The integration of the automobile supply chain: new competitive forms and ICT

The international automobile industry has been featuring for over a decade a structural excess capacity with respect to international demand. Such excess capacity can be estimated at about 20%, albeit with significant differences among the various automobile makes and the various models. Given the high amount of investments and fixed expenses that automakers must carry out, such unbalance between demand and supply generates a very high competitive tension which on the one hand pushes automakers to heavily invest in markets with a stage of first motorisation (Brazil, China, India, Eastern Europe, etc.) by developing the complex and articulated phenomenon which is usually referred to as globalisation, and on the other hand it pushes them to carry out new strategies in mature automobile markets (USA, Japan, Western Europe) looking for solutions capable of satisfying a replacement demand with more and more demanding customers both on the product side (product innovation) and on the commercial services side (Customer Satisfaction Management- CSM), but through solutions capable of containing and, if possible reducing, the total costs hence the prices (organisational and process innovations)1. This paper focuses almost exclusively on the initiatives unfolding in the most developed markets, since the process of entry into emerging markets, albeit important on the quantitative side, it is less relevant with respect to strategy, given that it largely reproduces schemes already developed in the past in markets which have become mature

The integration of the automobile supply chain: new competitive forms and ICT

The international automobile industry has been featuring for over a decade a structural excess capacity with respect to international demand. Such excess capacity can be estimated at about 20%, albeit with significant differences among the various automobile makes and the various models. Given the high amount of investments and fixed expenses that automakers must carry out, such unbalance between demand and supply generates a very high competitive tension which on the one hand pushes automakers to heavily invest in markets with a stage of first motorisation (Brazil, China, India, Eastern Europe, etc.) by developing the complex and articulated phenomenon which is usually referred to as globalisation, and on the other hand it pushes them to carry out new strategies in mature automobile markets (USA, Japan, Western Europe) looking for solutions capable of satisfying a replacement demand with more and more demanding customers both on the product side (product innovation) and on the commercial services side (Customer Satisfaction Management- CSM), but through solutions capable of containing and, if possible reducing, the total costs hence the prices (organisational and process innovations)1. This paper focuses almost exclusively on the initiatives unfolding in the most developed markets, since the process of entry into emerging markets, albeit important on the quantitative side, it is less relevant with respect to strategy, given that it largely reproduces schemes already developed in the past in markets which have become mature

Strategy Innovation as Business Model Reconfiguration

Strategy innovation gained popularity during the 1990s as a notion applying to firms that reinvented competition in an industry. Throughout the 2000s business model innovation drew much of the spotlight. The key traits of both these concepts (and how they relate to each other) are often implicit or unclear. Through a literature review and by applying the key elements to some innovative firms for illustrative purposes, this paper discusses the emergence of the notion of strategy (and business model) innovation aiming to bridge these concepts while identifying their basic constituents. Successful firms manage to envision and implement new combinations along different routes, but always exploiting the complementarities through self-reinforcing mechanisms. Finally, the paper argues that strategy innovation triggers the need to broaden the interpretative schemes in the field of strategy, as it resembles more an art than a science

Automotive Distribution at the Gates of Change: Towards New Architectures

The automotive industry has been long adopting a selective distribution scheme in sales and service featuring an architecture of vertical quasi-integration. Growing competition and the need for efficiency have triggered a process of downstream consolidation, while digitalization has been impacting retail by enabling new forms of coordination. In this context some automakers are driven to reshape the distribution architecture gaining more control mainly through an agency approach. However, its application may be more challenging than expected, making room for hybridization and co-existence of many strategies

Dealer Group Trends in Europe

This report provides and overview of dealer groups in the four major European markets (France, Germany, Italy and UK) and the Netherlands. Given the growing interest in this topic ICDP has decided to investigate the issue, although on a smaller scale than other mainstream studies (as for example new car supply and parts systems) (...). Research has highlighted considerable variations, both by market and within markets; hence there is no single group model emerging. In general, dealer groups of larger size, holding many franchises and operating many outlets, tend to show a lower profitability than their smaller counterparts. On the whole, the most robust approach to date is to increase scale while minimising complexity and maintaining focus (...