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Module 6-1 Milestone Two: Strategic Plan Ramel Myles Thomas MBA-580-Q2747 Innov/Strat High-Perform Orgs 23TW2 Professor Paul Markham 01/05/2024

Competitors’ Relative Strengths In the current market, Volkswagen has emerged as the frontrunner with a significant market share of 8.76%. Toyota follows closely behind 8.53%, while our company holds a respectable position at 5.80%. BMW lags slightly behind with a market share of 3.91% (Figure 1). However, looking ahead to the year 2030, cautionary signals are evident in terms of our company's future growth and that of our competitors. While Volkswagen maintains its lead by experiencing modest growth from 8.76% to an estimated figure of around9.00%, the remaining players in this arena face challenges as their growth prospects diminish (Figure2). Toyota is expected to witness a decline from its current market share down to approximately; conversely, our own shares will experience even steeper regression by decreasing by percentage outstretching level of. Similarly, BMW also faces a downturn as its market share will decrease from competitors. Despite these apprehensions surrounding our company and other competitors, it’s crucial to understand that the dynamicnatureofthemarketensuresconstantfluctuationsinsharesubsequently, influencing in dividual positions Thus, this predicament calls for comprehensive analysis and strategical adjustments to secure a more favorable position within this competitive industry. Volkswagen currently dominates the connected cars and trucks market, holding a significant share of 15.50%. In second place is Toyota with 8.90%, followed by our company at 7.10%, while BMW falls behind with only a 3.00% market share (Figure 3). However, when we analyze the projected market shares for connected cars and trucks in 2030, there seems to be a decline across most competitors including ourselves. In this forecast scenario, Volkswagen still manages to maintain its lead but experiences a decrease of about 2.45% bringing their market share down to around13.19%. Toyota secures the second position with an anticipated drop of merely 0.28% resulting in an estimated market share of approximately 8 .62 %. On the other hand, BMW rises slightly, gaining just 0 .07 %, placing them third overall at around 3 .07 % of the predicted Market Share. Frustratingly enough, it appears that our company takes a drastic fall from grace as we bear witness to plummeting from second place to last, losing unsettling 5 .12 % of the forecasted market share. This leaves us with an average of 1 .98 % (Figure4). Volkswagen anticipates a compound annual growth rate (CAGR) of 4.30% for cars and trucks in the upcoming decade, while Toyota expects a slightly lower CAGR of 3.90%. BMW foresees a CAGR of 3.70%, whereas our company's projected growth stands at 3.10% (Figure 9).

On the other hand, when it comes to connected vehicles, BMW envisions an impressive CAGR of 25.50%, followed closely by Toyota with their expected growth rate reaching up to 24.80%. Volkswagen estimates its CAGR to be around 23 .20 %, whereas our company has set more modest targets with a predicted increase of merely10 .20 % over the same timeframe (Figure 10). Our company’s market share The car and truck market share of our company is disappointingly second-to-last when compared to our competitors. Currently, we hold around 5.8% of the market share, which puts us behind Volkswagen by 2.96% and Toyota by 2.73%. However, we are ahead of BMW by a margin of 1.89% (Figure 1). A similar pattern emerges in the connected cars and trucks market shares as well. Our company's market share stands at 7.10%, once again placing us second-to-last with BMW trailing behind us by 4.1%. In contrast, Volkswagen enjoys an advantage of 8.4% over us, while Toyota has a lead of 1.8% (Figure 2). Looking towards the future, there is cause for concern regarding the projected market share for cars and light trucks in the year 2030. It indicates a modest decline from our current position of 5.8% to approximately 5.28%. The outlook is even more disconcerting for connected vehicles as it forecasts a significant decrease in our present market share of 7.1% to a mere fraction of that at just 1.9%. One major contributing factor to this decline can be attributed to the absence of technological innovation within our company coupled with our focus on incremental improvements in connected cars technology alone. In comparison, our competitors have forged strategic technological alliances that provide them with a competitive edge in meeting consumer demands for enhanced connectivity features in their vehicles. To remain competitive and reverse this trend, it would be prudent for us to reconsider our existing partnership with Toyota and Waymo while exploring potential collaborations with industry leaders such as Microsoft who possess comparable resources.

