Author: Jalal Y. Azari
Senior Consultant , Homasa Consulting Group, (email: azari(at)homasa.com)
Automotive industry has been considered as the second biggest industry of Iran after oil industry accounting for approx. 8.5 % of GDP and workforce of more than 750K employees. This article as a part twelve month in-house study on stakeholders of Iran automotive industry is supposed to strengthen the motivation of this work to understand players of automobile industry in deep due to help international investors and power groups to understand the broaden needs of stakeholders to espouse managers in order to achieve the objective in their business setting.
In recent years, together with political and economic challenges, Iran automotive industry has been suffering from managerial issues, where many sepcialists contemplate lack of technology or know-how is the main cause for such a big gap from global standards.
With recentsuccess on international politic negotiations and sanctions’ lift, it’s estimated a considerable economic growth for Iran in 2016 and 2017 (e.g. approx. 5% increase in domestic growth in 2016 reported by World Bank). Several international automakers are rushing to Iran’s present untapped car market. This would be a good news for all, but they need to be aware of local trends and understand needs of each stakeholder group.
Studying Iranian individuals, we categorized key stakeholders of this industry into five main groups base on Performance Prism (A multi-dimensional performance management framework developed by Andy Neely & et. Al., 2002) including shareholders, customers, suppliers, employees and local community. Reviewing and analyzing the interviews, documents and official reports, critical effecting factors on stakeholders were identified that might be interpreted as satisfactory factors also, are shown in figure below.
Figure (1) Effecting factors on key stakeholders
Surprisingly there were a few signs of consensus among all five groups whether they are satisfied with recent status, even shareholder’s group with or without profit are not satisfied.
Our analysis show that generally all groups of stakeholders are dissatisfied from three main challenges: Individual’s mindset, External pressures and Internal operations.
Findings of this work demonstrate factors that failed to satisfy stakeholder groups (e.g. Figure (2)) wherestakeholder become stake-losers!.
Figure (2). Key stakeholders’ dissatisfactory factors in Iran automotive industry
Even though It’s not possible to fulfill all needs of different groups but companies are suggested follow a multi-aspect framework to evaluate the corporate performance instead of one dimensional, traditional financial measures. For International entrants, It’s advisable to follow broad definition of corporate governance which includes more stakeholders and establish financial and non-financial metrics to evaluate the corporation.
Now the time has arrived big change in Iran market, potential waiting for new and trendy vehicles (passenger cars & commercial vehicles) for Iran market. However during past years, due to regulations with excessive customs duties for importing cars as CBU and government support for two main Iranian automakers (Irankhodro & Saipa) the market has been changed to monopolistic competition. In 2015 summer,a campaign to boycott “substandard and expensive” Iranian-made cars has been started in Social Media and it’s still going on. Or when production line stopped for half a day, because of delay in delivering parts from one of suppliers that sometime later it was proved that supplier didn’t delivered parts on time in objection to payment delay from automaker side.
With future high competitive atmosphere in Iran market, automotive industry requires great focus to solve the stakeholders’ satisfaction challenges, otherwise even with satisfying customers or shareholder’s group, stakelosers of other groups won’t engage or support company’s goals.
