Mobileye is the company of Israel and in the 2014 this company introduced the driverless cars after doing a lot of research and work for 15 years. The Mobileye is the future of the automatic vehicles and the case study talks about the different situations the company is facing. The company was founded by Amnon Shashua and Ziv Aviram and the case study is all about the debates carry out between them.The case study explores the competitive position of the company and what are the challenges they are facing for its sustainability and to gain the competitive advantage. The case study also highlights some the facts of working with the Google, which is a publicly a leader of self driving developments (Citron Report, 2015).
As per the case study, the company is facing many challenges in order to sustain in the market and to gain the competitive advantage. The debate between the two partners Shashua and Aviram with regard to the future of the company. The problems or the challenges they faced are two. First one is related to the maintaining the stable pricing in the market. However, Shashua and the Aviram are confused with regard to retain the market share either by cutting down its prices or continue to operate at current prices. Secondly, the problem found in this case study is related to the role played by the google for self driving cars revolution. The google can be the competitor for Mobileye or the partner for the future success.
The research report is based on the following research questions:-
The research report is based on the analysis of the case study based on the future of the Mobileye and its Driverless cars. The aim and objectives of the research report are-
The structure of the report involves the different chapters. All the chapters demonstrate the case description, its analysis, review of literature and the solutions for the problem faced by the company. The different chapters of the research are as follows:
The case study explores the company’s current position and the challenges faced by the company. The effective approach to work with the Google also analyzed in this research report. The case study is all about the Mobileye company which is Israel based company and its headquarters are at Netherland. The Company Mobileye has emerged as one of the best companies in the field of the driverless cars. The company was in the business of the automobiles and after 15 years’ efforts put by the founders of the Mobileye led to the company growth by launching a self driving vehicle in the year of 2014 (Fischer, et al., 2016). The company was founded by Amnon Shashua and Ziv Aviram and there is debate take place between them.The case study explores the competitive position of the company and what are the challenges they are facing for its sustainability and to gain the competitive advantage. The case study also highlights some the facts of working with the Google, which is a publicly a leader of self driving developments.
Talking about the technology and innovation, the company used the latest technologies in these cars. The ADAS is the advanced driver assistance systems used in these cars which are helpful in the safety of the cars as well as avoid the accidents. There are many technologies or new innovative systems are used in these cars like LDW(Lane Departure warning), TSR(Traffic sign Recognition), FSW (Forward collision warning) etc. These systems are used in these cars to improve the safety. The founders admitted that the technology is the key factor that saved the lives of the people and the best way to drive the demand of the people. Except the technology, the Mobileye also focused on the different strategies to promote its driverless cars in the market of strong competition. The Partnership idea to work with google which a leader of the self vehicle cars, is an effective approach to be considered by the owners of the Mobileye (Markoff, 2013). The debate took place between the two partners Shashua and Aviram result into the two major challenges for the company. First one is related to the maintaining the stable pricing in the market to gain the market share as well as to compete in the market. However, Shashua and the Aviram are confused with regard to retain the market share either by cutting down its prices or continue to operate at current prices. Secondly, as per the discussion the Aviram is very much concerned to know the role played by the google for self driving cars revolution. The google can be the competitor for Mobileye or the partner for the future success. However, to find out the effective approach to work with the Google is the greatest challenge for the company like Mobileye.
Moving further, the whole case study talks about the journey of the Mobileye and its efforts to launch the driverless cars. The mission and vision of the Mobileyo are to do things differently and build its different image in front of the people. The journey of the Mobilelye starts with the introducing the camera and the Shashua and Aviram has their own theory that they can compete and deliver many functions with a single and low cost camera. The company started developing the automobiles with the facility of camera in the year of the 2000. Then in the year of 2002, the company introduced Pedesterain collision back and the Mobileye was the first company who launched a Pedesterian collision warning feature in the year of 2010 as well FCW in the year of 2011.
