6-1 Milestone Two Strategic Plan

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6-1 Milestone Two: Strategic Plan Stacia Benton Southern New Hampshire University MBA 580 Innov/Strat High-Perform Orgs January 18, 2024

2 6-1 Milestone Two: Strategic Plan Competitors’ Relative Strengths Figure 1.1: Cars and Trucks Comparative Growth Figure 1.1 gives us a broad overview of the market share of our company and our competitors in the car and truck industry. The figure compares the market share that we have now compared to the market share that we and our competitors are expected to have in 2030. Specific to car and trucks (not connected), our competitors market share is as follows:  Volkswagen currently holds 8.77% of the market share, with an anticipated growth to 9% in 2030  Toyota currently holds 8.54% of the market share, with an anticipated decrease to 8.42% in 2030  BMW, which currently holds about 3.91% of the market share now is anticipated to decrease to 3.77% in 2030 ( MBA 580 Comparative Growth Data , n.d.)

3 6-1 Milestone Two: Strategic Plan Figure 1.2: Connected Cars and Trucks Comparative Growth Figure 1.2 provides us with the same broad overview of comparative growth for us and our competitors but for the connected cars and trucks segment of the industry. Overall, each of our direct competitors are expected to see a decrease in market share in the connected car and truck industry in 2030 compared to its market share now, while our company is expected to see a small increase. The other players in the market collectively are expected to gain more market share by 2030.  Volkswagen is expected to see a decrease from 15.5% to 13.2% in 2030  Toyota, which currently holds 8.9% in market share is also expected to see a decrease to 8.6%  BMW currently holds 3.7% in market share in connected cars and trucks but is expected to see a decrease to 3.1% in 2030  The Global Market minus our company and the above-mentioned competitors currently hold 65.5% of the market share but is expected to grow to 73.3% in 2030 ( MBA 580 Comparative Growth Data , n.d.) While reviewing our competitors’ comparative growth, we must also consider each competitor’s current financial standing. Volkswagen, our strongest competitor, is currently operating with a revenue of $282.9 billion and a net income of $16.1 billion. BMW is currently operating with a revenue of $126.1 billion and a net income of $6.1 billion. Toyota, who brings in more income overall, is sitting at $275.4 billion in revenue dollars and $19.7 billion in net income. Toyota also has more equity and a larger gap in assets and liabilities, making Toyota the stronger performer financially. ( MBA 580 Comparative Operating Statistics , n.d.)

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4 6-1 Milestone Two: Strategic Plan Company’s Market Share Currently, our company is losing market share in the non-connected cars and trucks industry when we compare the market share now to that of 2030. Our company holds 5.8% of the market share. In 2030, we anticipate having 5.29% of the market share. While the decrease in market share may seem insignificant, it does not reflect the goal of the company to become a leader in the industry. When we review the market share data for connected cars and trucks, we currently hold a market share of 7.1%, third behind VW and Toyota and we anticipate having 5.29% of the market share in 2030 ( MBA 580 Comparative Growth Data , n.d.). Just as our direct competitors, we anticipate a decrease in market share in the connected cars and trucks industry due to the increase share from the global market. This could potentially mean that there are new players entering the industry that have homed in our IoT and have found faster, more cost efficient and more appealing ways to innovate their vehicles that have increased their sales and market share. According to Fleet Management Weekly, Hyundai, Kia, Ford, and Continental are becoming more diverse in their innovation and are poised to make an impact in the connected car and truck industry in the future (Shedron, 2023). As new companies enter the connected car and truck industry, this may pose a threat to our company, however, there is much opportunity for us to grow and expand through increased innovation efforts. Compared to our closest competitor BMW, we are projected to surpass them in sales in non-connected cars and trucks over the next 10 years, while we still have a way to go in connected cars and trucks. Financially, compared to our competitors, our company is third in revenue behind VM and Toyota, bringing in around $187 billion in revenue, but we are last in net

5 6-1 Milestone Two: Strategic Plan income, at $900 million. Our company is also last in shareholder equity at around $39.9 billion. Overall, our competitors are finding ways to perform better than us financially. Available and Potential Market Total available market, also known as total addressable market or TAM, can be best described as the “revenue opportunity available for a specific product or service in a given market if 100% of the market were captured” (Olennikova, 2022). For the purpose of this report, we will look at the TAM of cars and light trucks as well as IoT-connected cars and light trucks. The TAM for cars and light trucks in 2020 for the global market is $3.2 trillion. Our TAM for cars and light trucks is $187.1 billion, while our competitors BMW, Toyota, and VW have a TAM of $126.10 billion, $275.40 billion, and $282.0 billion respectively. The global TAM for IoT-connected cars and light trucks is $53.9 billion. Our company’s TAM for connected cars and light trucks is $3.83 billion. Our competitor’s TAM is as follows: BMW-$1.62 billion, Toyota- $4.8 billion, VW-$8.36 billion. The global market’s projected compound annual growth rate over the next 10 years is 4.10% for non-connected cars and light trucks and 25.20% for IoT-connected cars and light trucks. Our company’s projected CARG for non-connected cars and trucks and connected cars and trucks is 3.1% and 10.2% respectively. Our fastest growing competitor for cars and light trucks is VW, which is expected to see an annual growth rate of 4.3% over the next 10 years. However, for IoT connected cars and light trucks, our fastest growing competitor would be BMW. BMW’s projected CAGR is 3.7% for non-connected cars and light trucks, but the company’s projected CAGR for IoT-connected vehicle is 25.5% over the next 10 years, just ahead of Toyota who is expected to see a CAGR of 24.8% for the same ( MBA 580 Comparative Growth Data , n.d.). While VM would still hold the most market share and bring in the most

