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Analysis of Future of Automotive industry | Innovation Management

2618 Downloads I Published: 09 Dec ,2019

Introduction

Innovation can be defined as a new idea which is used by most of the companies in order to enhance sales and profits in upcoming period. It is not easy to manage whole process of innovation because it requires appropriate planning and strategies. When an organisation plan for a creation or modification in its products than proper information, sufficient funds and market information is needed for this purpose (Tidd and Bessant, 2014). Main objective of business entities behind the innovation is to meet customer's requirements and fulfil all their needs so that large market share can be captured. If organisations are willing to get success by launching an innovative product than it is essential to communicate the plan with all functional departments of the company and allot them resources and responsibilities. Appropriate execution of plans will help to successfully introduce the innovation products in market. Main aim of this project report is to develop an understanding of proper management of innovation for a business. This assignment is based on Lotus cars which is a British automotive manufacturing company and its headquarter is in Hethel, UK. The organisation was founded in the year of 1952 by Colin Chapman. This report consist detailed analysis of future of automotive industry, innovation requirement of the organisation and future innovation capabilities of the company.

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The Future of The Industry 2020 And Beyond

Automotive industry is the sector that deals in different types of auto mobile products such as cars, motor vehicles etc. All the products are manufactured and developed under this sector. This industry is continuously growing in UK and contributing a higher amount in national income that helps to grow the economy. This industry was established in year 1860 and since than the sector is successfully running its business. Various companies such as Aston Martin, Daimler, Morgan, Bentley, Jaguar, Lotus, Rolls Royce are operating their business under this sector in UK. Higher employment is generated by the commercial enterprise in UK and currently it is offering jobs to large number of individuals (Drucker, 2014).

The companies who are a part of automotive industry continuously launching different types of innovation that helps to enhance profitability and productivity of whole sector. One of them is Aston Martin who is planning for electrification in upcoming period. The new car which is going to be launched by Aston martin is RapidE and the directors have decided to launch limited cars. This innovation will take the industry to the next level and increase competition among the companies. The organisation have also announced to re-engineer Lagonda as the first electric SUV luxury car company and from year 2021 all Lagonda are going to be electric (Innovation of Aston Martin,2018).

Rolls Royce company is also willing to launch innovation in upcoming period. The organisation has predicted to create tailor made cars which will target rich and famous personalities. The cars are going to be made according to the specifications of the customers. Directors of this organisation have said that cars will be manufactured in the supervision of our clients. This type of innovation will help the automotive industry to grow faster. The name which is decided for the tailor made car is 103EX which is going to allow to manufacture fully personalised cars (Future innovation of Rolls Royce,2017). A 3D design which is made by the company is as follows:

Illustration 1: Future innovation of Rolls Royce, 2017

Source: Future innovation of tolls Royce, 2017

Daimler is also a leading company who is executing its business operations under automotive industry. The organisation have announced to introduce a Mercedes's automated city bus with City Pilot in upcoming period. This concept is taken from the automated trucks that are launched by the organisation in year 2014. The city bus has a City Pilot who is able to recognise traffic lights and drive according to them (Innovation of Daimler,2018).

All the above discussed innovations are going to be launched in future by different automotive companies. It will help the auto mobile sector to grow faster and enhance profits. All of them also spread the business till 2020 and beyond. The new innovations needs to be managed appropriately by the business entities in order to successfully launch their business in the market.

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The Organisation Innovation Requirement 2020 and Beyond

Lotus Cars is a manufacturing company who is dealing in sport cars and was established in UK. The organisation is known for its good quality cars that are provided to different customers all around the world. Currently the business is operated with the help of around 1500 employees. Parent company of Lotus Cars is Zhejiang Geely Holdings Group. The organisation is willing to launch two new sport cars till year 2020. This will help to enhance profitability and market share of the company (Innovation of Lotus Cars, 2017). It has also planned to introduce SUV in the market till year 2022. It is the first time when the Lotus is going to introduce a SUV car. Owner of the business entity has declared that one of the new sport car is going to be replace an old car of Lotus Family. The other sport car will have a new carbon fiber monocoque body. The innovations are described in detail below:

Carbon fiber monocoque body sport cars:These are the new cars that are going to be launched by Lotus Cars till year 2020. The body of new sport cars is made from carbon fiber. It is mainly designed to give the customers a new experience. Main purpose of the company for these new sport cars is to get back the place in the market which was lost due to lack of innovation since last few years. This will result in enhanced profits of the company.

Electric cars:A new innovation of electronic cars has also been planned by the Lotus Cars which is going to be launched in future. This will reduce the cost of fuel and weights of cars. This will also contribute in the development of the economy of the country because it will attract large number of customers. Rechargeable batteries will be added in the the cars by Lotus (Du, Leten and Vanhaverbeke, 2014).

