Part 2 – Individual Report (50%) The purpose of this assessment is for students to demonstrate their capacity to identify a business issue, undertake quality secondary research to uncover both external and internal influences via relevant theory learned in prior units and then provide concise recommendations to address the issue. Feedback from the business proposal should be considered when developing this report as it is expected that the direction recommended in this earlier document will be translated into firm strategies and recommendations in the final report. Whilst many items in the proposal are expected to be discussed in the final report, students may find themselves discarding others due to further insights being uncovered as their research and analysis continues. If this is the case, the report must include reasons why any items were/were not progressed through to the final plan. Students must apply relevant theories and concepts to their report. Focus should be on selection of relevant theories, concepts and constructs and how these can be integrated to work for the chosen topic. Note: The final report is expected to significantly build upon the work completed in the original proposal. Where there has been no further information developed in a particular area, it is expected that the student will provide a brief summary of the original information that relates to the final recommendation rather than simply repeating it in full. The final report should contain (but is not limited to) the following components: Business topic Succinctly summarise the issue you are exploring, show why it is important, and what you believe you are achieving in your report Background information Provide sufficient background information to the business and/or situation for a reader to understand the context of the issue you are exploring. Situation analysis (including application of relevant frameworks) Provide a summary of the relevant situation, including the use of frameworks. Evaluation and application of appropriate theories to arrive at potential strategies Evaluate and apply appropriate theories to the analysed situation so as to arrive at potential strategies. Recommendations Make specific recommendations as to what you believe the organisation should do as a result of your overall analysis. Business Project 一 Challenges and opportunities for the digital transformation of China’s automobile manufacturing business model 1. Proposed in business topic In the past few decades, China’s automobile manufacturing industry has been one of the largest economic success cases in the world, which has experienced great transformation and rapid growth. However, China’s automobile manufacturing industry seems to have to change in order to maintain its competitiveness in the face of intensified competition in Europe, the United States and other countries, as well as market changes and cost increases in recent years, and the outbreak of covid-19 in recent years. With the rapid development of digital technology, digital technology has entered China’s large and small automobile manufacturing enterprises, and customers are also familiar with online shopping and e-commerce. This means that for Chinese automakers, a digital shift in their business model seems to be one of the best ways to help them regain competitiveness and generate new revenue. However, there are plenty of factors preventing Chinese carmakers from digitising their operations, whether by pitching ideas to senior management or by the costs and human resources concerns associated with new business. Therefore, in order to gradually realize the transformation of business model digitization, Chinese automobile manufacturers should first make clear the value that business model digitization can bring to the company. Then, find out the difficulties of digital transformation of China’s automobile manufacturing industry and work out corresponding solutions. Finally, by analyzing the successful digital transformation cases of Chinese manufacturers, the paper tries to solve the problem of how to promote the digital transformation of Chinese manufacturing industry. 2.Background 2.1The current situation of China’s automobile manufacturing industry With the COVID-19 epidemic, China’s auto industry is facing a major crisis. Total car sales in China fell by 84% from January to February 2020. Global supply chains are being hampered by supplier closures, production facilities being closed and logistics companies scaling back operations. However, as the risk of COVID-19 in China decreases, Chinese original equipment manufacturers (OEMs) and suppliers are increasing production, Chinese automakers have seen signs of recovery and need to make timely changes if they are to be winners. According to a recent report from IBM, half of China’s auto industry executives surveyed said that over the next few years, they will evaluate their companies’ business models, reshaping their existing organizations with information from digital technologies. 2.2Business model innovation(BMI) Every company has its own BM, and the core of the BM is: create value and obtain value. A BM defines a set of activities, from purchasing raw materials to meeting the needs of the final consumer, through which the company will produce a product or service and create value. The BM then uses some of the value generated from the activity for the development and operation of the company. Forward-looking companies often change the way they deliver value to their customers in response to changes in the market, not only by innovating their products and services, but also by innovating the way they deliver value to their customers. This is business model innovation. 2.3Digital transformation Digital transformation refers to integrating digital technologies into enterprises, deepening the application of various business software and emerging technologies such as the Internet of Things(IOT), realizing data-driven decision analysis, and fundamentally changing the business process of enterprises and the way of creating value for customers. Unlike those manufacturing industries that are oriented to corporate customers, such as equipment manufacturing, energy, components and raw materials, automobile manufacturing industry, which is oriented to individual consumers, has a great demand for digital services and its transformation is relatively easy. 2.4What is the value of the digital transformation of BM for China’s automobile manufacturing industry The automobile manufacturing enterprises that are good at deep application of digital technology will win significant competitive advantages. For example, timely insight into business data such as procurement, production, inventory, capital, quality, energy consumption, equipment status and other business data can help enterprises know all kinds of complex problems in operation and management; through the collection and analysis of employees’ work performance, the potential of employees can be further stimulated; customer satisfaction can be improved by personalized customization according to customer needs; through the collection and analysis of marketing data, can really know ourselves and know the other in the market and better serve customers. Excellent Chinese automobile manufacturers have also been working on the digital transformation of their products. For example, FaW-Volkswagen in China has implemented digitalization into the entire industrial chain of production and sales. By realizing data collection, state perception and remote control, it can improve the added value of products and increase service income. 