The Five Competitive Forces that Shape Strategy of Better Place Company - Case Study Example

? Exam s - Strategic Management Analysis Contents Contents 2 Mission, vision and stakeholder 3 Shareholder Mapping Matrix 5 Industry analysis andscenarios 6 Porter’s Five Forces Analysis 7  Resources and capabilities 9 Value Chain Analysis 9 Competitive Advantages 12 Key Success Factors 12 Business and corporation strategies 12 Ansoff Matrix 14 References 16 Mission, vision and stakeholder The mission of Better Place is to differentiate the selling of batteries and electric vehicles and boost a wider acceptance of the electric vehicles by providing effective support to the vehicles through an efficient battery recharging and servicing procedure. The vision of Better Place is based on the creation of productive linkages between the battery companies, car companies, consumers and utilities. Theses productive linkages are likely to accelerate the mass adoption of the electronic vehicles. Better Place aimed at overcoming the main obstacle in the acceptance of the electronic vehicles by the masses which is limited mobility. Better Place wants to introduce effective improvements in the mobility of the electronic vehicles by increasing the capacity of the batteries used in these cars. Better Place aims at creating a comprehensive solution for the issues related to the electronic vehicles which would deliver values for different profiles of drivers. The fundamental concept behind the Better Place’s vision is to re-engineer the electronic cars to create efficient vehicles. Better Place is aimed at making the world a better place to live in by supporting the use of electric vehicles as a means to protect the environment. The uses of the fuel powered vehicles are known to create several health issues and environmental hazards. The increasing concerns of the population of the world towards the environmental issues are driving the need for the companies to create products to support the green capabilities (Wery and Derriennic, 2010, p. 91). These factors majorly influence the success of Better Place as it is likely to fulfil a much required need in the current industrial scenario. The products of Better Place are aimed at increasing the environmental and economic sustainability of the electric vehicles. Better Place and its stakeholders are interdependent on each other. The governments throughout the globe are majorly interested in decreasing the usage of ICE technologies in the automobiles sector. The government is providing different incentives for pool cars, congestion pricing, parking tolls for encouraging the use of public transportation (Etzion and Struben, 2011, p.47). The stakeholders would majorly influence the functioning and success of Better Place. The social communities supporting the environmental benefit causes are also likely to influence the business of Better place. The customers are getting more concerned about the green movements and the conscious people are adopting the electric vehicles as a way to protect the environment as well as a way to add to their social image. The suppliers and manufacturers of the electric vehicles and parts would also be majorly impacting Better Place. Thus, Better Place would be highly affected by the changing government policies, buying patterns of the consumers as well as the investment interests of the investors, all of whom are part of the stakeholder group. Shareholder Mapping Matrix The shareholders are individuals or communities that influence the business through their various activities. The shareholders play a critical role in the success of Better Place. It is likely that many shareholders would be eager to invest in the business considering the innovative approach of the business and the probability of the business generating a high return on the investments (Freeman, 2010, p.71). Also, the shareholders would have an interest in the business considering the environmental viability of the business. In the shareholder mapping matrix, both the interest level and the power level are high for the shareholders of Better Place. Therefore, the shareholders play the role of key players in Better Place. Industry analysis and scenarios The industry for battery switching and battery charging is a booming industry that has tremendous potential to develop in the background of the increasing recognition of the need of electric vehicles as a main mode of conveyance. So, Better Place has a high chance of succeeding in this market where competition level and substitute products are very less. The automobile manufacturers are also getting inclined to manufacture and launch new models of electric cars which are better performers providing enough mobility and efficiency. Better Place can be hugely profitable as the major automobile manufacturers are likely to produce more electronic vehicles in response to the increasing concern of the ecological safety and the adoption of green methods in the private and public transport segments. Porter’s Five Forces Analysis An analysis of Better Place using Porter’s five forces model is used to evaluate the external macro-environmental factors influencing Better Place (Porter, 