luxury vehicles in the same price range but also with much more
expensive super cars.
Imitability
Alfa Romeo is one of the few truly Italian engineered vehicles in the
market.

Other

Italian

made

vehicles

include

Fiat,

Ferrari,

Maserati,

Lamborghini and Lancia. Only the last two that are not owned by FCA. Italian
made cars are known for their high quality and craftsmanship, a trait that is
hard to imitate among vehicle manufacturers.
Organization
Firm organization has potential to exploit its resources and capabilities
in order to compete with competitors. Since FCA, one of the largest car
manufacturers in the world, owns Alfa Romeo, Alfa Romeo has a good chance
to succeed in its intended market.
After analyzing all aspects of the VRIO model, we can see that Alfa Romeo
has a clear competitive advantage and has the core competencies that will
help FCA and Alfa Romeo succeed in a new market like Canada.
Resources
Marketi
ng

Operati
ons

Developm
ent

Financial

Human
Corporat
Resourc e
es
Reputatio

n
Small
market
share
outside
Europe

Strong
supplier
relations

Large scale
facilities

Growing
Canadian
market

Plants
shared by
Ferrari

Pipeline
projects
include SUV
and small
sized sedan
Technological
partnership
with
Microsoft

Reputatio
n for high
quality
vehicles

Backed by a
$17 billion
dollar car
manufactur
er

Positive
relations
with
unions
and staff
associate
s

FCA has a
longstandin
g, reputable
history with
suppliers
and buyers

Company performance over 3-5 years

Alfa Romeo has been suffering the past few years as indicated by the
100 vehicles sold worldwide in 2012. Whereas in the late 1980s and early
1990s, Alfa Romeo sold on average 144 vehicles in Italy alone. These low
sales volumes are due to poor range of vehicles and a bad European
economic market. Experts agree that these figures should change with the
launch of the new 4C edition vehicle and with new vehicles such as the SUV
and smaller sedan, Alfa Romeo is set to increase its sales and performance
numbers over the past few years.
On the other hand, FCA has been steadily increasing their net revenues
year over year. This result can be attributed to increasing demand in
European markets for Fiat vehicles and a turnaround by the CEO of FCA,
Sergio Marchionne.

Competitor Overview
Alfa Romeo 4C has two major direct competitors that are Porsche
Cayman from Volkswagen Group, and Jaguar F-Type from Tata Motors Limited.
Further details about the specific models that are considered direct
competitors can be found in appendix 6.

Alternatives
For the re-entry into the North American market for Alfa Romeo, four
alternatives have been developed that need to be evaluated for success and
best fit for FCA Group. These three alternatives examine broad approaches
that could be taken by FCA that would best suit the re-entry into the
Canadian market. The fourth alternative to be considered is the do nothing
alternative, that is do not enter the Canadian market.
The first alternative to be considered is the option to sell the new Alfa
Romeo through two already established independent dealerships and to
open two exclusive Alfa Romeo dealerships in key market locations.

This

approach would create a strong and positive brand image through the use of
the Alfa Romeo dealerships by providing an exclusively Alfa Romeo
experience for the customer.

Additionally, the use of the independent

dealerships would allow FCA to maximize on the existing customer base.

The issues faced with this approach are that there is a risk of customer brand
awareness confusion and possibility of brand value dilution by selling
through independent dealerships. Also, the existing independent dealership
staff would require additional training before the product launches, both in
customer service and vehicle service. This alternative is a relatively low risk
approach.
The second alternative is to solely sell the Alfa Romeo through
independent dealerships and not open any exclusive Alfa Romeo dealerships.
The advantages to this approach are that there are already established
dealerships with a customer base, this approach would allow FCA to
maximize on this and sell the target number of units. The drawbacks to this
approach are that the sole use of the independent dealerships, the risk of
brand dilution is quite high. As mentioned above, the staff would have to
undergo training in terms of customer service and servicing of the vehicles.

Finally these dealerships are already established and in fixed locations, FCA
would not be able to optimally position them for the Alfa Romeo target
market. This alternative is a medium-low risk approach.
The third alternative to be considered is to open four exclusive Alfa
Romeo dealerships in key areas.

