Alcoa & the Auto Industry Case Study
For the Final Exam Course Project, you will:
Prepare a “Creativity and Innovation” assessment on the Alcoa & the Auto Industry Case Study. The assessment will be a minimum of 5 pages double spaced in APA format. Your assessment must also include a cover sheet, reference page, proper citations, and free of misspellings.
Leverage the information contained in the textbook, weekly lectures, assignments articles, videos, etc..
This project does require that you conduct research outside the scope of the textbook, weekly lectures, assignments articles, videos, etc.
Be creative and innovative in your assessment and solutioning and demonstrate the knowledge you gained throughout the course.
The following elements must be incorporated into your assessment:
Identify and describe why their aluminum alternative was innovative;
Explain if or how Alcoa leveraged its creative resources (i.e., RBV, etc.);
Discuss who or what was the catalyst for creative change in the organization’s strategy;
Identify and discuss a process, product, or service that Alcoa may or may not need to reset;
If a reset is necessary, formulate an innovative and or disruptive alternative as the solution;
Review and discuss Alcoa’s implementation plan and recreate their implementation plan from your perspective;
Identify and discuss which of Alcoa’s innovative characteristics align best with which strategy (i.e. traits, trends, fringes, etc.);
Identify and discuss which theory of change they align with most closely and the data analytics used to support their innovative strategy;
Identify and discuss which change management plan aligned with their strategy (Lewin’s 3-Step Model, ADKAR, Kotter 8-Step Model, etc.);
Identify and discuss the Alcoa’s implementation strategy (i.e., Four-dimensions of behavioral implementation strategies, buying innovation, outsourcing innovation, creating innovation, or starting an autonomous organizations).
Alcoa and the Auto Industry
Alcoa remains a crucial market leader in the production of aluminum products and the automotive industry. The firm has built and advanced its brand in the market due to the production of aluminum-based products. The primary target was to provide consumers with automotive machines that meet and exceeded their expectations. The company has always been committed to world-class performance. The managerial level’s decision to incorporate aluminum products in the manufacture of auto models was based on the potential capacity that existed in the aluminum production area. The awarding of the Ford contract saw the company expand its factories to meet market demand. Overall, Alcoa’s contribution to the manufacture of autos composed of aluminum-based bodies remains a quality innovation in the industry.
The Innovativeness of the Aluminum Alternative
Alcoa brought aluminum technology in the automotive sector. It has become a world leader in the production of aluminum products that have been utilized in the manufacture of automotive products. The component played a vital role in constructing the body system, especially in the Ford F-150 pick-up trucks (Rosenthal et al., 2014). The rationale behind the selection of aluminum is based on its growing success in the United States. Also, aluminum significantly reduced vehicle mass, enabling an efficient and smaller engine with enhanced performance. The vehicles would produce higher performance with increased miles per gallon. For example, the F-150 model availed in the market in 2015 had a reduced weight of approximately 700 pounds compared to prior models (Rosenthal et al., 2014). Thus, Alcoa’s selection of the innovative aluminum option provided an opportunity to manufacture small-engine based autos and accelerated performance level. Consumers have a viable opportunity at hand to reduce energy consumption when utilizing their vehicles.
Leveraging Creative Resources
Alcoa relied on continuous improvement, the resource-based view tactic, and the horizontal insight model perspective to meet its agenda. The firm had been in existence in the market and identified a tactic to sustain its competitive advantage. It generates efforts to improve its products and thus meet and exceed consumer expectations and satisfaction. The move to shift to the manufacture of aluminum-based autos evidenced its continuous improvement process. Notably, it utilized strategic resources to exploit and achieve sustainable competitive advantage. The company invested $300 million in its Lowa factory and $150 million at the facilities located in Tennessee (Rosenthal et al., 2014). These strategic approaches leveraged its resource base and significantly advanced its brand name and image. The horizontal insight model entailed liaising with all team members to ensure they understand the process. The knowledge and experiences of the Alcoa team are vital elements that provide the firm with an advantage. These exist as imperative resources that the business relies on to meet its strategic goals.
The Catalyst for Creative Change in Alcoa’s Organizational Strategy
Creative change revolves around the establishment of new ideas that create value for individuals and organizations. Byers (2017) highlights that individuals and business establishments rely on cognitive processes to generate new and potential ideas. In Alcoa’s case, the introduction of the Micromill system portrays a creative approach in the organization. The call to meet new fuel-efficiency standards with lighter vehicles was one of the crucial catalysts for creative change in the organization. The auto world was shifting to a greater relevance of models made of a strong but lighter metal-based machine. Alcoa captured the opportunity by deciding to utilize its produced aluminum components in the auto business. The fuel-efficiency requirement also supported the establishment of the creative plan. Even though consumers might be expected to pay a high premium for these products, they would save fuel and gas. Thus, the new fuel-efficacy standards with lighter vehicle requirements create a gap in the market. Alcoa tapped into this gap and focused on adopting a creative change process that benefitted the firm and worldwide consumers. The other major catalyst was resource availability.