Talking about the financing and development of technology, the company also introduced the semiconductor chips called as EyeQ. These chips are the bundle of the software’s that include a camera as well as the warning display. Although, it took 14 years to the company for the promotion of the products as well as to make all these products profitable. In this case study, the role of Mobileye in the value chain also explained as the automobile industry is divided into 3 levels. Therefore, OEMs (original equipment manufacturers) is on the first and highest level as it includes the direct manufacturers like Toyota, General motors. The second level is tier 1 suppliers. The company Mobileye is the tier 2 supplier as the company generates its most of the revenue from the sale of semiconductor chips as well as the softwares. After working with all levels of the value chain like BMW, tier 1 suppliers and tier 2 suppliers, the company started serving at a larger market called the aftermarket option. In the year of 2007, the company sold its most of the product directly to the consumers at retail at a good price $400 to $500. The margin on these products were more than 50% (Litman, 2017). The aftermarket also generates a 22% of the revenue in the year of 2013 and 35% in the year of 2011 which is more than the 2013. The consumers and the government regulations are very open to the new technology especially the driverless cars. The reason behind this is that, it has been seen that the 90% of the accidents are due the failure and negligence of the drivers.
The case study talks about the coming revolution also and how these cars change or affect the economic growth of the country. At last, the Mobileye focused on the strategic pricing as well as on the strong competition. The case study also revolves around to find out the role of google and the real intensions of the Google. The partnership with Google obviously beneficial for the company, on the other if it will become the competitor, then it will be a big threat to the mobileye.
There are many researchers who shared their experiences with regard to the introduction of driverless cars. With the passage of time, if these cars perform well and their capabilities to work expand , then it will be obvious that business stop hiring people for their jobs and they start purchasing the cars instead of labor or drivers. For example- The human car drivers become of out of work when the Driverless cars will be able to load and unload the stuff from the trucks to the warehouses and there is also the possibility that the staff of customer service also replaced. Such developments and the advancement of technology put millions of humans out of work. If Driverless cars continuously replaced the human from jobs, then the unemployment will grow steadily. Then, if all these future estimation will come true, then it will be very difficult for the politicians to tackle with the increasing unemployment because of technology.
It is very difficult for the people to find out the solution of this problem. As there are many businesses that create jobs of drivers for the human beings, but they are not that much enough as they will replace with the Driverless cars. The companies or business like YouTube, Instagram and WhatsApp were not able to generate thousands of jobs for the humans. These companies also hired dozen of employees. Talking more about the fear of Driverless cars is that high tech jobs will also be out of reach for the people. Automation is very helpful for the poor community so that to make a proper use of the available resources in the economy of New Zealand. The revenue of the government also affected by the government artificial intelligence and self driving vehicles evolution. Moving further, the tasks performed by the automation are much more faster and accurate than the tasks performed by the human efforts. The artificial intelligence or Driverless cars used by the car makers in japan also believed that the work done by these new technology does not require any supervision and they complete its tasks in less time without any interruptions. As a result of which the companies and Many businesses start investing in the new technology rather than hiring employees in the company (KPMG, 2015). This shift of investment change the living as well as the working style of the people. Therefore the innovation and the artificial intelligence have already hit the every industry and it will become the essential part of the life of the human being over the 20 years. However, as per the research of the Oxford university, this revolution could put the workers at risk of being replaced by them the self driven vehicles revolution in 20 years and it estimated the percentage 35% of all workers in the UK, 47% in US, 42% in New Zealand and 45% in Australia. For example, in the year of 2014 the Google company already bought eight automation companies in just two months. This shows the fastest adoption of the technology by the large companies.
Moving further to some more articles and the point of view of the many other authors, there are many authors who talk about the Pestle analysis of the Mobileyo in building a driveless cars. First of all talking about the political factors, the government rules restrict the entry of the Driveless cars on the road. The automobiles companies like Mobileye need to eliminate the high end components from the cars to reduce the barriers of entry. These barriers are negatively affecting the business of the automobiles or self driving companies. Apart from this, the government is in full support of any innovation in automobile companies (Petrovic, et al., 2015).
