The Car-sharing Industry in Stockholm
Car-sharing is one of the many solutions proposed to ease the problems of sustainable mobility
in many urban cities where movement is getting increasingly tedious due to heavy traffic (Plata,
2022). Another issue making car-sharing a feasible solution is its impact on carbon emissions, a
major environmental issue plaguing urban cities (Plata, 2022; Bocken et al., 2020).
The concept of car sharing enables individuals to have temporary access to cars without actually
owning them. The idea of car-sharing was first brought up in the mid-20th century in Switzerland
(Brown, 2015), and in recent years, this idea has evolved into a large industry active in many
parts of the world. Environmental concerns and the growing populations, majorly in urban areas,
have contributed to the growth of this industry (Bocken et al., 2020; Reyes et al., 2020; Plata,
2022).
Free-floating and round-trip or fixed spot are the most recognised types of car-sharing, and both
forms are used in Sweden. According to Bocken et al. (2020), Aimo is the only car-sharing
company that offers free-floating services, while others continue to provide round-trip services.
This is indicative that there is a higher preference for round-trip services in Sweden cities as
compared to free-floating services.
SEAT has high hopes for minimo and promises that the all-electric quadricycle will transform
the car-sharing industry (Satara, 2019). SEAT management has revealed that the car was made to
help resolve urban city transportation challenges. The company will launch minimo in
Stockholm, Sweden and must understand its business environment to gain a competitive edge.
Service
Provider Distance Travelled
Flexibility
(Strategic group)
Free-floating:
(One Short trips
way trips from A to B)
Highly flexible with many parking options.
Customers are free to select a convenient
parking station to return their cars.
Round Trip: Station Mostly long distances
Reduced flexibility, customers must return
based
cars to the same take-off station
Peer to Peer
Mainly long trips for High flexibility is usually dependent on the
travel.
owner's preferences
Competitive Rivalry (Moderate to High)
Sweden is home to some top car-sharing companies like M, formerly Sunfleet, Aimo, and
MoveAbout. The car-sharing industry in Sweden is gaining more attention and consistently
growing. According to (Reyes et al., 2020), car-sharing services have continued to expand after
being introduced in towns and cities in Sweden. In 2009, a car-sharing initiative was
implemented to promote car-sharing services in Sweden, and it received unanimous support from
both the Swedish government and residents of selected areas (Reyes et al., 2020). Since then, the
car-sharing industry in Sweden has experienced remarkable growth (Bocken et al., 2020; Reyes
et al., 2020).
The Swedish car-sharing industry is predicted to increase in revenue and market share (Statista,
2023). However, Bocken et al. (2020) stated that the car-sharing industry in Stockholm is not as
proliferating as in other cities in Sweden. A likely factor is the government's strict parking space
regulations. P2P services dominate Stockholm's car-sharing sector, and the usage rate of roundtrip and free-floating services is low. Only Aimo offers free-floating services, which according to
Bocken et al. (2020), has been active since 2019 and faces stiff competition from public
transport. Though daunting, Aimo has succeeded in its car-sharing endeavours in Stockholm
(Hoglund & Persson 2019). Aimo has an advantage in that it offers parking services in Sweden
and successfully acquired the Q-Park in Stockholm (AimoPark, 2022). The threat of competitive
Rivalry for SEAT Minimo is medium to high as SEAT Minimo will face increased competition
from Aimo who already has a strong presence in Stockholm (Chimenti & Kjellberg, 2022; Reyes
et al., 2020) and also compete for the meagre user rate (Bocken et al., 2020). Alternatively,
SEAT minimo will face moderate competition from automobile manufacturers in Stockholm
because Aimo, the major car-sharing company in Stockholm, constantly seeks ways to add value
and reduce mobility hassles. Because of this, the company will want to subscribe to better cars if
the benefits are more. According to (Chimenti & Kjellberg, 2022)
Supplier Power (Low to Moderate)
The only car-sharing company is Aimo which recently changed its car fleet to the Volkswagen
ID series from its previously used Renault Zoe model. SEAT is a subsidiary of Volkswagen, and
as such, it is not a threat to SEAT. As the only car-sharing company in Stockholm, the power
shifts more to Aimo than to SEAT as the company can decide to change its suppliers at any time,
posing a threat to SEAT minimo. The raw materials needed for the production of minimo include
aluminium, rough steel, and petroleum products to produce plastic, rubber, and fibre. Suppliers
for these materials are abundant and pose minimal threat to SEAT.
