BUSINESS ADMINISTRATION AND

ECONOMICS DEPARTMENT

BA in BUSINESS STUDIES

Unit Code: Digital Transformation

Autumn Semester 2018-19

Report
SUBMISSION DEADLINE: 08/04/19

ACTUAL SUBMISSION: 08/04/19

STUDENT REG. NUMBER

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BS17135
Declaration:

All sentences or passages quoted in this coursework from other people's work have been
specifically acknowledged by clear cross-referencing to author, work and page(s). I understand
that failure to do so amounts to plagiarism and will be considered a reason for failure in this
coursework component and the module examination as a whole.

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Digital Transformation in Manufacturing and the role of
CEOs

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Abstract

The paper reviews the importance of digital transformation, focusing on the manufacturing
industry. Moreover, the integration of disruptive technologies such as IoT, Industry 4.0, and AI, are
going to be explained. The benefits that this digital transformation offer, are going to be portrayed
using statistics. Also, evidence will be provided by statistics about the increased production of
capacity. Some concerns and difficulties arise from some company owner such as budget
constraints. A discussion about how disruptive technologies are integrated in the automotive
companies will follow. An example through Tesla company will give an insight of the use of the
technologies. This paper will conclude that even if a company has access to these digital
technologies and tries to transform digitally, without an innovative CEO the enterprise will not
survive, so ways of how CEOs can gain more knowledge on this will be commented.

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Table of Contents
STUDENT REG. NUMBER......................................................................................................................................... 0
Abstract.................................................................................................................................................................. 3
Introduction............................................................................................................................................................ 5
Literature Review.................................................................................................................................................... 5
Discussion............................................................................................................................................................... 6
Conclusion............................................................................................................................................................... 6
References.............................................................................................................................................................. 7

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Introduction

Living in a globalized environment, that everything is changing constantly, firms are obliged to
respond to this change. In order for companies to take full advantage of the digital transformation
and have a competitive advantage from the other companies they need to combine digital
transformation with strong digital leadership, and this is also called ‘digital maturity’. This report
will be based on the way that digital transformation entered the manufacturing industry, and more
specifically the automotive manufacturing market. A discussion about the importance of the
integration level that CEO’s need to develop with the evolving technologies.

Literature Review

Companies in the manufacturing industry are now using IoT (internet of things), which is also
located in the centre of digital transformation together with industry 4.0. It is evident that since
the revolution of Henry Ford who introduced mass production, there have been many revolutions
in the manufacturing industry but none of them were in such scale as the disruptive technologies.
Of Course, now companies are trying to take it to the next level, by moving from mass production
to customised production. IoT and Industry 4.0 helps them to lower the production cost, optimize
the costs of inventory and to assure that the product is going to be delivered on time. In fact, 49%
of the IT decision-makers claim that IoT indeed plays a crucial role in the manufacturing industry.
Statistics also show that small factories that use these IT systems increased their production
capacity by 20%, (Newman, 2019) without sacrificing the quality of the product since algorithms and
artificial intelligence machines take control over it. Even though it is expected that by 2020 there
will be 30 billion connected devices with IoT, and 80 billion 2025 according to IDC, many
enterprises are cautious and sceptical about adopting it. (according to IDG's 2018 digital business
survey.) Mostly because of budget constraints (32%) and some others claim that they are already
making huge profits. (15%)

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Discussion

Automotive companies that lead the market through the adoption of digital technologies are Tesla,
Uber, Zip Car. (Gao et al., 2016). Considering Tesla as an example of a company that not only
adopted fast the digital transformation but is now also leading the market. Tesla cars are
considered to have semi-autonomous capabilities. They use Artificial Intelligence and IoT as a
software for the car. By elaborating these technologies, they created a car that is basically a
software, able to collect terabytes of data and send it directly to the cloud. What is more, by
collecting and analysing this data the system can automatically predict traffic jams and any possible
maintenance problems. Through the twelve ultrasonic sensors it can recognize objects (cars,
people, bicycles) and avoid them when the self-driving system is active. What companies however
should be worried about is not how to implement all these new technologies into their industry,
but how they can find a person suitable, able to understand and see such changes from advance.
CEO’s need to be alerted by the massive disruption wave and be quick to recognize the threats.
They need to get involve into these technologies, develop new strategies and processes, but also
understand better the customer’s needs and wants. They can do that by arranging visits to
companies that are thriving in the implementation of these technologies or even talk to digital
leaders.

Conclusion
To conclude, digital transformation places itself in the centre of all business industries. It is crucial
for every company of every sector - healthcare, manufacturing, marketing- to have this
transformation or ‘industry mutation’ as the CEO of Accord Hotels described it. (Sebastian Bazin).
Firms that evolve quicker and take full advantage of the digital technology they tend to have an
extra benefit. Enterprises that are not following the increasing demand of the digital
implementation are going to disappear. Since the CEOs are the core of every business, they need to
ensure the survival of the company through this digital transformation.

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References
 Dremel, C., Wulf, J., Maier, A. and Brenner, W. (2018). Understanding the Value and Organizational
Implications of Big Data Analytics: The Case of AUDI AG. Journal of Information Technology
Teaching Cases, 8(2), pp.126-138.

 Liere-Netheler, K., Packmohr, S. and Vogelsang, K. (2019). Drivers of Digital Transformation in

Manufacturing. [online] Muep.mau.se. Available at:
http://muep.mau.se/bitstream/handle/2043/27162/paper0494.pdf?sequence=2&isAllowed=y
[Accessed 8 Apr. 2019].

 M. Siebel, T. (2019). Why digital transformation is now on the CEO’s shoulders. [ebook] McKinsey &
Company, pp.2-5. Available at: https://idcdigitalsummit.com/COMMONS/ATTACHMENTS/Why-
digital-transformation-is-now-on-the-CEOs-shoulders.pdf [Accessed 1 Dec. 2017].

 Marr, B. (2019). The Amazing Ways Tesla Is Using Artificial Intelligence And Big Data. [online]
Forbes.com. Available at: https://www.forbes.com/sites/bernardmarr/2018/01/08/the-amazing-ways-
tesla-is-using-artificial-intelligence-and-big-data/#2fed40084270 [Accessed 8 Apr. 2019].

 Matt, C., Hess, T. & Benlian, A. Bus Inf Syst Eng (2015) 57: 339.
https://doi.org/10.1007/s12599-015-0401-5

 Narayanan, S., Hartmann, B. and P. King, W. (2019). Digital manufacturing: The revolution will be
virtualized. [online] McKinsey & Company. Available at: https://www.mckinsey.com/business-
functions/operations/our-insights/digital-manufacturing-the-revolution-will-be-virtualized [Accessed 8
Apr. 2019].

 Newman, D. (2019). Top 5 Digital Transformation Trends In Manufacturing. [online] Forbes.com.

Available at: https://www.forbes.com/sites/danielnewman/2017/08/08/top-5-digital-transformation-
trends-in-manufacturing/#4b0c671249f0 [Accessed 8 Apr. 2019].

 Newton, J. (2015). https://digitalcommons.ciis.edu/cgi/viewcontent.cgi?article=1079&context=ijts-

transpersonalstudies. International Journal of Transpersonal Studies, [online] 34(1-2), pp.172-186.
Available at: https://aisel.aisnet.org/cgi/viewcontent.cgi?article=1065&context=ecis2017_rip.

 Cdn2.hubspot.net. (2019). State of Digital Business Transformation. [online] Available at:

https://cdn2.hubspot.net/hubfs/1624046/Digital%20Business%20Executive%20Summary_FINAL.pdf
[Accessed 8 Apr. 2019].