Moreover, the economic conditions are very important to analyze before launching the product in the market. As the San Jose is the most stable place as their economic conditions are good and the driverless car’s development in the countries has shown the double growth. The current example of the automobile revolution can be seen in the San Francisco based company. This company is using the driverless cars that work used in the taxi services and that would do all the tasks. The tasks as a driver of the taxi include picking and dropping of the people from one place to another place. Talking about the economy of the US, then it represents 22% of nominal global GDP and 17% of gross world product. It is in top most countries currently and that is a good sign for any entrepreneur at this time. With more people returning to country life and increased awareness and sensitization towards the environment, more and more people are getting drawn towards these eco-friendly products. These driverless cars work similar to the human drivers. The load of work for the people is automatically reduced and there will be no physical activity need to be done by the people, which will create problems to the human bodies as an increase of the dependence on the technologies. Furthermore, technology is rapidly and perpetually changing. These days’ people are increasingly getting aware and conscious of their health and they want to perform the multi task at one time (Silberg & Wallace, 2012). The invention of driverless or self driving vehicle takes place to perform multiple activities at one time. And any of the innovation and improvement in this field will only affect the Automobile industries industry positively. This would only mean that people are more attracted towards the robots and but it is only for the easy life. As per the point of many researchers, the legal factors also need to be considered. There are many federal laws regulate the standards of manufacturing and safety requirements of these cars. Different states have different laws for these cars on the basis of their identity, type, maximum speed, maximum power, entry requirements, cost and license requirement. These have to be kept in mind and abided by at all times by the manufacturers and the users of these cars (Kornhauser, 2013).
This part of the report is related to the analysis of the case study and to determine the various factors that are beneficial for the Mobileye. The case study explores the different situations faced by the company and its founders and how they took the best decisions with regard to their problems. This chapter covers the different kinds of analysis like competitor analysis to gain the competitive advantage, Swot Analysis for competing with strong competitors. The decisions taken by the Aviram and Shushua will also be analyzed in this report.
There are a few major players in the automobile market currently who produce the self driving vehicles and a few smaller manufacturers who pose as competitors. The major driverless car manufacturing companies running currently include Tesla, Google and Waymo. The company is facing the strong competition in the market. All these companies have been in the market for 2 years or more and have a great hold over the market. They have strong distribution channels and reach. Where these companies fall short of being the promotion over social media. That is where we can get an edge above them and connect with the target audience.
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Strength · First company introducing the new technical ideas · High Margins of date like 50% on the products like primary camera and audio visual display of cars · Focused more on the product offerings · Strong portfolio of patents · Unique ideas and techniques · Technology based · Associated with the Tier 1 suppliers for the value chain management |
Weakness · Lack of profitability on the products · Uncertain about the future · Expenditures on the raw material · Maximum use of high end components in the driverless cars. · Not going to attract affluent class · Issues with the financial report accuracy and materiality. |
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Opportunity · Increased demand for the products by the OEMs (original manufacturing equipments) · Increased awareness of technology · The Future revolution of markets or industry to sell the Mobileye’s products. · Safety and technology mandate by the regulation of the government. |
Threat · Low cost aftermarket competitors. · RADAR, LIDAR are the alternative technologies that pose a threat to the Mobileye. · Government regulations on self driving vehicles · Business strategies of Google and tesla · The OEMs like Toyata, general motors acts as a competitor (Villasenor, 2014). |
Being a company, Mobileye is very open to trying new things and can experiment with the styles of promotion and connecting with the target market. Belonging to a tech savvy generation, the Mobileye have a better hold over the internet and thus have an edge over the competitors when it comes to online sales marketing and promotion. Also, being of the same age as most of our target markets, Mobileye can also have a better connect with them and can thus get more honest feedback helping us get better over time (Morgan Stanley, 2013).
In the beginning, the company will have a simple horizontal organizational chart and taking care of all the decisions being made. As company mobileye have designed the self driving cars and now it is an in charge of product procurement, order taking, customer service and other activities. As the company started growing in the future market and there are lots of chances to expand the business and to plan to have more organized, well-defined and dedicated departments, each working under the supervision of the head and performing the designated duties.
