BSE Assignment 3

Case: Driving the Future: How Autonomous Vehicles Will Change Industries and Strategy

Name: Pournima Gaikwad

Roll No.: M2018HRM039

Q1. What do you think about the trend towards autonomous vehicles (AVs)? Is it decisive and
irreversible? Why or why not?
Ans:
Trends have moved favourably in the direction of autonomous vehicles. According to the WEF
autonomous vehicle taxi will be trending in 2019; it mentions that ewer overall units of

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automobiles will be produced and sold because AV’s encouraging sharing. However multiple

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advantages are mentioned about the self-driving vehicles right from saving time, shared use of

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resources, increased efficiency, increased safety and security and many more. Some studies suggest

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that driver-less cars will not become mainstream on the majority of roads globally in the immediate
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future. The most likely adoption settings may be in closed environments such as university
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campuses, airports, golf courses, holiday parks and retirement villages. This is suggested that mass
consumer won’t be the target audience for the AV’s at the first instance, several researches and
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market study have to be conducted to find out the segment of consumers who will be comfortable
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in using the AV’s at the first place, thereby building trust in other consumers to follow the same.

No, it is not irreversible because the growing technology and advancements can provide consumers
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with the AV’s but it’s the adoption rate which determines the success, hence if the positioning of
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AV’s and early results predicts the non-success, then the trend towards the AV’s can be reversible
with certain manual controls and semi automation rather than totally automated vehicles.
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Q.2 Choose an industry you understand and explain how autonomous vehicles might impact
that industry. Think about a to-be new opportunity that AVs enable and briefly explain your
idea using Kim and Mauborgne's Eliminate-Reduce-Raise-Create Grid.
Ans:
Many costs and benefits will depend on how autonomous vehicles affect total vehicle travel. They can
increase vehicle travel in some ways, and reduce it in others. Example fleet services industry. The
fleet operating services like Ola, Uber will get impacted badly because of the emergence of
Autonomous Vehicle resulting in unemployment in this sector. But this shock will not be that sudden
as there is still lots of R&D going on in this new technology. Also, the cost of R&D is high as

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 Autonomous Vehicles Development is at nascent stage. Some of the direct impacts are – Increased
vehicle travel by non-drivers. Increased convenience and productivity increases travel. Empty vehicle
travel to drop off and pick up passengers Encourage sprawled development. Reduces traffic
congestion and vehicle operating costs, which induces additional vehicle travel. More convenient
shared vehicle services allow households to reduce vehicle ownership and use. Shared autonomous
vehicles reduce vehicle ownership. Self-driving buses can improve transit services. Reduced traffic
risk and parking facilities can make urban living more attractive. Reduce some vehicle travel, such as
cruising for parking.

Kim and Mauborgne's Eliminate-Reduce-Raise-Create Grid.

By the four-activity system and value curve and problematic development models, the
outcomes point to the entry of "another" vehicle idea that incorporates: distinctive proprietorship

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frames; leisure time for clients (no driving required); "infotainment"; social joining of senior and

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impaired individuals; taking all things together, factors that will cause the termination of certain

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business sectors and production of others. The AVs' value curves show various attributes when

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contrasted with traditional vehicles, being the fundamental components to be diminished: human
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intercession; possession; related administrations and mishaps. The components to be wiped out are:
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vehicle segments like controlling haggle; back view reflects; driver's permit need; driver's risk just as
the way that driving sensations and driver's power over the vehicle will in general vanish. It is
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additionally examined about the vehicle's business condition and related administrations that may blur
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away, for example, vehicle vendors, driving schools and corner stores. Then again, perspectives, for
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example, comfort, unwinding, driving smoothness and timing proficiency will be raised just as there
will be seen the making of another utilization of the time, reconfiguration of the structure and the
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versatility for different spectators. When dissecting the new incentive of the self-ruling vehicles we
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understand that, truth be told, these vehicles have in their plan of action a few qualities that fit them
into another market viewpoint, a 'blue sea' contrasted with the ebb and flow picture of Trad Vehicles.
It merits referencing that for AVs, the value curve is considerably increasingly unmistakable from the
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Trad Vehicles' curve, since other than having every one of the ascribes identified with the innovative
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issues of the vehicle, it is important to consider every one of the credits identified with the execution
of this vehicle in the market as an administration and not an item.

Q.3) Use autonomous vehicles to discuss the industry's evolution, the roles of different
players, and the shift in the profit pool.
Ans:
The need for autonomous vehicles was first realised in 2001 when the US Congress mandated that
one-third of all military air and ground vehicles should be unmanned by 2015. In order to achieve
this feat, DARPA announced a series of challenges for technologists to participate in to ensure that

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 the best minds were incentivized to create unmanned vehicle technologies. In the 2007 Urban
Challenge by DARPA saw the first three winners coming from Carnegie Mellon, Stanford and
Virginia Tech in that order. Companies such as Ford, Mercedes and Tesla are racing to build
autonomous vehicles for a radically changing consumer world. Ford, for instance, recently tripled
its investment in its autonomous vehicle fleet and is testing 30 autonomous Ford Fusion hybrids in
California, Michigan and Arizona.
Automated vehicles will cause an initial surge in new and used car sales, estimated at $600 billion a
year globally, but sales could drop significantly once it becomes possible for unmanned cars to be
summoned via an app and shared by multiple people (Source: Study by Protiviti). Parallel with this,
there will be a market for technology designed to retrofit vehicles with self-driving abilities. The
profit pool will move towards the tech-driven companies while the traditional units will lag.