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Additionally, transitioning from an incremental innovation strategy to one centered around disruptive breakthrough will position us favorably to either maintain or increase our market share within the realm of connected cars ( Is it real? can we win? is it worth doing?: Managing risk and reward in an innovation portfolio 2015). By realigning ourselves strategically and augmenting our technological capabilities through a partnership with Microsoft, we can unlock the untapped growth potential of our company. On the contrary, when examining the market share analysis, it becomes evident that the company's financials fail to mirror its performance accurately. While our annual revenue of $187 billion is commendable, both our operating and net incomes fell considerably short in comparison to our rivals (Figure 5). Furthermore, although our balance sheet appears satisfactory, there is a notable discrepancy in terms of equity level when compared to our competitors (Figure 6.1). Consequently, this disparity highlights the necessity for securing supplementary capital in order to effectively execute vital transformations essential for maintaining competitiveness within the connected vehicles market. Potential Total Available Market (TAM) According to the comparative growth data, the total available market (TAM) for cars and light trucks reveals different figures for various companies. Our company is positioned at $187.10 billion, BMW at $126.10 billion, Toyota at $275.40 billion, and Volkswagen at $282.90 billion (Figure 7). On the other hand, when it comes to connected cars and light trucks, our company's TAM amounts to $3.83 billion while BMW's stands at $1.62 billion; Toyota holds a value of around$4 .80billion whereas Volkswagen leads with approximately$8 .36billion (Figure 8). Both product TAMs emphasize that Volkswagen secures its position as the leader in both markets followed by Toyota, our company ranks third leaving behind BMW. Moving on towards future projections, the compound annual growth rate (CAGR) for cars and light trucks over ten years showcases varied rates among these businesses. Volkswagen exhibits a CAGR of 4:30% closely pursued by Toyota with a percentage of 3 :90%BWMranks next with a CAGR of 3:70%, and finally our company attains a predicted growth rate of approximately. The projected CAGR for IoT-connected cars and light trucks portrays an interesting picture in the upcoming decade. BMWtakesleadwithasignificant25:50%CAGR, followed Toyota at 24:80%. Volkswagen secures their place approximate 23 :20 % while our company achieves a still respectable figure of ap proximately10 :20% (Fig ure1 0 ). However, this analysis takes a

different turn as a result of the recent announcement made by BMW regarding their plans to launch fully automated cars in years. When analyzing the data, it becomes evident that Volkswagen has emerged as a formidable and rapidly expanding contender. It is worth noting that despite this impressive growth, there is one aspect in which Volkswagen falls short compared to its competitors - namely, the projected annual growth rate (CAGR). However, when examining its financial standing with revenues amounting to an impressive $282.9 billion, it becomes apparent that Volkswagen holds a position of strength within the market share realm, surpassing all other companies in this regard. Changes in Business Conditions If our customers exhibit a sluggish response towards our groundbreaking innovation, it is imperative for us to ascertain the underlying cause by actively seeking customer feedback. Once we have successfully pinpointed the gap in their satisfaction, we can then recalibrate our strategic approach to align more closely with their evolving demands. As part of our chosen methodology which combines elements from both stage-gate and lean innovation management processes, each phase will involve a series of brief, yet expeditious experiments aimed at swiftly launching prototypes while incorporating valuable input derived directly from customers. By adopting this hybrid model, we are able to expedite the introduction of radical innovations into the market whilst minimizing potential risks. Should one competitor begin outperforming all others, including ourselves, it becomes imperative for us to employ an effective technique known as quality function deployment (QFD). This method facilitates seamless communication between engineering units, production teams and marketing departments; enabling them collectively translate customer requirements into actionable development directives. Through QFD's incorporation of novel measurement criteria along with reference points drawn from competitor benchmarks and specific client specifications- target values can be established accordingly. The inclusion of customers within this process fosters adaptability within product concepts if necessary; ultimately leading to enhancements or even differentiation in future iterations. Concept Outline to Launch Our focus will be on allocating investments towards various aspects of our operations, such as research and development, technology advancements, marketing strategies, and recruitment of skilled personnel ( Competitive benchmarking: What it is and how to do it 2018) To ensure a comprehensive business plan that covers all necessary areas for success, we will conduct an initial market assessment along with in-depth studies. Additionally, customer

