Rainey (2010, p. 18-20) stated that sustainable business development involves adopting business activities and strategies which meet the needs of the industry and its stakeholders today while enhancing the natural and human capital that will require in the future. The three goals of business sustainability involve social welfare, environment protection and economic development.
The automobile industry faces significant challenges of environment, technology, demographic changes as well as a change in customer expectation.
According to Amer et al (2013), scenario planning is a process of visualising the future possible condition and events along with their consequences. This allows the business to develop a strategy to respond to these challenges to minimise risk and maximise opportunities. The automobile industry in Italy is one of the largest in Europe as well as the important driver of the economy with 4.5% contribution to GDP. The automobile industry is based on premium cars and i.e. industry faces innovation, environment, productivity and demographic challenges (Maielli, 2015).
The aim of this report is to analyse automobile industry through applying scenario analysis for sustainable business planning in 2060. The objective is to identify uncertainty and external sustainability challenges and develop an insight how automobile industry can tackle these challenges in 2060.
The 2060 scenario development for this study involves analysis of current, emerging and future trends in automobile industry through exploring technological, environmental and social-political changes. At last, not least, report presents will highlight the response and innovative solution from the automotive industry (Kilger, et al., 2015).
Lanzini, et al (2016) discussed that globalisation and global mobility have evolution the transportation system and it is difficult to operate without reliable transport. The automobile industry in Italy faces numerous external sustainability challenges. The first issue is a population, as it is stagnating with an expected population of 59 million in 2030, 58 million in 2040, 56 million in 2050 and 54 million in 2060. Moreover, the demographic challenges presented are the ageing population because of lower fertility rate.
Kushwaha & Sharma (2016) added that it is expected that population of Italy would plunge which present human capital challenges and diverse customers’ needs. The automotive industry is based on luxury ranges which have high emission problem and fuel consumption. The environment issues surrounded are air pollution and emission from the transport.
According to OCED air pollution will double the health risk and mortality rate by 2060. To control the air pollution some cities have banned the road traffic to minimise the health risk.
Buxel et al (2015) evaluated that the legal constraints by the automotive industry include meeting the European commission emission target and clean air directives. For example, EU emission target is to meet 60% below the level of 1990 by 2060. In addition, the milestones set are 40% reduction by 2040 and 60% reduction by 2060. The air pollution and emission targets have posed legal challenges for the automotive manufacturer.
The traditional combustion engine is challenged on the legal and environment problem and zero-emission technology innovation is need of the automobile industry. The changing transport dynamic requires business to proposed new solution such as self-driving cars, alternative fuel vehicles as well as fuel efficient vehicles to address challenges business in 2060 (Manello, et al., 2016).
Deutz & Ioppolo (2015) evaluated that the sustainable business in 2060 involves delivering products which meet the need of ageing population with minimum impact on the environment. The sustainable business development in 2060 involves delivering vehicles which meet the needs of the ageing population and meet the environment issues such air quality. The business needs to develop new products to meet the emission target and develop vehicles which meet the local legal requirement.
For example, vehicles which meet the legal requirement such as zero-emission, smaller in size and self-driving would address the legal and environment challenges. Automobile industry needs to overcome weakness such lack of research and development in Italy to innovative and design new solutions (Henderson, 2016).
Moreover, diverse portfolio such as self-driving and electric cars would allow tackling the threat of changing demographics and technology. Moreover, the automobile industry in Italy has the environment and legal complication. The sustainable would involve offering products which are cleaner and meet the pollution target of EU in 2060. The luxury car industry is likely to change because of gaining population but network business likely to overcome legal and technological challenges and develop better resilience to environment and technological changes (Andreoni, et al., 2015).
To address the environment and social challenges in 2060, automobile industry needs to improve the value chain and respond to global competitiveness. Automobile industry needs to deliver the technical advancement which includes improved safety system and connects cars, self-driving cars and better vehicle connectivity. Automobile industry needs to adopt the new business model which is built to deliver vehicle beyond horsepower and built a vehicle which meets the legal and environment needs of the customers. The automobile industry requires a shift from the high-performance combustion engines and innovate vehicles which have better safety and emission control while keeping it cost effective for the consumer (Naor, et al., 2015).
The automobile market has renowned for a luxury car which will change in future and therefore, energy efficient and alternative fuel vehicle with zero emissions is fundamental for the business resilience in 2060. The establishment of restrict emission zones for the combustion engines and rapid urbanisation requires vehicles which allow the user to fulfil their transport requirement such condition through the vehicle with zero emission and less carbon footprint (Deutz & Ioppolo, 2015).
The increasing cost of resources presented challenges for the manufacturers and using recycled material and solar panels would allow cutting social cost and regulatory priorities. The digitalisation and real-time monitoring would be required in 2060 to meet the safety requirement and respond to changing intelligent infrastructure (Nykvist & Nilsson, 2015).
Ruff (2015) analsyed that the adaptation of the automobile industry to tackle and meet the challenges in 2060, the automobile industry has started to change its business model and products which meet the legal and environment regulation in 2060 as well as offered better value for money to the customers. The automobile industry is spending a significant amount of money on research and development of the electric vehicles (Deutz & Ioppolo, 2015).
