Better Place Company - Essay Example

? Strategic Management Analysis - Based on case study By Business of Introduction 0 Better Place’s vision Better Place Company was founded by Shai Agassi in 2007 with it headquarters situated in Palo Alto, California. Better Place Company operates in the automobile industry. The company’s vision was to create connections with diverse car, battery and consumers companies with the intent of achieving global acceptance and adoption of electric vehicles. In essence, the objective of this company was to reduce and eventual riddance of automobile industry’s over dependence on oil. 1.1 Mission The mission of Better Place Company is to make the world a better place by 2020 through successful adoption of electrical vehicles use. The intended change will create a significant difference in the environment by reducing the amount of emissions. The automobile industry stands to gains from Better Place Company in numerous ways, which include providing flexible and readily available products for the consumers such as service plans, accessible charge spots and switching stations. Moreover, the absence of Better Place Company in the automobile industry will significantly reduce and weaken the inter connections amongst the primary players in the industry. 1.3 Stakeholders Better Place Company enjoys an intensive niche of stakeholders in the electric vehicle manufacture and marketing environment across numerous countries, which include Israel, United States, Denmark, Canada, Australia, and Japan. Some of the Better Places’ stakeholders include diverse governments, national electric utility, and venture capital and battery firms. In addition, the car manufacturers and the corporate sector forms part of the Better Place Company’s stakeholders base. 1.3.1Significance of the Stakeholders The company depends on the stakeholders to run its activities. Running financial activities of any company requires capital and from the case study, Better Place Company gets its capital from the stakeholders. For instance, in 2007, the company raised $200 million from venture capital funding and $350 million in 2010 from different governments across the globe. The amount summed up to $1.25 billion making it the second largest start-up in the history of company venture capital funding. On equal measure, stakeholders such as utility, battery and manufacturer companies play a significant role in helping Better Place in achieving its objective of widespread of Electric Vehicle adoption. The companies link the consumers with the car companies consequently reducing the hurdle of limited mobility, which undermines the adoption of electric vehicles. This linkage influences the consumers’ mindset to adopt the electric vehicles (JOHNSON, SCHOLES, & WHITTINGTON, 2008). Moreover, the linkage creates easy platform of improving services offered to consumers due to the competition amongst the firms. The healthy interdependence between the company and the stakeholders propels the growth of the company factors such as competition from other small companies motivate Better Place to offer exemplary services to maintain its market niche. Consider the following diagram indicating the interdependence between the stakeholders and the Better Place Company. Better Place Stakeholders On the other hand, the government through its policies influenced the standards and incentives, which enhanced provision of the bulky of increased activity in both the hybrid and EVs markets. In other words, the governmental incentives to the service companies such as Better Place expanded the respective market niches, consequently market competition. This move enabled the Better Place company to achieve its objective of wide spread adoption of EVs. 2.0 Industry and scenario analyses The steam engine technology, initially developed and adopted for industrial applications was progressively tailored to personal vehicles by middle of 18th century into the automobile industry due to increased population in cities. Increased demand for steam cars, the propulsion technology got the attention of entrepreneurs who embarked on the invention of the electric vehicles. The EVs invention resulted from intense contributions towards EVs operations, improvements in the motor, battery and storage technology. The electric vehicles’ ease of use, near-silent operation and high degree of cleanliness expanded its use in second half of the nineteen century. This is because they outperformed the steam engine powered vehicles. The automobile industry functions well with intermediaries linking the manufacturers with the potential consumers. The Better Place Company occupies the intermediary segment or niche. Its primary function is to link services between the manufacturers and the consumers in a bid to enhance the widespread of electric vehicle use and adoption. Potential entrants Stiff competition compelled numerous service companies to enter the EV market. Such companies as Coulomb Technologies emerged with sophisticated EV services. For instance, Coulomb Technologies introduced Charge point America program, which intended to provide an estimated five thousand charging stations to nine areas within the United States. The Coulomb Technologies offered alternative recharging infrastructure, which provided access to electricity instead of selling the electricity directly (PORTER, 2008). For instance, when a driver needed to recharge from the charge point, he would pay a predetermined amount for a specific amount of time spent at the charge point together with a variable cost of electricity consumed. On equal measure, such companies as Elektromotive Company based in the UK pursued the same strategy by creating a rigid connection with the primary manufacturers such as Renault-Nissan and Mercedes-Benz. Other entrants in the automobile service industry include Toyota, which intended to install EV compatible solar-powered recharge stations, Tesla motors aligned with Solar City, installed recharge points on the buyers’ roofs, GM and Nissan in collaboration with Portland General Electric developed a smart grid technology intended to maintain a network of EV across numerous states. All these represented better substitutes, which would reduce the prices and demand of the leading companies such as Better Place. It is imperative to note that, for Better Place Company to maintain its position in the automobile industry it needs to embrace better value strategies, which facilitated wider product accessibility. These entrants posed a rigorous threat to Better Place Company, which realized that, a plain provision of an EV would not meet the customers’ needs for a consistent transportation solution. With the bypassing of swapping technology by other companies through creation of direct collaborations with utilities and governments, the