Lotus Cars Innovation Management

This assignment delves into the innovation management practices of Lotus Cars, a company known for its lightweight cars. Initially, they used aluminum, but later transitioned to carbon fiber, showcasing their commitment to innovation. The document references various books and journals that provide insights into strategic innovation management, eco-innovation, business model innovation, and the importance of customer participation in driving business success.

MANAGING INNOVATION
IN BUSINESS

Executive Summary
Innovation is a process of converting ideas into reality so that it can be beneficial for both
companies and people who are using them. In this report, researcher will focus on Lotus
Company, which is a automotive company and manufacture sports cars. Auto-mobile industry
refers to as a commercial enterprise that involves in an activity of designing, manufacturing,
developing and marketing of motors vehicles so that it can be sold to its valuable customers. In a
nation, it is a big source of income and comes under the largest economic sector across the globe.
In this assignment, history and innovation which company has done throughout the years is
mentioned in this report so as to analysed the growth which firm has gained in the years of
business. Thus, innovation includes some deliberate application of resources and activities
through which a thought can be changed into useful products which can be further deliver to
customers for providing benefits. Since the automotive industry started in the year 1860s,
commercial enterprise has gone through many changes such as making a four wheeler car
including safety measures, adding new features for comfort etc. Other than this, performance and
capabilities of Lotus cars was included that assisted in making glorious history. In addition to
this, position of company in 2018 and things they have implemented for getting better into
market area is included in this report. Therefore, in order to know different aspects of the
company Porter's five force model is being included which will further provide an overview of
the company's threats of substitute whether it is high or low or does bargaining power of
suppliers is high or low etc., further with the help of SWOT analysis company's strengths,
weakness, opportunities and threats is being evaluated. Henceforth, with the help of this
assignment company's performance and its implementation of innovation for getting better
services and facilities is included.

Table of Contents
INTRODUCTION...........................................................................................................................1
Main Body.......................................................................................................................................1
The Organisation and its Innovation History.........................................................................1
The Organisation existing Innovation Performance and Capabilities....................................3
The Industry in 2018..............................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Innovation is basically define as a new idea, device or method which company imply for
gaining benefits from the market area. Lotus Cars is a British Multinational Company of United
Kingdom that manufactures sports cars and racing cars. This company was eastablished in the
year around 1952 and since than they are providing effective services and facilities to its loyal
customers. Generally, the company designs and manufactures racing cars that are light weight
and inbuilt with lot of features and characteristics. Company is operating its business worldwide
and they are doing well. Auto-mobile industry, with the change in course of time has evolved
and now they are touched every aspect of technology such as making a light weight car which
can reached to its destination in quick time without any problem. Thus, this is the main reason
why this topic was chosen as determining the innovative process in this industry will be very
helpful in getting proper information related to the evolution of this auto-mobile industry.
According to the survey conducted in the year around 2014 it has been analysed that Lotus Cars
is ranked 50 according to the IQ Score (Automotive Brands Ranked by Digital IQ Score, 2018).
Purpose of Lotus Cars is to manufacture best cars which incorporates all the features that
comforts an individual who is driving the car. Thus, company wants to pioneer in one of the
renowned racing competition i.e. Formula racing. As a result, Lotus Cars is manufacturing cars
considering the factors required for the same. Structure of Lotus Cars is similar like other
companies who are dealing in manufacturing industry. For instance: they have a General
Manager under which five departments are included and these are manufacturing centre, research
department, personnel department, financial department and marketing department. Thus, it can
be said that Lotus Cars follows a hierarchical structure for performing its activities. Present
report will include overview of the company along with its innovation history. Other than this,
firm's existing innovation, performance and capabilities are also being explained in this
assignment. Lastly, the latest position of the company in market area is included in this report.
Main Body
The Organisation and Industry Overview
The Organisation and its Innovation History
Lotus Cars is a automotive company which was found in the year around 1952, by Colin
Chapman. Firm mainly manufactured sports and racing cars and its headquarter in Hethel,
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United Kingdom. Company is operating its business all over the world and they are gaining
benefits from them as well. Lotus Cars was previously owned by DRB-HICOM. During their
initial years company was formed by the name Lotus Engineering Ltd. By two engineers Colin
Chapman and Colin Dare.