2008, p.78-93). Bargaining power of buyers: The bargaining power of the buyers for Better Place is moderately high as the use of electric vehicles is still limited and car manufacturers who buy from Better Place sell more ICE vehicles. The companies like Tata, Renault and General Motors are the buyers of the products of Better Place and they may not be ready to pay more for the battery recharging and selling services (Yamaguchi, Tabata and Sawato, 2009, p.51-57). Bargaining power of suppliers: The bargaining power of suppliers for Better Place is high considering that Better Place is a company manufacturing exclusive products aimed at the niche market segment. The materials required for theses productions are costly and not easily available. The number of suppliers is also limited in this industry as it is in the nascent stage. Threat of Substitutes: The threat of substitutes is low because the product is aimed at the niche market. Not many products are available in the market which can substitute the battery recharging facilities. Threat of New Entrants: The threat of new entrants is low as high innovation technologies are required to compete in this industry. There are few existing companies in the industry and access to technology for the production by different companies is a costly and complex process. Competitive Rivalry: The competitive rivalry is low as the industry is comparatively newer with high innovation factors and high differentiation. Not many companies have the resources to adopt the high value innovations and latest technologies. Better place can be mapped at the low rivalry segment where high differentiation of the products and services of the company are present. Also innovation is the main driver of the business functionalities. Better Place has much scope for higher growth and increasing the customer base because it has entered an untapped market with enormous potential.  Resources and capabilities Better place is a venture-based multinational organization that manufactures and sells battery-switching and battery-charging services for the electricity cars. It is an US based organization. Value Chain Analysis A value chain analysis has been executed in this part of the study in order to determine the competitive advantages and key success factors of Better Place. There are nine elements in a value chain model which will be discussed below. Firm Infrastructure Better Place is continuously trying to improve its firm infrastructure around the globe. Better Place developed a research and development plants in Israel. Apart from all these things the organization developed several switching gas stations in different countries. Human resource Better Place has developed its research and development centre in Israel. The organization is strongly focusing on recruiting and retaining skilled and knowledgeable employees as they are trying to operate in a niche market segment (Barney, 1991, pp.99-101). Procurement There are three types of resources that can be availed by an organization, such as tangible, intangible and human resources. Financial investors like HSBC Group, Israel Corp, Ofer Group, GC investments LLC are the major capital investors of Better Place. Better Place is procuring valuable financial resources from the above mentioned investors. Technological Development Better Place is integrating advanced technology in each and every product that will be supplied to the clients. Integration of computerized tracking time, advanced electric shocked and charging spots are the examples of technological development process adopted by Better Place. Inbound Logistics Better Place used to source high quality technological resources from the suppliers around the globe. They maintain effective relationship with suppliers to gain quality business operation resources. Operations Better Place is trying to maintain sustainability in the business operation processes as the organizations are trying to use renewable energy resources in the business operation processes. Various service plans for different-range drivers are the unique operational activities of the organization. Outbound Logistics Low lead time and reduced inventory management system helps to maintain the efficiency across the logistics and supply chain network. It helps Better Place to reduce overall supply chain time and cost. Service Better Place provides different service menus for different consumers based on the consumption level of gasoline resources by the drivers. Better Place always tries to provide quality products in reasonable price level. Marketing and sales Better Place maintains strong relationship with the external marketing agents around the globe in order to create strong brand awareness among the clients. Offering of client loyalty cards and aggressive sales promotional activities helped Better Place to gain significant competitive advantages. Competitive Advantages Strong quality management of R&D team, adoption of cost leadership strategy, valuable client service, integration of advanced technologies and strong financial resources are the major competitive advantages for Better Place (Paroled and Hamel, 1990, pp. 112-114). Key Success Factors Better Place is