Organizational Structure and Culture
Shemah Rau
December 12,2021
Contents
Executive Summary 3
Introduction 4
Recommendation 4
Strategic Plan 4
Organizational Structure and Culture 11
References 15
Executive Summary
Most of the parts of Model T Ford were made and assembled by workers. Even the car was painted by hand. However, the companies started to transfer roles from workers to robots or machines to make vehicles. Since 1961, robotics is being used in car production, with General Motors using it for spot welding jobs. MIT developed a microprocessor and pressure-sensitive sensors in 1974. Early use of robots to offer high quality at less price boosted incremental innovation across the automobile industry. The BMW’s plant in South Carolina has achieved around 98% automation. In 1994, the assembly line of BMW had robots contributing only 2% of the workforce. Incremental improvements are also being made to make connected cars a norm. Thus, the correct way for our company is to move forward using incremental innovation to modify its existing vehicles.
Introduction
Recommendation
Our company must adopt incremental innovation to implement IoT in its cars. Such innovation involves a series of small improvements made to the existing services or products of a company (Carleton, 2019). Low-cost improvements assist in differentiating a company from its competitors while improving current offerings. As we are a premium car brand, we have to think like innovators. It is understood that the shift to autonomous driving is not going to happen overnight. On the contrary, we will be seeing continuous advancement and application of driver assistance technologies, paving the way for connected cars.
One of the primary focuses is to reduce the use of mechanical devices. In the past 100 years, several applications of mechanical devices, like ignition and oil flow control, have been transferred to electronic and electromechanical devices. An average vehicle has over 40 electronic controllers that are connected through five miles of wiring. Electronics have played an important role in improving automobiles. It has a refined powertrain to enhance fuel consumption and reduce emissions. In addition, it has refined interior, exterior, and chassis for improving comfort and safety. Such development has increased comfort, reduced emission, and increased fuel efficiency.
Even though connected vehicles are gaining popularity now, but automakers have been making incremental progress to delegate driving roles to vehicles themselves. Due to this, diving has been becoming easier and safer. For instance, a car navigation system can both select a route and change it for avoiding congestion. In addition, the lane detection system advises drivers to check themselves while they drift from designated lanes.
Strategic Plan
BMW is the pioneer when it comes to connected mobility. In 1980, it was the first company to integrate onboard computers in Formula 1. The company has over 20 years of experience in connectivity, which allows it to make the most connected and intelligent vehicle. BMW ConnectedDrive is among the most advanced car services worldwide (Technavio, 2019). It connects the vehicle and car with the outside world. Driver assistance systems, driver-focused technologies, and digital services offer improved safety, entertainment, and comfort.
Volkswagen has huge plans to make advancements in autonomous driving. It aims to capture the market share from car rental and ridesharing. Sedric is the first Level 5 autonomous car of the Volkswagen Group. It can safely and conveniently drive itself to destinations with just a push of a button. Through the smartphone App, the car can look for a parking space or collect shopping and drop adults off at workplaces and children at schools. The company has made huge investments in its R&D related to autonomous cars. For this purpose, it has created concept cars like the I.D. Crozz, I.D. Buzz and the I.D. VW has developed an in-house automotive software arm, namely, Cariad. The company believes that it can generate around $1.4 trillion in revenues by 2030 with the help of sales and subscriptions (Alamalhodaei, 2021).
Toyota is one of the leading automobile companies, which is considered the best-connected car brand. To get a bigger market share of the connected market, Toyota has partnered with Microsoft to use some of its patents. Toyota has been using the Azure cloud of Microsoft for its Big Data Center. These patents will help the company to deliver safety and predictive maintenance features and fuel savings. Toyota Motors South Africa (TMSA) has achieved an important milestone by realizing its IoT strategy in Africa. The company has introduced an in-car WiFi solution for Lexus and Toyota vehicles in South Africa. MyToyota Connect App offers key extension features through a partnership with Altron Netstar and Vodacom.
In relation to market share percentage for connected cars and trucks, Volswagen leads the market with 15.50% of the market share. It is followed by Toyota, with 8.90% of the market share. Finally, BMW has captured 3% while our company stands at last with 7.10% of the market share.
Figure: Market share now
In relation to the growth rate over the next ten years, BMW leads the competition with 25.50 CAGR. It is followed by Toyota, with a CAGR of 24.80%. Finally, Volkswagen has a CAGR of 23.20%, while our company stands at 10.20%. The research shows a trend of losing market share. In relation to the market share percentage for connected cars and trucks in 2030, Volkswagen loses its market share to reach 13.19%, while Toyota drops to 8.62%. Only BMW shows a slight improvement and gains a market share of 3.07%. Lastly, our company loses market share to reach 1.98%.