3.Situation analysis The complexity of business, product and value chain of automobile manufacturing enterprises brings many obstacles to the digital transformation of their business model. The analysis will assess the factors influencing the digital transformation of China’s automobile manufacturers from both internal and external perspectives. 3.1Solidification of managers’ concepts The executives of some Chinese auto manufacturers do not realize the necessity, urgency and complexity of digital transformation, and the concept is still to deploy common IT systems. The reality is that digital transformation is far beyond the reach of IT departments and must be led from the top down by corporate decision makers. 3.2Retail improvement E-commerce and omni-channel retail have permeated most consumer industries, and automakers must digitize the purchase process to improve the experience for all parties across all channels. However, although some Chinese automobile enterprises have invested in and built their own e-commerce platforms, their customers are still controlled by mainstream e-commerce platforms, and their self-built platforms have not achieved the expected results. 3.3.Attract the right talent As car companies explore opportunities for digital transformation, they will face increasing competition from new technology companies. Rather than exploring new technologies at the same time as startups and tech companies, these automakers should focus on attracting digital talent from the tech industry. This way, they bring in the talent they need to stay competitive, rather than face the competition. 3.4Improve operational efficiency Automakers must use digital conversions internally to maximize cost savings and efficiency. The cost can be greatly reduced through the efficient tracking index brought by big data. Although digital is expensive to implement in the early stages, smart factories will bring huge efficiencies, security improvements and asset tracking that will pay off handsomely for businesses. 3.5Build important partnerships As startups such as Didi Chuxing from within and Uber from outside have disrupted consumer demand for private cars. In this case, China’s auto industry can partner with these companies rather than fight them. FaW-Volkswagen, for example, has recently invested in a ride-sharing app, Gett, and is talking about exploring self-driving cars in China in the next few years. 4.Proposed conceptual tools 4.1 Business Model Framework Chesbrough’s (2007) Business Model Framework (BMF) can help enterprises objectively generate an assessment of the current business model and then look at the attributes of the next phase of the framework. BMF provides some guidelines on how to further improve the business model. Here are the different phases of BMF: 1- Undifferentiated BM 2- Differential BM 3- Subdivision of BM 4- BM with external consciousness 5- The company combines the innovation process with BM 6- The company’s BM is an adaptive platform Most of China’s automobile manufacturers have reached stage 5 or even higher. In this case, although their models may be very profitable and difficult to imitate, there is no BM that can last forever. After a clear understanding of the enterprise’s BM through BMF, it is the best choice for enterprises to promote BM innovation. 4.2 Digital transformation mode When an enterprise determines its own BM, it can start to promote BM innovation. According to the previous analysis, BM digital transformation is the best choice for Chinese automobile manufacturers. However, digital transformation is omni-directional. How to deepen the application of digital technology can be determined by Berghaus’ digital transformation framework: business model transformation; service mode transformation; R & D mode transformation; operation mode transformation; manufacturing mode transformation and decision-making mode transformation. After determining the digital transformation mode of enterprises, enterprises can quickly determine the road map of future development and save unnecessary waste of resources. 5.Proposed data resources and plan for completion The resource that needs to be studied most should be the evaluation of the income brought by BM of major Chinese automobile manufacturing enterprises at this stage, to sort out the demand of enterprises to promote the transformation of BM to digital, and determine the breakthrough of enterprises to promote digital transformation according to the importance and feasibility. Secondly, it is necessary to evaluate the digital technology of China’s automobile industry to determine the necessity of cooperation with foreign technology companies. The proposal aims to discuss the challenges and opportunities for the digital transformation of China’s automobile manufacturing business model, while proposing conceptual theories to provide solutions and future roadmap development. Therefore, all the resources used should meet the requirements for implementing the plan outlined in this article. A complex plan is required to gather information resources that meet the tasks described above（see appendix for details). References Academy, T. (2020). IBM BrandVoice: Digital Transformation Is The Auto Industry’s Road To Recovery. Retrieved 20 August 2020, from https://www.forbes.com/sites/ibm/2020/04/24/digital-transformation-is-t he-auto-industrys-road-to-recovery/#79e2d7b4147e Berghaus, S., & Back, A. (2016, September). Stages in Digital Business Transformation: Results of an Empirical Maturity Study. In MCIS (p. 22). Cassidy, F. (2018). Business Innovation: what is it and what could it do for you?. Retrieved 13 August 2020, from https://www.raconteur.net/business-innovation/business-innovation-gui de Chesbrough, H. (2007). Business model innovation: It’s not just about technology anymore. Strategy & Leadership, 35(6), 12-17. Chesbrough, H. (2010). Business Model Innovation: Opportunities and Barriers. Long Range Planning, 43(2-3), 354-363. Digital Transformation in Manufacturing: Challenges, Trends, Examples. (2020). Retrieved 20 August 2020, from https://oroinc.com/b2b-ecommerce/blog/digital-transformation-in-man ufacturing/ Zhang, J. (2017). Manufacturing the future-China’s digital transformation. Retrieved 17 August 2020, from https://www.orange-business.com/en/blogs/connecting-technology/indu stry/manufacturing-the-future-china-s-digital-transformation
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