Lotus Car's first factory was situated in behind the railway Hotel in Hornsey, North
London and it was an old stables. Later in around 1954, Team Lotus split from Lotus
Engineering and they actively manufactured cars for formula one racing from 1958 to 1994.
Innovation is basically define as something which is original and is more effective as
compared to previous things. In relation with Lotus Cars its innovation history is explained
below for better understanding:
Lotus 1948 – 1950's
1948 Humble origins: In this year, founder Anthony Colin Bruce Chapman built their
first trials racing cars. In order to make this car, they used only power drill and with the help of
skill of elementary panel beating. Their first car wyas 1930's Austin Seven based special later
known as mark 1 lotus, registered as OX 9292. Chapman work experience in British Aluminium
played a significant role on the evolution of Lotus ethos i.e. “performance through lightweight”
and this helped them in making lightweight sports cars.
1950 Chapman's 2nd trials Car: This car was a perfect presentation of state-of-the-art
and it was first lotus car which was unused on roads. In the year around 1950, this car was sold
to Mike Lawson and later won the Wrotham Cup. By the year 1954, company was Lotus Cars
came into being and by manufacturing mark 8 they gained overnight success.
1960 The mid-engine principle: Lotus Cars have developed this engine with the focus
on ruling the automotive business sector. Chapman adopted this mid-engined layouts for Cooper
race cars. Throughout this decades many company grows gradually like in the year 1962 they
developed four races and one road car. 1963 was for The Cortina and Formula 1 success. In
1967, The legendary Cisworth-Ford DFV V8 engine was made which dominated the Formula 1
race over a decade. 1967 production of Seven S4 begun and is designated as Type 60.
1970's Heritage: This year was for Elan Sprint and more Formula 1 racing cars that
added more glorious to the company. In 1971 a new engine was developed named Type 907 road
engine. The Texaco Star was manufactured in 1973.
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1980's Heritage: Lotus Cars has developed on racing front and on road cars as well.
They have made modifications in their engines and developed strengths to strengths . Many cars
were manufactured such as Esprit turbo with new suspensions and a 210bhp 16-valve
turbocharged with 2.2 litre engine.
1990's Heritage: In the year 1993, Lotus Cars owned Bugatti ownership and with the
change in course of time company have significantly worked on designing and making more
convenient for customers.
2000's Heritage: New generation of Elise was launched with improved performance in
terms of styling, handling and quality. In 2003, a glorious era comes to an end as company
thought of rolling off Lotus Esprit form the production line marking. Many cars were
manufactured in this decade such as The Sport Exige GT3, The Lotus Sport Exige etc.,
2010's Heritage: Lotus Cars returned to Formula one after a long gap of 15 years. Other
than this for on road cars company worked on sound technology and implemented next
generation intelligent pedestrian warning system along with HALOsonic sound synthesis system.
Therefore, with the change in course of time, company has developed a lot in terms of
designs, engines and comfort. With every decade they have developed strong engines which can
be used in Formula racing cars and won them too. Till now Lotus Cars comes under the best
manufacturing cars in the world.
The Organisation existing Innovation Performance and Capabilities
In relation with Lotus Cars, with the change in course of time they have made lot of
innovation in its cars. As in earlier times their vehicles use to be heavier and bulky but as the
time passed they have made lots of modifications in their products can company now is known
for manufacturing best light weight racing cars in the world. Therefore, lotus cars on a regular
basis is incorporating many features such as HALOsonic sound synthesis system and with the
help of these features company is manufacturing sports cars Exige GT3 etc., In order to know the
performance of companies SWOT analysis is done and it will provide better understanding:
Strengths: Lotus Cars manufacture cars by targeting customers who are true drivers and
love to drive cars. Company's biggest strengths is their light weighted cars which provides better
facilities as compared to low power cars. Most of their cars are hand built and this gives high
precisions to the product. Other their this, Lotus Cars have a strong presence in motor sports and
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Formula One. In addition to this, light weighted cars are adding glorious history to the lotus Car
history (SWOT analysis, 2018).
Weaknesses: Main weaknesses of Lotus Cars is their highly dependence on engineers for
designing engines and other activities. In most of the companies in some of the countries are
restricted because of which company's customer base is affected. Other than this, some of their
cars are high at cost because of which consumers are moving towards other firms for fulfilling
their needs and requirements.