This approach will enable FCA to best

develop and grow brand awareness through these dealerships. Additionally,

through these exclusive dealerships a unique customer experience can be
provided and unique and exclusive products could additionally be offered to
the customer. Also, this alternative offers the flexibility to be able to choose
the locations that best suit the target market to have the dealerships open.
The drawbacks to this alternative is, that currently there is minimal brand
awareness which these new dealerships would be required to develop along
with marketing strategy. There is no customer base to rely on, since there
has not been a large number of Alfa Romeos in Canada since 1995. This
alternative is a medium-high risk approach.
The fourth alternative is the do nothing approach and not enter the
Canadian market with the Alfa Romeo brand. This approach would allow FCA
to focus and further develop its current product offerings. But, this approach
will not further diversify the product offerings by FCA in Canada and not
allow FCA to gain greater market share and therefore grow the FCA brand.
This approach is a low risk approach as it requires that FCA keep operating as
is, but it is also a relatively low gain approach.

Decision Criteria
Alfa Romeos corporate goals and structure should be considered when
analyzing which strategy is best for Alfa Romeo and Fiat Chrysler. The
metrics in the following decision matrix include Competitors Rivalry,
Profitability, Consumer Preference and Time to Implement. The scores are
ratings as to how well each dimension contributes to Alfa Romeos potential

success in the Canadian market. Our scoring is based on the following: a

score of 5 is the best option where as a score of 1 of is the worst option for
Alfa Romeo.

Decision
Criteria

Competitor
s Rivalry
Profitabilit
y
Consumer
Preference
Time to
Implement
Total

Weight

Alternative
1 (Two
owned
dealers
and sell
through
two
dealers)

Alternative
2 (Sell
through
dealers)

Alternative
3 (4
showrooms
in Canada)

0.2

0.3

0.4

0.1

1.0

2.6

2.5

As evident in the matrix above, the benefit of Alfa Romeo opening two
dealerships of its own and selling through dealers at two other locations is
higher than compared to focusing solely on one method of entering the
Canadian market. The following information outlines the reasoning and
assumptions behind each criteria in the decision matrix:
Competitors Rivalry: The degree of competition varies depending on the
method of entering the Canadian market. By building your own dealerships
and selling Alfa Romeo exclusively, you may be competing against other
brands that have been well established in the Canadian market such as BMW
and Audi. These companies have a well-developed supply chain and have
experience operating within Canadian laws and regulations. Selling Alfa
Romeo vehicles through established dealerships that sell exotic cars will help
Alfa Romeo enter the Canadian market without having to deal with the

troubles of establishing themselves in the market. Combining these two

options and choosing alternative 1, Alfa Romeo can have the benefits of
getting experience in owning their whole supply chain in Canada along with
benefiting from selling through dealerships in the other two locations.
Profitability: By having their own dealership in Canada, Alfa Romeo can have
more control over their operations in Canada. Low control over operations
can lead to human errors that can cost the company millions of dollars in
lawsuits in the future. By choosing Alternative 1, Alfa Romeo can have
control over their operations in two locations and therefore control
profitability but also has a the risk of costs being higher than expected. By
selling through other dealers in two other locations, Alfa Romeo may be able
to benefit from their advanced supply chain processes and therefore increase
profitability.
Consumer Preferences: A showroom is proved to be not only an effective way
to boost the sales in automobile industry, but also a demonstration of the
luxury image for costumers. Although it is a good way to differentiate Alfa
Romeo from other brands and take up the market share, it will cost a lot time
and money. However, Alternative 1 has a balance of both cost control and
brand pitching. Two owned dealers can put advertisement to target
consumers and avoid the potential customer churn made by middle dealers.
Time to implement: Setting up their own dealership in Canada will be time
consuming as there will be more aspects that go into making a dealership.
By selling vehicles through other dealerships, Alfa Romeo can save time but
may need to pay more premiums to dealerships to sell their vehicles. In
Alternative 1, the dealerships that Alfa Romeo sets up will take a longer time
to make but entry into Canada will be much quicker with the two locations
that they will sell through other dealerships.

Implementation
Short-term plan: year 2016 ~ year 2017

Open two branded dealerships and award two independent dealerships

to carry Alfa Romeo 4C in Canada in 2016. (Appendix 7)
City
Dealership
s
New Name
Served
Region

Oakville, ON
Awarded:
Maserati
Store,
Oakville, ON
Maserati-Alfa
Romeo, ON
Greater
Toronto Area

Time

Summer 2016

Staf

Maintain
current sales
and technical
staff.

Training

Vancouver,
BC
Awarded:
FIAT of
Vancouver,
BC
Alfa Romeo
of Vancouver,
BC
Vancouver
Island &
surrounding
area
Summer
2016
Recruit
experienced
sales and
technical
staff from
local luxury
car dealers,
including
sister brands,
Ferrari and
Maserati, and
competitors
brands, i.e.
BMW and
Porsche.

