CASE STUDY ON

By:Ashish Nashikkar
13115B0052

CASE STUDY SUMMARY

Elio engineering,Inc is a private company categorized
under
engineering
services
and
manufactured
automotives bodies vehicle bodies and trailers,
automotive chassis, product and material trailers.
Elio engineering is a company that designs the new
technology of the seat in the automobiles which is
called No compromise or NC
NC seat is a part of All-Belt-To-Seat(ABTS)
The firm was founded by Pual Elio and Hari Sankara.

CASE STUDY SUMMARY CONTINUED

1996, Pual Elio designed a revolutional bike which got a
patent.
1998,Pual met Hari Sankara who was his mentor in
Structural design and Analysis department of Johnson
Controls,Inc.
July 1998 , Pual invited Hari to join his idea about the NC
seat and they founded Elio Engineering
Nov 1998,They went to present the NC seat to Bostrom
Seating, the seat supplier for heavy truck and bus
industry, that was looking to develop the ABTS.

CASE STUDY SUMMARY CONTINUED

Early 1999, Bob Glaspie joined in as the 3rd member of
the team.
Feb 1999, Bostrom made a licensing deal with Elio.
Mar 1999, Bostrom planned to unveil the NC seat at an
annual trade show in Kentucky

INDUSTRY BACKGROUND
Customers
Potential Market Size for Elio ABTS Seat Technology
Competitors
Barriers to Entry
Role of Upstream and Downstream Products of Firms
Regulatory Issues

CUSTOMERS
Not the buyers of the cars, but the OEM customers of
seat system suppliers
OEM market: concentrated
High bargaining power of buyers unfavorable for seat
suppliers

POTENTIAL MARKET SIZE FOR ELIO ABTS SEAT

TECHNOLOGY
Benefits over 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
passenger train markets

truck,

air-craft

and

COMPETITORS
Concentrated
U.S.
automotive
dominated by two big firms
U.S. Seat Systems: 1997 Market Share

seating

market,

BARRIERS TO ENTRY
Tier-one, tier-two and tier-three suppliers
Tier-three or below: relatively low BTE
Harder to compete in manufacturing and distribution;
easier in design and development
A new entrant may
Enter the market as a tier-two or tier-three supplier
Or
Partner with one of the tier-one or tier-two suppliers or with an
OEM through a licensing agreement

ROLE OF UPSTREAM AND DOWNSTREAM PRODUCTS

OF FIRMS
Oligopoly of tier-one suppliers in the U.S.
Tier-two and tier-three suppliers of components and raw
materials have limited market power
There can be exceptions if OEMs insist that tier one
suppliers source from tier-two suppliers to access a
given technology or component

REGULATORY ISSUES
Strict federal safety standards set by National Highway
Traffic Safety Administration (NHTSA) and codified in the
Federal Motor Vehicle Safety Standards (FMVSS)
The seats should pass various crash tests

BOTTLE NECK IDENTIFICATION

Costly work stations which can be afforded only by
Fortune 100 companies
No external sources of funding and hence resulting in
delay in the crash tests
Software's needed to simulate the tests were costly
which could not be afforded by Elio
Limited number of workforce

SOLUTION 1
Collaborate with tier-1 seat supplier company
Advantages
Founder members have previous experience dealing with tier1 seat manufacturing companies
The tier-1 suppliers:
High volume manufacturing and distribution
Experience in product design and development and manufacturing
process
Easier to get US federal safety standards
Strong relationship with OEM

Disadvantages
Have less control over the core ABTS technology
Lower Profit Margin

SOLUTION 2
Collaborate with multiple OEMs
Advantages
High market share
Sufficient resources, matured strategies
Secured market, less financial stress

Disadvantages
Less control over ABTS technology
Limited market exposure and low margin

SOLUTION 3
Establish Elio as tier-2 supplier
Advantages
Supply products to all-tier suppliers
More control over ABTS technology

Disadvantages
Product delay (large capital requirement, lack of
competence in manufacturing, distribution, lack of
access to OEMs, implementation of a JIT delivery)
Low product value added

BEST SOLUTION

Solution 1- collaborate with tier-1

supplier
Less time required to startup
Rivalry- No, because of disruptive
technology , already with biggest
US supplier
Threat of new entrants- other tier-1
Threat of substitute- No

VALUE ADDITION- EXECUTION PLAN FEB 1999JAN 2000

1st Quarter- Market research, data gathering and
analysis for which type of seat to start and sign the
contract
2nd Quarter- Material selection, design verification,
product testing, US product safety approval,
design lock phase and low volume manufacturing
3rd Quarter- Product ramp up and high volume
manufacturing
4th Quarter- Distribution of product with theme NC
Seat fitter vehicle

EXECUTION CONTINUED
Feb 2000- Jan 2001- Observations and statistics
growth, market response and market opportunity
expansion, product improvement based on
feedbacks
Feb 2001- Jan 2003- Team expansion, Invest
money in optimizing the current ABTS technology
and in developing new technologies
Feb 2003 onwards- Search for further opportunities
to expand itself with Train transport system,
Aircraft seats, European and Asian seats market

QUESTIONS?

THANK
YOU