The route to success in the automotive industry is a meticulous and ever-evolving process. It requires immense brainstorming and strategy formation to achieve required targets, both effectively and efficiently.
While there is no guide to improve market capitalization, most automakers try to be distinct in their approach. That being said, the underpinnings of the strategies from each car company remain largely the same.
Before we delve deeper into some of these strategies, it is important to have a general idea of what market capitalization is.
In the simplest terms, market capitalization is representative of the value of the shares of a company that is publicly traded on the market. Tesla, as an independent entity, has shares worth over $1 trillion being traded in the market.
This helps the firm to be strong financially and undertake expansion plans without an iota of doubt.
But how do automotive companies aim to expand their market cap? Let’s have a look:
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Capitalize on the status quo and play on their strengths: In a bid to improve market capitalization, automotive giants do not sway away from their basic strategies. They try to remain wary of radical movements in business plans and aim at backing their recurring revenue streams. This strategy ensures continuity of business and allows a larger crowd of investors in the market, by delivering impressive results all across the board.
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Formulate sales strategies as per expected flows and profit margins: To be able to put a strong face in a market that changes almost every second requires tremendous planning and when automotive companies can budget their expenses in accordance with sales and savings margin, performance is expected to remain top-notch, which attracts larger investment from shareholders. Consequently, car companies do spend extensively on developing strategies to improve sales.
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Customer Management and Retention: To be able to sway the market in your favor in order to improve capitalization, it is in the best interest of the car companies and management to pay heed to the demands and grievances of the customers. In the simplest sense, car companies not only aim at creating new buyer segments for added revenues, but they try to retain existing customers for long-term relationships.
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New Business Opportunities and First Movers Advantage: Perhaps, the most important strategy for any automotive brand to improve market capitalization is the introduction of new ideas. By analyzing the requirements of the buyers, brands can tap into newer spheres of business. While it may not be essential in the form of a new vehicle, improved technology, and new service opportunities, brands can improve their market value.
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Asset Management: To improve performance, automotive companies also try to focus on adequately managing all their tangible assets. By doing so, companies can manage their inventory efficiently and economically manage their operating expenses, improving their profits and eventually, improving their market value.
While there might be other strategies that may vary from brand to brand, the aforementioned policies are probably the oldest tricks in the book.
Though brands can prioritize asset management and budget operating expenses, profit, sales volume, and customer loyalty make for the easiest ways to improve market capitalization.