Montreal,

Calgary,

QC
Branded

AB
Branded

LaSalle Alfa
Romeo

Alfa Romeo
Of Alberta

Greater
Montreal area

Calgary &
surrounding
area

Summer 2016
Before Grand
Prix
Recruit
experienced
sales and
technical staff
from local
luxury car
dealers,
including
sister brands,
Ferrari and
Maserati, and
competitors
brands, i.e.
BMW and
Porsche.

Summer
2016
Recruit
experience
d sales and
technical
staff from
local luxury
car dealers,
including
sister
brands,
Ferrari and
Maserati,
and
competitors
brands,
i.e. BMW
and
Porsche.

Start With:
An intensive one-week training for all sales and technical
staff.
Lead by a dedicated staff assigned by the parent company.
Aim to ensure the high quality service for Alfa Romeos
clientele.
Continue to:

Cars
(Appendix
2)
Target
Clientele
Ads Time
Advertise
ment
Channel

Advertise
ment
Contents
Sales and
profits

Further training once every month

Target to teach employees what problems appeared in the
previous month, how to deal with them, and how to avoid
the same problems in future.
24 Alfa Romeo 4C Launch Edition coupes will be delivered by
the four dealerships with a Canadian MSRP of $ 78,495.
24 Standard Alfa Romeo 4C will be distributed by the four
dealerships starting fall 2016 with a Canadian MSRP of $
64,495.
Household annual income: $100,000+
Gender: primarily Male
Age: 25 to 54, focus on Millennials
Starting March 2016
Traditional: TV, newspaper, and business magazines to
attract Generation X (age 35-54), i.e. CBC, Global and Mail,
and Canadian Business
Digital: Internet, Mobile Apps, Social Media to attract
Millennials
(Age 25 - 35): Website, Youtube, Facebook, Twitter, and
Pinterest
Emphasize the power of technology.
Slogan: Without Heart We Would Be Mere Machines.
Appendix 8

Mid-term plan: Five-year

Dealership: Open 10 more awarded independent dealerships in Canadian
Market. We will extend the awarded dealerships to Burnaby, BC, Edmonton,
AB, Regina, SK, Winnipeg, MB, Vaughan, ON, Ottawa, ON, Quebec City, QC,
Halifax NS, St. John, NB, and Charlottetown, PEI (Appendix 9).
Models: Alfa Romeo plans to develop new rear-wheel-drive and four-wheeldrive vehicles. Eight new Alfa Romeo models will be introduced through all
14 dealerships. The new models will include sedan to compete with BMW 3series and SUV to compete with Audi Q5 and BMW X3 in the mid-sized luxury
car market.

Sales units: Increase the sales to 670 units in the Canadian market (Appendix
10). We expect the majority of sales to realize in the British Columbia,
Ontario, and Quebec with a steady increase of sales in Saskatchewan,
Manitoba, Nova Scotia, New Brunswick, and Prince Edward Island.
Target market: Males will remain the primary market; and females will
become the potential market. Besides, more Millennials will grow into
working ages and might become new rich because of their success of
eBusiness. The desire to compensate themselves for hard working and early
success might drive sales in this younger generation. Thus, the importance
of Millennials will increase. To better serve the Millennials and the female
clients, we will recruit Millennials sales that share the same values and hire
female sales that better understand females concerns about cars to boost
sales and client satisfaction.
Commercials: Female clientele can be roughly divided into mother clients
and single professional clients. To increase the interest of mothers,
commercials of Sedan and SUV will stress how safe and stable the cars are
when moms have kids in them. For example, the kids will continue playing
happily without realizing that they are driving on a bumpy road. Slogan: Alfa
Romeo, for you and your beloved ones. To draw attention of young, single,
and successful professional women, focus on how the cars can extend their
feelings of being in control of their lives and enhance their experiences of
enjoying the adventures. Slogan: Alfa Romeo, the best lover on the road.
Public relations: Attend Grand Prix in Montreal every year to maintain
exposure to the public. Tourists go to Montreal for Grand Prix from all over
Canada every year. The quality of attention that Alfa Romeo could generate
during that week would be much higher than commercials as potential
clients could physically experience the excellent design and technology of
the car. In addition, sponsor MBA Games and Case Competitions in business
school across Canada. MBA graduates have a tendency to work in venture
capital and consulting firms and have a potential to become new rich. They

might appreciate the support offered by Alfa Romeo when it is in need and
would prefer Alfa Romeo to its competitors when they desire a luxury car
indeed.
Data collection and analysis: Children born after year 2000 will start to turn
into 20s since 2020. They could become a totally new generation from
Millennials. Alfa Romeo should start to collect and analyze data of this age
group to project their preference of luxury cars. This age group could become
a major client or influencer in another five to ten years. Understanding and
meeting their needs will ensure Alfa Romeos first mover advantage of
attracting and maintaining the youth market and enable Alfa Romeo to start
building brand loyalty in the younger generations.