As it has been seen in the case study, the Avuiram and Shishua took the decisions very carefully for the future growth of the company. They always believe in choosing the best option for the company as there are many alternatives available in the market. Talking in the terms of technology, then the Aviram took two decisions. First strategic taken by them is to develop all the applications in one unit. The decisions taken on the basis of the analysis of the situation as the customers asked to have the lane departure warning , but the company has only one system application of collision warning system used to see the cars in front of the people to avoid the accidents. After that, Aviram took a decision to put all the application at one place to fulfill the needs of the customers as well as to earn profits from all the application at one. The second strategic decision took by the founders was to develop the own system chip. This decision taken when the suppliers of tier 1 missed the delivery of two orders and then Shishua and Aviram decided to have its own system chip (Kornhauser, 2013).
The decision making is the process of the choosing the best alternative by identifying the actual problem, gathering information and the assessing the information to choose the best one option.
The seven steps of effective decision making are as shown below: –
After analyzing the case study, it has been observed that there are many alternatives available for the Mobileye company to take the best decision. These alternatives are as follows-
Strategic partnership- It has been observed that the company was trying to figure out the real intentions of the Google. There are two views with regard to the Google, either is would be a partner for the Mobileye or it would be a strong competitor. After the long discussion of the Shishua and Aviram on the role of the Google and the differences and similarities in the Mobileye approach, they found that the google prototype was a model for its future cars. The strategic partnership may pose threat to the Mobileyo company. On the other hand, the company also has the other alternative available in the market and that is Tesla, which is performing and working with the Mobileye rather than the Google.
Pricing Strategies: There are three alternatives available for the OEMs pricing strategies and these are:
Aftermarket product offerings- The aftermarket options available for the Mobileye is to retain its high end products in the market like Camera sensor and the driverless cars with unique steering and innovative technologies and second one is to diversify the business from high end to the lower end to gain the profits.
After analyzing the case study, it has been found that the company needs to take the best decisions to build its image as well as to gain the market share. The findings of the research report are shown in the below diagram.
As it is found from the research and analysis, the company took the decisions to build the strategic partnership relations with the Tesla rather than Google to gain the competitive advantage in the global markets. The premium pricing strategies are adopted by the Mobileye as the company is already introducing the high tech softwares and techniques and there is no such a strong competition for the Mobileye as the products offered by the company are unique in nature. The founders should raise the strategic prices of the high end products to gain the market share and to make all the products profitable. Last option chosen by the company is the aftermarket diversification to compete in the global market and build its brand name in the field of the self driving vehicles (Kaur & Joshi, 2014). To sum up, all these decisions taken by the Shishua and Aviram are the best decisions and leads to high productivity of the company. The wrong decisions can adversely affect the performance as well as the productivity of the company. A one poor decision may slow down the working of the company. It is very difficult to analyze the results if one have chosen the wrong alternatives also. In short, the Mobileye and its founders playing a very important role in the success of the company. The decisions taken by the founders are very much helpful for the future of the company.
This chapter provides some of the recommendations for the problems or challenges faced by the company. The first and foremost important feature is to set the goals for the coming 10 years and then implement those goals to gain the competitive advantage and market share. Moreover, the other best method is to improve the marketing mix strategies for the growth of the company. The goal setting and its implementation are very important for resolving the problems faced by the company. The goals for the Mobileye company should be-
1 year goal: In the planning of the next coming 10 years, the first goal should be to enter into the lower end markets and keep the high end products, to increase the sales in both the fields.
3 year goal: The next goal of the company should be to develop the partnerships with the companies like Tesla (Mohanapriya, et al., 2014).
5 year goal: To start working with the partners for the development and more improvements in the driving system.
10 year goal: To introduce the driverless cars in the market, partnering with the Tesla.
The company should focus on the implementation of the strategies to reach the goals and to launch the driverless cars in the global markets alongside Tesla in coming 10 years. The strategies should be like to hiring the new talent to implement the strategies and to achieve the goals. The other ways is that the company should increase its marketing budget from 2013 while introducing the new products or technologies in the market. The company should offer at least $200+ low quality products to enter into the lower market.
