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Strategic Plan for Implementing IoT Innovation in the Automotive Industry

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Strategic Plan for Implementing IoT Innovation in the Automotive Industry

The Competitors’ Relative Strengths in the Marketplace

The market owned by each competitor and the trend of gaining or losing market share

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Figure 1:

Market Share % For Cars & Trucks Now

Figure 2:

Market Share % For Cars & Trucks in 2030

Figure 3

Market Share % For Connected Cars & Trucks Now

Figure 4

Market Share % For Connected Cars & Trucks in 2030

Market Share Percentage For Cars and Trucks

Market Share Percentage For Connected Cars and Trucks

The Growth Rate of Each Competitor.

The main competitors are BMW, VW, and Toyota. The three companies have been experiencing a significant growth rate over the years. In 2020, BMW’s annual car and light truck revenue was $126.10 billion. The market share percentage for trucks and cars was 3.91% in 2020 and is currently 3.00%. The company expects to have a CAGR of 3.70% within ten years. Their estimated revenue in 2030 is $181.5 billion. The company also expects to increase its market share for trucks and cars to 3.77% in 2030. BMW’s global market for connected automobiles and light trucks is currently $1.62 billion. The projected car revenue is anticipated to be $15.67 billion in 2030, with a market share proportion for the company’s connected automobiles and trucks reaching 3.07% in 2030. Toyota’s annual automobiles and light trucks revenue was $275.40 billion in 2020, with a market share percentage of 8.53%. The company’s estimated CAGR is expected to be 3.90% within ten years. The estimated revenue in 2030 is anticipated to reach $404.5billion, with the market share percentage for automobiles and trucks reaching 8.41%. Toyota’s global market for connected vehicles and light trucks is currently $4.80 billion. The current market share proportion for connected vehicles and trucks is 8.90%. The CAGR is expected to reach 24.80% over the next ten years. The projected revenue for connected vehicles is anticipated to reach $43.97 billion in 2030. The company also anticipates reaching a market share percentage of 8.62% for connected vehicles and trucks in 2030.

VW’s yearly automobiles and light trucks revenue was $282.90 billion in 2020. Subsequently, the current market share proportion for automobiles and trucks is 8.76%. In addition, the company has a projected CAGR of 4.30% within ten years. Further, the estimated revenue in 2030 is $433.1 billion. The company also anticipates increasing its market share for trucks and cars to 9.00% in 2030. The company has a global market share of $8.36 billion for connected vehicles and light trucks. The current market share proportion for trucks and cars is 15.50%. The CAGR is expected to reach 23.20% within ten years, reaching an estimated revenue of $67.30 billion for connected vehicles in 2030. The company also intends to get a market share proportion of 13.19% for connected automobiles and trucks in 2030.

Each competitor’s financial strength

Based on comparative data on the revenue and net income generated by each company, it is evident that VW is the most financially strong company among the three competitors. VW generates $282.9 billion in revenue and $16.1 billion net income. On the other hand, Toyota generates $275.4 billion and has a $19.7 billion net income. Further, BMW generates $126.1 billion in revenue and a $16.1 billion net income.

How Our Company’s Market Share Compares to Our Competitors’

Analysis on whether our company is gaining or losing market share

The pie charts in question 1 above clearly indicate that our company is losing the market share for ordinary cars and trucks and connected automobiles and trucks because the current market share is 5.8% and will be 5.29% in 2030 for trucks and cars. In contrast, connected cars and trucks are currently 7.1% and will be 2% in 2030. The change in market share could be attributed to various factors in the business environment. One of the factors is the increase in the demand for cars and trucks manufactured by competitors. The rise in demand could be influenced by the quality of vehicles manufactured by competitors and customer loyalty because the competitors have already established substantial brand equity in the automobiles market (Rehman, 2020). The second factor is a delay in production due to the high cost of raw materials required to manufacture connected cars and trucks. The delay could make customers shift to purchasing automobiles sold by competitors, reducing our market share.

