Concept for a Start-Up Enterprise - Essay Example

?Concept for a Start-Up Enterprise OVERVIEW Against the milieu of fast economic development in Indonesia, the demand and the consumption of energy efficient electrical equipment are on the upsurge. Achieving energy efficiency in business activities is a vital facet in today scenario for an organization. Light-Emitting Diode (LED) lighting technology possesses numerous advantages over fluorescent lighting. According to the current industry standards, it has been viewed that an LED bulb is twice as energy efficient as a regular bulb and has a 50% longer lifetime along with requiring less maintenance. It also does not use mercury and contributes to reduce climate control costs in comparison with a florescent bulb. With the growing competitions in the business world, smarter investors know what to invest in. Considering this facet, investing in LED energy savings bulb can be regarded as one of the most prospective businesses in Indonesia. Contextually, it is observed that the revenue generated from the global LED lighting market stands at a substantial figure of US$9.46 billion in 2013. It is estimated that the global demand for LED lighting would broadly stay the same for the coming 4 years. However, this steady growth prospect bodes well for the proposed start-up business (Sector Publishing Intelligence Ltd, “The World Market for LED Lighting”). Indonesia is determined to be amongst one of the leading resource saver countries in the world. Considering the current electric equipment demand, investing capital to start a business of LED bulb in Indonesia can be considered as beneficial. THESIS STATEMENT This essay will mainly focus on the opportunity for the investors to invest into the LED energy saving bulb business in Indonesia. The essay would also contain a new-start up business concept mainly focusing on establishing a LED light bulb In Indonesia along with determining the value which can be created by the business. DISCUSSION Potential in LED business in Indonesian Electronic Market. Indonesia is considered to be amongst the largest economies in the Southeast Asia. It has registered a Gross Domestic Product (GDP) growth of 6.2% till 2012 and is projected to be above 6% for the coming five years. It has been viewed that during the downfall in the global economy the country was measured to be amongst the top performers in the global context. The vital reasons behind the strong performance emanated from effective performance of number of industries, high domestic demand of goods and services along with rich natural resources. Additionally, it is also observed that the consumer market of Indonesia is considered to be amid the fastest developing markets, where GDP per capita is US$3500 exceeding many of its neighboring countries. The political condition of the country is determined to be supportive in comparison with other nations especially in the South Asian region of the world. It is worth mentioning that according to an estimation, it is predicted that 60 million people who are considered as low-income Indonesian workers would join the intermediate class of people in the upcoming years, increasing the consumer demand (Export.gov, “Doing Business in Indonesia: 2012 Country Commercial Guide for U.S. Companies”). LED light bulbs are observed to be electronic bulbs that utilize semiconductor technology to use electric energy in a more efficient way. It has been viewed that with the increasing technical advancements in every aspect, large organizations are adapting more advanced technologies to develop products by considering the increasing negative impacts of their operations on the environment. Indonesia is ascertained to be amongst those countries that have been implementing policies and regulations to adapt eco-friendly products as their first priority. It has been viewed that LED lighting products are now available three or more times more effective than compact florescent products and are considered to be the best lighting alternative till date. The LED insurgency in lightning technology is comparable to another technological transformation in the world. The market for the general purpose LED lightning though is measured to be small in comparison with other electronic product manufacturers. However, the increasing policies to save energy have provided an opportunity for LED bulbs to a great extent. According to an estimation made by Gereffi and Lowe in the year 2007, the worldwide LED marketplace was projected to be around US$4.6 billion. Furthermore, it was estimated that around 44% of the LED would be used in mobile applications, 17% in signs and displays and around 15% would be used in automobiles (Gereffi and Lowe 10-24). Considering the growing industry in Indonesia, it has been viewed that electricity consumption had increased significantly in the year 2012. According to the report of the state power company PT Perusahaan Listrik Negara (PLN), it is found that the electricity sector enjoyed production growth of 5.85%, which was up by 10.15% in 2012. This rapid growing consumption of electric energy in Indonesia can be considered as an opportunity to focus on opening a market of Energy Saving LED light bulbs in Indonesia (Hadiwerdoyo, “Indonesia: An industry-led growth economy”). Additionally, it has also been viewed that the Indonesians consume far more energy per GDP output as compared to other developed or developing nations. In this regard, it has been viewed that on September 23, 2009, the government of Indonesia modified the Electricity Law No 30, 2009. Under the new law, PT PLN no longer holds the authority to be the only supplier and distributor to the customers. Contextually, if a new business is developed, collaborating with the new electricity provider in the country, the LED business would flourish to a great extent. Furthermore, it has been measured that Indonesia imported electric power equipment costing around US$1,010 million. Therefore, with these considerations, it can be said that if a business is developed that would aim at providing high quality LED products with low cost, produced in collaboration with a few of the renowned LED bulb manufacturers in the world then the business would flourish by a considerable extent (Export.gov, “Doing Business in Indonesia: 2012 Country Commercial Guide for U.S. Companies”). Potential Investors. Indonesia is considered to be amongst those countries which have been inviting numerous multinational companies to establish themselves in their nation. The main reason behind considering the country as their first priority is because of its rapid industrialization and its growing demand for new products by the Indonesians. Moreover, it has also been viewed that the economic condition of the country has been growing in-comparison with other nations located in the South Asian region of the world. The market for LED product in Indonesia has been constantly amplifying (Moeharyoso, “Lighting Industry Development in Indonesia”). It has been estimated that around the year 2020, 100% of the houses in the country would be electrified. Considering this facet, the government of the country has been inviting industries that provide high end LED bulbs which would facilitate to save energy by a significant extent. Furthermore, it has also been viewed that the demands of the people especially residing in urban areas have been shifting from florescent to LED bulbs as they are measured to consume less energy. In addition, these bulbs need to be replaced after the end of a longer period. It is worth mentioning that another main reason behind the shifting demand is recognized to be the facet of less electric bills after the replacement. Considering the growing market of LED bulbs in Indonesia, there exist a number of competitors. It is estimated there are nearly 35 brands that sell or manufacture LED bulbs in the country. Among which, most of the brands import their products from China, South Korea, Japan and Taiwan and 5 among them manufacture their products locally. It has also been viewed that many MNCs are collaborating with the Indonesian government to penetrate the market. However, it is found that the country lacks in laboratory facility for conducting research to develop or improve the quality of the product (Connex, “Prospect and Market of Energy Efficiency lamps in Indonesia”). Value Creation of the Business. Value creation is recognized to be an essential aspect in every business as it helps in determining the future or sustainability of a business. Although it has been comprehended that many organizations aim at creating value very creatively however creating value is regarded as the most challenging task. In relation to the idea of starting a new start-up business that deals in LED bulbs in a country such as Indonesia, it is very essential that the organization adapts certain unique strategies that would not only help to gain customers trust towards the business but would also aid in providing tough challenges to other competitors in the market. In this aspect, the first step that would be adapted to create value is that the cost price of the bulbs would be kept same as the selling price. This would facilitate in attracting more customers which would in turn enable to create value as the product would be available at much lower price than the market rate. The second step that would be conducted is marketing of the products. In this regard, the business would utilize animation advertisement to attract more customers. This would not only aid in promoting the product, but would also be cost effective for the business, as this mode advertisement is considered to be less expensive than other forms of advertisement (Animation Career Review, “California Graphic Design Schools: Most Expensive to Least Expensive”). Additionally, campaigns would be done in remote areas of the country where the use of LED bulbs has not been a common affair, along with providing them free samples. This would help in attracting media attention towards the business which would facilitate in drawing more customer interest. Thus, this approach would enable to create value for the business. With reference to the above stated discussion, it can be stated that the idea of starting up of a new business focusing on LED light bulbs in Indonesia can be regarded as a fruitful idea and investment in a business to be operated in such an emerging country would be quite beneficial for the investors. Works Cited “California Graphic Design Schools: Most Expensive to Least Expensive.” Animation Career Review. 2013. Web. 01 Nov. 2013. Connex, E. Prospect and Market of Energy Efficiency lamps in Indonesia. 2013. Web. 01 Nov. 2013. “Doing Business in Indonesia: 2012 Country Commercial Guide for U.S. Companies.” Export.gov. 2012. Web. 1 Nov. 2013. Gereffi, Gary, and Marcy Lowe. “LED Lighting.” Centre on Globalization Governance and Competitiveness (n.d.): 10-24. Print. Hadiwerdoyo, C. H. Indonesia: An Industry-Led Growth Economy. 2013. Web. 01 Nov. 2013. Moeharyoso, A. Lighting Industry Development in Indonesia. 2013. Web. 01 Nov. 2013. “The World Market for LED Lighting.” Sector Publishing Intelligence Ltd. 2013. Web. 01 Nov. 2013. Read More