Businessmodel of Autoliv

Customer Segments

Autoliv has a niche market business model, with a specialized customer segment. The company targets its products at automobile manufacturers. Its top five clients account for 52% of sales.

Value Proposition

Autoliv offers four primary value propositions: innovation, performance, risk reduction, and brand/status.

The company has embraced innovation throughout its history. Its groundbreaking products include:

• First two- and three-point seat belt system
• First airbags for front and side impacts
• First pyrotechnic belt pretensioners
• First non-azide air bag inflators The company has demonstrated strong performance through tangible results. It claims that its products save 30,000 lives per year and prevent 10 times as many severe injuries as those of rivals.

The company reduces risk by maintaining high quality and safety standards. Specifically, it:

• Maintains the Autoliv Product Development System (APDS), which ensures that all new products pass five required checkpoints: 1) project planning, 2) concept definition, 3) product and process development, 4) product and process validation, and 5) product launch. The purpose of this system is to prevent problems proactively and confirm quality.
• Maintains the Autoliv Production System (APS), which trains employees to respond proactively to anomalies in the manufacturing process.
• Maintains the Autoliv Quality System (AQS), which ensures zero defects by using mistake-proofing methods such as in-line inspections, Poka-Yoke, and cameras and sensors to prevent it from delivering bad products. Autoliv also operates an advanced product traceability system.
• Involves suppliers in projects early and trains them. The purpose of this activity is to ensure suppliers are producing robust, effective components. The company has established a strong brand due to its success. It bills itself as the largest manufacturer of auto safety equipment in the world. It has a global market share of 39% in the passive safety equipment category and of 20-25% in the active safety equipment category. It has 64,000 employees and generated sales of $9.2 billion in 2015. Lastly, it produces products for over 1,300 car models representing over 100 car brands, with its top customers including General Motors, Ford, Renault/Nissan, Hyundai/Kia, Volkswagen, FIAT/Chrysler, and Daimler.

Channels

Autoliv’s main channel is its direct sales team. The company promotes its offering through its website, social media pages, and participation in trade shows and conferences.

Customer Relationships

Autoliv’s customer relationship is primarily of a self-service, automated nature. Customers utilize its products while having limited interaction with employees.

Key Activities

Autoliv’s business model entails designing, developing, and manufacturing its automotive safety products for customers.

Key Partners

Autoliv’s key partners are the suppliers that provide it with the equipment and materials it needs to manage its operations. The company has also formed several joint ventures in order to encourage its geographical expansion, develop new technologies, and expand its customer base. Its joint venture partners typically provide access to manufacturing facilities and sales support.

Key Resources

Autoliv’s main resources are its human resources, who include the engineers that design, develop, and manufacture its products and the sales staff that market it. The company relies heavily on its physical resources in the form of 80 production facilities in 30 countries and 22 technical centers in nine countries globally with 20 test tracks, more than that for any other automotive safety supplier.

Cost Structure

Autoliv has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is likely cost of goods, a variable expense. Other major drivers are in the areas of research/development and sales/marketing, both fixed costs.

Revenue Streams

Autoliv has one revenue stream: revenues it generates from the sale of its automotive safety products to its manufacturer customers.