Any change process requires a massive capital investment. Businesses considering to commence a creative and innovative change process has to have a vast resource base at its disposal. As Rasmussen (2016) reveals, contemporary economic decision-making follows an examination of the firm’s internal operations. This helps the managerial level to make effective choices that safeguard the businesses’ interests and welfare. Alcoa was keen to make the dream that it has at hand into reality. It invested $300 million in the Lowa factory and another $150 on facilities located in Tennessee. The primary plan was to meet the new demand produced by the Ford contract and fulfill market needs. Light-weight autos have an essential advantage for the consumers. The absence of resources would have affected the adoption and implementation of the change process.
Process, Product, or Service that Alcoa should reset
Alcoa may need to reset the price for its aluminum product. Price flexibility is an imperative aspect that has the capacity to guarantee its success and sustainability. The adoption of aluminum by the auto industry is limited by factors such as cost and availability. Aluminum is deemed an expensive component, and its utilization translates to a high cost of purchasing the readily available products in the market. A large segment of the potential market consumers may not be able to buy these products due to the increased cost attributed to the high cost. Alcoa might need to adjust its prices to suit the needs and concerns of auto-manufactures and that of the customers. Also, the high demand for aluminum could further accelerate its price and affect the users’ purchasing ability. The acquisition of long-term support by the consumer market will depend on how far Alcoa is willing to flex the price to accommodate the clients’ needs and interests.
In line with the price adjustment requirement lies the adoption of an innovative strategy, such as a buffering approach. There is a dire need to have a proactive strategic plan that meets any emerging issue. Alcoa can rely on steel as a buffer component, considering that other firms had adopted its use to produce lighter alloys. This means that there is a vast potential that lies with the dependence of the steel material. It will ensure that consumers can purchase products at a pocket-friendly price since steel is cheaper than aluminum. Notably, Alcoa has an opportunity to continue expanding its business amidst issues such as reduced aluminum availability and threats of the loss of clientele due to high prices.
Alcoa’s Implementation Plan
Alcoa invented and adopted a new technology known as Micromill in its expansion strategy. The technology produced stronger and lighter aluminum sheets. As Guthire and Isac (2016) state, Alcoa made a major breakthrough in aluminum casting technology with the Micromill system’s support. The acquisition of a new and improved process paved the way for attaining improved targeted milestones and objectives. The desire of the consumers revolved around lighter autos. Notably, mileage acted as another crucial aspect that called for the utilization of aluminum material in the autos’ manufacture process. The plan’s implementation focused on adopting a new and advanced business process capable of meeting its targeted consumers’ needs. The recreation of the strategy revolves around the combination of steel and aluminum materials. As opposed to the abandonment of steel, Alcoa should have incorporated both products to develop a proactive action. Such a plan is positioned to generate significant market value. According to Brege (2018), proactive market strategies enable businesses to create superior value for their clientele. A combination of proactive and response market orientation strategies delivers higher value for the consumers. Thus, Alcoa should have incorporated the two materials to manufacture autos to meet current market demand and handle future outcomes.
Alcoa’s Innovative Characteristics and alignment with Crucial Strategies
Alcoa’s advanced technology reveals the element of possibility. The weight-reduced aluminum auto products align with the traits and trendy strategic perspectives. The Micromill system is one of the best and valuable innovations in the aluminum industry. Its alignment with the trait strategy entails the need to meet the concerns and interests of potential consumers. The new way of making aluminum sheets that make vehicles lighter is a trendy aspect experienced in the market. Benefits attributable to such innovation include energy efficiency and reduced environmental emissions (Das, Peretz & Tonn, 2001). The informed judgment is arrived at depending on the expected value to different stakeholders. The decision to develop new auto-related technologies, plants, and facilities emerged from the auto changes experienced in the industry (Miller, 2014). The directive on fuel-efficiency standards with lighter vehicles is another key trend that attracted Alcoa to venture into aluminum products in the auto industry.