Buyer Power (High)
The bargaining power of the buyer of the SEAT minimo is high because SEAT is entering the
car-sharing industry in minimo, and Aimo is the only car-sharing company active in Stockholm.
This shifts the power to the buyer. The end users of the minimo, which are the residents of
Stockholm, will also pose a threat to the minimo as they prefer peer-to-peer services or public
transport despite the conveinience and comfort offered by using free-floating services. Reyes et
al. (2020) opined that this can be attributed to “Cognitive bias and behavioural anomalies” as
such much thought should be put into understanding how the residents make their transportation
decisions.
Threat of Substitute (High)
The residents of Stockholm tend to prefer peer-to-peer car-sharing services and public transport
as a means of transportation. Individual cars, trains and public transport are the primary
transportation used in Stockholm. The switching cost for changing from one mode of
transportation to another is low. SEAT will need strategic solutions to retain and attract new
customers.
The threat of new entry (Low)
The barriers to new entrants in the car-sharing industry are low. The business is not highly cost
intensive. Though the transport and parking laws in Stockholm are strict, they are not to the
extent of discouraging new entrants. Stockholm is home to many automobile manufacturing
companies, and these companies will have the advantage of being local businesses if they choose
to enter the car-sharing industry. Overall, the threat of new entrants to SEAT minimo is low.
Value chain of Minimo
In today's fast-changing business world, where customer requirements are constantly evolving
and ensuring customer satisfaction is essential for business growth, now more than ever,
businesses must ensure that their products bring value. The most effective tool to realise this is
value chain analysis. According to Zamora (2016), the value chain model introduced by Porter
(1985) enables businesses to understand and analyse the various activities and processes a
product passes through from production to the end of its life cycle. These activities impact a
company's competitive position and directly affect its profitability (Coursaris et al., 2008).
According to Ensign (2001), companies use value chain analysis to understand their business
activities, which gives them a better competitive position and effectively develops business
strategies that promote value.
The value chain activities, according to Porter's value chain model, consist of primary and
support activities. The primary activities are directly involved with the production, while the
support activities are the bedrock of primary activities. The primary activities are inbound
logistics, operations, outbound logistics, marketing & sales and service (Coursaris et al., 2008).
The value chain model is based on how a business converts its input into outputs valued and
purchased by customers.
Value-Adding Activities of SEAT
Inbound Logistics
Inbound activities are related to procuring, storing and distributing raw materials necessary for
production. The company procures raw materials needed for production, such as rough steel and
aluminium ingots, to the SEAT component site in Barcelona. SEAT produces most of its
component parts (gearboxes, casing gears and axle box) from these raw materials needed for
manufacturing its various car models (SEAT, 2022). The company's procurement and processing
of raw materials for production is geared towards more efficient production. The company's
effective inbound logistics enable the company to meet production goals and product demands.
Neubert and Bartoli (2009) stated that logistics costs and costs of acquisition are determining
factors of how raw materials are procured by a company. The question of whether to outsource
raw materials or produce them directly is determined by the cost factor. SEAT's strategy of
building its component parts has positively impacted its production as the Mortorell plant alone
has an increase of 5.4% (SEAT, 2019; SEAT: 2020).
Operations
A company's operational activities deal with transforming inputs into finished products that
customers purchase. Managing machines, production and assembling are all parts of the
operations process (Coursaris et al., 2008). The SEAT operation process ensures quality and
innovative car models are manufactured. Production in SEAT is carried out in Volkswagen
group plants in Spain, the Czech Republic, Germany and Portugal, with Mortorell, Spain, having
the highest unit production (SEAT, 2019; SEAT, 2021). Though the manufacturing plant in
Mortorell has the most increased production, the plant in Germany is closer to Stockholm. It may
be better to deliver products to Stockholm, Sweden from Wolfsburg, Germany, to make delivery
of products more accessible, faster and cost-effective.
SEAT employs the use of robots in its operations process. The company aims to increase
efficiency and reduce errors by using robots. The company has an efficient production strategy
that meets customers' demand for quality and a smooth delivery process. The company also has
an assembly finish system that uses innovative technologies that makes the process seamless and
smooth (SEAT, 2019; SEAT, 2020).
Outbound Logistics
Outbound logistics refer to activities responsible for the movement of finished products from
warehouses or storage facilities to the customer. According to Ahmed (2017), outbound logistics
are essential for business performance and in influencing customers' perception of a company's
product. These activities play an essential role in ensuring customer satisfaction. SEAT
developed an innovative process that improves customer experience and enables quick and easy
delivery. This fast lane project directly increased customer orders through the company's
platform to 30% of the total orders (SEAT, 2019). SEAT also has registered dealers that have
been licensed to sell its car brands in Sweden. The company also has advanced automated
technologies that improve the efficiency of its outbound logistics processes. A shining example
is SEAT's automated guided vehicles (AGVs) for delivery (Willaims, 2017), which will likely
ease the transportation of minimo to Sweden.