Opportunities: As Lotus Cars is highly active in Formula One race which is providing
them with an opportunity of enhancing its brand image in front of customers. Other than this,
their unique feature of making cars light weighted so that it can run fast. As a result, most of the
racers are using their cars in these races.
Threats: Interdependence on engineers can delay manufacturing process because of
which company can face issues or problem in delivering complete manufacturing good.
Other than this, company also manufactures electric vehicles which was established by
Lotus Engineering and this group was totally dedicated to hybrid and electric vehicles. Their first
hybrid concept car was Evora 414E that usually covered 300 miles and 0 -6 MPH in 4.4 seconds.
Organisation's engineers have kept their focus on electric propulsion while manufacturing this
concept car. In terms of its glory and award Lotus Cars was awarded the Queen's Award for
Enterprise for its contribution in International Trade.
Lotus Cars is know for its unique designing and performance. Company is standing in
three distinct pillars of competence and these are its lightweight structure, efficient performance
and driving dynamics. In their latest models they have incorporated similar engineering integrity.
Sports cars that are developed by this company are thrilling the souls and creating wonders and
because of this Lotus Cars are highly praised for providing dynamic advantages. In reference to
this, engineers have played a crucial role as they have raised the bars for the organisation.
Lightweight designing and not compromising its efficiency is the major key guard of this
company. Thus, they are focussing on designing myodels which can light in weight but effective
at the same time. While manufacturing cars company has a blend of enshrining hybrid and
technology of electric vehicles according to its range of capabilities. Most of the companies in
order to manufacture goods seeks into different governmental policies but Lotus Cars has
steeped into a policy of lightweight structural composition and integration. They have engineers
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who are experts in filed of composites and finite lightweight metallic structures. This is assisting
companies in manufacturing best quality racing cars and most of the cars have won Formula 1
races as well. For example: for series-hybrid cars they have Range Extender Engine all in
aluminium, mono-block, 1200 cc, three cylinder, 47 horsepower, four-stroke engine. These
engines are small and light weigh near about 56 Kg i.e. (123 lbs) mostly having three cylinders
with no detachable cylinder head. Other than this, their first model which was made and named
Mark 1 Lotus which was heavier and gradually they started making cars with aluminium which
is perfect for Formula 1 racing cars. By keeping concept of light weight in the minds company
manufactured all new in-house designed V8 range of cars which weight around 170 kg (375lbs)
and just 612 mm (24.1 inches) long.
Both the images are showing the modifications and changes which company have done
through out the decades in their cars. Gradually Lotus Cars is thinking of making cars with the
help of carbon fibre. This will make car more light in nature and provide the better experience to
its drivers.
Now a days world market is looking for a secured platform where without decreasing
fossil fuel or resources they can manufacture best quality products. Company has focussed on 3D
elemental construction, noise, vibration and harshness.
The Industry in 2018
Auto-mobile industry is one of the multi-billionaire industry across the globe and large
number of companies are trying to gain competitive advantages by sharing a huge market share.
Other than this, commercial firms who are dealing in this sector are performing their activities so
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Illustration 2: Mark 1 Lotus Illustration 1: The Evora Carbon Concept

that better services and facilities can be provided. Since, auto-mobile industry was established it
has gone through various changes from its size to its features. For example: Companies who are
dealing in this sector has now focused more on passenger's safety and environment friendly cars.
Further to understand the same porter's generic model is being explained:
Threat to new Entrants: In relation with auto-mobile industry, there is a low chance of
new entrants as for establishing a new company it may require a large number of funds and
managing this for a fresh firm can be difficult. There are some categories for which investments
are required and these are manufacturing facilities, distribution networks, selecting eligible
candidates who are skilled enough in performing the task (Threat of new entrants, 2018).
Therefore, it can be said new entrant cannot survive unless a new brand with innovative idea has
come up in the market. Other than this, there are several factors that are to be considered by new
companies such as high import taxes imposed by regulatory bodies. Henceforth, Lotus Cars does
not have of think in this relation as their brand image is providing the firm with competitive
advantage.
Bargaining Power of Suppliers: For most of the companies who are dealing in this
sector have low bargaining power of suppliers. Moreover, it depends upon the size of the
industry and based upon the labour, raw materials required for manufacturing a product. For
instance: Lotus Cars have a large number of suppliers as a result, they can persuade to different
suppliers in order to get better raw materials for manufacturing their product (Supplier Power,
2018).
