Strategic Management Analysis of the Best Place Company - Case Study Example

? EXAM S - STRATEGIC MANAGEMENT ANALYSIS by and Topic Mission, Vision and Stakeholders Generally, the company ‘Better Place’ is dependent on the stakeholders because it cannot prosper without them. As in any business, no organisation can exist and conduct successful business in isolation, thus stressing the importance of stakeholders. For this organisation, the most important stakeholders include potential buyers of electric vehicles, governments, city authorities, and suppliers. The company engages in the business of producing electric vehicles that are more efficient and appealing to many users than the steam cars. It exists to improve the environmental conditions that the previous locomotives have degraded due to the high level of greenhouse gases that they emit into the atmosphere. Despite the rigidity and complexity of the motor industry, Better Place Company cooperates with all stakeholders to control a sisable market share and beat competition. For example, the company targets corporate clients to be the potential buyers of electric vehicles it intends to manufacture. This group of stakeholders is imperative because the targeted consumers can influence the operations in the company by either propelling it to success in the market or reducing its dominance if they refuse to purchase the products. Governments are the second major stakeholders for the company. They include national governments and local authorities of the country and specific areas where the company operates a franchise. For instance, the company operates in the United States and intends to open branches in Israel, Denmark, Japan, Canada, and Australia among others globally. The branch in Israel is very significant to the company because it specialises in research and development to improve the quality of output. This means that the company must work with the respective government of each country to ensure uninterrupted operations and sustainability. These governments are equally important because their policies, in areas of taxation and electric utility may affect the company. The other important category of stakeholders for this company is its suppliers. This group includes car manufacturers, battery companies and venture capital firms whose contributions and influences to the company are immense. For example, venture capital firms are important to the organisation because they provide the much needed capital for startup. For instance, they helped the company to raise a total of $200 million to initiate the business (Etzion & Struben 2011, p. 2). Battery manufacturers, including Fuji Heavy Industries Ltd, A123 Systems and Automotive Energy Supply Corporation are also significant because they would provide connectivity for the electronic vehicles with switching stations, positioned to charge and swap batteries so that the vehicles would change them at convenience (Etzion & Struben 2011, p. 6). In addition, there has to be battery chargers at each station capacitated to charge the batteries within the shortest time possible. The car manufacturers such as General Motors, Ford, Subaru, Mitsubishi, and Toyota would provide experts who will contribute to the development of the electric cars (Etzion & Struben 2011, p. 12). Figure1: Stakeholder Analysis Topic 2 - Industry and Scenario Analyses In this scenario, the analysis is on Porter’s five forces, including the suppliers, potential entrants, buyers, substitutes, and competitive rivalry that have a remarkable impact on the progress of the company (Porter 2008, p. 3). Certainly, the company understands that changes in the means of transportation came from the need to counter the increasing animals’ wastes and nuisance that they caused in urban centers. Other changes that necessitated the manufacturing of electric vehicles were the adoption of clean energy and other liquid fuels, which include ethanol, kerosene and gasoline in addition to petrol (Etzion & Struben 2011, p. 9). Therefore, Shai Agassi started Better Place Company to offer solution by linking various stakeholders in the motor industry. Indeed, industrial and scenario analyses show the dynamics in the motor sector as outlined herein. The suppliers present a strong force that affects the operations of the company since the materials used in manufacturing the vehicles are outsourced from other entities (Porter 2012, p. 6). For example, General Motors, Ford, Toyota, Subaru, and Mitsubishi would supply cars for the organisation. Electric Recharge Grid Operator, Hawaii Electric, Portland General Electric, Israel Electric Corporation, Bullfrog Power, and SolarCity Companies would supply the electricity needed for charging the batteries in their various countries. Potential entrants into the electric vehicle industry also play a role in enhancing competition that would lead to quality outcome (Porter 2012, p. 4). For instance, Coulomb Technologies piloted the provision of charge stations in various parts of the United States, Elektromotive of United Kingdom, Tesla Motors, and Big Three Auto increased competition in the electric auto industry. As a result, this keeps the giant car manufacturers under stiff business rivalry. Best Place Company noted that potential buyers also affect the motor industry in a profound way. The attitude of buyers may promote business or reduce it by purchasing or failing to buy them respectively (Porter 2012, p. 5). A number of reasons that may influence the potential buyers not to purchase the products include poor quality and inefficient cars because they would lead to financial wastage. Indeed, consumers may be forced to use additional funds to cater for repairs and maintenance if the products do not meet the acceptable standards, thus may lower the company’s image and that of the entire industry. Substitutes used in transportation such as airplanes, trains and crew ships also offer stiff competition to the electric vehicles that the company wants to introduce into the market (Porter 2008, p. 3). This means that cheap substitutes such as trains and crew ships, and faster one such as airplanes continue to attract more potential users than the electric cars, causing a shift of interest in the industry. Finally, competitive rivalry in the motor industry is worrying Best Place Company and much need to be done to make sure that it does not affect the operation of all companies in this business. The rivalry between old and new vehicle manufacturing companies and among players in the same category, could threaten the sustainability of Better Place Company, since they are the suppliers that the entity depends on. Topic 3 - Resources and capabilities Identification of Resources and Capabilities With specific reference to Best Place Company, some of the key resources that the entity relies on include management systems, recruitment & training, software (IT systems), electric cars, and spare parts. These resources are important because they enhance the firm’s capabilities in fulfilling primary and support activities. Concerning the support activities, the specific resources of the company include management systems under the firm’s infrastructure, recruitment and rewarding training systems under the human resource management, IT systems (software) under technology development, and electric cars & spare parts under procurement. Certainly, the availability of these resources increases the company’s capability in delivering efficient electric cars and boosting its competitiveness. Moreover, the effective utilisation of the resources could make the organisation acquire first-mover advantages in the market despite competition (Barney 1991, p. 104). Concerning the primary activities of the company, the specific resources include electric components that fall under inbound logistics, human labor under business operations, suppliers that fall under the outbound logistics, promotion and advertising that fall under sales and marketing. Finally, there are spare parts, servicing and recycling that fall under the service activities in the organisation. These resources significantly contribute to the success of the company and improve the organisational capabilities and competitiveness. Appraisal of Resources and Capabilities In terms of resource and capabilities appraisal, the discrete activities that Best Place Company would engage in, during the production of its electric vehicles will directly benefit the consumer and add value to the products. Notably, each activity would utilise available resources to realise the organisational objectives, capitalise on the entity’s strengths and counter evidenced weaknesses during the production of electric vehicles. According to Grant (2001), it makes the company maintains its competitive advantage and strength to acquire more resources and gain a considerable market share (p. 122). Moreover, Best Place Company understands that the motor industry has undergone tremendous changes aimed at using the available resources to improve organisational capabilities, quality and efficiency of cars that meet the dynamic needs of users (Freyssenet 2009, p. 10). The shift from traditional forms if transportation is the time the industry started seeing transformations, particularly with the introduction of steam engine technology in personal transportation, which Best Place wants to improve production efficiency by introducing best electric vehicles to strengthen its market presence (Freyssenet 2009, p. 96). Strategy and Implications Due to its market strength, the major strategy that Best Place Company should adopt is objective outsourcing. During outsourcing, the use of technological innovation and software to promote the quality of products and company strength is a positive gesture that would develop a more fundamental system of ensuring quality control and maintenance. The implication is that the company must identify areas of weakness and improve on them while maintaining its superfluous strengths to remain very competitive in the market. However, Harrigan & Porter (1983) noted that some companies may remain in an industry experiencing a decline because of strategic considerations (p. 4). Topic 4 - Business and corporation strategies In relation to business and corporation strategies, Best Place Company should adopt product differentiation for value creation. Ideally, developing a proper strategy for the organisation may not be easy because it involves the determination of resources and particular competencies that stakeholders anticipate (Prahalad & Hamel 1990, p. 81). Therefore, this strategy draws heavily from the organisational strengths and works to eliminate possible weaknesses. This facilitates decision making in the organisation. Moreover, the business and corporation strategy must show aspects that are geared towards sustainability and cooperation among stakeholders. Some of the key stakeholders whose operations with the company have close ties include battery companies, car companies, consumers, and utilities. This link is vital because it facilitates the introduction of the electric cars that the company would introduce into the market. The other aim of this company is to buy electricity and batteries, and sell miles. The long-strategy that the firm should adopt is product differentiation and collaboration with all stakeholders to provide direction for the organisation (Johnson, Scholes & Whittington 2008, p. 6). Product differentiation and collaboration determines the scope that the organisational activities reach as the company gains a sizeable market and competitive advantage over other players. Moreover, they help stakeholders initiate changes that would improve the environment under which the business operates. These aspects would also develop the company’s resources and core competencies to deal with emerging tactics that other players use in the industry. These would definitely create a competitive advantage for the organisation Johnson, Scholes & Whittington (2008) observed that the organisation that adopts product differentiation and collaboration will be best placed to realise value for its products, meet consumer and stakeholder competition, and counter the firm’s weaknesses. Based on this strategy, the customers and suppliers can be best influenced into buying the company products and supplying the needed items respectively by carrying out effective marketing of the products to increase the awareness of the company and its products. In addition, it is through this strategy that the customers will judge the company based on the quality of products, meaning that their increased preference for the products presents opportunity while the opposite poses a big threat to the organisation (Kim & Mauborgne 2004, p. 78). Furthermore, creating and using technology in production is part of strategic development in the organisation that is beneficial to the company because it leads to the manufacturing high quality electric vehicles. Kim & Mauborgne (2004) noted that other than the production of quality products, the use of advanced technology could lead to mass production, thus lowering the average cost of end-products (p. 84). This could give the company a competitive edge over other companies in the same business. Indeed, technological advancement leads to knowledge generation and potential diffusion of the acquired skills to improve productivity in the organisation. This is a consequence of resource development in the car manufacturing industry to replace the old resources, which are environmental friendly. Fig 2: Knowledge Creation and Diffusion. Reference List Barney, J 1991, “Firm Resources and Sustained Competitive Advantage”, Journal of Management, pp. 99-120. Etzion, D & Struben, J 2011, Better Place: shifting paradigms in the automotive industry, McGill University, Canada. Freyssenet, M 2009, The second automobile revolution, Palgrave Macmillan, London. Grant, R 2001, “The resource based theory of competitive advantage: implication for strategy”, California Management Review, pp. 114-135. Harrigan, K & Porter, M 1983, “End-game strategies for declining industries”, Harvard Business Review, pp. 111-120. Johnson, G, Scholes, K & Whittington, R 2008, Exploring Corporate Strategy, Pearson Education Limited, England. Kim, W & Mauborgne, R 2004, “Blue ocean strategy”, Harvard Business Review, pp. 76-84. Porter, M 2012, “The five competitive forces that shape strategy”, Harvard Business Review, pp. 1-17. Porter, M 2008, “The five competitive forces that shape strategy”, Harvard Business Review, pp. 79-93. Prahalad, C & Hamel, G 1990, “The core competence of the corporation”, Harvard Business Review, pp. 79-91. Read More