A New Type of Battery - Essay Example

Running Header: PESTEL Analysis Student’s Name: Instructor’s Name: Course Code: Date of Submission: Abstract The idea of manufacturing new efficient batteries that will be able to move for more than 500miles after charging is a great idea. However, in order for the business to prosper and thrive in UK, there is need to analyze various external environmental factors. This is to evaluate various challenges that are likely to affect the venture in future. The new batteries will be made of Lithium-nickel-manganese-cobalt as illustrated by Haxel, Hedrick & Orris, (2006). This is because of their high safety and performance. The rise of electric cars has meet by a great challenge of batteries having short span. This has led to innovations of various batteries in trying to meet the great challenge ahead. The market size of the new battery will be £3.96billion by 2014 in UK; i.e. for every 40 cars bought, 1 car will be using the new electric battery. However, this is likely to meet some stiff competition from companies like Chloride Industrial Batteries, Marshall Batteries, Alaska Batteries, Alpha, batteries, and Batec Batteries (UK) among others. Some of the major factors that are likely to have an effect on new battery investment include political, economical, technological, and sociological as illustrated by David & Tom, (2005). Others include environmental and legal factors. Political factors include legal and regulatory aspects. Economical factors include economic situations such as interest rates, taxes, importation costs among others. Sociological factors on the other hand are determined by the lifestyle and the way people live. Technological factors play a great role in ensuring that the product meets the expected high quality and performance. However, technology is likely to make the product obsolete as new products arise. It is recommendable that the company continues to invest in development and innovation as a way of improving the performance and reducing the possibility of the existing product losing market. This is through making batteries that can move for longer distances. Table of Contents Abstract 2 Table of Contents 3 Introduction 3 PESTEL Analysis 5 Political factors 6 Economic factors 8 Sociological factors 9 Technological factors 10 Environmental factors 12 Legal factors 12 Conclusion and recommendations 13 References 15 Appendix 16 Introduction Battery-powered technology is prevalent in almost every aspect of life today ranging from laptops, mobile phones and even electric vehicle batteries. Almost every battery manufacturing company in the world is mastering the art of minimizing batteries while maximizing their efficiency and output. However, there is a significant difference with the electric vehicles due to weight to efficiency ratio, weight to power ratio. Therefore, this calls for a more efficient battery that will be able to meet the power requirements of the vehicles. The improved battery that the new business will venture into involves making a battery that will allow cars move up to 500miles from a range of 100miles. This is a good venture that is likely to gain a large market share in UK as people are anxious towards getting a battery that will enable them move for longer miles before charging. The market share is high as oil prices continue to rise day by day due to various political factors around the globe. This is making many people opt to seek for potential ways of reducing travel costs with the alternative being electric cars using battery. The type of battery that the investment will venture into is lithium ion (Lithium-nickel-manganese-cobalt) batteries as illustrated by Haxel, Hedrick & Orris, (2006). These will utilize a combination of cathode and anode materials due to their high safety, performance, and cost among others. These are the most popular batteries in the UK and throughout the world. The new batteries will exhaust roughly 80% to 90% of their power before recharging. There is expected to be a high market size in UK with high rising number of electric cars and as people seek to get more efficient and reliable batteries. The total market size of people who will own electric cars by 2014 will be 1.8percent of the total population according to survey. This means the number of electric cars will be more than 300000 cars. In approximation, the number of people who will be using the new improved battery will be 55percent of the total electric car owners according to market prediction. This is because more people will be opting to have more efficient batteries. This means that the over 0.99 percent of population will be using the new battery; this means over 165,000 cars will be using the new battery. By 2014, the electric vehicle market would be £7.2billion worth. Therefore, the market size of the new battery will be £3.96billion. This means for every 40 cars bought in UK, 1 car will be using the new electric battery by 2014. However, this investment comes with challenges due to high levels of competition from the existing battery manufacturers. Some of the major competitors include Concorde batteries, Chloride Industrial Batteries, Marshall Batteries, Alaska Batteries, Alpha, batteries, Batec Batteries (UK), Dynamic Batteries, Tungstone Batteries Ltd, Delta UK Ltd, and Shield batteries among others as argued by as illustrated by Haxel, Hedrick & Orris, (2006). Although they are major threats to the new battery in future, they currently produce batteries that are used in less than 250miles. In types of batteries as argued by as illustrated by Haxel, Hedrick & Orris, (2006), Lead-acid batteries are widely available and cheapest; these are a major threat to the new product. However, they only allow a range of 80miles per every charge. Nickel metal hydride batteries on the other hand have high power energy density with a range of 120miles. Lithium battery electric car types are the most preferred due to their excellent range of 250-300miles. However, it is crucial to take into consideration the threats that may arise from them as they strategize about their batteries enhancement. PESTEL Analysis It is crucial for any existing or upcoming business ready to get into market analyze the situation in its external environment. This is towards enabling it come up with strategies