Clean tech eco vehicles:Lotus has planned to launch new and innovative clean tech eco vehicles that are very attractive and eco friendly. This innovation will reduce carbon emission and wont affect the environment. This will help to establish a good market image because now a days pollution is continuously increasing and government is imposing environment protection acts. A car who is eco friendly will attract large number of customers as it is a new concept. This will be very beneficial for Lotus due to its nature. Government will also help to promote the new clean tech eco car because it will help to reduce pollution which in continuously increasing due to motor vehicles (Souto, 2015).

All the above described innovations are planned by Lotus Cars that are going to be introduced in future. The organisation is willing to attain higher success by launching all the new cars till 2020 and beyond it. All of them will increase its market share and profitability because the new cars are going to be introduced with new concepts that have not yet been launched in market.

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Building the Future Innovation Capabilities For the Organisation

Lotus Cars is planning to launch new innovations that are Carbon fiber monocoque body sport cars, Electric cars and Clean tech eco vehicles. All of them are equally capable to enhance profitability of the company (Kindström and Kowalkowski, 2014). A roadmap for the company which needs to be followed by the company for the implementation of the innovation is as follows:

Suggestion:It is suggested to the company to focus on the innovation of “Carbon fiber monocoque body sport cars” as it will be very beneficial for the company.

Reason:This innovation is selected by Lotus Cars because is a new concept which has not yet been planned by any other company to use carbon fiber to make body of a car. Another reason behind the selection of carbon fiber monocoque body sport cars is that it can provide an excellent driving experience to the customers.

Impact of changes:For the organisation it is very important to analyse the impact of changes that are going to be made in order to launch the new innovation in the market. Following points should be considered while determining impacts of changes:

  • Research and development:When a plan for the innovation is being prepared by the organisation than it is very important to conduct a market research in which all the information of market conditions can be gathered (Spieth, Schneckenberg and Ricart, 2014). Main responsibility of research and development department is to identify that is it the right time to introduce a new product in the market. Customer's preferences, needs, demands are also analysed by the research and development department of the company. Information of threats and available competition is also been determined so that an appropriate strategy for the launching process of innovation can be formulated. Proper research can help to successfully establish the business in market. Lotus has lost it market image as it has not introduced any new car in the market from a long period. As the new sport cars that are made by carbon fiber monocoque are are the innovation of Lotus Cars and for the organisation it is very important to guide its research and development department to collect appropriate market data (Carayannis, Sindakis and Walter, 2015).
  • Required resources:All the business entities who are going to introduce new innovations in the market it is very important to gather appropriate resources that are needed for the innovation. There are two main type of resources that are required by Lotus Cars in order to launch its new sport cars that are made of carbon fiber. These resources are tangible and intangible. Tangible includes skilled human resources, funds etc. and intangible includes intellectual property rights that are copy right, patent, trademark and trade secrets. All these resources are required to be collected to successfully launch the new innovation of Lotus Cars. Finance is the major requirement of the company as it is not possible to manufacture new cars without sufficient funds. Money can be raised from various sources including bank loan, investors, business angels and venture funding (Van Lancker, Wauters and Van Huylenbroeck, 2016).
  • Requirement of technical skills:Technical skills are required to perform specific task that can only be performed by such individuals who have appropriate knowledge and experience in the sector. As Lotus Cars is going to introduce carbon fiber body sport cars in market hence technical skills are required for this purpose. The main purpose of the company behind this launch is to attract large number of customers in order to be more successful in the market. The human department of the organisation is required recruit and select new individuals who have knowledge and experience of automotive sector. Technical skills are required to manufacture the cars that may fulfil all the requirements of the customers. The cars are able to provide impressive driving experience to the riders. As the concept has not yet been introduced by any other company hence organisation needs to hire new employees who have knowledge about carbon fiber so that they can appropriately contribute in manufacturing process of cars.
  • Legal aspects and compliance:All the intangible resources are considered as legal aspect and compliance that includes copy right, patent, trademark etc. A specific act is launched by the government for the safety of innovative ideas which is intellectual property right act that direct companies not to copy the concept of innovation which has already been used by other business enterprises. When a new innovation is launched by a company than it is very important to patent the idea of innovation so that another organisation cannot copy the concept (Talukder, 2016). As Lotus Cars is going to introduce new sport cars in market hence it is very important for the company to follow this act and patent the concept of carbon fiber cars so that another company may not copy the style of Lotus Cars. This act can also make sure that Lotus is also not copying the idea of any other company. It is very beneficial for businesses as it helps to secure the innovative ideas of new products that are manufactured by companies in order to achieve organisational goals.
  • Cost of change: A summary of cost that may take place for innovation is as follows:

Expenses

Amount

Research and development

15000

Marketing

14000

Advertising

12000

Material

180000

Human resources

16000

Total

237000

The estimated cost that may occur for the company is 237000 and it is suggested to the directors to arrange sufficient funds for future.

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Feasibility:In this stage the research and development department of Lotus is required to analyse that its new innovation is feasible or not. It will result in higher profitability or not and also determine that it can survive in competitive market or fails to survive. In this step the researchers of the company assess the practicality of new innovation or products that are going to be introduced in market in order to achieve predetermined goals of the company. It is analysed with the help of proper testing of cars (Saebi and Foss, 2015). Research and development department will determine that the material which is used to manufacture the cars is able to face all type of weather, the seats are comfortable and the price of the cars is affordable for the target market or not. All the elements that are researched by R & D division will be recorded in a report that carry each and every information regarding the new car. When the report is generated it is presented in front of the board of directors for their approval.