Marketing and Sales
The SEAT minimo was unveiled at Geneva International Motor Show and the 2019 Mobile
World Congress held in Barcelona. This has caused the fame of minimo to spread and built the
anticipation of many worldwide. An added advantage is that the minimo is a new concept that
brings together a vehicle's safety and comfort and the motorcycle's agility and smaller
dimensions (Listers, 2019). The minimo is moderately priced at $9,300, coupled with its unique
design and attractive features that have made the minimo appealing and intriguing to the
populace. Recently, the public has its attention to electric vehicles. The introduction of the
minimo, alongside its numerous beneficial features, has spiked the interest of many and has
made the product even more intriguing. Because of this, the awareness of the minimo is at an alltime high. SEAT has a well-defined sales network with 1664 points of sales, 2959 service
centres and 74 active markets, of which Sweden is included. These sales channels will make the
sales process of SEAT minimo in Sweden more effective (SEAT, 2021).
Services
After-sales services offered to customers help to strengthen and improve product value, and these
services are essential in enhancing customer satisfaction and competitive advantage (Coursaris et
al., 2008). SEAT has a central department in charge of receiving and handling queries and
complaints from customers. The company ensures that this department is proactive in responding
to the customer. SEAT also has registered and authorised service centres (2959) in various
countries where customers could be attended to (SEAT, 2021). SEAT has also organised an
after-sales virtual event that takes the form of a television show. This event is informative in
nature and informs importers of significant business issues and strategies.
Support Activities
According to Coursaris et al. (2008), a company's value chain support activities are deeply
rooted in its organisational structures, enabling it to carry out processes that improve product
value. SEAT minimo has a culture that places priority on its customers. The company is
futuristic and values environmental sustainability. Innovation is at the heart of the company, and
it constantly comes up with new designs and digitalised and technological innovations that bring
customer experience to a higher level. SEAT's procurement and purchase activities are efficient
and detailed, and the company ensures the development of its employees. All these measures and
processes are applied to ensure the company has a competitive advantage over its competitors
and an improved business performance.
SEAT Mode of Entry
Shen et al. (2017) stated that the methods a company will implement to carry out its business
activities in a foreign country and the extent to which the company is willing to engage the
market describes the entry mode. According to Schellenberg et al. (2017), a company must have
an integrative and broad knowledge of market entry processes and principles to succeed in the
new market. SEAT minimo must determine the entry mode options available and which is more
productive for the company. The company can either directly sell minimo to car-sharing
providers in Stockholm or become a car-sharing provider.
Exporting Decisions
Exporting is a critical aspect of internationalisation. Companies can employ various exporting
strategies when expanding their businesses to foreign countries (Oliveira et al., 2017). Exporting
decisions are essential in determining the performance of the company in the new market. There
are factors to consider when deciding on direct or indirect exportation. According to Cieslik and
Michalek (2018), indirect exportation is popular among many firms and improves value added to
an economy.
SEAT carries out direct exporting. More than 50% of its export is by road. The risk associated
with exporting is low, and it affords the company considerable control over the processes. The
distance between Mortorell and Stockholm is vast, leading to more export expenses compared to
Wolfsburg, Germany. Hence, SEAT may decide to export minimo from Wolfsburg.
Oliveira et al. (2017) argue that institutional barriers could impact exporting, such as the
country's laws and regulations and could increase the risk associated with exporting. However,
they agreed that despite the barriers, exporting is the easiest way to enter a new market, and it
becomes even more accessible when the company have already joined other foreign markets.
McNaughton (2002) agrees and advises that companies should employ diversity to enter foreign
markets as it enhances export performance. Hollensen (2007) also decided that though exporting
is usually the initial means of entry to a foreign market, it should evolve and diversify over time.
In this regard, Donnenfeld and Weber (2000) opined that incurred costs and the market size of
the host country are determining factors for selecting between exporting and direct investment.