For example, Tazzari group has presented battery electric motorcar named as ‘Tazzari Zero’ which have a range of 140 kilometres. The vehicles are classed as the zero-emission vehicle and meet the legal requirement and therefore, free from the emission restriction problem.
Moreover, the automobile industry is adaptation new materials which are degradable or made from the recycle material. The metallurgy programme is used by the automobile industry to reduce cost and deliver environment-friendly vehicles. For example, ‘strati’ an electric vehicle is in development phase has been launched which is made from lightweight recycle material and 3D printing technology with the top speed of 40 Km/h (Long, 2014).
Park et al (2016) analsyed that the research and development for an electric vehicle are trails by the automobile industry in Italy through testing wireless charging technology. The wireless charging technology would allow improving the distance vehicles can travel and improve the performance of the electric with low carbon footprint and emission. For example, inductive charging technology is used for buses in Genoa and Turin.
This has allowed tackling the air pollution problem while electric buses remain operational all day. The transportation system has allowed fossil free and quiet transport in the congested cities with the cost of electric power engine at 9000 euros per annum when compared to 50,000 euros for the diesel engine (Wilkinson, et al., 2014).
Babb (2016) evaluated that the automotive is likely to experience a problem in 2060 because of changing business environment today. The fuel consumption and development of emission zones are likely to increase in future and therefore, design, style and choice of the consumer are likely to base on the product which meets the environment regulation and customers can drive without restrictions in 2060. Therefore, today developing a problem of emission and legal regulation is likely to translate into customer needs in future.
The technological changes such as ‘internet of things’ and costly consumption needs to replace with cost effective products with the customer would buy energy efficient product which offers better value for money (Babb, 2016).
The lack of road safety and increasing population in the urban areas is likely to make the driving condition difficult and therefore, future such as auto parking, navigation system and autopilot would allow increasing the safety and traffic problems. The government has set target and planning to implement taxes on the vehicles which fail to meet the emission targets which would transport expenses in future. Therefore, the regulation and taxes would make it difficult and inadequate infrastructure for the transportation (Hao, et al., 2016).
The three milestones which will lead to future changes in the automobile industry in Italy are based in 2030, 2045 and 2060. The three pillars of sustainability involve social, environment and economic. The first milestone in the automobile in near future 2030 is ‘economic pillar’. The social sustainability involves bearable and equitable solution for the customers (Slawinski & Bansal, 2015).
Hitt et al (2016) studied that the business needs to develop a strategy which allows controlling the cost and producing a vehicle which is economically viable. The running cost of the vehicle, government taxes and increasing legal requirement requires producing material and components which are technology advance which reduces the operating cost and develop the affordable technology.
For example, the existing cost of running the car in Italy (insurance, taxes and Tolls) are estimated at 700 euro per annum which is likely to increase at an annual rate of 5% for coming years. Therefore, automobile industry needs to produce vehicles which are economic to operate but cost effective to build (Valente, 2015).
The EU emission targets of 40% need to meet by 2040 and therefore, automobile industry to improve the performance of the electric vehicle which is economically viable. Further allow reducing the operating cost while meeting the emission target. The third milestone for the automobile industry is based on the social pillar in 2060. The ageing population is likely to demand vehicles which meet their transportation need through improved safety and comfortable. The population of Italy would reduce by 2060 and therefore, a vehicle such as a self-driving car would cater the need of customers (Buxel, et al., 2015).
Cleland-Huang (2015) evaluated that the development of the economical vehicle which is fuel efficient and not subject to taxes would allow tackling the environment which requires immediate attention. The traditional horsepower combustion engine should be dealt at immediate priority to reduce the operating cost as well as address the air quality problem. The people should be more acceptable towards the small electric vehicle which is design for energy efficiency and environment problems rather buying a gas guzzler. The existing business in the automobile industry is design to achieve economies of scale and rather innovation.
Bjorkdahl & Linder (2015) added that the automobile industry needs to focus on innovation to deliver vehicles for future. The automobile industry needs to ‘innovative business model’ which integrate supplier and resource to spur innovation. The tapping of business opportunities through new environment-friendly vehicles, generate value by engaging customer and supplier and developing the new system and metrics would have allowed transforming the automobile industry (Kotler, et al., 2015).
Globally, the automobile industry has successfully managed to address the environment and technical challenges surrounded the automobile industry. For example, in the US, ‘Tesla motors’ has introduced Model X which has the top speed of 166 km/h as well as it has auto-pilot, parking and navigation system. Similarly, Renault, Mercedes B-class, KIA soul and many other automakers in the world has introduced zero-emission car. The proposed scenario for the automobile industry makes logical as industry is famous for its luxury brand (Hitt et al., 2016, p. 303).
Nevertheless, the changing world demographic, environment issues and economic will result in demand for vehicles which meet the environment and legal requirement and ensure safe and cost effective mode of transport (Tillemann, 2016).
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