Selling Mobility Instead of Cars - Why Companies Should Exploit the Potentials of Carsharing?
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Selling Mobility Instead of Cars - Why Companies Should Exploit the Potentials of Carsharing? Master Thesis by Marina Kostitskaya MSc. Economics and Business Administration Finance & Strategic Management May 17, 2016 Supervisor: Kirsten Foss 104.364 characters/ 50 pages Copenhagen Business School Abstract The following thesis has the aim to provide a practical approach on the concept of carsharing and analyse its growth potential from the perspective of a car manufacturing company. Carsharing represents an innovative and sustainable mobility solution for the future and has already been adopted by a handful of European OEMs. For the purpose of analysing the attractiveness of the carsharing industry the Porter’s 5 forces model has been applied. However, its relevance and application in dealing with an innovative business model has been considered as insufficient and therefore extended by the theory on the disruptive innovation by Clayton Christensen. Last year, the global carsharing market experienced a double-digit growth rate and is expected to grow further in the number of customers and fleet size in the years to come. A comprehensive analysis of the future macroeconomic, societal and technological trends has shown that there will be a huge demand for green, alternative and sustainable mode of transportation particularly in the emerging markets. By putting the focus on the value creation and capturing processes within the automotive industry, the differences between the traditional car sales model and the innovative approach to mobility have been presented on the example of BMW Group and its carsharing service DriveNow. Despite the contradictory approach of systematic innovation pursued by the BMW Group and disruptive innovation by DriveNow, the flawless integration of the innovative business model into the consolidated view as well as a sophisticated portfolio on complementary services enable the company to bypass all the difficulties their smaller competitors are struggling with. i Table of Contents Abstract ............................................................................................................................................................... i List of Abbreviations ......................................................................................................................................... iv List of Figures..................................................................................................................................................... v 1. Introduction ............................................................................................................................................... 1 1.1. Research gap and objectives .............................................................................................................. 2 1.2. Research Question ............................................................................................................................. 3 1.3. Thesis Structure ................................................................................................................................. 4 2. Methodology .............................................................................................................................................. 6 2.1. Selection of the target company for the analysis ............................................................................... 6 2.2. Delimitations ..................................................................................................................................... 7 3. Theoretical Approach on Carsharing ......................................................................................................... 8 3.1. The Defining Dimensions of Carsharing ........................................................................................... 9 3.2. Delimitation of Carsharing from Analogical Services .................................................................... 11 3.3. Different Types of Carsharing ......................................................................................................... 12 3.4. Current State of the Carsharing Market ........................................................................................... 14 4. Macroeconomic Trends behind the Automotive Revolution -2030 Vision ............................................. 15 4.1. Changing Demographics ................................................................................................................. 15 4.2. Consumption and Generational Change .......................................................................................... 18 4.3. Technological Progress.................................................................................................................... 18 4.4. Environmental Consciousness ......................................................................................................... 19 4.5. User Mobility Types of the Future .................................................................................................. 20 4.6. Implications for the Carsharing Service Providers .......................................................................... 23 5. Evaluation of the CS Business Potential- Porter’s Five Forces Model ................................................... 25 5.1. Limited Application and Criticism ....................................................................................................... 30 6. Disruptive Innovation - Engine in the Dynamic Business Environment ................................................. 30 6.1. Definition of Innovation .................................................................................................................. 31 6.2. Determination of Different Types of Innovation ............................................................................. 31 6.3. Carsharing as Disruptive Innovation? ............................................................................................. 34 7. Comparison of the Traditional Sales Model and Innovative Carsharing ................................................. 35 7.1. BMW Group- “Evolution” .............................................................................................................. 35 7.1.1. Porter’s Value Chain ............................................................................................................... 37 ii 7.1.2. Value Capturing Activities ...................................................................................................... 39 7.2. DriveNow – “Revolution” ............................................................................................................... 41 7.2.1. Functionality of DriveNow in Practice .................................................................................... 41 7.2.2. Profit generation in the innovative business model ................................................................. 42 7.2.3. Role of BMW i Ventures within the innovative model ........................................................... 45 7.3. Challenges ....................................................................................................................................... 47 8. Implications for further Research and Practice ....................................................................................... 48 9. Conclusion ............................................................................................................................................... 49 References ....................................................................................................................................................... 51 iii List of Abbreviations ACEA European Automobile Manufacturers' Association BRIC Brazil, Russia, India and China CS Carsharing DN DriveNow EU European Union OEM Original Equipment Manufacturer P2P Peer-to-Peer CCS Corporate Carsharing NSC National Sales Company ROI Return of Investment iv List of Figures Figure 1: Snapshot of Mobility Business Models. ............................................................................... 8 Figure 2: Overview of the Traditional Consumption Models in the Automotive Industry. ................ 9 Figure 3: Number of Carsharing Users Worldwide (2013-2020) ...................................................... 15 Figure 4: Future Customer Target Groups for Carsharing Services .................................................. 23 Figure 5: Overview of the different types of innovation ................................................................... 32 Figure 6: Innovation Cycle over time ................................................................................................ 32 Figure 11: Evolution of BMW 7-Series ............................................................................................ 35 Figure 12: Organizational Structure of the BMW Group.. ................................................................ 36 Figure 13: BMW Brand Model. ......................................................................................................... 37 Figure 10: Value Chain according to Porter ...................................................................................... 40 Figure 14: Model of the Vehicle Sourcing Process.. ......................................................................... 43 Figure 15: BMW Group View on Carsharing Process ...................................................................... 45 Figure 16: