Cannabis Beliefs Denied Energy and the Firm's Internal Resources - Case Study Example

? Internal Assessment of CBD Energy Australia Number} Introduction Australia possesses tremendous potential for generating energy through alternative means. A high solar insolation exists throughout Australia averaged at 4kWh per square metre per day in winter and 6kWh per square meter per day in summer. No other country in the developed world has solar insolation levels that compare to Australia. These levels are comparable to those found in deserts around the world and can be used to create massive amounts of energy. (Solar Streetscapes, 2010) In this respect new and old business ventures are emerging in Australia to tap into the massive solar reserves. Appropriately enough most cutting edge research on implementing solar energy solutions is also being carried out in Australia. Various new companies and old ventures have begun to frequent the Australian solar energy market. CBD Energy is one such company with a two decades old history in the alternative energy industry. (ASX, 2011) This text will attempt to analyse the internal strengths and weaknesses possessed by CBD Energy that will enable it to deal with the solar energy industry effectively. 2. Analysis of the firm's internal resources and/or capabilities Competitive Advantage CBD Energy possesses significant competitive advantages against its competition within the Australian market. CBD is strongly connected to international global renewable companies such as Datang, SOLON, Tianwei and Oelmaier Technologies which ensure that technological access and supply are always available. This is essential as the global solar energy products manufacturing industry is finding itself under increased pressure to fulfil customer orders due to inflated demand. Moreover CBD has begun to assemble solar inverters as of January 2011 and had produced 500 units by February 2011 while annual projections put the figure at 20,000 units. This will ensure that CBD has alternative revenue streams in place as well and this will also ensure that CBD has critical components available at its disposal in required quantities at all times. Another significant advantage displayed by CBD is its ability to assemble key components for PV installations on rooftops. Most other companies in the Australian solar industry market do not have the requisite expertise as yet. This aids in reducing input costs, getting government tenders as these products are made in Australia and ensure timely access to required components. The recent opening of an office in China will enhance CBD’s manufacturing standing and will aid its efforts to manage outsourced components. (CBD Energy, 2011a) Consequently the lowered prices will encourage a new wave of buyers to invest in solar technology as it becomes more affordable for individual family units. Analysis of Resources Resources Indicators Financial Share value has been unsteady for the last fiscal year; Investors and speculators are pulling out. Organisational Employees are well paid. Physical Company is expanding its manufacturing and servicing capabilities. Technological Company’s resources are being updated continuously with new installations; Continuous improvement in products and services is underway. Human The management team is composed of experts from respective fields. Innovation New methods are being developed for servicing and installations. Reputation Sales are going up indicating developing market reputation. CBD is presenting a mixed picture in terms of its key resources. In terms of its financial resources, the share value of the company has been declining steadily (ASX, 2011) over the entire year (see Appendix “A”). While some pressure may be attributed to a low performing stock exchange market but a major reason is the removal of accrued profits to support business expansion. Traded volumes have also remained low. Various speculators and investors are also pulling their stock out of the company although the key investors are still in place (see Appendix “B”) (MSN Finance, 2011). As far as the organisational resources are concerned, the employees are well paid as displayed by their high levels of professionalism. (CBD Energy, 2011b) In terms of technology, the company is expanding continuously so its installations and key capital assets are new as yet. Moreover, the company is continuously innovating business products and services in an attempt to become a market leader. New products are being introduced and new service plans are being marketed to reach new audiences in an attempt to boost sales. The various management positions at CBD Energy have been filled by experts from the concerned fields which indicate unparalleled skills for growth and sustenance of business. (CBD Energy, 2011b) Given that CBD runs a business that is highly technically demanding it is essential that the company hire the best people in the market. As mentioned before continuous innovation is a constant feature of the company’s business stratagem. Although share prices have reclined but the company’s sales figures have been going up driving profitability and performance up. Sales figures improved by some 65% in 2H 2010 and demand for new products such as the solar rooftop installations are seeing an increase of some 24% in 1H 2011 versus 2H 2010. (CBD Energy, 2011c) Analytical Frameworks Value Chain Analysis Organisational Infrastructure HR Recruiting Recruiting Recruiting Technology Design of innovative systems Design of components, testing, assembly and installation Design of innovative systems Market research, sales growth Servicing existing installations, service manuals Procurement Transportation Mechanical and electrical parts Transportation Media agencies, suppliers, potential customer Spare parts Material handling and inspection Manufacturing, assembling, installation Shipping Advertising, media releases, sales generation Service technicians Inbound Logistics Operations Outbound Logistics Marketing / Sales Service Activity System Analysis Identification of implications: strengths and weaknesses Based on the analysis by various tools presented above the strengths and weaknesses of CBD Energy can be easily discerned. CBD Energy is facing increasing sales as well as an expanding manufacturing and servicing base. On the other hand, the price of its shares is dwindling in part due to stock market behaviour and in part due to the migration of net capital to new investments. Moreover the company has a strong and able workforce that is professionally capable enough to take the company’s objectives to an altogether new level. CBD is well connected to international manufacturers and suppliers and has opened up a new Chinese office that ensures that it has an ample supply of parts as and when required. Technologically the company is creating innovative products which will help it to reduce costs and boost sales at the same time. A SWOT analysis is presented as Appendix “C” for a complete appraisal of external and internal factors affecting the company. 3. Identification of major strategic issues facing the company. CBD Energy needs to reinvest in its people and investors by offering them dividends and profits from increasing sales. This will enable the company to drive up shareholder’s confidence and might lead to increased revenue generation by sales of high valued stock later. If the company continues with its current fiscal policy the share price may dwindle too low and this would force the company to sell more stock to generate revenue for expansion. In the longer run this could prove harmful for the company’s investment base and may result in a takeover if enough shares need to be released into the market for further expansion. The company is involved in the global solar energy products market and imports quite a few products from outside Australia. This hurts the costs of products as well as creating demand and supply issues. Moreover procurement and logistics need to be invested in to support such a framework in the longer run. In order to curtail this problem the company should aggressively focus upon its program to develop components within Australia. If the company cannot support manufacturing operations on its own then it would be sensible to contract these components to other industries in Australia that are already manufacturing similar components. This wave of vendor development can result in large savings and can also spell increased efficiency for the company’s operations. CBD Energy may face increased competition in the near future from other suppliers and manufacturers. In order to sustain its reputation and to garner further expansion the company must concentrate on its existing installations and service structure. Consumer confidence must be retained if the company plans to stand out in the face of increasing competition. Incoming competition from larger international competitors may force the company into tough battled for individual customers. Rather than facing the music later it is best that CBD begin to diversify its approach to consumer satisfaction as soon as possible. Bibliography ASX, 2011. CBD Energy Limited. [Online] Available at: http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=CBD#details [Accessed 26 August 2011]. CBD Energy, 2011a. Half Year Update. Biannual Report. CBD Energy. CBD Energy, 2011b. About Us. [Online] Available at: http://www.cbdenergy.com.au/management.html [Accessed 27 August 2011]. CBD Energy, 2011c. ASX and Media Release. [Online] CBD Energy: CBD Energy Available at: http://www.cbdenergy.com.au/media/21:03:2011%20CBD%20ASX%20HY2011%20110228%203.pdf [Accessed 28 August 2011]. MSN Finance, 2011. CBD Energy Limited. [Online] Available at: http://finance.ninemsn.com.au/news-and-markets/company/shareholders?code=CBD#tabsnav [Accessed 27 August 2011]. Solar Streetscapes, 2010. World Solar Insolation Maps. [Online] Available at: http://www.solarstreetscapes.com/page119086.cfm [Accessed 25 August 2011]. Appendix A – Daily Price Chart for the last 6 months Appendix B – Position of Shareholders Shareholders selling DATE SHAREHOLDER SHARES TRADED PREV % NEW % 20-09-10 Hunter Hall Investment Management Limited 3,766,175 6.47 5.31 03-11-10 Hunter Hall Investment Management Limited -- 5.31 -- 23-12-10 Bank of America Corporation (Formerly Merrill Lynch & Co, Inc) -- 5.01 -- 16-02-11 Washington H Soul Pattinson and Co Ltd 0 15.73 13.78 Shareholders buying DATE SHAREHOLDER SHARES TRADED PREV % NEW % 21-12-10 Bank of America Corporation (Formerly Merrill Lynch & Co, Inc) -- -- 5.01 02-02-11 Hunter Hall Investment Management Limited -- -- 15.16 13-04-11 SG Hiscock & Company Limited -- -- 5.38 Substantial shareholder list at 26 August, 2011 SHAREHOLDERS SHARE HOLDING % OF SHARES Solon AG 69,545,294 18.60 Souls Private Equity Limited 23,071,429 6.17 Washington H Soul Pattinson and Co Ltd 39,384,824 10.53 Appendix C – SWOT Analysis Strengths Weaknesses Professional and motivated workforce; Rising sales figures due to increased market reputation; Reducing costs through internalised manufacturing; Consistent supply of components. Fluctuating share price and withdrawal of investors; Certain components are still being imported that drive up the costs. Opportunities Threats Abundant solar reserves in Australia backed by governmental initiative to install solar panels; Increasing awareness of consumers to green living; Expanding market in lieu of greater spending on sustainability. Competition is springing up in the Australian market for solar panels; Buyers are reluctant to invest large amounts in solar panels; Substitutes may brush aside the sale of solar panels. Read More