Caso elio engineering

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Elio Engineering, Inc.
Hari Sankara, Harald Winkmann

Case I-1

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OUTLINE
• • • • • ORIGIN OF ELIO ENGINEERING SEAT MECHANISM TECHNOLOGIES INDUSTRY AND REGULATORY ENVIRONMENT TECHNOLOGICAL BARRIERS AND RISKS CAPABILITIES REQUIREMENTS FOR PLAYERS IN THE AUTOMOTIVE SEATS AND COMPANY PROFILES • DECISION TIME
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ORIGIN OF ELIO ENGINEERING

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• • • •

Story starts with Paul ElioSince 1996:a revolutionary bike design Received a patent, but the venture failed Started to work for the automotive seat supplier Johnson Controls (JCI) as a part of a product design team • Drew a sketch of a new seat design: NC • “No Compromise”: simultaneous progress on cost, weight and performance
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• The department was not challenging • “The Structural Design and Analysis Department”
Computer simulations of crashes  Structural tests

• Hari Sakara- together 9 years in the department • The aluminum prototype of the concept-1998 • Part of a special class

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“All belts to seat” (ABTS)

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• Federal Motor Vehicle Safety Standards (FMVSS) on ABTS higher • Only in luxury cars and high-end sports convertibles • NC: low-cost, lightweight and strong • Potential penetrationin all segment of auto market

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• Paul&Hari: ‘Elio Engineering’ • Capital problems • “Bostrom Seating”
 Seat supplier for heavy truck and bus industry  looking to develop an ABTS seating

• 1999: licensing deal between Elio and Bostrom

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Position of Elio within the truck market • 1999: U.S. truck market expected to be ~500.000 units • Bostrom had a 50% market share • Elioexpects to get 2-5% royalties on the sales • Right partner for their vision ??

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SEAT MECHANISM TECHNOLOGIE S
Seat Mechanism Technologies Existing Seat Technologies Elio Engineering ABTS Technology

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Existing Seat Technologies
• Typical conventional* front seat costs around $500 to the original equipment manufacturer (OEM) • Cost of a conventional seat < cost of ABTS (~$750 to the OEM)• Innovation needed because of safety reasons • Major advantages: inexpensive, lightweight, easy to manufacture and assemble.
* Conventional front seat:seat shoulder belt attached to the door pillars
and the floor

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Existing Seat Technologies (cont’d)
• ABTS seat mechanism integrates the seat belt into the seat • Twice as heavy as the conventional seat • Major advantages: easier use,more attractive appearance, higher comfort and safety levels • Considered superior to conventional seats • Architectural innovation: “reconfigurations of the system of components that constitute the product”
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Elio Engineering ABTS Technology
• Based on cable and drums as opposed to gears • Key benefit: does not permit catastrophic failure- the seat does not fracture after the peak load •Other advantages: lighter, easy to assemble, does not require expensive parts etc. • Radical innovation: expected to be followed by incremental innovations.

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INDUSTRY AND REGULATORY ENVIRONMEN • Customers T

• Potential Market Size for Elio ABTS Seat Technology • Competitors • Barriers to Entry • Role of Upstream and Downstream Products of Firms • Regulatory Issues
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Customers • Notthe buyers of the cars, but the OEM customers of seat system suppliers • OEM market: concentrated (Fig.1) • High bargaining power of buyersunfavorable for seat suppliers

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Figure1: U.S. 1998 Light Vehicle Market Share
4% 5% 6% 7% 9% 25% Ford GM Daimler Chrysler Toyota Honda Other Asian European Nissan

16%

28%

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Potential Market Size for Elio ABTS Seat Technology
• Benefitsover existing technologies to OEMs and end users • Decrease unit costs: price competitive • Given all advantages, a potential to eventually become the technology choice for all OEMs • Potentially penetrate heavy truck, air-craft and passenger train markets
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Competitors • Concentrated U.S. automotive seating market, dominated by two big firms
• Figure 2: U.S. Seat Systems: 1997 Market...
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