Harvard Case - Automakers in the Sharing Economy: An Examination of the Burgeoning Mobility Industry and Automakers' Strategies
"Automakers in the Sharing Economy: An Examination of the Burgeoning Mobility Industry and Automakers' Strategies" Harvard business case study is written by Sven A. Beiker, Stephen D. Lewis. It deals with the challenges in the field of Strategy. The case study is 34 page(s) long and it was first published on : Jun 30, 2017
At Fern Fort University, we recommend that automakers embrace a multi-pronged strategy to thrive in the sharing economy. This strategy should involve:
- Strategic partnerships with established mobility providers.
- Developing their own mobility platforms, leveraging their existing infrastructure and expertise.
- Investing in and acquiring innovative mobility startups, fostering a culture of disruptive innovation within their organizations.
This approach will enable automakers to capitalize on the burgeoning mobility market while preserving their core competencies and brand value.
2. Background
The case study 'Automakers in the Sharing Economy' explores the rapidly evolving mobility landscape, characterized by the rise of ride-hailing services, car-sharing platforms, and other shared mobility options. Traditional automakers face a significant challenge as these new business models threaten their traditional sales and revenue streams. The case focuses on the strategies adopted by various automakers, including General Motors, Ford, and Daimler, to navigate this disruptive environment.
The main protagonists are the established automakers, who are grappling with the need to adapt to a changing market, and the new mobility providers, such as Uber, Lyft, and Zipcar, who are disrupting the industry with innovative business models and technology.
3. Analysis of the Case Study
Porter's Five Forces Analysis:
- Threat of New Entrants: High, due to the low barriers to entry in the mobility sector, particularly with the rise of technology-driven startups.
- Bargaining Power of Buyers: High, as consumers have a wide range of choices in the mobility market, including traditional car ownership, ride-hailing, car-sharing, and public transportation.
- Bargaining Power of Suppliers: Moderate, as automakers rely on a diverse range of suppliers for components and materials.
- Threat of Substitutes: High, as various transportation options, including public transportation, cycling, and walking, can substitute for car ownership.
- Rivalry Among Existing Competitors: Intense, as traditional automakers face competition from established mobility providers, new entrants, and even tech giants like Google and Apple entering the market.
SWOT Analysis for Automakers:
Strengths:
- Strong brand recognition and customer loyalty.
- Established manufacturing and distribution networks.
- Expertise in vehicle design, engineering, and manufacturing.
- Access to capital and resources.
Weaknesses:
- Slow to adapt to changing market dynamics.
- Traditional business models are being disrupted.
- Lack of experience in the mobility services sector.
- Potential for brand dilution if not careful about partnerships.
Opportunities:
- Growing demand for mobility services in urban areas.
- Technological advancements in autonomous driving and connected vehicles.
- Partnerships with mobility providers to gain access to new markets and customer segments.
- Developing their own mobility platforms to control customer experience and data.
Threats:
- Competition from established mobility providers and new entrants.
- Regulatory uncertainty surrounding autonomous vehicles and shared mobility.
- Changing consumer preferences towards mobility services over car ownership.
- Potential for technological disruption from new players.
Value Chain Analysis:
Automakers need to re-evaluate their value chain to adapt to the sharing economy. They should focus on:
- Developing connected and autonomous vehicle technologies: This will be crucial for providing a seamless and efficient mobility experience.
- Building data analytics capabilities: Understanding customer behavior and mobility patterns is essential for optimizing services and pricing.
- Developing new business models: This could involve subscription services, pay-per-use models, or partnerships with mobility providers.
- Strengthening their brand and customer relationships: Automakers need to build trust and loyalty with customers who are increasingly choosing mobility services over car ownership.
Business Model Innovation:
Automakers need to embrace business model innovation to remain competitive in the sharing economy. This could involve:
- Shifting from a product-centric to a service-centric model: Focusing on providing mobility solutions rather than just selling cars.
- Developing subscription-based services: Offering flexible and affordable access to vehicles and mobility services.
- Creating data-driven platforms: Leveraging data to optimize service delivery, pricing, and customer experience.
- Partnerships with technology companies: Collaborating with tech giants to develop innovative mobility solutions.
4. Recommendations
Strategic Partnerships: Automakers should form strategic partnerships with established mobility providers, such as Uber, Lyft, and Zipcar. These partnerships can provide access to new markets, customer segments, and technology.
Developing Own Mobility Platforms: Automakers should develop their own mobility platforms, leveraging their existing infrastructure and expertise in vehicle design, manufacturing, and distribution. This will allow them to control the customer experience and data, and potentially offer a more integrated and seamless mobility solution.
Investing in and Acquiring Mobility Startups: Automakers should invest in and acquire innovative mobility startups, fostering a culture of disruptive innovation within their organizations. This will allow them to access emerging technologies, talent, and business models.
5. Basis of Recommendations
These recommendations are based on the following considerations:
Core Competencies and Consistency with Mission: The recommendations leverage automakers' core competencies in vehicle design, engineering, and manufacturing, while also aligning with the growing demand for mobility services.
External Customers and Internal Clients: The recommendations address the changing needs of customers who are increasingly choosing mobility services over car ownership. They also cater to the needs of internal clients, such as employees and shareholders, by ensuring the long-term sustainability and growth of the business.
Competitors: The recommendations acknowledge the intense competition in the mobility sector and aim to position automakers as leaders in the market.
Attractiveness: The recommendations are expected to be attractive from a financial perspective, as they offer the potential for significant revenue growth and market share expansion.
6. Conclusion
The future of mobility is rapidly evolving, and automakers must embrace a multi-pronged strategy to thrive in the sharing economy. By forming strategic partnerships, developing their own mobility platforms, and investing in innovative startups, automakers can capitalize on the burgeoning mobility market, preserve their core competencies, and ensure their long-term success.
7. Discussion
Alternatives:
- Focusing solely on traditional car sales: This is a risky strategy, as it ignores the growing demand for mobility services and the potential for disruption from new entrants.
- Ignoring the sharing economy: This would leave automakers behind in a rapidly changing market.
Risks:
- Competition from established mobility providers and new entrants: This could lead to a decline in market share and profitability.
- Regulatory uncertainty surrounding autonomous vehicles and shared mobility: This could hinder the development and deployment of new mobility solutions.
- Technological disruption from new players: This could render existing technologies and business models obsolete.
Key Assumptions:
- The demand for mobility services will continue to grow.
- Technological advancements in autonomous driving and connected vehicles will continue to progress.
- Automakers will be able to successfully develop and deploy their own mobility platforms.
8. Next Steps
- Develop a strategic roadmap for entering the mobility market.
- Identify and evaluate potential partners for strategic alliances.
- Allocate resources for developing their own mobility platforms and investing in startups.
- Monitor market trends and technological advancements.
- Build a strong internal team with expertise in mobility services and technology.
By taking these steps, automakers can position themselves for success in the rapidly evolving mobility landscape.
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Case Description
This paper compares different types of shared mobility solutions, in particular carsharing and ride hailing, the two most prevalent forms today. It describes the major trends prompting OEMs to engage in the mobility industry, such as urbanization, shifting consumer preference from 'owning' to 'sharing', and various technological advances. With that understanding in mind, the authors examine the current state of the shared mobility industry in more detail, taking a closer look at growth, profitability, and strategies for the different solutions. The study also considers the impact that highly automated vehicles might have on these mobility businesses, and suggests that carsharing will ultimately fold into ride hailing. Based on those analyses, the paper discusses forward directions for automakers, such as investments vs. partnerships, criteria for market selection, and synergies with other industry trends.
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