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Q.4) Is autonomous driving technology a Blue Ocean opportunity? Why or why not?

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Ans:

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Taking into account the market condition of the automobile industry in India and around the world,

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the surge of technology and the breakdown of barriers to international market, a point of saturation is
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inevitable in the near future. Niche markets and monopoly havens are continuing to disappear, with
the availability of multiple options in car purchase. Therefore, in order to bring a radical change that
would not only deliver distinguished value to the consumer but also create a new need, autonomous
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driving technology will be a new blue ocean market in the red ocean of conventional passenger
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vehicles.

In many economies, both developed and developing, the car sales have witnessed a sharp decline in
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the last two quarters with the advent of alternatives to transport like cab-aggregating platforms. With
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the global economic decline coupled with the rising prices of fuel, the sentiment for purchasing
personal vehicles has been low. Therefore, the automobile industry is facing a situation of high supply
and low demand. In such a competitive market for boosting sales, the existing players are waging a
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price war with a hit on profit margins in attempts to capture customers’ attention. The arrival of
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autonomous vehicles, bring with them technological innovation but also a solution to the various
other woes (needs) of the consumer. With electrical autonomous vehicles, the expenditure on
expensive fuel will be saved, the opportunity to use the free time during transit, the promise of safety
will help the user and provide a better user experience. Thus, the utility of an autonomous vehicle
technology is very different from a conventional vehicle technology, creating an uncontested market
space which makes the existing competition irrelevant.

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 Q.5) What, if anything, is the difference between technology invention and value innovation?
Ans:
Technological leadership may not always culminate into value innovation and it is not the sole factor
for having a successful market strategy. Organizations may end up pushing products in the market that
are too ahead of its time or too complicated. Without a sustainable, complementary ecosystem,
technological invention seldom create value. An organization can thus create blue oceans, with or
without technological inventions but not without creating desirable value, and thus by making
competition irrelevant.

Instead of focusing on competing in the existing market space, value innovation focuses on breaking
the existing barriers in the market by creating an incremental value for the buyers such that the

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competitors are left behind. Thus, value creation anchors not on how innovative the technology is but

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the added value it gives to the buyer. It is concerned about how to make buyers lives simple,

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productive and safe. To shift from red oceans to blue oceans, it is imperative that the organizations

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focus on value creation in order to expand its horizons of growth.
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For example, Motorola’s Iridium. While the innovation was a technological innovation which reached
in the far and wide, but failed to make its mark in the corporate zone since it did not work in
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buildings. Similarly, while Kodak was a market leader in photography, the market was overtaken by
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the digital camera wave brought in by competitors like canon, which rid people the of the time
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consumption and quantity limit of camera rolls. Thus, more often than not, Blue Ocean strategy is
more about creating the value in the market, rather than the speed or making the first move in the
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market.
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Q.6: Use AVs to illustrate the difference between disruptive innovation and Blue Ocean
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Strategy, and to discuss a growth model in terms of a market-creating strategy.

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Ans:

The contrast between disruptive innovation and Blue Ocean Strategy, especially regarding a market-
making technique, are as follows:

1. Market Creation Strategy: A disruptive innovation does not necessarily create a new market need.
It serves in the current market limits, serves a similar client base, it simply has a technological
advancement. For example, Mac PC by apple. For e.g., the Macintosh PC served in a similar PC
advertise, however gave an actually propelled item, which beat the contenders. In Blue Ocean
technique the association makes another market for its item, making the challenge insignificant. For

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 instance, iPad by Apple, for this situation the Mac did not battled in the Personal PC showcase or the
Smartphone advertise. It made another market segment and thus created a new demand.

On account of AV, we can say that it is a blend of Blue sea technique and a troublesome development.
From one viewpoint it has made a specialized achievement by making the vehicle computerized at the
other hand it has taken advantage of the vehicle leasing business.

2. Demand: A problematic development really pursues the interest. Client might require a most
progressive form of the item, a proficient item, and so on. The innovative disturbance just satisfies the
clients' current requests with another item. For example, presentation of Colour T.V., it was anything
but another item, it was a mechanically new form of the old item. In Blue Ocean procedure the
association makes new requests outside the conventional market space for the item. For example,
iPhone was not just a Smartphone, it was likewise a Walkman and a camera all implanted into one
item.

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On account of AV, we can say that it has not made another interest, it has tapped on the current interest

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of the clients from various market fragment Car proprietors and Car leasing.

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3. Rivalries: A disruptive innovation may race in front of the rivals in the market however at some
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point or another the challenge will make up for lost time. Different organizations will emulate the
innovation and the sea will be again red-a merciless challenge field. For instance, in the cell phone
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showcase, however Apple was a pioneer once, its matchless quality is being tested by Samsung and
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different brands. In Blue sea procedure the association has the main mover advantage and the
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contenders won't probably make up for lost time with the primary mover. For instance, in the iPad and
iPod showcase Apple is still market pioneer. On account of AV, we can say that at some point or
another the challenge will develop here too.
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