strategy management:Disruptive Innovation, AI, Blue Ocean Strategy, Disuption

STRATEGIC MANAGEMENT: DISRUPTIVE INNOVATION, ARTIFICIAL

INTELLIGENCE, BLUE OCEAN STRATEGY AND DISRUPTION

Saideh Kariminezhad Maryan

Dr.Pegah Yghmaie

University of Canada West

15th Dec, 2020

Executive Summary

Research and development in the field of autonomous vehicles has become very hot in

the last five years, and almost all major car companies in their R&D sector are working on it. It is

expected that car companies will soon offer their solution to use this technology. This article

discusses the effects of this technology on the ride sharing industry. The industry of AVs is not

rising in isolation. Still, it is connected to the fuel industry, manufacturing industry, ride-sharing

companies, taxis, hotels, convenience stores, auto insurance, communication industry and with

used cars dealer’s industry, which will not only change the current dilemma but the future of all

of these industries.

Background:

In 2001, the US Congress declared its need for unmanned and remote-control cars; hence the

idea of producing self-driving cars was generated. Although progress was slow at first, pioneering

companies such as Carnegie-Mellor and Stanford started production for the first time and had good

results in 2007. Then car companies, in collaboration with Google for navigating the city roads,

implemented this human desire. So, by considering the blue ocean strategy, they created a revolution

in the automotive industry.

Question 1:

AV Impacts the Transportation Industry

Transportation is the first industry to be significantly affected by driverless cars

positively and negatively. Firstly, drivers are eliminated so; public transport will face a high

unemployment rate due to taxi and bus drivers' unemployment. For example, there are 3.5

million truckers in the United States who would be unemployed if a driverless truck became

normal (Ey Global, 2018), therefore this industry faces a serious problem.

Analysis

Many researchers think that other industries are affected more. For example, Mr. Hayes

thinks the car industry is mostly affected (2019), or According to WGU, the IT industry is the biggest

field that impacts (2019). Although these industries will be affected, the transportation industry is at

the first level of impact. Many other industries like tourists, oil and gas and construction industries,

are connected to the transportation industry and will affect by these industry changes (Bowman,

2018). If the massive public transportation by driverless cars happened, the city roads should be

considerably changed as well as gas stations. Also, oil and gas consumption will reduce since people

use public transportation more than their own cars as it is cheaper and safer. Similarly, passengers

will travel easily and more by comfortable self -drive cars so, hotels and the tourist industry will

affect and benefit it a lot. Therefore, it can be said that the transportation industry will have the

greatest impact and will significantly affect other industries as well. The strategy of brand

recognition is the strength of Lyft and Uber. There is another very significant barrier that is faced

by ride-sharing companies I that companies like GM may start creating autonomous vehicles

instead of conventional vehicles and start their ride-sharing services, which will ultimately result

in customer shifts ( see figure1). Ridesharing companies, in any way, will be facing more

competition in the market (see figure 2). However, they have brand recognition, and customers

still, companies like Ford and GM can be competitive if they start ride-sharing of their own

companies (Michele, 2002).

Figure1: Kim and Mauborgne's eliminate reduce raise grid

Figure 2: workable and unworkability in the system

Question 2:

Is AV driving blue ocean tech?

AV has used a blue ocean strategy because it created a new market and radically changed

the existing markets. It is the city car for the future and a revolution in the automobile industry

(Antonialli etc., 2017). Additionally, based on this strategy's four main components including

creation, reducing, raising, and eliminating, AV is in the blue ocean segment. This technique is

not about making any company a first seller company, but it makes a relationship between

innovation and value (Habib, 2019). For AVs, it can be a blue ocean technology because this

technology has no relation to new technology. Still, the level of ease and efficiency of the system

are the things which make any technology a blue ocean technology. As far as autonomous

vehicles are concerned, they reduce the possibility of risk, offer accuracy, give efficiency, ease

the user, are simple to use and are environment friendly (shai, 2019). According to Cavazza and

etc., regarding elimination, AV deletes the drivers as well as driving components like mirrors,

pedals and steering. F0r reduction part, human control over driving will be reduced so, the

accident caused by human errors will also decrease. Instead, many items will rise, like human

safety as well as machine liability. Also, City infrastructure should improve, and the roads and

city streets should reconstruct larger. Finally, about creation, new market demand of the people

who have some driving consideration will create. It also creates the freedom to do other activities

while moving, such as reading books, sleeping and organizing daily activities such as washing

the car, delivering dinner while people are at work (2020).

Question 3:

Difference between disruptive and blue ocean strategy

The blue ocean focuses on creating new market demand, while the disruptive only hits

the existing market (Christensen, 1997). AV industry has used the blue ocean strategy since they

create the new market demand, including the aged people, disable persons and all the people who

have limitations for driving. According to Harper etc., the underserved population, including

non-drivers, seniors and also people with medical restriction conditions, is the new market

created by AV technology (2016). Even people without limitations face fundamental changes in

their lifestyle. Also, the car industry must follow this pattern, otherwise it will lose. Accordingly,

AV pursues the Blue Ocean strategy with major changes that are unexpected in the destructive

strategy.

Recommendations

• Identify the risks and opportunities that the business will face because of AVs and

prepare the related strategies.

• Develop strategic corporations for the sustainability of the business and

positioning due to the potential changes by AVs.

• Identify changes in the macroeconomic environment given the significant impact

of this innovation on the price of oil, which is a major part of many governments'

revenues.

• Preparing the necessary online security platforms, because the introduction of this

technology requires security laws for companies, police and municipal legislators

and countries as national security.

Conclusion

AVs will come soon and will bring the disruptions, challenges and benefits which

impacts cars, industries and life style. Prepare the essential road map including the

comprehensive regulations by government and vital infrastructures will help to decrees the

downsides and increase the benefits.

References

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Appendix1:

Eliminate Reduce

There should be more focus on customer

relationship and marketing of the services.

There should be a complete reduction in

investing more in a traditional vehicle

purchase.

Raise Create

Currently, it is important to focus on

manufacturing and raising awareness among

people for new technology use.

Leaders and other company strategists should

focus on partnerships, market value and brand

identity, which will give them sales now and

in future.