1. Executive Summary
The report is about the company’s innovation through its strategic measures to address multiple issues affecting Audi’s products and operation. The focus of the business includes its market, trends, and new and advanced technologies. The current study on the Audi utilizes the MVIS model of innovation, examining the three problems that identify various gaps exhibited by the company in its operations. The study also references the automotive industry concerning Audi, innovation requirements, capabilities, and innovation. Information about the market, customers, collection of data, and the choice of innovation is also analysed in this study.
2. Introduction: Purpose of the Report & Structure
The report is on the management of innovation in the Audi Company that conducts its business in the automotive industry. The report examines the current technological advances and their capabilities to implement future innovations. As one of the leading automobiles around the world, there is a need to examine its innovation and management processes. The report’s purpose is to identify the road map for the company’s innovation with the help of the MVIS model framework. The model provides two stages that focus on the company’s innovation gaps and how these gaps are addressed.
3. Stages of MVIS
3.1. MVIS Stage 1
The driver of innovation 1: Laws and regulations
Problem A: faulty backup camera on some of its 2022 model
Recently, almost every Audi 2022 model sold by the company has a potential software issue. The problem is related to the multimedia system, such that the backup camera of this model is faulty (Steitz, 2021). The view of this camera may fail to display as the vehicle shifts into reverse. This happens such that the view captured by the rearview camera does not display. The problem increases the risk of collision when backing due to the driver’s limited rearward visibility (Rufiange, 2021). The faulty camera problem makes the display show a frozen image, and in some cases, it would go black. The problem has seen an estimation of over 2,800 vehicles that may have been affected by being recalled (Tucker, 2021). Due to the expected update to the infotainment unit systems to adhere to safety standards and the current faulty backup camera, Audi has an innovation gap to assure drivers their maximum safety.
In the future, it is expected that automobiles, including Audi, which engage in innovations, will do enough research, especially concerning the safety of the infotainment features. The innovation that saw the exterior mirrors replaced by an integrated small camera has since been embraced (Uhlar, 2021). However, with the occurrence of the problem leading to the inability of the Audi 2022 models to display the camera’s view in reverse, it shows that the company has failed the security test. The future will see Audi strictly consider and comply with the requirements of the Motor Vehicle Safety Standards on rear visibility. Adherence to safety measures will ensure that Audi displays the rearview image in a short period after shifting to the reverse to ensure maximum safety. Therefore, Audi looks forward to prioritising the security and safety of the drivers, especially in reverse shifts. Many new models coming beyond 2022 may not show any risk of collision to drivers even when backing up.
Solution: Bucket 1 Innovation
The solution for the Audi problem associated with the faulty backup camera on some of the company’s 2022 models will include updating the infotainment unit parameters to ensure that the maximum safety of the drivers is assured when shifting into reverse. The decision by Audi to contact owners of the affected 2022 models ensures that they take their vehicles to the dealers is to have the dealership update the parameters (Næss and Tjønndal, 2021). The updated infotainment system would be easier and faster for the backup camera to display the rearview image. This assures the drivers of their clear show of the image even when backing up or reversing to avoid any possible collision that would land them into trouble (Grupp, 2020). The fixing will be done free of charge considering the free software patch, and even those without the ability to accept updates will be brought to the dealership to ensure safety is guaranteed for drivers.
The driver of innovation 2: New technologies
Customers having problems in finding charging stations
The major auto companies, including Audi, have massively invested in electric vehicles over the past five years. However, the EV charging structure has been a global problem, including having few charging stations, which are even far between in most cases (White, 2021). Even with many public charging networks for EVs offering national coverage, they are only found in some areas (Lambert, 2020). The variation has been experienced, especially in payment and access methods across networks (Lee and Clark, 2020). The majority of the rapid and fast chargers require payment despite having some EV charging stations that are free. Customers driving EV charging vehicles have at one point found issues of locating a charging station or waiting in a queue for each fill to complete for about 20 minutes (White, 2021). As customers struggle to find a charging station, the company produces more electric vehicles. Considering Audi’s improvement of experience in charging stations in the future, there is an innovation gap in handling new technologies even when there have been little or none.
