Businessmodel of Navistar International

Customer Segments

Navistar has a mass market business model, with no significant differentiation between customer segments. The company targets its offerings at firms of all industries and sizes.

Value Proposition

Navistar offers two primary value propositions: accessibility and brand/status.

The company creates accessibility by providing a wide variety of options. It manufactures a broad range of vehicles ranging from military and commercial trucks to school and commercial buses. It also provides service parts and wholesale, retail, and lease financing services for its parts and trucks.

The company has established a powerful brand due to its success. It is responsible for many vehicles on the road in North America as follows:

• In the U.S. and Canada, about one in four Class 6 through 8 vehicles on the road is a Navistar International truck - over half a million trucks.
• In North America, Navistar produces more than a third of all school buses, and provides yellow buses for transportation for nearly half of the children in the U.S. Navistar operates one of the largest commercial vehicle parts distributions networks in the U.S. Outside the U.S. and Canada, it has the top truck brand in Mexico and a significant part of Latin America. The company is also the largest diesel engine company in Brazil. Lastly, it has won many honors, including the Illinois Governor’s Sustainability Award, the WestStart-CALSTART Blue Sky Award, and the Society of Automotive Engineers Environmental Excellence in Transportation Award.

Channels

Navistar’s main channel is its network of almost 1,000 dealer outlets in the United States, Canada, Brazil, and Mexico and over 60 dealers in 90 countries worldwide. The company promotes its offerings through its website, social media pages, and participation in conferences.

Customer Relationships

Navistar’s customer relationship is primarily of a self-service nature. Customers utilize its products and services while having limited interaction with employees.

Key Activities

Navistar’s business model entails designing, developing, and manufacturing its vehicles and parts for customers and delivering associated services.

Key Partners

Navistar’s key partners are the suppliers that provide it with the raw materials, parts, and components it needs to manufacture its products. It primarily utilizes single-source suppliers, and grants them access to a portal where they can view resources such as business process guides.

Key Resources

Navistar’s main resources are its human resources, who include the engineers that design, develop, and manufacture its vehicles and parts. It maintains important physical resources in the form of facilities in North America, South America, Europe, Africa, Asia, and Australia; they are as follows:

• The Truck segment operates nine manufacturing and assembly facilities (eight in the U.S. and one in Mexico)
• The Parts segment leases six distribution centers in the U.S., two in Canada, and one in Mexico
• The Global Operations segment owns and operates manufacturing plants in Brazil and Argentina
• The Financial Services segment leases an office in Mexico Navistar’s main product development and engineering facilities are located in Lisle, Illinois; Melrose Park, Illinois; Madison Heights, Michigan; New Carlisle, Indiana; and Columbia, South Carolina.

Cost Structure

Navistar has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is cost of products sold, a variable expense. Other major drivers are in the areas of sales/marketing, administration, and engineering/product development, all fixed costs.

Revenue Streams

Navistar has one revenue stream: revenues it generates from the sales of its products to customers. Sales are typically made through the formation of long-term contracts.