Strategic Management Analysis - Essay Example

? Topic: Strategic Management Analysis Better Place Company Mission, Vision and Stakeholder Better Place Company is an automobile industry that is aimed at transforming the car industry through the adoption of Electric powered vehicles. The reduction of emissions from carbon is amongst one of the greatest priorities that governments, individuals and organizations are focusing oninternationally. The Company focuses on transforming personal transportation by introducing vehicles that will use electricity rather that the norm of fuel consumption vehicles.The Company was founded by Agassi and its headquarters are in R&D center which is in Israel as well as in California and Palo Alto. Mission The mission set by Better Place Companyis to be able to accelerate the change from the use of oil based vehicles to the adoption of vehicles that are powered by renewable energy that is they have zero emission. Vision Its vision is to be a company that is aimed at creating great linkages between the car companies, the battery companies as well as the consumers and utilities in a way that will ensure that the adoption of the Electric Vehicles (EV) is a success. Better Place is geared towards ensuring that the automobile industry adopts a profitable change by propelling the consumers to be able to embrace the adoption of the EVs. Stakeholders A stakeholder simply refers to people, organization or groups that have a specific interest in an organization. Being a company that deals with automobiles Better place managers have to always give more attention to the expectations of those stakeholders that are directly involved in the industry. This is due to the fact that the influence and success of the company depends primarily on such stakeholders. The stakeholders include governments, the battery manufacturers, car companies, automobile manufacturers, investors, potential consumers for the EV as well as other private companies. With regards to the way in which each stakeholder influences the success or the failure of the business strategy Better place has three types of stakeholders (Johnson, p.156). These are: The socio/political stakeholders-these are mainly the governments as well as the agencies that are supporting the adoption of the company’s strategy. For instance the governments that have embraced the adoption of the Electric Vehicles are Israel, Denmark, Australia, Japan, Toronto and Hawaii. In order for Better Place to be able to attract the government, industry as well as the capital for the adoption of the EV model a number of challenges was faced: These were-the lack of marketing strategy to create awareness about better place in order to build its reputation. The second challenge was trying to convince the decision makers in government and business that the use of the Electric Vehicles was a viable mode of transport. Economic stakeholders-These include the manufacturers, the competitors as well as the suppliers. For instance, the battery manufacturers such as LG Chem and the car companies such as Toyota. Technological stakeholders-These includes the competitors who come up with new technologies that are aimed at improving the industry standards. Better Place Company through the expectations of its stakeholders aims at making a difference by ensuring that the form of transport used worldwide is environmental friendly. The impact of the company has been seen throughout the years and it is clear that in the case that the company will not have materialized, the hope for a personal transport that has zero emissions would have been lost. Better PlaceCompany is dependent on its stakeholders due to the fact that its implementation primarily depends on their approval as well as continuation of the supply chain. For instance for Israel to fully embrace the Electric Vehicles it was necessary for the government to grant the company permission to start up the venture.Below is a figure showing power/interest matrix: Industry and Scenario Analyses Industry and scenario analysis does not rely on predicting what lies ahead in the future but it focuses on describing that which is possible in the future. With regards to Better Place Company there were a lot of changes that were brought about by its adoption in the automobile industry (Schoemaker, p15). These changes have enabled the company to grow and even though there is a positive impact of adopting the change, it is quite unclear what the future holds for EVs. Some of the factors that have propagated change in Better Place focus on production, cost cutting, globalisation, innovation, global sourcing among many other factors (Freyssenet, p.7). Two scenarios that have greatly influenced the adoption of the Electric Vehicles is that of its expensive build up cost as well as the fact that one cannot be able to drive for long without charging the battery. Application of Porters Five forces in Better Place (Porter, p.3). Supplier power- This force focuses on the control of the suppliers towards the car industry. The suppliers can be regarded as the key decision makers in terms of the product pricing but this can be changed by the car industry chains. Better Place adopted a number of suppliers in order to support their sales for the electric vehicles. For instance, Tesla Motors were focused on installing recharging stations on the roofs of their buyers to ensure that that the electricity used originated from a source that was secure. Toyota also offered to install about 20 recharging stations that were solar powered and would be able to cater for both the EVs and PHEVs as well as being powered by the storage batteries for the company and the grid energy. Better Place partnered with car manufacturers such as Toyota and batteries manufacturers such as LG chem among others that aimed at controlling the supplier power as a result of their growing ability in the car industry. Buyer power- This mainly focuses on the capability of the buyers in being able to bring down the prices of the product. If Better Place does not identify the needs of the buyers as well as the required services then retaining the buyers will be difficult. Better Place rollout strategy is the buyer’s maintenance strategy that aims at increasing the profits as well as achieving the customer’s needs. Receiving significant media attention also made the company to gain more buyers. Competitive rivalry-This depends on the various competitors that are present in the market. Presence of many competitors in the market lowers down the attractiveness of the market. There was great emergence of competition among the different vehicle platforms as well as for some components of the vehicles. For instance automobile manufacturers and some battery producers were developing various products for the Electric Vehicles. Better Place faced competition from the Japanese automobile manufacturers based on the low cost of their vehicles, quality production of the products and also in producing their products at a faster rate. Thus the Japanese industry was becoming more efficient and reliable. Based on these scenarios Better Place was beginning to lose its attractiveness in the market. The threat of substitution-This force mainly focuses on the issue of having close substitutes in