A report from the representative of Audi shows that the future experience of charging electric vehicles acquired from the company will improve. The company looks forward to having alternative yet luxurious service provisions for the drivers of these luxury cars. People will no longer feel glamorous, awkward, or even pack longer periods, only waiting for their car batteries like it has been (White, 2021). It will be more than just waiting for the car to be charged, and drivers will have various options to do and even decide to leave or continue staying for some time. The focus of Audi would be giving clients high-class and modern design places to re-energize the car batteries in an attempt to influence faster transformation towards green production (Hertrich and Mayrhofer, 2021). The speed of charging will increase to the maximum capacity of about 270kW, though this will give the drivers enough time to have tea and some crumpets.
Solution: Bucket 2 Innovation
The solution would be to improve the experience of charging the increasing number of electric vehicles. As an auto manufacturer, Audi wants to achieve this through changes to recycle spent batteries in a concept called a charging hub (Nijhuis, 2021). Unlike the previous or current charging stations requiring charging, the charging hub will be composed of a modular and portable charging station with powercube modules consisting of second-life battery packs. One thing with these powercube charging locations is that their voltage DC power that is self-contained is high and does not require locally available power infrastructure (Nijhuis, 2021). Even as Audi goes digital and green to produce more electric vehicles, this new approach’s innovation gap is sealed. This is because the system holds enough power to charge up to 70 vehicles at a rate of 300Kw daily (White, 2021). Thus, it is considered a significant step towards finding the solution to achieve future trends of advanced experience.
The driver of innovation 3: Unthinkable events
Audi has a problem with the supply chains due to the shortages of semiconductor chips
The global carmakers were faced with a worldwide crunch in chip supply which continued to it the production of cars worldwide. The automobile industry strongly suffered in terms of the sales of vehicles. Audi, the manufacturer of cars, had been unable to build cars amounting to a mid-five digit number in July during its first half of the year (Ronanki et al., 2021). The production and logistics spokesperson for Audi confirmed the existence of a highly volatile level of supply. This resulted in registering short-time work for about 10,000 employees at the sites in Germany, especially in June (Page, 2021). As the problem of semiconductors’ shortage continued, the industry became even more affected as the global production of vehicles went down by 2 million (Page, 2021). Considering the expected increase in the supply chains of cars, there is an innovation gap for Audi to improve its supply process following the global semiconductor chips shortage.
Efforts put in place by the automotive companies, including Audi, give hopes that the future of the supply chain of cars will improve compared to the current situation exhibited by the shortage of semiconductor chips (Williams, 2021). It is anticipated that the production of vehicles will again pick up to attain the production level of over 2 million cars that could not be manufactured as expected. The increase in the supply chain to normal and even surpass will see employees re-deployed back to work a long-time, unlike before. In the case of Audi, it is anticipated that all the 10,000 employees will get back their jobs (Page, 2021). The most important thing is that improved supply chains will help Audi maximize its profit like before or even perform much better. The company will depend on the supply situation to make up for the shortfall witnessed in production (Williams, 2021). Therefore, customers will have a variety of cars they anticipate buying with increased supply.
Solution: Bucket 1 Innovation
The supply chain issues solution illustrates how new approaches and strategies of the future will enhance the parameters around supply management possessed by Audi and enhance the expected performance. As Audi looks forwards to making up for the shortfall production experienced recently to improve the supply in the future significantly, the company is considering reducing the high order backlog (Matsuo, 2020). The company’s leadership has raised its outlook and become confident about business development in the whole year. Through the enhanced supply management consultation, Audi has sought closer ties with the makers of the semiconductors chips hence expectations that this would help the company emerge strongly from the problem (Page, 2021). In what appears a strategic move to fill the gap related to the supply of vehicles, Audi has embarked on ambitiously shifting to have battery-powered cars. With this in mind, the company will produce fully electric cars by 2026 hence finishing off the shortage of cars.