Bargaining power of Buyers: In relation to this, bargaining power of buyers is
moderately higher because whether buyers are small or medium they can switch to another brand
if price are not according to the budget of the customers. Therefore, in terms of Lotus Cars if
customers are not getting appropriate results than they can shift to some other companies for
purchasing cars which can fulfil needs and requirements of consumers (Porter's 5 Force, 2018).
Threat from substitutes: According to current market environment many alternatives
are present for the modes of transportation and because of the hike in fuel prices people are
considering more on pool transportation such as taxis, buses, trains and planes (Threat of
Substitutes, 2018). Therefore, in relation with Lotus Cars threat of substitute is higher because
their there are many commercial enterprise who are dealing in the same sector such as BMW,
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Rolls Royce, TESLA, etc., thus, by implementing new and innovative ideas these firms can give
tough fight to these organisation.
Rivalry among competitors: In this context, competition amongst firms is very strong
because there are many recognised organisation who are dealing in the same sector. Basically,
rivalry between companies in this sector is based on features, pricing strategies, design and
quality of products. Thus, Lotus Cars have great competitors for instance BMW, they are
manufacturing both luxury as well sports cars moreover, can give a tough fight to this
organisation.
CONCLUSION
From the above report it has been concluded that innovation in a company is essential for
providing new and vibrant products to its customers. Lotus Cars, in recent times is one of the
leading company that manufactures sports cars on road cars as well. Throughout their journey
they have faced many ups and downs but innovated powerful engines which are the part of
glorious history of Formula 1 racing. First for manufacturing cars they used heavy metal and but
later they switch to aluminium which justify their concept of lightweight. But now company
have shifted towards making cars that are made of carbon fibre. In years company has developed
by making innovation on a regular basis.
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REFERENCES
Books and Journals
Tidd, J. and Bessant, J., 2014. Strategic innovation management. John Wiley & Sons.
Brown, K. and Osborne, S. P., 2012. Managing change and innovation in public service
organizations. Routledge.
Ngo, L. V. and O'cass, A., 2013. Innovation and business success: The mediating role of
customer participation. Journal of Business research. 66(8). pp.1134-1142.
Drucker, P., 2014. Innovation and entrepreneurship. Routledge.
Schiuma, G., 2012. Managing knowledge for business performance improvement. Journal of
knowledge management. 16(4), pp.515-522.
Cheng, C. C., Yang, C. L. and Sheu, C., 2014. The link between eco-innovation and business
performance: a Taiwanese industry context. Journal of Cleaner Production. 64. pp.81-
90.
Frankenberger, K. and et. al., 2013. The 4I-framework of business model innovation: A
structured view on process phases and challenges. International journal of product
development. 18(3/4). pp.249-273.
Schneider, S. and Spieth, P., 2013. Business model innovation: Towards an integrated future
research agenda. International Journal of Innovation Management. 17(01). p.1340001.
Ritala, P., Hurmelinna-Laukkanen, P. and Nätti, S., 2012. Coordination in innovation-generating
business networks–the case of Finnish Mobile TV development. Journal of Business &
Industrial Marketing. 27(4). pp.324-334.
Online
Locus Cars. 2018. [Online] Available through: <https://www.lotuscars.com/lotus-1960s-
heritage>.
Automotive Brands Ranked by Digital IQ Score. 2018. [Online]. Available through:
<https://www.rankingthebrands.com/The-Brand-Rankings.aspx?
rankingID=99&year=817>.
Porter's Five Force. 2018. [Online]. Available Through:
<https://www.strategicmanagementinsight.com/tools/porters-five-forces.html>.
Threat of new entrants. 2018. [Online]. Available Through: <https://strategiccfo.com/threat-of-
new-entrants-one-of-porters-five-forces/>.
SWOT analysis. 2018. [Online]. Available Through: <https://www.liveplan.com/blog/what-is-a-
swot-analysis-and-how-to-do-it-right-with-examples/>.
Supplier Power. 2018. [Online]. Available Through: <https://strategiccfo.com/supplier-power-
one-of-porters-five-forces/>.
Threat of Substitutes. 2018. [Online]. Available Through: <https://strategiccfo.com/threat-of-
substitutes-one-of-porters-five-forces/>.
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