the industry. In case of a price increase buyers may opt to change suppliers also the market attractiveness factor is lowered. The Saft partnership and Johnson Controls developed a nickel, cobalt, lithium and also the aluminium chemistry for the Mercedes-Benz. AESC, LG Chem, Hitachi and Samsung began investing in batteries that were built with manganese and these attracted the attention of companies such as General Motors based on the fact that their prices were cost effective and the resources used were well reserved. Even though Better Place emphasized more on the lithium ion based batteries that had a longer life span of about eight years other designs were produced by other automobile manufacturers that were offering better price points, weights, life span and energy densities(Grundy, p.214). Threat to a new entry- Demand for car companies, battery manufacturers and automobile manufacturers are under the spotlight with regards to Better Place. However, majority of competitors in the car industry have already established themselves with authority in marketing strategies as well as their operating efficiency. This force mainly focuses on the fact that profitable markets will tend to attract new entrants into the market. For example, it was difficult for Better Place to secure adequate resources as well as better services and thus this also made it difficult for other competitors. This is evident on other investments that Better Place has made based on its advanced technology that aims to improve the recharging infrastructure that blow existing and new competitors. Below is a diagram showing porter’s five forces: Resources and capabilities A resource based approach to strategy analysis involves the identification of resources, identification of capabilities, establishment of competitive advantage and the formulation of the business strategy Grant, p.118). The figure below gives a summary of the steps that will be taken in analysing the resources and capabilities of Better Place: Resources and capabilities of Better Place Tangible resources include-Financial resources, raw materials and equipment, human abilities that include skills and knowledge and organizational abilities which include processes and structures. Better place is well equipped with all these resources for instance the recharging infrastructure that is comprised of two main components which are the switching stations and the charge spot all rely on the use of the various resources that are mention above. Intangible resources include- the technological resources such as knowledge, innovation abilities such as employees skills and facilities and reputation which mainly includes the stakeholders perception. Better Place lacked a marketing strategy that would enable more stakeholders to have an interest on the company’s strategy. Better Place Company is able to use its resources to gunner a competitive advantage due to the fact that it received approval from most of its stakeholders to carry out its venture. Even with the amount of raw material that are available in promoting the adoption of the Electric Vehicles. Appraising the resources and capabilities The implementation of a recharging infrastructure aimed at focusing on the switching stations and recharging spots is one the major factors that aims at giving Better Place a competitive advantage. However this factor depends on the advantage of developing a cost effective technology and differentiation. Cost advantage depends on access of affordable raw materials as well labour force while the differentiation advantage is based on service networks, the extensive sales as well as the reputation of the company (Barney, p.102 Developing strategy implications Better Place experience a number of strengths as well as weaknesses which are based on a number of factors such as physical resources, customer relations and strategic focus Physical resources-Better place required adequate equipment and facilities that could be able to sustain the maintenance of EVs. Finances also were a major resource that was essential in the companies operation. Customer relations-This is the most important success factor as it is where the money comes from. Better Place used media attention to attract its customers so as to generate more potential sale opportunities. Strategic focus-Better Place could not firmly retain most of its customers due to the high prices. This factor can determine success or failure of the company because it depends on the manager’s focus towards steering up the results of the company with emphasis on profits and customer relations. Porter’s Value Chain analysis diagram Business and Corporation strategies The benefit that comes up with the implementation of the Electric Vehicles technology is the removal of the entire internal combustion from the car. However the drawbacks associated with this technology is the need of a market base even with the uncertainties caused by battery charging standards, battery technology and battery cost. The strategies developed by Better place based on the approach of porter’s theory focus on both differentiation and cost advantage. Differentiation was aimed at marketing the rollout strategy of Better Place so as to increase its reputation level in the industry market. Another aspect brought by differentiation is that of facilities as well as the knowledge of the company’s strategy. Cost advantage is a future aspect that Better Place aimed to achieve by cutting down the cost on their product. Better Place experienced a strategic drift and as a result it failed to keep up with the changing environment. Its strategies changed incrementally based on cultural and historical influences and as a result it failed to keep up with the changing environment (Johnson, p.188). Below is a figure that illustrates the form of strategic drift that was faced by the company: In phase 1 there was incremental change based on the fact that the adoption of the Electric Vehicles was based on the cultural and historic influence of the automobile industry. Phase 2 involves the period of flux. According to Better Place strategies may adopt a change that has no clear direction. There may also be change in the management as was seen when there was a new CEO of the company. Phase 3 and 4 involves transformational change which may be as a result of adopting a new change in the company, the company closing up and also in the case of a competing firm taking over. REFERENCES Johnson, G., Scholes, K., & Whittington, R. (2008). Exploring corporate strategy. Harlow, Financial Times Prentice Hall. Freyssnet, M. (2009). The second automobile revolution: trajectories of the world carmakers in the 21st century. Basingstoke, Palgrave Macmillan. Porter, M.(2008) The Five Competitive Forces That Shape Strategy. Harvard Business Review. Grant, R, M.(2001).The Resource Based Theory of Competitive Advantage: Implications for Strategy Formulation Barney, J. B. (1991). Firm resources and sustained competitive advantage. Schoemaker, P. J. H. (1989). When and how to use scenario planning. Chicago, Center for Decision Research, Graduate School of Business, University of Chicago. Grundy,T.(2006). Rethinkimg and reinventintimg Michael’s porter five forces model.Strategic change 15(5)213-219. Read More