Opportunities and Threats of Smart Connected Products for Volvo's Business Model

INNOVATION
AND
SUSTAINABLE BUSINESS
DEVELOPMENT

1
Modern day business has changed and so is the ways in which companies are
transforming themselves. Innovation has become one of the most crucial parts of the
strategies of the firm. Disruptive innovation has been adopted by many multinational
organisations (Giannoutakis & Li, 2012). It can be understood that the business models which
have made excellent profits to their organisations in the past are failing in these days. Many
opportunity and threats have been created by the disruptive technological innovations like
smart connected products. Volvo has been one of the largest supporters of the innovative
products. Business models today are subjected to displacement, outright decisions and fast
disruptions. Volvo is one of the largest manufacturers of buses, trucks and other construction
equipment (Volvo group, 2018). This report illustrates about the opportunities and threats that
are created by smart connected products. It also gives idea regarding the business model
framework by Pigneur and Osterwalder in terms of Volvo as well as two perspectives of
business model.
As per Hildebrandt, Hanelt, Firk & Kolbe, (2015) organisation’s business model for any firm
is known as a rationale of how a firm captures and generates values as well as delivers in
economic, culture, social or some other contexts. Construction process of business model
forms a part of strategies of business. Business model is known as larger range of informal
and formal description that showcases central business aspects. It includes sourcing,
operational processes and polices, trading practices, target audience, offerings etc. Firm’s
business model offer three components like value capture, value creation and value delivery.
These all factors generates new financial model that describes the method in which an
organisation captures economic values from its operations in business.
Apart from this Kuschel, Remneland & Kuschel, (2011) suggests that disruption is known as
business administration that refers to as the innovation that may generate create value
network and new market. This is eventually disrupting a value network and the market that is
present. It is capable of making displacement in the market like the alliances, products or the
establish organisations that are market leaders. It contains details related to the values that
any organisation offers to its potential targeted market. This enhances the margins of profit
for the firm. The products that exist in the market have been replaced by the smart connected
products.
Any smart connected product is capable of getting linked with other products in a manner
that they are able to take decisions as per the requirements (Porter & Heppelmann, 2014).

2
Many a time decisions are taken based on the past experience. It is a type of disruptive
technology as it makes business smarter than what exist in the market. These innovations
have higher flexibility and hence can solve many issues of the firm. Every smart connected
product acts as a node in the larger network and interacts among themselves by sending and
receiving data.
Vehicles these days are have gone smarter since they require those devices which act smartly
as per the situations (Narla, 2013). With the concept of smart cars is also being used in the
trucks like the Volvo is having research on the unmanned trucks that are capable of
delivering the products on the far across destinations. Smarter equipment that is required in
construction industry.
There are many smart connected products that Volvo is making like trucks, buses, cars,
cranes, rollers etc. Several sensors are connected with such products which are capable of
making adjustments as per the work they are assigned to do (Dimitrakopoulos, 2011). In the
increasing demands of the drivers for which companies are highly concerned about requires
the trucks that can be operated from the distant location just with the use of network.
Vehicles are capable of making navigations and reaching to particular locations without
human interference. With the development of Internet of things these smart connected
product is having a great future. Since everything in the environment is getting connected
hence accessing the environment has become easier. This can benefit the owner of the truck
who supplies some fresh products by automatically adjusting the temperature as per the
requirement.
Smart connected vehicles have larger scope in the market as they are able to do several
operations without human interventions. Owners of the firm faces many types of loses due to
drivers faults because of tiredness. Such products are capable of reducing these problems as
they are capable of making decisions without human interventions (Weber, 2017). It also
helps the stakeholders like the consumers of the company and the owners of products to
know the location of their vehicles. It also empowers the owners to sit in any part of the
world and change the route of the vehicle whenever they want.
On the other hand it is also threatening the Volvo’s business as it empowers the smaller
companies without even having huge experience in the industry to have control over their
business and achieve success. Whenever a product gets connected to a network the acts as a
node on which hackers attacks (Guerrero-Ibanez, Zeadally & Contreras-Castillo, 2015). By