Figure: Market share in 2030
Figure: Market share Trend
The automakers are losing the market share of cars and trucks, i.e., non-connected vehicles. In relation to the market share percentage for cars and trucks now, Volkwagen leads the competition with 8.76% while Toyota follows it with 8.53%. On the other hand, BMW has a market share of 3.91%, and our company stands at 5.80%.
Figure: Market share now
The trend also shows a losing market share. Volkswagen shows a slight improvement with a 9% share while Toyota drops to 8.41%. BMW also loses market share to reach 3.77%, and our company stands at 5.28%. The projected revenue in 2030 for our company is $254.20 billion. Thus, we can exploit the market to ensure steady growth and incremental innovation.
Figure: Market share trend
There is a huge potential for our company to excel in the market. If our company experiences a growth rate of 3.10% in the next ten years, it can generate a revenue of $254.20 billion through cars and trucks. Similarly, we can achieve revenue of $10.11 billion in 2030 with a CAGR of 10.20% in the next ten years. The projected global revenue for connected cars in 2030 will be $510.07 billion. Thus, there is a huge opportunity for our company to invest in the market and cut a huge slice of the market share.
Financially, our company is in the third position with a revenue of $187.1 billion. BMW has a revenue of $126.1 billion, while Toyota generates $275.4 billion. Volkswagen leads the competition with $828.9 billion. However, it does not make us financially very strong as our profitability is low. Our net income is $0.9 billion only, placing us at the last of the list.
The total available market (TAM) for cars and light trucks is $3227.10 billion. BMW has the opportunity to gain $187.10 billion from this market. TAM for Toyota is $275.40 billion, while it is $282.90 billion for Volkswagen. Our company has the opportunity to generate $187.10 billion from this market. Also, the projected growth rate over the next ten years for our company is 3.10%
In addition, the total available market (TAM) for connected cars and light trucks is $53.9 billons. BMW has the opportunity to gain $1.62 billion from this market. TAM for Toyota is $4.80 billion, while it is $8.36 billion for Volkswagen. Our company has the opportunity to generate $3.8 billion from this market.
If there is a change in the business conditions, we have to revaluate our business processes. Any change can bring opportunities along with it. Thus, these processes need to be checked if they are still relevant. Our ability to adapt will be our competitive advantage. The organizational change process needs to be used to achieve business outcomes and customer value. Following is the change process:
If the customers have a slow response, we can invest in marketing to ensure they understand the value proposition of our product. All the key features have to be communicated effectively to them. If a competitor is moving ahead, we need to consider how we can offer similar services at a lower price. An investment will be required in technology and R&D to create better experiences at affordable prices. Finally, the company needs to follow some steps to ensure a perfect launch:
Meet customer demands
Research on competition
Prototype testing
Reconfigure the product
Pre-marketing
Develop a solid supply chain
Post-launch review & continuous improvement
Yes, additional capital and personnel are required. Capital will be required to make a prototype, test, manufacture, and market the vehicles. It is important to pick the right team to launch a new product. Thus, the company will require a new technical team, along with project managers, QA, and sales who specialize in connected cars. For checking the progress of the plan, milestones will be set. A firm production schedule will be established along with the new product launch process.
Organizational Structure and Culture
As an automaker, our goal must be to place ourselves at the forefront of future mobility solutions. Until completely autonomous cars become the standard, there will be people who appreciate the driving experience. Thus, incremental innovation will be central to our innovation strategy. The company must add autonomous features incrementally in its existing vehicles. It will allow us to monetize those features while testing them in the real world.
Due to a lack of technology breakthroughs, it has been observed that the automobile industry benefits from incremental innovation. The industry is undergoing changes through an endless loop of iterating incremental innovation, ranging from Kaizen, Toyota’s continuous and constant improvement, to using robotics in production. There is a race among automakers to outperform the competition in incremental innovations. This innovation has been the core competence in the last 100 years to acquire the ability of providing a better and affordable vehicle. The companies failing in this innovation race cannot sustain the competition. Examples include several automakers of the former Soviet Union and Eastern Europe and India’s Ambassador. They did not fail because they were not making vehicles similar to those of Honda or Toyota. Instead, they suffered from slow progress and development in incremental innovations.
We have a tall matrixed structure design, which is highly complex because of several levels of hierarchy. This structure impacts innovation as it is very rigid. Thus, it is often unsuccessful at nurturing creativity. Also, employees are given fewer opportunities to innovate. In addition, due to its hierarchical nature, communication is difficult and slow. Effective communication is a critical element of decision-making, which inspires innovation.
