Deloitte Consulting Case Competition 2017

D-Motors
Corporate Operating Strategy
Bevoshire Group
February 17, 2017

Copyright © 2017 Deloitte Development LLC. All rights reserved. 2
Outline
Industry and Situation Analysis
Key Recommendations
Implementation
Timeline
Financials

Porter’s Five Forces Industry Analysis
Barriers to
Entry
Manufacturing
Dealership
network
Bargaining
Power of
Buyers
High, lots of
substitutes in
market
Intensity of
Rivalry
Entry-level
market has
many players
Heavy pricing
competition
Threats of
Substitutes
Requires
enormous
capital outlays
Reputation
paramount in
automotive
industry
Bargaining
Power of
Suppliers
Global network
heavily based
on volume
pricing
Lots of options
for identical
parts, low
switching costs
HIGH LOW LOW HIGH HIGH

Situation Analysis
Information
Disconnect
Corporate
Culture
Declining
Revenues
and Profit
Margin

Vision
David uses
predictive
analytics to find
the ideal price
point and market
During a
weekly meeting,
David learns
about a new-cost
efficient motor
from Larry, an
accountant.
The 2018
Locust is taken
to market; it's
a smash hit!
David is trying to
boost revenues on
the 2018 D-Motors
Locust.

Key Recommendations
S&O Technology Human Capital
Rebrand towards a
younger market with
cost-efficient, reliable,
and stylish vehicles
Leverage predictive
analytics to improve
company knowledge on
the customer, itself, and
the industry.
Flatten hierarchical
structures to improve
information transfers
across the corporate
structure

DBS
Cognitive
Technology
Predictive
Analytics
Database Solution

Hierarchical Adjustment

Copyright © 2017 Deloitte Development LLC. All rights reserved.
Strategy and Operations

Target Audience: Gen Z and
Millennials
87 million
Gen Z
consumers
83 million
Millennials

Target Audience Data
Only 8% want
car/ridesharing
services to replace
car ownership
91% of millennials
trust American
products more
than ones made
elsewhere
43% think safety
is important
27% of Generation
Z views
environmental
friendliness as
important feature
92% of Generation
Z plans to own a
vehicle
For millennials,
key factors are
reliability,
purchase cost,
safety features,
and fuel economy

Product Strategy
Technologically-Oriented
Personalization
Upselling
Safety
Infotainment

Marketing Approach

High Stakes States:
Youngest Median Populations
Source: ArcGIS Median Age
US Map

• Reduces Recalls and Repairs
• Increases Credibility
SUPPLY CHAIN:
Sensors
• Decreases Customer-service
Investments Costs
• Differentiated Customer
Experience
CUSTOMER
EXPERIENCE
Artificial Intelligence
INCREASED
PROFIT
MARGINS

Employee Engagement

How?
Changing Culture
Team-based
Rewards
Flattening
Hierarchy
Investing in
Employees
Adjusting
Hiring
Strategy

Implementation Schedule
and Financials

Timeline of Implementation
Year
1
Year
2
Year
3
Year
4
Year
5
TRANSITION
• Roll out database
• Transition to
flatarchy
• Begin leadership
development
programs
• Transition
redundant
employees into
training positions or
educational
opportunity
• Launch new
marketing
campaign with
database leads
integrated
• Revenue growth
moves positive
BRANDING
• Begin selling first
updated models
• Move into more
celebrity and
event promotions
• Increase social
media
promotions
• Launch new
campus recruiting
initiatives
• Begin switching
roles of
employees who
have gone
through training
programs
• Beginning of the
self-driving
initiative
EXPANSION
• Meet 20%
revenue
growth goal
• Profit margin
surpasses
8.5%
• Begin selling
vehicles
internationally,
taking
advantage of
border-
adjusted tax
advantage
• Educational
opportunity
employees
return, utilize
knowledge in
different
departments to
prevent inertia
INNOVATION
• Self-driving car
prototype
completed
• Profit margin
surpasses 9%
• International
sales at least 5%
of revenue
• Plan for release of
self-driving
midsize sedan
below $30,000 in
Year 5
EVOLUTION
• Release sub-
$30,000 self-
driving midsize
sedan in the
US
• Expand
international
sales to at
least 7.5% of
revenue
• Have achieved
49% revenue
growth, 29%
profit growth

5 Year DCF Model
Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Revenue ($M) 55,204.00$ 51,988.00$ 55,094.00$ 47,896.00$ 43,742.00$ 45,491.68$ 50,495.76$ 56,050.30$ 60,534.32$ 65,377.07$
Net Profit
Margin (%) 8.34% 8.13% 7.90% 7.15% 7.06% 7.50% 8.25% 9.00% 9.50% 11.00%
Growth Rate -5.83% 5.97% -13.06% -8.67% 4.00% 11.00% 11.00% 8.00% 8.00%
NPV 49,264.16$ 53,349.48$ 56,212.14$ 59,228.40$
Discounted 50,988.41$ 57,149.30$ 62,323.40$ 67,965.95$
WACC 2.50%
Beta 0.85
Discount Rate 3.50%
Profit 4,604.01$ 4,226.62$ 4,352.43$ 3,424.56$ 3,088.19$ 3,411.88$ 4,165.90$ 5,044.53$ 5,750.76$ 7,191.48$
Assumptions
Total Profit
FY2012-16
Total Profit
FY2017-21
http://people.
stern.nyu.edu/
adamodar/Ne
w_Home_Pag
e/datafile/wac
c.htm 19,695.81$ 25,564.54$
Gain in
Revenue Gain in Profit
49% 29.80%

Conclusion
S&O Technology Human Capital
Rebrand towards a
younger market with
cost-efficient, reliable,
and stylish vehicles
Leverage predictive
analytics to improve
company knowledge on
the customer, itself, and
the industry.
Flatten hierarchical
structures to improve
information transfers
across the corporate
structure

Thank You

• https://oemsolutions.agameautotrader.com/wp-
content/uploads/2016/03/Gen-Z-Study-Infographic.pdf
• https://media.ford.com/content/fordmedia/fna/us/en/news/2015/06/09
/through-the-eyes-of-gen-y-and-gen-z.html
• http://www.theharrispoll.com/business/Interest-in-Electric-and-Hybrid-
Vehicles.html
• http://www.forbes.com/sites/drewhendricks/2015/04/09/a-look-at-
how-car-brands-are-effectively-using-social-media/#61723ba85356
• http://www.strategyand.pwc.com/reports/connected-car-2016-study
Bibliography

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