Long-term plan: Ten-year

Establish more branded dealerships in Canada while remaining harmonized
relationships with independent dealerships. FCA could have more direct
control over the import and distribution channels, have the sales data on a
daily basis, and be able to react to market requirements more promptly.
Launch commercials and activities to attract the generation born after 2000.
For example, Alfa Romeo could offer its old car models to science museums
in selected cities so that the youth who are truly interested in cars will get a
chance to learn the science behind the speed and the power. If Alfa Romeos
technology leaves the youth a great first impression, there might be a high
chance that the youth would become impressed and loyal for a lifetime.
Keep track of the immigration trend. Vancouver and Toronto have been the
most attractive settlement places for immigrants for decades. If the
immigrants choices start to change because of the crowdedness of these
two cities, Alfa Romeo should adjust its attention to the new cities
accordingly as the market of previous target cities would start to saturate. If

Alfa Romeo could detect the new trend and follow it closely, the brand would
have a better chance to beat its competitors.

Contingency
If the sales of the first four dealerships did not meet the target after
one year, then research will be conducted to assess the reasons why the
sales target was not met. If the reason was due to a decrease in demand for
Alfa Romeo luxury cars, a decision will be taken accordingly. If the decrease
in demand is a slight decrease, then the 2 dealerships producing the least
sales will be closed, and only 2 dealerships will be kept.
If the decrease in demand was a medium decrease, then only the most
profitable dealership will be kept, and the other three will be closed.
If the decrease in demand was a sharp decrease, then Alfa Romeo will
close its 4 dealerships in Canada and leave the Canadian Market.
If the reason was due to fierce competition with other brands, then the
reasons why other brands are performing better will be studied. If the reason
is a better dealer-customer relations, then dealers and staff of Alfa Romeo
will be re-trained how to improve and exceed competitors customer service.
Training will be repeated, modified, and its results will be evaluated on
monthly basis.
If the reason was a better communication strategy, then Alfa Romeo
should do research on the best way to communicate and reach its
customers, take in consideration what competing firms are doing, and
develop a fierce and competitive communication plan accordingly.
If the reason was the quality and performance of Alfa Romeo compared
to its competitors, then more developments should be made to Alfa Romeo
cars to improve their quality, performance, satisfy their customers, and
outperform the competing cars.

If competition was still very fierce after one year, then Alfa Romeo
should close one or two of its dealerships depending on the decrease in sales
or leave the Canadian market at all.