that will enable it survive in the competition. There have been several number of checklists developed in trying to analyze various possible issues that affects any business. One of them is PESTEL that analyzes environmental influences that include political, economic, social, technological, legal, and environmental according to Anthony, (2008). PESTEL analysis is a crucial tool for understanding the growth of business, any arising potential, direction for operations and business position. The analysis assists an organization in making strategies that help them be aware of the environment where they operate currently and even in the future. PESTEL analysis is crucial for business especially for the new battery business. This is because they are effective for market planning, business and product development, and business and strategic planning. PESTEL analysis plays a key role in ensuring business performance is aligned positively with strong forces of change affecting the business environment. Any company wanting to venture into business operations in new markets should utilize PESTEL in analyzing the underlying situation (Shuen, 2009). In venturing into new improved battery business, use of PESTEL will assist in breaking unconscious assumptions as well as enabling the new business adapt to the new environment realities. Therefore, the new battery business requires an extensive analysis of external environment as a way of determining the factors that will affect its operations and success. They are many factors that affect the way a business operates and becomes successful especially with the introduction of new products in the market as illustrated by Babette & Craig, (2008). In this analysis, four main factors that shall be taken into account include political, economical, technological, and sociological factors. Other factors include legal and environmental factors. Political factors Manufacturing new improved batteries will face a lot of political challenges as the company tries to establish new markets in UK that includes legal and regulatory aspects. It is crucial to analyze how the political factors that might affect and influence the business or new industry. As illustrated by Anthony, (2008), the main aspects that require to be taken into consideration include current and taxation policy, grants, funding, and initiatives, trade bodies, the current and future political support, effects of war, employment law, competitive regulations, political trends, industry-specific regulations, environmental regulations, and consumer protection among others. Manufacturing of new batteries requires strict environmental regulations due to the toxic nature of the materials used and the materials remaining after the battery use life comes to an end. Current taxation policies in UK ensure that the company’s manufacturing environmental hazardous materials pay is highly taxed. This is likely to affect the new battery company due to high tax rates that government demands. Such a move to venture into new improved electric car batteries maybe provoked by some political class that may feel their existing battery business or interests may be affected. This is a great threat to the new business because many businesses require some political support to some extent in order to thrive. In most instances, government will regulate on the quantity of chemicals to be utilized in manufacturing of batteries. This will be a major hindrance towards the full realization of the intended quality. In terms of political stability, there are no political upheavals in UK that is likely to interfere with the manufacturing of new batteries. Funding of new projects is mostly determined by political situations of a country. In some occasions, government declines to fund some projects even if the companies with those initiatives are not capable financially. In situation whereby company has less capital, this may affect the production of required quality. Political policies in most instances affect the economic conditions. The current global environment issues including global warming is likely to have a major boost to the new battery product as car manufacturers opt to manufacture new cars that are less polluting. Therefore, this is likely to make the government emphasize on the need for people to use less polluting fuels or electric cars according to David & Tom, (2005). Political environment in UK determines the success of new battery business mainly because of interest among the politician. Economic factors Economic factors in most instances determine the extent to which a new business will thrive and survive. The factors have a major effect on the way business operates and even make decisions. Economic factors comprises of economic growth, tariffs, consumer confidence index, import/export ratios, levels of production, exchange rates, inflation rate, and interest rates. Exchange rate for instance affects the supply and price of goods imported in any economy. This might have a significant effect on the raw materials imported into UK from other countries to manufacture the product. Economic situations determine how difficult or easy a business can be profitable or successful as illustrated by David & Tom, (2005). This is because they affect demand, cost, and availability of capital. In the situation where the cost of capital will be low, it will be easier to start investing in the new batteries business. Interest rates are also major determinant especially when a business or company wants to get capital from banks or other financial institutions in order to establish and meet its expectations. According to Babette & Craig, (2008), Economic conditions in most instances influences the timing and relative success of specific strategies. In the situations where economy of a country is growing, the demand of products is usually high. Other than the economic recessions, they are major problems that deter the prosperity of the economy that is likely to hinder the establishment of the business. However, in case of any financial crisis in future, this may become a major threat to the survival of the business. Depressed economy makes many business or companies move out of business, it may end up providing an opportunity for others. Labor markets reflect the availability of specific skills