Case Study 5

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Automakers become software companies

Q1: How is software adding value to automakers’ products?

Answer: 
Software adding value to the automakers’ products via:
Cutting cost and time
By using the on-board software, the automakers’ products can be managed via the cloud. For instances, Ford Motor Company previously need to take about two and one-half years to plan, design and build a new car. Design and production, including the metal stamping equipment and assembly line setup must be finalised long before the car rolls off the line. But now, by using the software, the automakers can create a new software interface within months and update it over and over again for the customers in the future and the process is not time consuming.

Improve customer’s experiences and values
Automaker will be able to keep updating the features and functions to improve the customer’s experience. For instances, Ford is trying to fulfil customer’s needs because they know it will bring them benefits at the end. They care about the complaints and comments from the customer and keep improving their product based on what the customers need because they know that a business will only be able to success when they customers are satisfied.

Q2: How are the automakers benefiting from software-enhanced cars? How are customers benefiting?

Answer: 
Benefits to automakers
Firstly, automakers are entering uncharted territory with the inclusion of software in their cars. Although they must putting in more resources to update and testing their software and have to establish ways to provide the updated software to their customer, but they are adding values to their company as well as this will increase the business volume of the company.
With the software-enhanced cars, Ford has save a lot of time and effort in upgrading the functions of the cars, they do not need to gather all the cars back to the factory and upgrade one by one but just to mail out the USB sticks to the customers and in the stick, it contains all the updates which customer can do it on their own.

Benefits to customers
GPS tracking system is included in the software-enhanced cars, therefore, customers will get to enjoy additional function. It helps customers to navigate the road and as well helps the customers to avoid using the roads that having bad traffic. At the same time, customers will be able to communicate to the other road users (with the smartphone connected to the car) on the road condition so that his/ her friends will get to know which road to avoid. Besides, customers can as well listen to the songs they love by connecting to the music application while they are driving alone to avoid sleepiness.

Q3: What value chain activities are involved in enhancing cars with software?

Answer: 
Value chain activities that involve in enhancing cars with software can be illustrated by the case of Ford Motor Company. For instances, MyFord Touch interface is an in dash touch screen available for select vehicles with controls for navigation, music, temperature control and phone integration. Ford has upgraded the interface and the Sync software behind the interface, they added the tablet and smartphone integration and better voice response in the system. In year 2010, Ford even invested on the online music streaming service Pandora which is very popular among the young potential buyers to boost up the sales and gain more demands. Moreover, the chairman Bill Ford Jr. has championed the use of software to alleviate urban congestion by investing in the technology that responds to the problems arose by traffic in the big cities. Hence, we can see that by upgrading their system, it is not only helping the company to improve and to satisfy the customer’s need but also help them to get more competitive advantages and to boost up the demands on their products and so they can create a higher barriers for the other competitors.

Q4: How much of a competitive advantage is software providing for automakers? Explain your answer.

Answer: 
For instances, software provides the automakers a competitive advantage of allowing cars to be managed via the cloud. Ford Motor Company enable users to be able to remotely track their cars or even diagnose problems with the car such as the problems of low tire pressure or need for an oil change by using the software that operate online in the cloud. These software developments provide a new platform for automakers to enhance many car drivers’ life by just a touch of a finger through a touch panel. Those are the competitive advantages that software provides for the company which is adding values to the company compared to other competitors in the same industry. The reason why software providing for automakers with so many competitive advantages is software upgrading the quality of the cars and support the cars with many convenient facilities and as well fulfilling customer’s need.

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