Question

Identify and discuss 2-3 business models which are emerging in car industry, specifically focusing on the emerging business models in the value chain. These business models can be as a result of breakthroughs in new products, services, or new revenue models in any part of the value chain. You may want to consider both near and long-term possibilities.

Answer 1

The relationship between business and sustainability has become one of the central debates for the long-term future of human health and happiness, both in those countries that have already experienced industrialisation and in those that are undergoing the transformative impact of the process. It is already apparent that in certain critical respects the prevailing business models may be inappropriate and inadequate to meeting the challenge of sustainability. While there is a significant school of thought that argues for ‘factor x’ resource efficiency improvements that will allow even the poorest nations in the world to attain the material standards of living existing in the industrialised nations.

Underneath this fundamentally simple idea is a more controversial theme: that there is an intimate causal relationship between such issues as the characteristics of product technology, the industrial processes required to create that product, the structure of the industry that emerges to supply the product, and the business models employed by firms operating in that sector of the economy. This set of inter-dependencies suggests that, for example, it can be difficult for an established sector to absorb new technologies or, put another way, that new technologies in product and process create and enable new business strategies. As a result, the search for sustainable business solutions cannot be reduced to technological fixes alone, or to the piecemeal reconfigurations of parts of the value chain that some analysts advocate. Moreover, a sustainable product cannot be produced by an unsustainable industry. Equally important is the idea that the ‘normal’ business challenges being grappled with by management today are intimately bound up in the environmental and social challenges: in other words business management and strategy pertaining to environmental issues and the wider themes of sustainability are no longer marginal, they are absolutely central.

Many of the techniques and procedures being deployed to gain an empirical understanding of corporate sustainability themselves demand a system-wide analysis but neglect the possibility of structuring business models in different ways. The rich theoretical and methodological field of industrial ecology for example, using tools such as Life Cycle Analysis and mass balances, can quantify the environmental burden of existing practices or compare different ways of making the same product but has not been widely used to re-design the industrial ecology of entire product supply chains or to offer alternative business models.