within a country. Labor cost is determined by inflation and the general trends in other industries. It is also determined by the power and role of trade unions. Inflation is likely to provoke high demands in terms of wages from employees as the living costs rises. This may end up raising the cost of manufacturing. On the other hand, higher national income growth may increase the demand of the products as illustrated by Robert, (2005). Although it is unpredictable, major changes in economy in UK are likely to affect the way in which the buying behavior changes. In case of another economic recession, this is likely to have a major impact to the product sales. Therefore, for the new business to become successive; it will have to be determined by the economic conditions in UK and even in the world at large. Sociological factors The way people live is a major determinant of how the product and business becomes successful in a country. The changes in the social trends in most instances have some impact on the demand for the products. Sociological factors involve the cultural aspects within the country. The sociological factors involve tastes and demands, and they vary with disposable income, fashion, and general changes that are likely to provide threats and opportunities for some companies or products. It also involves demographics, lifestyle patterns, and changes, social mobility, media views and perceptions, differences in terms of religion and ethnic, and attitudes towards issues like corporate responsibility, education and environment according to David & Tom, (2005). The current trends in the UK are that many people are opting to buy electric cars because they are new in fashion. They have a great feeling of becoming associated with the new automobiles that are electrically driven. Therefore, this calls for the need to have batteries that are efficient and those that can be used in a long range. With the current situation, the number of upgraded batteries running for a long time is low hence introducing such new batteries into the market will attract a lot of attention. Therefore, it will be easy to strategize on how to promote and set the price. However, it is vital to know the demographic changes including affluence regions, number of working people, and the rate of demand for the related products. In a population where large numbers of people have a feeling of the existing technology, it provides a good opportunity for the upgraded product that is likely to change and improve their life. However, recently, large population has been ageing which may be a challenge to the new fashioned products that few old people take as a priority. This also means that old people may be recruited as the employees. This is a great challenge that is likely to have an impact on the production of new products according to Robert, (2005). It is considerably crucial to take into account social factors as major determinant towards the success of the new initiative in UK. Technological factors In most occasions, new technologies are behind the creation of new products. For a new product to meet the expected performance, new technologies and design must be put in place. New technologies will have a key role of ensuring the manufacturing of efficient batteries is achieved. Technological factors include relevant current and future technology innovations, intellectual property rights and copyright infringements, research and developments activity, rate of technological change, technology incentives, and the ways consumers make purchases (Robert, 2005). Technology plays a key role in reducing the costs of manufacturing and improving quality. Such developments are a benefit to new products intended to be manufactured especially the new improved batteries. Although the new product will be very costly to manufacture, it will be able to attain a better standard or quality that will meet the expected functions. According to Ian, (2009), the new technology of creating improved and efficient batteries will ensure that the product has a better competitive advantage compared to other products. Nonetheless, it is important to take into consideration that other new upgraded products may also be manufactured by other companies after their similar products become obsolete. This is likely to be a major threat especially in future as similar products floods into the market. In most instances, companies changes their products and design immediately a superior product gets into the market. However, new technology requires high input in terms of resources both human and finances. This may end up having an impact on the final cost or price of the product. Rise of new technologies can make the new batteries obsolete by 2014; this is a drawback to the new innovation as it may force the designers to go back to the draw board to design again. Furthermore, shifts in technology usually affect the quality and costs and in most instances leads to other innovations. Technology usually changes with time, new technologies in some instances mature to an extent that they become obsolete. Therefore, new technology should be utilized effectively and to maximum in ensuring it the product gains a significant market segment and increased brand awareness (Teresa & Adrian, 1997). Environmental factors Although environmental factors will not have significant an effect on the production, they still play a key role in determining how the new product will be accepted. Changes in climatic conditions leading to global warming are encouraging the use of greener technology with lesser effect in terms of pollution. This is increasing the encouragement of using electric cars technology. This in the long run might have an effect to the new battery in terms of sales and market size. On the other hand, the materials used in the manufacture of batteries might be a risk to the environment. This may lead to government interference in the ensuring materials used are not health hazards after disposal. This may interfere with the efficiency of the battery as a result due to the restrictions of using some materials as illustrated by Babette & Craig, (2008). Legal factors These are associated to the legal setting where the business operates. In the recent past, UK introduced several changes that had some impact on the behavior of the