This article starts with Paul Elio had been working on a revolutionary bike design for two years, in 1996 and failed in venture. Then he met Hari, founded Elio Engineering INC and they worked with JCI in order to improve their financial quickly. Elio designed NC seat and met Bostrom seating which supply the seat to heavy truck and bus industry. In early 1999, Bob joined them as the third member of team. In Feb 1999,Bostrom made a licensing deal with Elio. Otherwise, Elio need to face to a lots of issues, such as seat technology, industry and regulatory environment, technological barriers and risks, and capabilities requirements for players in automotive seats and comparative company profiles. Elio’s vision is bringing the seat to the entire automotive industry and at the end of the article, they asked some questions about how to set up a company.
Answer the questions:
1. Simply describe Elio Engineering and characterize its position in its industry? Elio Engineering is a company that design the new technology of the seat in the automotive which is called NC seat is a part of ABTS. Elio Engineering’s vision is bringing the seat to the entire automotive industry. Elio want to provide a stronger, lighter ,and cheaper NC seat in the industry. In its industry, Elio Engineering had to face the technology, barriers and risks, manufacturing issues, customers, and competitors.
2. What is Elio’s vision. Is its vision appropriate to the environment? Elio’s vision is bringing the seat to the entire automotive industry. I think its vision is appropriate to the environment. Elio’s seat systems are stronger than existing companies. They focused on ease of use, higher comfort level, more attractive appearance, better maneuverability of removable seats and safer. Also, they had to face to many barriers of environment. Tier-one supplier, huge scale advantage in manufacturing and distribution. It provide standard products and incremental innovation with a significant lower cost position and shorter time to market.
3. Describe the strategic option of 2/99. What issues should the company consider in evaluating its strategic options and why. A new entrant had two major options. One of them is partner with tire-one or tire-two suppliers or with OEM and develop and market seat in a joint venture or through a licensing agreement. Otherwise, enter the market as a suppliers of mechanism or seat structure. In my opinion, Elio Engineering might be joint venture with tire-one or tire-two or with OEM. This strategy would provide the newcomer with substantial resource and significantly reduce technological and market risk, and exclusive partnership with a tire-one or OEM would limit the size of the total market for the new entrant. If they collaborate with tier-one seat supplier company.
The advantage is founder members have previous experience dealing with tier-one seat manufacturing company. The tier-one suppliers have strong relationship with OEM, easier to get US federal safety standard, and high volume manufacturing and distribution. The disadvantage is Elio only have less control over the core ABTS technology and lower profit margin. If Elio build the relationship with OEM, the advantage are high market share, sufficient resources and matured strategies, secured market and less financial stress. Also, the disadvantage are less control over ABTS technology, and limit market exposure, and lower margin.