Our company’s growth potential in the industry

According to Dvoeglazov (2021), a company’s growth potential can be determined by evaluating the company’s earnings and revenue, the ratio of price to earnings, the growth of price to earnings ratio, and the return on equity. Comparative data indicate that our company’s annual revenue in 2020 was $187.10 billion and is anticipated to rise to $254.2 billion in 2030. The projected increase in revenue indicates that the company has good growth potential. Our company also has an estimated compounded annual growth of 3.10% within ten years, thus indicating good growth potential.

Comparing our company’s financials to competitors’

Our company’s financials look favorably good compared to our competitors. For instance, our current revenue is $187.1 billion, while the revenue for one of our major competitors, Toyota and VW, is $275.4 billion and $282.9 billion, respectively. That of the minor competitor, BMW, is $126.1 billion.

Future Potential Total Available Market (TAM) And Growth for Each Chosen Product/Service and Technology.

The TAM for cars and light trucks

The total potential market for automobiles and light trucks globally is 3,277.70 billion. Currently, our company has a total available market of 187.10 billion, which is significantly low. However, the TAM is close to that of competitors based on the fact that BMW, Toyota, and VW have a total available market of 126.10,275.40 and 282.90 billion, respectively.

The TAM for IoT-connected cars and light trucks

The global total available market for IoT-connected automobiles and light trucks is 53.9. Our company’s TAM is currently 3.83, and BMW, Toyota, and VW have a TAM of 1.62,4.80 and 8.36 billion, respectively.

The projected compound annual growth rate (CAGR) for cars and light trucks

Our company’s estimated CAGR for automobiles and light trucks within ten years is 3.10%. Our competitors’ CAGR ranges around that percentage because BMW, Toyota, and VW’s CAGR is 3.70%,3.90%, and 4.30%, respectively. The anticipated global CAGR for automobiles and light trucks is 4.10% which is relatively higher than our company and the competitors.

The projected CAGR for IoT-connected cars and light trucks

The global estimated CAGR for IoT-connected automobiles and light trucks is 25.20%. Our company’s CAGR is, on the other hand, 10.20%. Our rivals have a higher CAGR because BMW, Toyota, and VW have a CAGR of 25.50%,24.80%, and 23.20%, respectively.

The fastest-growing competitor.

VW is the fastest-growing competitor based on the rapid increase in revenue. For instance, VW had revenue of $282.90 billion in 2020 and has the largest market share of 8.76%. The company also has the highest estimated CAGR within the following years and will have the highest revenue of $433.1 billion in 2030.

Ways to Adjust if Business Conditions Change.

Strategies for when our customers are slow to respond (buy) the innovation

We anticipate changes in business conditions that may, in turn, affect sales. One of the main changes is customers slowing to respond to or buy the innovation. This change will be addressed by marketing and advertising to inform customers about the innovation and our value proposition. The advertisements will focus on the benefits of the technology and eliminate any misconceptions that the customers may have. We will include advertisements demonstrating how the innovation works and the unique aspects that make it better than competitors’ offers. We will also use exhibits to demonstrate to customers how the innovation works and allow them to experience using the cars so that they can understand how the innovation works.

What to do if one competitor is overtaking all the others, including your company

Holweg (2008) argues that competition in the automotive industry is intense, creating a possibility of a situation whereby one competitor may overtake all the others, including our company. If such a situation arises, we will lower the prices of our vehicles and improve quality to attract more customers. We will also offer discounts for our returning and first-time customers and after-sale services such as free repair and maintenance for one year after the purchase. We will also consider partnering with our competitors to improve our sales. We may partner in manufacturing or distribution to profit from their already established brand equity.

The Steps Our Company Needs to Take from Concept Outline to Launch.