Identification of the Theory of Change
Lewin’s theory of change is the ideal approach that aligns with the strategy adopted by Alcoa. It helps accelerate organizational awareness and the postulated structured change. The model allows decision-makers to increase change forces, decrease force to maintain the status quo, or even combine the two depending on the conditions and circumstances (Hussain et al., 2018). The adopted perspective should encompass the proactive and reactive organizational change. The Alcoa team needed to first prepare for the change by examining the rationale behind the move. The organization-level ensures that all team members understood the process and its significant benefits. Next, elements such as effective communication and quality leadership pave the way for the initiative’s success. After embracing and implementing the change process, Alcoa’s primary concern was stability. The team relied on data analytics such as prior autos weight and millage to support the innovative strategy. The consumer market accommodated the presence of lighter vehicles with reduced millage.
Assessment of the Change Management Plan
Kotter 8-step model exists as the most viable change management plan that Alcoa can adopt. The innovative strategy’s response is supported by aspects such as urgency, having a correct vision, and effective communication, among others. Teams are expected to ensure that the change re-created is locally relevant to the targeted individuals (Pollack & Pollack, 2015). The primary idea behind the model is preparation as opposed to allowing the process to change itself. At Alcoa, the top-leadership level needed to strategize on short-term goals, communication, establish a correct vision, and build the need for an urgency to introduce the change process. All these perspectives primarily targeted change acceptance and establishing a viable working environment for all team members. In each stage, the leadership levels should ensure that everyone depicts willingness and readiness to achieve a common goal.
Alcoa’s Implementation Strategy
The change process witnessed at Alcoa relied on creating innovation. The firm assessed how innovation benefits consumers by accelerating value. Other elements of consideration include corporate value and competitiveness. Research shows that creating new designs strives to balance the potential for innovation, enterprise, and other internal factors (Lendel & Varmus, 2011). The postulated benefits combine consumer and organizational value. In this case, Alcoa adopted a new system known as Micromill to support lightweight auto machines’ production. Consumers have an opportunity to purchase autos that adhere to weight consideration and mileage. On the other hand, the business stands to benefit from increased sales and profitability. Aluminum is costly, and the organization can tap into the existing market potential to boost its marginal profits and revenue.
Overall, Alcoa and auto case study reveals one of the best innovative tactics in the corporate world. Emerging trends always drive markets. The plan to have lightweight autos and reduce millage supported the need for a change process. Alcoa, being a key market leader in aluminum production, supported the call to integrate this component in automotive manufacturing. The investment of a significant pool of resources at the Lowa factory and other facilities based in Tennessee evidenced the advanced market value that auto users and the company itself stand to benefit from with the utilization of aluminum in the F-150 machine production.
Brege, H. (2018). Exploring Proactive Market Strategies: Managing the Market to Create Value (Vol. 1809). Linköping University Electronic Press.
Byers, V. (2017). Creativity, Innovation, and Change. In the book: Leadership and Change for the Health Professional. McGraw Hill Education.
Das, S., Peretz, J. H., & Tonn, B. (2001). Evaluation of the Benefits Attributable to Automotive Lightweight Materials Program Research and Development Projects. Oak Ridge National Laboratory.
Guthrie, R. I. L., & Isac, M. M. (2016). Conventional and near net shape casting options for steel sheet. Ironmaking & Steelmaking, 43(9), 650-658. https://doi.org/10.1080/03019233.2016.1216510
Hussain, S. T., Lei, S., Akram, T., Haider, M. J., Hussain, S. H., & Ali, M. (2018). Kurt Lewin’s change model: A critical review of the role of leadership and employee involvement in organizational change. Journal of Innovation & Knowledge, 3(3), 123-127. https://doi.org/10.1016/j.jik.2016.07.002
Lendel, V., & Varmus, M. (2011). Creation and implementation of the innovation strategy in the enterprise. Economics and management, 16(1), 819-826.
Miller, J. (2014). Alcoa Targets Auto Industry with New Aluminum Process. Retrieved 10 October 2020, from https://www.wsj.com/articles/alcoa-targets-auto-industry-with-new-aluminum-process-1417734874
Pollack, J., & Pollack, R. (2015). Using Kotter’s eight-stage process to manage an organizational change program: Presentation and practice. Systemic Practice and Action Research, 28(1), 51-66. DOI: 10.1007/s11213-014-9317-0
Rasmussen, J. (2016). The Investment Process for Capital Investments: The case of industrial energy-efficiency investments and non-energy benefits (Doctoral dissertation, Linköping University Electronic Press).
Rosenthal, J., Gentry, B., Cort, T., OldhamRogan, J., & Elias, J. (2014). Alcoa & the auto industry. Yale School of Management.
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