trying to integrate modern and effective technological resources in the business operations so that the organization can provide better accessories for the electric vehicles. In addition to this, adoption of renewable energy resources and strong supply chain network are the major success factors of Better Place. Business and corporation strategies It is highly important for an organization like Better Place to adopt and implement unique strategies in the business operation processes in order to gain competitive advantages and develop a potential client base. Better place adopted the cost leadership strategy in the business operation process under the porter’s competitive generic strategy. Better Place has adopted and implemented cost leadership strategy in the business operation processes. The management of Better Place understood that the demand for low cost substitute energy resource vehicles is significantly among the people around the globe. Better Place highly focuses on the efficiency on the supply chain management and other business operation process. Better Place uses renewable energy resources in the business operation process in order to reduce the overall business operation cost. On the other hand, the management of Better Place motivates entire research and development team to introduce high quality accessories for the electric vehicles in low price. Significant cost and quality control helps Better Place to meet the market demand and needs of the target customers. It is quite important for an organization like Better Place to manufacture and distribute low weight battery accessories for the electric vehicles to enhance the energy efficiency. However, Better Place is considering this aspect during the manufacturing process. Lightweight materials, such as body frames made by carbon fibre helped the organization to reduce the Weight of the vehicles. It allowed Better Place to increase the mileage of each electric vehicle. Ansoff Matrix Ansoff matrix has been designed in order to determine the major diversification strategy that has been adopted by Better Place. It will help to determine corporate strategy direction. Market Penetration It is quite important for Better Place to penetrate the target market whenever an organization tries to enter diversified market segment. Demand for electronic vehicle is significantly increasing among the target customers (Kim and Mauborgne, 2004, p.81). Effective integration of advanced technology and implementation of renewable energy resources helped Better Place to penetrate global market place. New products and Services Better Place is implementing niche marketing strategy as the global consumers are trying to avoid the consumption of vehicles that are run by gasoline or other fossil fuel energy resources. Better Place is manufacturing and introducing new cars in different global market places according to the current market demand. In addition to this, Better Place is trying to provide different services for the different rang vehicle drivers which are quite impressive. Market Development It is important for the Better Place to develop a potential market for their products. Several vehicle manufacturing and distributing organizations are becoming partner of Better Place due to its sustainable business operation strategies and growing market demand towards the electric vehicles. Therefore, Better Place has able to develop a potential market place around the globe (Harrigan and Porter, 1983, p.112). Conglomerate Diversification Better Place is adopting and implementing global business diversification strategy in order to maximize its market share. Strong market development in several global emerging areas and presence in Canada, United States, Australia, Japan and Israel are considered as the example of strong global diversification strategy adopted by Better Place. References Barney, J., 1991. Firm Resources and Sustained Competitive Advantage. Journal of management, 17 (1), pp. 99-101. Etzion, D. & Struben, J. 2011. Better Place: Shifting Paradigms in the Automotive Industry. [Pdf]. Available at http://oikos-international.org/programmes/curricula-change/cases-program/. [Accessed on 31 December 2013]. Freeman, R. E. 2010. Strategic Management: A Stakeholder Approach. London: Cambridge University Press. Harrigan, K. R., and Porter, M. E., 1983. End-game Strategies for declining Industries. Harvard Business Review. 1(1), p.112. Kim, W. C., and Renee Mauborgne, R., 2004. Blue Ocean Strategy. Harvard Business Review, 1(1), p.81. Porter, M. E., 2008. The five competitive forces that shape strategy. Harvard Business Review, Vol. 86(1), pp. 78-93. Prahlad, C., and Hamel, G., 1990. The Core Competence of the Corporation. Harvard Business Review, 1(1), pp.112-114. Wery, R., & Derriennic, Y. 2010. Paving the Way for Electric Vehicles: A Trajectory for a 50% Cost Reduction by 2020. Electrical Vehicle Plug and Play. [Pdf]. Available at http://ec.europa.eu/energy/technology/initiatives/doc/pv_implementation_plan_final.pdf. [Accessed on 31 December 2013]. Yamaguchi, J., Tabata, K. & Sawato, M. 2009. Electric Vehicles - Batteries not the only EV plays. Strategic Management Journal. Vol. 1(4), p.51-57. Read More