Approval process:In this process a formal meeting is conducted in which research and development department of Lotus Cars present the feasibility report of the innovation in front of top executive of the organisation. For this purpose a formal board meeting is conducted in which directors evaluate the reports that provide detailed information of new business project. They mark their approval if report is formulated appropriately and present proper information of future that it will result positively for the organisation. If they found that new carbon fiber body cars are not able to be successful in the market than they reject the project and ask the research and development department to formulate the report again. When directors of Lotus Cars found that the project is feasible enough to generate profits leads and profits for the organisation than they mark approval for the implementation (Frow and et.al., 2015).

Application of new innovative idea:When approval is received from top executives and directors of Lotus Cars then new cars can be introduced in the market. A proper planning is required for the new innovation in which marketing, advertising, promotions, launching and distribution related activities are included. Appropriate promotions are required to aware customers about the new cars as it will help to grab their attention to the new business idea of carbon fiber body cars. The new cars will be launched in the market if board of directors mark approval on the report which has been p[resented in front of them by research and development department of Lotus Cars.

Review of the impact of innovation: Under this stage the results of implementation of innovation is being reviewed by the managers dan directors of the organisation. They also analyse that the new project is able to make profits for the company or not. Directors of the organisation evaluate overall performance of the new innovation. As the new sport cars are going to be launched by Lotus Cars in the market for the purpose of capturing large market share. When the new cars are being introduced in market than their impact on business will be examined in order to analyse that it is beneficial for the organisation or not.

All the above described steps of road map needs to be followed by the directors, research and development departments and top executives as it can help to successfully launch the new project and evaluate its performance in the market (Carlborg, Kindström and Kowalkowski, 2014).

Conclusion

From the above project report it has been concluded that innovation is the new idea which is used by an organisation in order to make modification is its existing products so that profits and sales and be maximised. For all the industries it is very important to make innovations so that overall profitability of the sector can be enhanced. Managing innovation is vital for all the business entities as it can help them to attain all their business objectives. Now a days various innovations are introduced by the business entities who are operating business under automotive sector. Lotus Cars is also a part of this sector and it is very important for the company to launch a new innovative car in the market as it is loosing its place in market due to lack of innovative products. The organisation is planning to launch new sport cars that are made of carbon fiber and able to survive in the market. The main purpose behind the new launch is to get back the market position of the company which has been lost few years ago. The cars that are going to be launched by the company are made to provide an excellent experience to the rider. For the launch a road map for the company is being generated by research and development department in which all the activities related to marketing, research, advertisement, promotion, planning etc. are performed. The road map directs to successfully analyse the feasibility of the new business projects. A detailed report is formulated by the research and development department of the company and this report is presented in front of the board of directors in a formal business meeting. Detailed information is evaluated by board members and than approval is market for the launch by them.

References

Books and Journals:

  • Tidd, J. and Bessant, J., 2014.Strategic innovation management. John Wiley & Sons.
  • Drucker, P., 2014. sInnovation and entrepreneurship. Routledge.
  • Du, J., Leten, B. and Vanhaverbeke, W., 2014. Managing open innovation projects with science-based and market-based partners.Research Policy. 43(5). pp.828-840.
  • Kindström, D. and Kowalkowski, C., 2014. Service innovation in product-centric firms: A multidimensional business model perspective.Journal of Business & Industrial Marketing. 29(2). pp.96-111.
  • Souto, J. E., 2015. Business model innovation and business concept innovation as the context of incremental innovation and radical innovation.Tourism Management. 51.pp.142-155.
  • Spieth, P., Schneckenberg, D. and Ricart, J. E., 2014. Business model innovation–state of the art and future challenges for the field.R&d Management. 44(3). pp.237-247.
  • Carayannis, E. G., Sindakis, S. and Walter, C., 2015. Business model innovation as lever of organizational sustainability.The Journal of Technology Transfer. 40(1). pp.85-104.
  • Van Lancker, J., Wauters, E. and Van Huylenbroeck, G., 2016. Managing innovation in the bioeconomy: An open innovation perspective.Biomass and Bioenergy. 90.pp.60-69.
  • Talukder, M., 2016.Managing innovation adoption: from innovation to implementation. Routledge.
  • Saebi, T. and Foss, N. J., 2015. Business models for open innovation: Matching heterogeneous open innovation strategies with business model dimensions.European Management Journal. 33(3). pp.201-213.
  • Frow, P. and et.al., 2015. Managing co‐creation design: A strategic approach to innovation.British Journal of Management. 26(3). pp.463-483.
  • Carlborg, P., Kindström, D. and Kowalkowski, C., 2014. The evolution of service innovation research: a critical review and synthesis.The Service Industries Journal. 34(5). pp.373-398.
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