The Future Of Driverless Cars Harvard Case Solution & Analysis

Introduction

            Mobileye is basically a technology company that has looked to develop a vision based advanced driver assistance systems (ADAS) which helps in providing the warnings for collisions prevention and also the mitigation. The company before announcing an IPO had employees approximately 400 who operated from Netherlands which is the legal headquarter for the company, whereas Israel is the parent country.

            Moreover, a total of 150 employees have been working in the quality assurance department that operates from Sri Lanka. The major cost of the company is spent upon the R&D. The company does not have a factory and it has a limited small sales force which generally focuses on the aftermarket. The company has been co-founded by AmnonShashua and ZivAviram. Moreover, the company is a Tier 2 supplier which operates in the global automotive industry.

Problem Statement

            The major problem that has been identified in the case “Mobileye: The Future of Driverless Cars” is the fact that the company has been initially a successful entity where it has been able to generate ample revenues and in fact, it has emerged as one of most exciting companies in the field of driverless cars.

            With the initial success, the company has to decide the future direction of the company where it needs to over the dilemma of the notorious for squeezing the suppliers on the price. The decision which the management has to take is based on the fact whether they should reduce the margin in order to retain the share. Another issue for the company is to decide the method of how to work with Google, which is already a publicly perceived leader in the self-driving revolution.

Analysis

Strengths:

            The major strength for the company Mobileye has been the fact that it has been offering highly innovative products. Moreover, the financial strength for the company is another major strength for the company. Along with this, Mobileye has got the expertise in the field. The technical expertise and the employees hired by Mobileye are a major strength for the company. The brand image of the company and the number of customers associated with the company are also its strengths.

Weaknesses:

            The major weakness for the company has been the fact that it does not have its own business units. Moreover, the limited market expansion has been a weakness as well. Along with this, the company does not have a large profile for the products which is a weakness too.

Opportunities:

            A major opportunity for Mobileye shall be to explore new markets and offer technology in different parts of the world and to the companies simultaneously. Moreover, it should need to decide how the company shall cope up with the publically perceived leader Google in this field.

Another opportunity for the company shall be to reduce its prices and increase the number of customers for the company.

Threat:

            A major threat for the Mobileye is the increasing competition in the market. Moreover, the increasing government rules and regulations pose a threat to the company. The increase in the prices of raw material and supplier demand again pose severe threat to the company Mobileye. Furthermore, the increasing labor cost is also a threat for Mobileye where it needs to limit the expenses to earn reasonable profits.

Porter Five Forces Model

Bargaining Power of Buyers: High

            The bargaining power of buyers for the industry players is high. The reason is simple;the customers are the large auto manufacturers who shall quote prices as per their demands and customer demand. Along with this, the low switching cost is also an issue for the industry players. Therefore, it can be said that the bargaining power of buyers is high for the industry.

Bargaining Power of suppliers: Low

            The bargaining power of suppliers is low for the industry. The reason it is low because the number of suppliers in the industry is quite large in numbers. Moreover, the production cost can only be recovered once economies of scale is achieved which shall be possible once the suppliers sells in bulk quantity.

Threat of new entrants: Low

            The threat of new entrants in the industry is quite low. The reason is simple, although the profits in the industry are relatively higher, but to enter the industry requires ample capital investment. Moreover, the company entering the industry shall be required to follow and abide by the rules and regulations of the government. Along with this, the high material cost and the high labor cost makes the industry a no favorable one for the new entrants........................

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