Geely Auto Research on T3 Game Embeded Theory

Geely Auto Research on T3 Game embeded theory

Here summarized our research on Geely Auto, Geely was a small Chinese local passenger car maker till last year, while started to present globally by acquiring Volvo Technology, which shows a great ambition to become a big global player.

Our research objective is to use T3 framework (Type, Technology, Time) of game theory to analysis Geely Auto’s business strategy previously and give relevant conclusion and suggestions from Managerial Economics perspective.

Geely Overview:
← Key decision maker: Mr. Li Shu Fu with persistent, brave, confident and rational personality
← Overall business performance continues growing in past five years up to revenue 20,099,388 KRmb last year.
← Share price now is about 1.5 rmb/share, which was sharply dropping down after Volvo acquisition.
← Greely’s market share is about 3% in Chinese passenger car segmentation now.

3T Key Assumptions and Critical Time Line (CTL)
← Technology: Geography: China, Ties 2,3 Cities. Products: Low-End Passenger Car.
← Time: 2007-2011
← BYD was identified as near rival among major competitors: Chery, BYD, Chang’an Isuzu etc.
← Type: analysis by Critical time line development between Geely and BYD.

Key findings in CTL analysis
← Geely adapted mixed strategy with Bertrand and Cournot Pattern previously, but more recently evolving to pure Cournot strategy (no-price pattern).
← Geely prefer to play FMA strategy, which was successful in launch of Panda, acquisition of Volvo, and it may come from risk taking personality of the CEO Li Shufu.
← Solid evidence showed that Geely’s strategy moving from Stackelberg leader to Chamberlain, by building up sustainable competitive advantage on differentiation, functionality, branding, etc.
← Game changed after acquisition of Volvo (from Ties 2&3 market to Ties 1,2&3 market)

Suggestions on strategy (next five years):
← Strategic move from Stackelberg leader to Chamberlain in...