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from

Exhibits
Appendix 1

Small/Entry
Luxury Car

201 201
Februa %
%
February
4
3
ry
Chan
Change
2014
YT YT
2013
ge

D
D

Volvo C30

---

42

-100% ---

Audi A3

---

65

-100% --- 110 -100%

BMW 1-Series

---

250

Acura TSX

50

89

86 167 -48.5%
43.8%

Acura ILX

119

179

226 369 -38.8%

33.5%

BMW 3-Series

593

626

-5.3% 967

Lexus CT200h

77

48

60.4% 107 127 -15.7%

Infiniti G/Q60

34

37

-8.1% 52

BMW 4-Series

113

---

---

224 ---

---

Mercedes-Benz
CLA-Class

153

---

---

374 ---

---

Volvo V60

33

---

---

Mercedes-Benz CClass

372

534

928 927
30.3%

0.1%

Mercedes-Benz BClass

201

178

12.9% 392 379

3.4%

Audi A5

113

136

221 213
16.9%

3.8%

Audi A4

419

357

17.4% 720 689

4.5%

Volvo S60

73

78

-6.4% 206 186 10.8%

Cadillac ATS

202

164

23.2% 335 270 24.1%

Infiniti Q50

231

117

97.4% 451 229 96.9%

Lexus IS

254

62

310% 431 114 27.8%

---

---

---

---

Total

3037

2962

2.5%

-100%

70

---

50

-100%

344 -99.7%

130
-25.7%
2
60

---

---

579 553
1
6

-13.3%

---

--4.6%

Appendix 2

Midsize Luxury Car

201 201 %
Februa Februa %
4
3 Chan
ry
ry
Chan
YT YT
ge
2014
2013
ge
D
D

Mercedes-Benz R-Class

---

23

-100% ---

54 -100%

Infiniti Q70/M

26

20
69.2%

52

Cadillac XTS

34

52

67 112
34.6%
40.2%

Lexus GS

23

37

54
37.8%

Lexus ES

111

176

253 346
36.9%
26.9%

Acura TL

96

125

175 236
23.2%
25.8%

Volvo XC70

44

38

BMW 5-Series

111

140

Lincoln MKS

47

Hyundai Equus

Audi A6

53

55

-3.6% 111 103 7.8%

Cadillac CTS

58

36

61.1% 105 93 12.9%

Mercedes-Benz E-Class
& CLS-Class

181

183

-1.1% 379 300 26.3%

Volvo S80

Audi A7

54

41

31.7% 124 79 57.0%

Jaguar XF

58

45

28.9% 93

Lincoln MKZ

58

25

132% 138 54 156%

Acura RLX/RL

51

---

---

---

Total

892

1058

15.8% 77

83

90

61.5%

34.9%

14.4%

298 331
20.7%
10.0%
70
85.1%
0.0%

50.0%

920% 63
---

---

71 -1.4%
6

0.0%

40.0%

55 69.1%

1160
%

---

---

204 207
-1.7%
15.7% 0
5

Appendix 3

Large Luxury
Car

%
Februa Februa
%
201 201
Chan
ry
ry
Chan 4
3
ge
2014
2013
ge YTD YTD

Jaguar XJ

14

29

25
51.7%

64

60.9%

Audi A8

12

18

23
33.3%

33

30.3%

Lexus LS

12

21
25.0%

23

-8.7%

Porsche
Panamera

19

18

37

2.7%

BMW 6-Series

33

25

BMW 7-Series

16

Mercedes-Benz
S-Class & CLClass

67

25

---

---

---

Total

170

134

Appendix 4

5.6%

38

32.0% 60

43 39.5%

129%

24 62.5%

39

168% 185 51
---

---

---

263%
---

26.9% 391 275 42.2%

Appendix 5

Appendix 6
Direct
Porsche Cayman
Competit
ion
Models
Parent
Volkswagen Group
Compan
y
Origin
Germany

Jaguar F-Type

Target
Market:
Age
Current
Market:
Income
Level
Target
Market:
Gender
Campaig
n
Highligh
ted
Traits

Typical: 40 years+
New: Younger between
25-54 years old
Household
with
a
college
graduate:
$100,000+

Younger:
25-54 years old

Primarily Male

Primarily Male

Rebels, Race on.

Its Good To Be Bad

-Fuel economy
City - 11.5 L/100 km
Hwy 7.9 L /100 km
- Drivetrain
Rear-Wheel-Drive
-Transmission Options
6-speed manual
7-speed dual-clutch auto
-Weight
1,655 kg to 1,685 kg
16

- Fuel Economy
City - 10.4 L/100 km
Hwy - 7.1 L/100 km
- Drivetrain:
Rear-Wheel-Drive
- Transmission Options
8-speed auto
-Weight
1,567kg to 1,594kg

$59,900 - $96,500

$77,500 - $117,500

# Of
dealersh
ips
Price
Ads
Channel

Traditional:
Radio,
Magazine
Digital:
Blog
Social Media

Tata Motors Limited

British

With high
income

level

of

disposable

24

Traditional:
Television, Article,
Magazine,
Newspaper,
Radio, Broadcast TV, Cable TV
Digital:
Blog
Social Media
Mobile Apps

Mobile Apps
Internet

Internet

Appendix 7
The Locations of Four Dealerships from 2016 to 2017

Appendix 8
Estimated Income Statement
Alfa Romeo Brand
For the year ended December 31st, 2017
Revenue
$3,413,760
Costs of goods sold (86.5%)
$2,952,90
2
Gross Profit
$460,858
Expenses
Selling (7.4%)
$252,618
R&D (1.5%)
$51,206
Other (2.6%)
$88,758
$392,582
Net income before tax
$68,275
Net profit margin (before taxes)
2%

Appendix 9
The Locations of 14 Dealerships

Appendix 10
Sales Target in Five-Year Plan
15,000 vehicles x (4 Canadian dealerships / 86 dealerships in North America)
=670 Vehicles.