engagement initiatives will play a pivotal role in understanding their needs and preferences. We aim to analyze financial resources at hand and allocate them effectively while taking into account the availability of other essential resources. Furthermore, it is imperative for us to identify the existing knowledge base within our organization along with assessing its capabilities. A thorough risk evaluation shall also be conducted so that adequate measures can be taken to mitigate any potential setbacks or challenges (Johansson, The Medici effect: What elephants and epidemics can teach us about innovation: With a new preface and discussion guide 2017) The commitment from senior leaders who share a clear vision is crucial for aligning organizational goals towards innovation-driven growth. Facilitating information exchange among different departments and encouraging collaboration amongst cross-functional teams will foster synergy throughout the company's journey. To streamline our product innovation process efficiently while ensuring competitiveness in the market landscape; we propose implementing a hybrid approach combining stage-gate methodology with lean innovation management processes. This integrated framework aims not only at expediting time-to-market but also maintaining quality standards from inception till product launch through meticulous planning (Cooper, Winning at new products: Creating value through innovation 2011).

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Figure 1: Market Share Percentage for Cars & Trucks – Now (Carlier, Major car manufacturers' U.S. YTD market share 2023) Figure 2: Market Share Percentage for Cars & Trucks – 2030

(Carlier, Major car manufacturers' U.S. YTD market share 2023) Figure 3: Market Share Percentage for Connected Cars & Trucks – Now (Carlier, Major car manufacturers' U.S. YTD market share 2023) Figure 4: Market Share Percentage for Connected Cars & Trucks – 2030

(Carlier, Major car manufacturers' U.S. YTD market share 2023) Figure 5: Competitors Financial Comparison (Car lier, Major car manufacturers' U.S. YTD market share 2023)

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Figure 6.1: Competitors Balance Sheet Comparison (Car lier, Major car manufacturers' U.S. YTD market share 2023) Figure 6.2: Competitors’ Human Capital

Figure 7: Annual Cars & Light Trucks revenue TAM – 2030 (in billions) Figure 8: Global Market for Connected Cars & Light Trucks TAM (in billions) ( Competitive benchmarking: What it is and how to do it 2018)

Figure 9: Cars & Trucks CAGR over the next 10 years Figure 10: Connected Cars & Light Trucks CAGR over the next 10 years

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References Competitive benchmarking: What it is and how to do it . Brandwatch. (n.d.). https://www.brandwatch.com/blog/competitive-benchmarking-defined-how-to-do-it/ Cooper, R. G. (2011, July 12). Winning at new products: Creating value through innovation . Google Books. https://books.google.com/books/about/Winning_at_New_Products.html? id=HjG2pZ0J0_c Is it real? can we win? is it worth doing?: Managing risk and reward in an innovation portfolio . Harvard Business Review. (2015, July 16). https://hbr.org/2007/12/is-it-real-can-we-win- is-it-worth-doing-managing-risk-and-reward-in-an-innovation-portfolio Johansson, F. (2017). The Medici effect: What elephants and epidemics can teach us about innovation: With a new preface and discussion guide . Amazon. https://www.amazon.com/Medici-Effect-Elephants-Epidemics-Innovation/dp/1422102823 Carlier, M. (2023, December 19). Major car manufacturers’ U.S. YTD market share . Statista. https://www.statista.com/statistics/343162/market-share-of-major-car-manufacturers-in- the-united-states/

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