3.2. MVIS Stage 2
A). Target audience
For Audi, the target customers include those in the modern urban under the affluent class. This group of customers is often highly educated, modern, and tech-savvy who appreciate quality, style, and rider safety (Buck et al., 2021). The popular group attracted to these cars are both male and female riders. The tech-savvy millennial customers have become the latest targets of a range of cars introduced by the company (Ramey, 2021). The group likes sporty and adventurous life; hence Audi provides them the luxury and comfort needed. The prices attached to the company’s products are high hence appealing to the classy population and those earning large amounts.
b). Sample Size
Audi is among the major auto manufacturers worldwide, and the company has a strong base of customers. In 2020 along, statistics show that the company delivered up to 1.693 million new cars to its customers (Carlier, 2021). However, this was a drop from 2019, when the number of cars sold was higher at about 1.802 million (Carlier, 2021). Therefore, considering this strong customer base for Audi, a suitable sample size would be 500. The 500 settled on is convenient to reflect many people’s opinions with each year being represented by between 30 and 40 people. The number includes those who recently acquired Audi model vehicles and those who have had them before.
c) Sample size justification
The sample size considered is justified and most convenient to work within this case to find the actual picture of the Audi market, tastes, and need for improvement. The number selected depends on the base of customers, and it is not too high or too low because of the shortcomings associated with a poor sample size (Fonseca, 2021). For instance, if the sample size is too large, there is the likelihood that the number required or anticipated may not be attained. However, when it is too small, the information received may not be sufficient to conclude. Sometimes it may give a false impression that does not reflect on trends and patterns.
d). Conducting the survey
The sample size selected will be instrumental in helping provide information on the Audi and its products regarding the perceptions of customers and their experience. Therefore, the survey will be conducted through the questionnaires sent to them. However, Audi being a car company, the best procedure used to conduct a survey will be using dealerships considering that many customers are found far away and some in different regions (Dremel et al., 2017). Dealerships work best in the sales of cars, and using the same to get feedback can easily achieve reliable results in a less costly and limited time consumption since customers are given copies of surveys when they visit dealer shops.
e). Close-ended questions on innovations
In relation to innovation gap A
- Does your backup camera display clear rearview?
- Does it capture images as you expect?
- Do you feel you are safe with this backup camera?
- When compared to the initial exterior mirror?
- Do you feel it should be readjusted to give a better view?
In relation to innovation gap B
- Have you experienced a problem in finding a charging station?
- Do you feel making time to look for a charging station consumes much of your time?
- Is paid to charge better than free charging stations?
- Do you consider electric vehicles efficient regardless of the charging aspect?
- Do you find it convenient if Audi offers alternative charging services?
In relation to the innovation gap C
- Were you affected by the supply chain deficit?
- Do you think the drop in the supply chain was only due to semiconductor chips?
- Do you think this problem will be over soon?
- Does a low supply chain negatively affect the global economy?
- Is Audi making enough efforts to address the supply issue?
f). innovation to be chosen by the customers
It is predicted that customers would choose innovation gap A related to the faulty backup camera on some of the 2022 models. The choice of this option is influenced by the need for the company to take action towards ensuring the safety and security of the drivers. The failure by the backup camera to give a clear view of the images when in reverse means that drivers can easily cause a collision with other objects. This would lead to accidents or damage the vehicle that would require expensive repairs. Therefore, customers will point out this issue as a priority to them.
g). Innovation requirements
Since the major target for innovations by Audi include the tech-savvy millennial customers. The best marketing strategy to be employed is the use of online means such as social media platforms. Television advertisements and promotions would also do well in this business.
The recent months have seen a drop in the supply chain of cars due to the low semiconductors chips availability. The focus should shift to enhancing the supply of semiconductor chips to bring back the market.
The automobiles industry is competitive, and enough financial resources would be required to market the innovation to potential customers. More content would be required for the generation that gets attracted to this innovation.
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