The required size of the development

Our company will require extensive development to accommodate various driverless features, such as sensors and computer systems that can be integrated to create functional autonomous cars. The development will also include a prototype that will be used to test the functionality of the innovation before it can be implemented in manufacturing many vehicles. Therefore, the startup production cost will be high but later reduced in future productions because there will be no need for a prototype.

Additional capital and personnel

We will require additional capital to purchase all the equipment needed to manufacture the autonomous cars because it is our first time producing them. The capital will be used to buy computer systems and sensors and manufacture the prototype that will be used to guide manufacturers on areas of improvement. We will also require additional personnel with knowledge and skills in manufacturing autonomous cars because our current workforce does not have that expertise.

Our Approach to Determining the Timeline from the Beginning of Development Until Initial Product Launch

We will determine the timeline of the manufacturing process until the initial product launch by reviewing the activities in every phase of the stage-gate process. We will estimate the maximum amount of time that can be spent on each stage and use it to create a schedule. The schedule will be adjusted regularly based on changes in the time spent in every stage. The changes could arise from delays caused by poor project management (Westwood, 2005) or the technicality in designing the vehicles.

References

Dvoeglazov, S. I. (2021). Indicators system to evaluate the company’s economic potential based on the accounting (Financial) statements. Socio-economic and humanitarian magazine Krasnoyarsk SAU, (3), 45-63. https://doi.org/10.36718/2500-1825-2021-3-45-63

Holweg, M. (2008). The evolution of competition in the automotive industry. Build To Order, 13-34. https://doi.org/10.1007/978-1-84800-225-8_2

Rehman, S. (2020). Social media: Brand loyalty influencing brand equity. Journal of Advanced Research in Dynamical and Control Systems, 12(SP7), 2526-2533. https://doi.org/10.5373/jardcs/v12sp7/20202385

Westwood, A. (2005). Project delays. Refocus, 6(5), 14. https://doi.org/10.1016/s1471-0846(05)70450-9

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Question 

Overview

Using the recommendation that you provided in Milestone One, you will develop a strategy to implement the innovation and get ahead in the marketplace.

Strategic Plan for Implementing IoT Innovation

Scenario

You work as a middle manager for one of the top U.S. producers of luxury and mass-market automobiles and trucks. You are now leading a cross-functional team to move forward with the company initiative. To remain a viable competitor and meet the demands of consumers’ desire for technology, the company’s chief technology officer (CTO) has decided to implement the Internet of Things (IoT) into its product line.

In Milestone One, you and your cross-functional team looked at the risks and benefits of each innovation option, competitors in the market, and the company’s internal capability for moving forward with the innovation. After doing this analysis, you presented your recommendation to various stakeholders about how to proceed. You chose one of the following:

  1. Design a completely new product line based on recent technology (discontinuous innovation)

or

  1. Add recent technology features into one model and then incrementally into the broader product line (incremental innovation)

The CTO has accepted your recommendation. Now, you are ready to develop a strategy for taking the innovation to market. In order to develop a strategy, you will need to look at your competitors’ relative strengths in the current marketplace to understand how the company compares to your competitors and to identify the total market and the market’s annual growth rate. Finally, you also need to share your thoughts on how to respond to changes in business conditions. Although no one can predict what is going to happen, it is important to think about how flexible your plan is in order to meet unexpected conditions.

Prompt

Using the recommendation you provided in Milestone One, develop a strategic plan to implement the innovation and gain a competitive advantage. Use the Sales Forecast, Comparative Growth Data and Comparative Operating Statistics to complete this milestone.

Strategic Plan

  1. Analyze the competitors’ relative strengths in the marketplace.
  1. Explain how your company’s market share compares to your competitors.
  1. Identify future potential total available market (TAM) and growth for each chosen product/service and technology.
  1. Identify ways to adjust if business conditions change.
  1. Describe the steps your company needs to take from concept outline to launch. Consider what you learned from the previous two modules to ensure the steps are easy for your team to understand.
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