Contractual Decisions
Another option open to SEAT is contracting the minimo business to car companies in
Stockholm. Licensing and franchising are contractual methods that could be explored. These
methods are cost-effective and help in increasing SEAT market share, but the company will lose
its control over its product in Stockholm. Though this method has low risk, SEAT must consider
the car-sharing market in Stockholm and its growth potential to assess its overall risk. According
to Fernandes et al. (2014), entry choice is usually based on the level of uncertainties in the
foreign market, while Gunnarsson (2011) believes that contractual methods should be explored
when the foreign market is challenging, thereby reducing risk. Apart from the possible loss of
control the company will face while contracting, it is also exposed to the risk of creating new
competitors for its product (Gunnarsson, 2011).
Investment
Many companies enter a new market through investment. For example, Toyota entered the
Indian market through a joint investment with another company in India. Entry into a new
market through investment is cost-intensive and affords the company a high level of control over
its investment. However, this method carries a high level of risk and commitment. There are
different forms of investment that could be explored by SEAT.
Joint Venture
Stockholm has a major car-sharing company called Aimo which offers free-floating services.
SEAT could enter into a joint venture with this company. In a joint venture, a company directly
enters a new market by partnering or cooperating with a local company to make a profit
(Gunnarsson, 2011). The joint venture is less expensive compared to other forms of investment.
Acquisition
SEAT can consider acquiring a car-sharing company in Stockholm as a means to enter the
Sweden car-sharing industry. This method gives the company complete control over the carsharing company and will generate more revenue. However, this venture is capital intensive, has
a high-risk factor and will require the company to commit its resources.
Greenfield Investment: Fully owned subsidiary
SEAT can set up a subsidiary company in Stockholm and add car-sharing services. This foreign
direct investment offers the company complete control and reduces exportation costs and trade
barriers. However, it is high-risk and capital-intensive. Gunnarsson (2011) stated that this
investment requires a high commitment to finances and resources. Fernandes et al. (2014) opined
that there are many factors to consider before embarking on this kind of investment, the chief of
which is the market size of the host country.
Recommendation for SEAT
Sweden's car-sharing industry is at its growth face, and experts predict that the industry will
continue to expand into the foreseeable future. However, the sector in Stockholm is not as
prolific as in other areas such as Gothenburg, as the population prefer peer-to-peer car sharing
and public transportation to free-floating car sharing. This increases the risk factor of the
business in Stockholm.
Stockholm has one major car-sharing company (Aimo), which recently changed its fleet of
Renault cars to the Volkswagen ID car series. Because of this, a joint venture is preferable to a
Greenfield investment. Considering the market size of the car-sharing industry in Stockholm and
the financial resources required for the different entry modes, I believe that SEAT minimo will
benefit from a joint venture.
Control
Exporting
Contractual
Investment
Zero control
Minimum to moderate High control in joint
control in licensing investment.
and franchising.
Complete control in
the
acquisition
and
Greenfield investment
Risk
The
from
minimum
trade
risk Minimum risk
High-risk investment.
barriers Risks may arise from High risk of investing
and tariffs
the
possibility
acquiring
a
competitor.
of in a new market.
new Risks from cultural
and political distance
associated with a new
market
Financial
risks
associated
with
investments
Commitment
No
resource Minimal to moderate High
commitment required
commitment
financial
and
is resource
required in the form requirements. It may
of
training
support.
and require a transfer of
knowledge, skills and
workforce
Scale of Entry
Minimal
financial Minimal to moderate High
resources required
financial
financial
resources resources are needed.
required
Shared Value of SEAT Minimo
SEAT Company values innovative thinking and environmental safety. This is seen in the cars
manufactured by the company and its business approach. The company's philosophy is hinged on
bringing value to society. Because of this, the company takes part in addressing critical societal
issues. Its electric cars were manufactured to combat growing environmental concerns; its SEAT
designs are innovative while prioritising safety; it respects culture and has partnerships with
other organisations and charities to support various societal issues (SEAT, 2023).
Shared value is increasingly gaining ground in the corporate world. Many businesses are
becoming more aware of this concept and its immense benefits to their growth and competitive
standing (Dembek et al., 2015; Kramer & Pfitzer, 2016). The shared value concept postulates
that companies can create value through three strategies.
1. Development or reconceiving of new products and markets
2. Redefining productivity in the value chain to bring benefits for stakeholders.
3. Creation and strengthening of local clusters.
According to Royo-Vela and Lizama (2022), the strategies to create shared value will help
businesses and society find common ground in meeting their needs. The idea driving the shared
value concept is that the interaction of companies and stakeholders will generate economic,
environmental and societal value (Royo-Vela & Lizama, 2022). Nandi et al (2022) agreed that
these strategies enable companies to incorporate societal issues into their business processes as
opposed to resolving them in isolation however they remarked that methods of applying these
strategies will vary in different markets.