value of Better Places’ ERGO lost meaning (JOHNSON, SCHOLES, & WHITTINGTON, 2008). As the competition to create a prevailing infrastructure increased, Better Place continually backed a consistent EV infrastructure to be entirely standardized and called for adherence to international standards by car manufacturers, battery developers and utility firms. Better Places’ continued pressure on standardization reduced the competition pressure. On the other hand, the buyers’ potential increased due to affordable electric charges and service plans compared to high cost of fuel prices. The ease of use and cleanliness of EVs has gradually increased the buyer’s potential to purchase the EVs. Suppliers High suppliers’ potential to supply the EVs to willing clients existed because of numerous firms, which entered the EVs industry. Such firms included Coulomb Technologies, Toyota, Tesla motors, GM and Nissan. The numerous firms aimed at widespread of adoption and use of EVs increased the supplier base and potential. However, the aspect of scaling up the EV market created a big challenge in reshaping the supply chain. The suppliers faced a market that is not ready to appreciate the EV; the smaller and willing niche of buyers had concerns on vehicle capabilities, which they were not ready to compromise (JOHNSON, SCHOLES, & WHITTINGTON, 2008). Resources and capabilities With the intense competition from other emerging service companies, Better Place Company resulted in maximizing its resources and capabilities in its bid to maintain its market position (CRONSHAW, MICHAEL, DAVIS, EVAN; AND KAY, JOHN, 1994). The aspect of sustainable value chains in supplying proved beneficial to Better Place Company in cutting the competition put forth by its competitors. Better Place enjoyed a well-connected network among the stakeholders who includes governments, suppliers, manufacturers and utilities. The supply and manufacturer chain network proved worthiness by reducing the substitutes and forces from the competitors. Better Place Company embraced the value of this network both locally and internationally (PEPPARD, JOE AND RYLANDER, ANNA, 2006). With the marketing pull and push factors edging the competition in the automobile industry, Better Place Company continued with its incentives of increasing the capability of ERGO to collaborate directly with utilities and governments. Another resource that is significant to Better Place Company is the R&D centre located in Israel. The centre provides crucial information through research, on the market status and needs. The information is fundamental in helping the company to forge strategies of reducing the threats of substitutes, increasing the value of its resources and positioning itself in such way that, it can meet the demands of the consumers in the most affordable way. On equal measure, market research in the automobile industry is critical because it enable the company to understand the market trends and its relationship with the supply network and chains (CRONSHAW, et al, 1994). The research provides information on the strength and weakness of the company’s network and chains. For example, the emergence of manufacturers’ direct partnerships with governments and utilities, which reduced the viability, and relevance of ERGO of Better Place Company facilitated Better Place management to seek ways such as standardization and criterion of ISO to curb the forces of competition from the emerging competitors (PEPPARD et al, 2006). Despite ERGO’s ability to connect to numerous stakeholders it had a weakness of lacking direct contact with the stakeholders, this led to the company’s efforts to increase its value for fair competition with other competitors. From the case study, it is evident that, the R&D centre is competitive in keeping the company informed on the market trends and this contributed to apt strengthening of the market networks and chains consequently addition of value to Better Place’s processes and activities (CRONSHAW, et al, 1994). Business and corporate strategies With the increasing competition in the automobile industry across Europe, and the United States, Better place rolled out corporate strategy that learned towards porter’s theory on product differentiation (PORTER, 2008). However, the strategy was employed in islands such as Israel, Denmark, Australia, Canada, Hawaii and the San Francisco Bay area. Better Place believed that in the islands consist of dense population, the most drivers travelled less than 70 km a day, and this formed a good market for the electric vehicles. This step of creating new market in the potential areas such as the islands listed above formed one of the significant opportunities of reducing cost of operation within the Better Place Company (JOHNSON, SCHOLES, & WHITTINGTON, 2008). Better Place Company embraced the process of establishing networks to enhance its relevance in providing apt services to EV consumers. The company envisioned that the utility companies needed to play a fundamental role in mainstreaming EVs and provide the required support in laying down the foundations of underground cables and other infrastructure. Better Place enhanced the synchronization of ERGO’s infrastructure with utility software in its bid to increase chain value, which allowed the local grid to establish the optimal allocation of energy to vehicles at peak and off peak hours (SOOSAY, CLAUDINE; FEARNE, ANDREW; & DENT, BENJAMIN, 2012). On equal measure, Better Place invested in software that tracked data, correspond with the grid and mete out electricity as demand changed. This minimized the cost of spikes in electricity demand. This activity is cost effective in respect to the total product cost. The value networks and chains are influenced by the cost of laying down the infrastructural base needed to link the company and the consumer SOOSAY et al, 2012). This forms the primary cost driver within the value chain of Better Place Company. List of references CRONSHAW, MICHAEL; DAVIS, EVAN; AND KAY, JOHN, (1994) "On being stuck in the middle or good food costs less at Sainsbury's" from British Journal of Management 5(1) pp.19-32, Oxford: Blackwell JOHNSON, G., SCHOLES, K., & WHITTINGTON, R. (2008). Exploring corporate strategy. Harlow, Financial Times Prentice Hall. PEPPARD, JOE AND RYLANDER, ANNA, (2006) "From value chain to value network" from European Management Journal 24 (2-3) pp.128-141, London: William Heinemann PORTER, M. E. (2008). The five competitive forces that shape strategy. [Boston, MA], Harvard Business School Publishing. SOOSAY, CLAUDINE; FEARNE, ANDREW; AND DENT, BENJAMIN, (2012) "Sustainable value chain analysis – a case study of Oxford Landing from “vine to dine”" from Supply Chain Management: An International Journal 17(1) pp.68-77, Bradford: MCB University Press Read More