business. There was introduction of age discrimination and disability legislation as well as increase of minimum wage. This affected many businesses operating cost. Legal factors in some instances affect the likelihood of buying behavior by the customers as illustrated by Ian, (2009). Laws in most instances control the price of products hence determining the price at which the product will be sold. This is towards protecting the customers from exploitation by monopoly powers. This is may manipulate the production and sale of the batteries. Conclusion and recommendations The manufacture of new improved batteries should commence immediately in order to take the advantage of untapped market. It is also important for the company to undertake an extensive marketing of the new batteries in order to create awareness of the product. This is likely to increase the buying pattern. The marketing should inform the intended and targeted consumers on the goodness of the product. It is recommendable for the company to collaborate with car manufacturers as a way of increasing the distribution channels and creating more awareness to the consumers as illustrated by Robert, (2005). Formation of joint ventures with various car manufacturers like GM, Toyota, and Ford among others that manufacture electric cars will increase the chances of product acceptability as well its awareness in the market. The company should perform test drives to some customers in UK and other parts of the world as a way of creating confidence among them. The new improved batteries have a greater chance of getting large customer segment as they are only ones that will be in existence. However, they are several threats to the new projects. Some other companies may also involve themselves into such innovative technologies of increasing the efficiency of the batteries. The regulation by government to use specific materials may lead to manufacture of less efficient batteries. This is a major threat towards the production of the exact batteries if the expected chemical ratios are not used accordingly. There is need for a continued development and innovations for new technologies in ensuring more efficient batteries that go for more than 500miles are innovated. In future, new models may be manufactured in such as way that they use more power hence the new batteries will not be able to run for 500miles as expected. This is a way of ensuring absoluteness of current batteries does not affect the business in case other players get into manufacturing similar batteries. It is worth to note political, economic, sociological, and technological factors are the greatest determinant of how successive the business will become. The political situation in UK in most instances will not have great impacts in 2014. However, due to the toxicity of manufacturing materials, there is likelihood that the manufacturing process will feel some political pressure from the governments. However, this should not deter the investment. In an economic perspective, consumer confidence index, import/export ratios, levels of production, exchange rates, and inflation rate are the factors that are likely to affect the new venture in UK as illustrated by David & Tom, (2005). Importation of resources is likely to be affected greatest by the economic factors. The high wage rate may also have an effect on the overall cost of production. In case the cost of living continues to rise, this is likely to have a major impact on people by 2014 hence affecting business negatively. New technology to manufacture new batteries comes with a cost hence need for large capital. Furthermore, rise of new technologies will have an effect to batteries by 2014 as many other companies will venture into similar business hence rising competition. This may even make the batteries obsolete within a short life span. Change in technology may even lead to inventions of other electric cars requiring more power than the current ones; this may make the batteries unable to retain power for 500miles as expected. Social life of people may change to such a way they prefer the cheap cars other than electric ones, this is a major problem that is likely to decrease the market trends (Stephen & Kerry, 2005). References Anthony, H 2008, Understanding Strategic Management, Oxford press, New York. Babette, E & Craig, S 2008, Analysis without paralysis: 10 tools to make better strategic decisions, FT Press, New Jersey. David, C & Tom, C 2005, Organizations and the business environment, 2nd ed., Butterworth- Heinemann, Oxford. Haxel, G., Hedrick, J & Orris, J 2006, Rare earth elements critical resources for high technology, USGS, Reston. Ian, E 2009, Managing Sustainable Innovation, The driver for Global Growth, Springer, New York. Robert, M 2005, Contemporary Strategy Analysis, Blackwell publishing, Oxford. Shuen, A 2009, Business and external environment factors, Strategic Management Journal, vol. 24, no. 5, pp. 67. Stephen, P & Kerry, B 2005, Managing Change and Innovation in Public Service Organizations, Routledge, New York. Teresa, W & Adrian, G 1997, The Business Approach to Training, Gower Publishing Limited, Hampshire. Appendix Factor Comprises of Political Current and taxation policy, grants, funding, and initiatives, trade bodies, the current and future political support, effects of war, employment law, competitive regulations, political trends, industry-specific regulations, environmental regulations, and consumer protection. Economical Economic growth, tariffs, consumer confidence index, import/export ratios, levels of production, exchange rates, inflation rate, and interest rates. Sociological Demographics, lifestyle patterns, and changes, social mobility, media views and perceptions, differences in terms of religion and ethnic, and attitudes towards issues like corporate responsibility, education and environment. Technological Relevant current and future technology innovations, intellectual property rights and copyright infringements, research and developments activity, rate of technological change, technology incentives, and the ways consumers make purchases Legal Legislation in employment sector Environmental Climate changes Government regulations and environmental laws Figure 1 (Anthony, 2008) Read More

 

 

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