Many companies understand that by creating value for their communities they in turn procure
economic value for themselves especially in recent years where the public continue to view
businesses as the major cause of environmental and societal hazards (Porter & Kramer, 2011).
Daood and Sagar (2017) stated that shared value creation is about resolving challenges in the
society in a profitable manner. This concept has debunked the widespread belief that companies
exist to make profit.
SEAT focuses on sustainability in its operations and plays a crucial role in all its decisionmaking processes. The company ensures the development of tools and resources to serve its
workers and society (SEAT, 2021). SEAT is known for respecting the community and the
environment, honesty, diversity, dependability and integrity. SEAT culture inculcates the 'Us
instead of me' philosophy (SEAT, 2021).
The SEAT minimo is a new product developed by SEAT to meet the needs of customers, society
and car-sharing companies. Minimo is an additional automobile industry product that benefits
the car-sharing sector. SEAT minimo is a solution to environmental concerns as it is fully
electric with no emissions. It also helps solve urban mobility issues as it has a smaller dimension
than regular cars. Minimo brings convenience to users with its innovative digital interface and
5G technologies incorporated into the vehicle.
Through its activities, SEAT has proven that it takes the need for shared value to heart. The
actions of SEAT touch on the strategies of the shared value concept in its development of new
products and markets and producing value in its value chain processes. SEAT activities are also
seen in creating local clusters; however, the company works with over 15,000 professionals
(SEAT, 2023), 1664 points of sales, 2959 service centres and 74 active markets (SEAT, 2021) in
different countries of the world. All these activities benefit both SEAT and society.
SEAT company practices create shared value and do not do business mainly for profit alone.
SEAT always considers society when carrying out its activities. The minimo car model perfectly
demonstrates that SEAT practices create shared value (SEAT, 2019; SEAT, 2020). The minimo
model was designed to combat environmental and societal challenges such as high CO2
emissions, urban congestion, and limited parking space. With these mobility issues in mind,
SEAT also considered the comfort and safety of its customers while catering to their
technological and aesthetic demands. The idea behind the creation of the minimo model was not
only to directly resolve the mobility issues by to jointly resolve mobility, environmental and
societal challenges. Minimo will also help develop sustainable markets. SEAT has taken the idea
behind minimo beyond satisfying customer requirements to meeting more societal essential
needs.
Launching SEAT minimo in Stockholm will help create environmental and social value in
reducing emissions, aiding mobility and reducing the problem of limited parking space. These
values benefit Stockholm and not the larger populace. From a different point of view, the shared
value concept is about bringing value to society that a company operates (Kramer & Pfitzer,
2016). SEAT designed its minimo car for specific conditions and situations, which, when
launched, will benefit Stockholm in the short-to-medium term.
In the long term, urban cities are very likely to become even more populated creating even more
dire mobility and space issues. The minimo is equipped to combat these challenges with its
smaller dimensions (2.5m by 1.24m) as compared to regular cars (4.1m by 1.7m) and its
electrical engine. Increasing technological advancements and customers' increasingly changing
demands will likely cause the requirements for sustainable mobility to increase in the long term.
The minimo has built-in 5G technology, its dashboard has advanced features that allow it serves
as an instrument console incorporated with Google assistant and wireless Android Auto that
allows voice command and other tasks (Jeo, 2021). Minimo’s fast charging capacity and battery
location that allows fast replacement of the battery will also be an advantage in an increasingly
fast paced world. (Jeo, 2021; Satara, 2019). SEAT has advanced technologies and is also one of
the automobile companies with autonomous driving technologies that could be incorporated into
the minimo car in the long term.
In addition, SEAT has a training centre, the SEAT e-mobility training centre, used for training
and developing the company's workforce. Informative and specialised training is given to the
employees via this training centre. The company's HR Vice-president, Xavier Ros, stated that it
aims to develop and equip its employees with the necessary knowledge to face future challenges
in the automobile industry (SEAT, 2023).
Conclusion
In our present globalised world, companies are constantly expanding and improving their
businesses, causing many companies to go international. This requires a great deal of planning
and strategising as many factors affect the internationalisation of companies. An understanding
of the host country's business environment is paramount, as also the competitive environment.
Another critical and deciding factor is the mode of entry into the international market.
SEAT minimo has a great value chain, carrying out activities to add value to its products,
increasing customer satisfaction and brand loyalty. SEAT's value-adding activities, from the
procurement of raw materials to the marketing of the finished products, are all expertly crafted to
bring value to the end users. SEAT must strategically decide its entry mode into Stockholm's carsharing industry to ensure its success.
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