The automotive industry is currently undergoing significant transformation, driven by trends in electrification, autonomous driving, connectivity, and shared mobility. This evolution presents both challenges and opportunities for traditional manufacturers.

Understanding the competitive landscape requires an analysis of the primary forces shaping the industry:

• Internal Rivalry: Intense, due to the presence of global manufacturers and the entrance of new players focused on electric and autonomous vehicles.
• Supplier Power: Moderate, with major suppliers holding significant negotiation power over smaller automotive manufacturers.
• Buyer Power: High, as consumers have a wide array of choices and are increasingly sensitive to innovation and sustainability.
• Threat of New Entrants: Increasing, particularly from tech companies venturing into electric and autonomous vehicles.
• Threat of Substitutes: Growing, with public transportation and new mobility services as alternatives to car ownership.

Emergent trends include a shift towards electric vehicles (EVs), increased demand for connected car technologies, and a push for more sustainable manufacturing practices. These trends are leading to major changes in industry dynamics, including:

• Increasing electrification of vehicles, opening opportunities for innovation in EV technology but also posing risks in the form of high R&D costs.
• Greater focus on digital and connected technologies, offering opportunities for differentiation but requiring significant investment in new capabilities.
• Rising importance of sustainability, presenting opportunities to lead in green manufacturing but also risks from regulatory fines and shifting consumer preferences.

The STEEPLE analysis highlights significant socio-economic, technological, environmental, and legislative factors shaping the industry, such as increasing environmental regulations, technological advancements in vehicle manufacturing, and shifting consumer preferences towards sustainability and digital features.

The organization has a strong foundation in automotive manufacturing with a recognized brand and a loyal customer base. However, it faces challenges in operational efficiency and adapting to digital trends.

The MOST Analysis reveals misalignments between the company's mission and its operational strategies, particularly in areas of digital transformation and sustainability. Objectives related to cost reduction and efficiency improvements have not been fully integrated into daily operations.

The Core Competencies Analysis indicates strengths in traditional manufacturing and design, but gaps in digital innovation and sustainable practices. Addressing these gaps is critical for maintaining competitive advantage.

The McKinsey 7-S Analysis underscores inconsistencies in Systems and Skills with the current strategic direction, highlighting the need for digital upskilling and the adoption of advanced manufacturing technologies to improve operational efficiencies.

• Revise Target Operating Model: This initiative aims to realign the organization's operating model with industry best practices in digital innovation and sustainable manufacturing. The intended impact is a reduction in operational costs by 20% and improvement in production efficiency by 25%. The source of value creation lies in streamlining processes, adopting new technologies, and enhancing workforce capabilities. This initiative will require investments in technology, training, and process re-engineering.

Target Operating Model Implementation KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.

• Reduction in Operational Costs: Tracking this KPI will provide insights into the effectiveness of the new operating model in controlling expenses.

Monitoring TOM-related KPIs will offer actionable insights into the strategic plan's performance, helping the organization adjust its approach to meet its objectives effectively.

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The strategic initiative to revise the Target Operating Model was underpinned by the application of 2 critical business frameworks: the Value Chain Analysis and the Resource-Based View (RBV).

The Value Chain Analysis, developed by Michael Porter, was instrumental in dissecting the company's operations into strategic activities to understand cost drivers and identify areas for differentiation. This framework proved invaluable in pinpointing inefficiencies within the manufacturing process and areas where digital technologies could be integrated to enhance productivity. Following this analysis, the team:

• Conducted a comprehensive review of the company's primary and support activities to identify bottlenecks and inefficiencies in the current operating model.
• Implemented advanced manufacturing technologies in key areas identified by the Value Chain Analysis to streamline operations and reduce costs.
• Developed training programs to upskill employees, ensuring they could effectively utilize new digital tools and processes.

The Resource-Based View (RBV) was also applied to assess the company's internal capabilities and resources, focusing on those that could provide a competitive advantage in the context of the revised operating model. This perspective was crucial in identifying the company's unique strengths, such as its skilled workforce and proprietary manufacturing techniques, and aligning them with the new strategic direction. The application of RBV involved:

• Evaluating the company's resources and capabilities to determine their potential to create sustainable competitive advantages.
• Aligning the company's strategic resources, such as proprietary technology and skilled labor, with the new target operating model to maximize efficiency and innovation.
• Investing in areas where the company had gaps in capabilities, particularly in digital technologies and sustainable manufacturing practices.

The implementation of these frameworks facilitated a comprehensive overhaul of the Target Operating Model. As a result, the company achieved a 20% reduction in operational costs and a 25% improvement in production efficiency. The strategic realignment, supported by the Value Chain Analysis and Resource-Based View, enabled the organization to streamline its operations, leverage its core competencies, and embrace digital transformation, thereby regaining its competitive edge in the automotive industry.