However, the tall structure also supports innovation through centers of expertise (COE). Functional COEs use increased control, governance, and structure for process and resource efficiencies. In addition, as resources are centralized, duplication of efforts is reduced. These COEs play a huge role in implementing innovation through their deep knowledge. Decisions are centralized, which makes it easier to implement practices and policies. Thus, specialized members are responsible for key decisions, and subordinates know their particular roles.
Businesses cannot depend on traditional strategic direction to grow and succeed in the ambiguous and complex world. Instead, we have to quickly recognize emerging changes while responding with speed to benefit from potential opportunities. Thus, our company has to move towards adopting an adaptive structure. It will offer organizational and technical agility while offering an environment that fosters innovation, collaboration, motivation, the autonomy of workforces, and engagement.
This structure can easily address market changes as it develops an open, collaborative workforce. Employees are motivated to identify market trends to determine new opportunities or adverse conditions for the business. This culture centers around the culture of advancement. Here the top-level employees are by all accounts not the only people answerable for direction, yet different individuals from the association likewise have their commitment. Leaders are currently zeroing in on establishing a climate where individuals approach with thoughts and foster a culture of advancement. Presently the focal point of the company is more on advancing an association-wide core value and vision, engaging every representative to satisfy it as the individual in question sees fit. Presently it isn’t just the supervisor or pioneers who have selective freedoms in causing rules and others to need to observe it; however, employees could think of a thought, and it could transform into an important decision.
Adaptive structure invests in innovation through employees. It becomes possible as it is an organic or free-form structure. Such a design is able to take any shape that eliminates the limitations of rigid bureaucracies. In addition, it focuses on self-regulation. Technology impacts the organization structure due to the fact that it causes changes in factors like the ratio of managers to personnel and line of command. Technology is known to ease professional life. An adaptive organization uses technology to expand its horizon. It is known to readily accept modern IT innovations along with their features for moulding them as per the requirement of the organization. It gains maximum benefits through the inclusion of technology in daily procedures while evolving a business model accordingly.
Thus, our company can become open to change while adapting our strategies and principles for smooth operations. The company can turn into an innovative hub through a structure based on the logic of configuration and content. The focus is more on human efficiencies to implement change. One of the ways is to replace job titles with roles. A title has a valuable purpose as it offers a view of the overall responsibilities and skills of employees. However, it is seen different organizations use different titles for the same work. In addition, job titles create a linear status rather than a flexible set of skills. Through job roles, the company can allow a person to showcase real responsibilities and relevant skills. A title is observed to cement a power structure, while roles establish a work structure (Bunch, 2018). Power abuse can be reduced significantly as an employee may lead in certain teams while supporting other teams. It will go a long way in diminishing hierarchy and moving towards networks.
In addition, our company can establish fast feedback loops. The goal must be to offer real-time feedback loops to assist employees in understanding how they can improve or evolve the value that they create for our company. We do not have to wait for quarterly or annual reviews to offer feedbacks. It means we are losing critical time, which can be effectively used to empower and improve employees to reach their full potential. Feedbacks can be provided on a project basis to be given as soon as a particular project ends.
References
Alamalhodaei, A. (2021). TechCrunch is paVolkswagen’s new business strategy puts software and autonomous driving front and center. Techcrunch.com. Retrieved 13 December 2021, from https://techcrunch.com/2021/07/13/volkswagens-new-business-strategy-puts-software-and-autonomous-driving-front-and-center/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAANTbawhLiawVXehHUDJD-K1XjZpc4jDUWb_hbBvMwZN4Mmketp_DbzaSQZHZVLbhpYDIhMwoqZWxNnNUA619se_e5mzWzIqSfLFpliYBGkOxkgA-8MabXhVRvWLXnWtH06g8uUzOtQ-63kaUQk2efZoWQSuDVE3kXTOVuzHD55cc.
Bunch, J. (2018). 3 Ways to make your Organizational Structure more adaptive. Linkedin.com. Retrieved 13 December 2021, from https://www.linkedin.com/pulse/3-ways-make-your-organizational-structure-more-adaptive-john-bunch.
Carleton, S. (2019). What is Incremental Innovation?. Northeastern University Graduate Programs. Retrieved 13 December 2021, from https://www.northeastern.edu/graduate/blog/what-is-incremental-innovation/.
Technavio. (2019). Top 10 Connected Car Companies 2019 | Global Connected Car Market. Technavio. Retrieved 13 December 2021, from https://blog.technavio.com/blog/top-10-connected-car-companies-leading-global-connected-car-market.