6 6-1 Milestone Two: Strategic Plan revenue, they are slightly behind Toyota in CAGR for connected vehicles at 23.3%, making BMW the company to watch in terms of growth potential. Change in Business Conditions So, what we would need to do should our customers be slow to respond to our innovation ideas? First, we need to understand why the customers are hesitant or resistant to the innovation. According to Mani & Chouk, 2018, this resistance can be caused by a number of reasons, including value barriers, ease of use, digital barriers, risk barriers, privacy and confidentiality reasons and the fear of replacing the human element of certain services (Mani & Chouk, 2018). For our company, that means we must remain flexible and adapt to consumer responses. If indeed customers are slow to buy our newly innovated vehicles, we must prepare in how we market the product and display the new line of vehicles. This is another reason why it is key to have our marketing teams on board and they are flexible as well. Let’s consider Apple products. Apple does a phenomenal job in its Apple store and retail partner in displaying new products and providing a hands-on experience for customers prior to them making a purchase. It would be the same for our company and our newer vehicles. We must prepare our marketing team and dealers to provide an hands-on experience so that our customers are able to understand the full benefit of IoT connected vehicles. Another option, while not the best option for the long-term, would be use “initially low prices to woo early adopters, whose presence can reduce the anxiety felt by holdouts ”, then markup pricing later on as sales increase (Kmenke, 2021). Not only does this ease resistance to innovation, it also helps when one of our competitors is overtaking all of the others, including us. If we offer this new and exciting innovation early on at a lower price compared to our competitors, we will not only gain more buy-in from our consumers, it is also possible for us to

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7 6-1 Milestone Two: Strategic Plan gain more market share over some of our closest competitors; all the more reason for us to introduce IoT technology that is unique to our company and adds value for our customers. Concept to Launch While we currently have some connected services in our vehicles, we are looking at a large size development, year over year, that will be required in order for us to compete adequately in the connected vehicle industry. Our competitors have been ahead of us for some time and are projected to maintain their place in the market. It is important for us and the success of the company to introduce game-changing technology into our vehicles, and this is by far the largest development that we will take on thus far. The research and development process will be paramount to the success of implementing IoT technology into our cars and trucks. We will need to inves into the R&D department and determine which suppliers and providers we will need to use. We will first begin with the resources that we have available now prior to reaching out to third parties and looking for talent outside of the organization. Not only is this cost effective but it places a higher value on the confidence we have in the teams we have in place now. While additional capital and personnel may not be an immediate need or requirement, it may become necessary, especially if our original concept is falling short of anticipated results and feedback suggests we need more in order to stand out above our competitors. As far as determining an appropriate timeline, we will want to consult with our cross functional teams consisting of R&D, production, and marketing to set clearly defined and attainable goals from the beginning of development to product launch. Considering that our competitors are looking to introduce new products and services into their vehicle fleet, the timeline that we are looking at in order to compete with them is about 18 months. As technology

8 6-1 Milestone Two: Strategic Plan changes at a rapid pace, we must plan to be agile in our process, and should we need to, we must be able to ramp up the innovation and production process as well. References Kmenke. (2021, February 24). Attracting early adopters: Best way to overcome consumer resistance to innovative products . UCLA Anderson Review. https://anderson- review.ucla.edu/innovative-products/ Mani, Z., & Chouk, I. (2018). Consumer Resistance to Innovation in Services: Challenges and barriers in the Internet of Things era. Journal of Product Innovation Management , 35 (5), 780–807. https://doi.org/10.1111/jpim.12463 MBA 580 Comparative Growth Data . (n.d.). SNHU MBA 580. https://learn.snhu.edu/content/enforced/1445143-MBA-580-Q2747-OL-TRAD- GR.23TW2/Course%20Documents/MBA%20580%20Comparative%20Growth %20Data.xlsx?ou=1445143 MBA 580 Comparative Operating Statistics . (n.d.). SNHU MBA 580. https://learn.snhu.edu/content/enforced/1445143-MBA-580-Q2747-OL-TRAD- GR.23TW2/Course%20Documents/MBA%20580%20Comparative%20Operating %20Statistics.xlsx?ou=1445143 MBA 580 Sales Forecast . (n.d.). SNHU MBA 580. https://learn.snhu.edu/content/enforced/1445143-MBA-580-Q2747-OL-TRAD- GR.23TW2/Course%20Documents/MBA%20580%20Sales%20Forecast.xlsx? ou=1445143 Olennikova, Y. (2022, December 13). How to define your total addressable Market . N.Rich. https://n.rich/blog/how-to-define-your-target-addressable-market

9 6-1 Milestone Two: Strategic Plan Shedron, C. (2023, November 27). Internet of Things: Who are the leaders in intelligent In- Vehicle displays for the automotive industry? Fleet Management Weekly - Significant Industry News & Developments for the Management of an Automotive Fleet . https://www.fleetmanagementweekly.com/internet-of-things-who-are-the-leaders-in- intelligent-in-vehicle-displays-for-the-automotive-industry/

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