Moreover, the company should utilize all the resources of the Tesla company for successful implementation and the achievement of the goals to launch the driverless cars. The company should apply large marketing strategies to attract the maximum number of employees. In this report, founders need to narrow down the target market to apply the market mix. Coming up with the right marketing mix is vital to the success of any business and therefore these have to be chosen carefully and after thorough understanding.
All of the above recommendations are need to be properly followed by the company for the positive results.
Conclusion
Technology and innovation are the main aspects of the successful operations of the company. The purpose or aim of the report is to find out and to analyze the exact problems and challenges faced by the company named Mobileye. Hence it is concluded that the stable pricing, adoption of the OEMs and the partnership with the Google or Tesla are some of the important decisions that the Aviram and Shushua should take for the growth of the company. There are many situations that are very well handled by the both founders like Aviram and Shishua. The company needs to compete against many competitors and the idea of partnership with the leader of the self driving cars like Google is the most effective approach, but it depends on the intension of the Google as it can be a big competitor for the Mobileye. The report also analyzed the various management factors and models like strategic decision making, strategic pricing, aftermarket diversification and all these models. The company Mobileyo has the main objective to avoid the car accidents as well as to increase the road safety. The cost of these products or driverless cars I obviously high which needs to be reduced to attract the more and more customers. The Mobileyo company is using the ADAS in their cars for this purpose. There are many technologies or new innovative systems are used in these cars like LDW(Lane Departure warning), TSR(Traffic sign Recognition), FSW(Forward collision warning) etc. These systems are used in these cars to improve the safety. In short, the driverless cars are the future of the world and these will definitely affect the country in a positive way. The technology will change the lives of the people and these will help to build a strong image. Also the creative and innovative ideas are the best methods to compete in the global market just to gain the gain the competitive advantage. It is recommended for the company to improve its marketing strategies to increase the sales and revenue of the company. The goal setting and the implementation of the strategies is very important for the Mobileye.
References
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Atwan, A., 2016. Integrated Case Study Analysis, Available at: https://prezi.com/jrsfp9bxp3-t/integrated-case-study-analysis/?webgl=0
Citron Report, 2015. Mobileye: Just Follow the Money, Available at: https://www.citronresearch.com/wp-content/uploads/2015/09/MBLY-final-Sept-9.pdf
European Parliament, 2016. Research for TRAN Committee- Self-piloted cars: the future of road transport, Available at: https://www.europarl.europa.eu/RegData/etudes/STUD/2016/573434/IPOL_STU(2016)573434_EN.pdf
Fischer, M. et al., 2016. Connected car report 2016: Opportunities, risk, and turmoil on the road to autonomous vehicles: PWC, Available at: https://www.strategyand.pwc.com/media/file/Connected-car-report-2016.pdf
Kaur, G. & Joshi, S., 2014. Going driverless with sensors, Available at: https://ijset.in/wp-content/uploads/2014/06/ijset.0620140074.1011.1806_Geet_298-305.pdf
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KPMG, 2015. The future of the car: Who’s in the driving seat?, Available at: https://assets.kpmg.com/content/dam/kpmg/pdf/2015/12/the-future-of-the-car-report.pdf
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Markoff, J., 2013. At High Speed, on the Road to a Driverless Future, Available at: https://www.mobileye.com/wp-content/uploads/2013/05/www_nytimes_com_2013_05_28_science_on_the_road_in_mobileyes.pdf
Mohanapriya, R., Hema, L., Yadav, D. & Verma, V., 2014. Driverless Intelligent Vehicle for Future Public Transport Based On GPS. International Journal of Advanced Research in Electrical, Electronics and Instrumentation Engineering, April, 3(3), pp. 1-7.
Morgan Stanley, 2013. Autonomous Cars: Self-Driving the New Auto Industry Paradigm, Available at: https://orfe.princeton.edu/~alaink/SmartDrivingCars/PDFs/Nov2013MORGAN-STANLEY-BLUE-PAPER-AUTONOMOUS-CARS%EF%BC%9A-SELF-DRIVING-THE-NEW-AUTO-INDUSTRY-PARADIGM.pdf
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