Mission, Vision and Stakeholders - Essay Example

? Exam s Topic Mission, Vision and Stakeholders Mission and Vision The term ‘stakeholder’ encompasses both the individuals and groups who have an interest in the activities of a business such that they are impacted by the attainment of an organization’s goals or have the ability to impact the manner in which an organization is able to accomplish its objectives (Gossy 2008, p. 6). In order to assess the operations of Better Place from the perspective of its stakeholders, it is important to assess the foundation on which the organization has been established. Being a part of the automobile industry, the business plan of Better Place is based on a revolutionary and visionary ideology which aims to challenge the conventional dynamics of automobile development by intending to establish a countrywide network of electric cars. The company’s program rests on the teachings of social entrepreneurship, which in this particular case aspires to lessen and gradually eliminate the automotive industry’s reliance on oil through the incorporation of research and development efforts (Etzion and Struben 2011, p. 2). Stakeholders Indeed, Better Place exists in the business because it believes that change is the most fundamental need of the automotive industry and it is possible to inspire this change by cooperating with the stakeholders of the organization. By assessing the environment in which the company operates, its stakeholders can be identified as follows: 1) Israeli government 2) National electric utility 3) Car manufacturers 4) Battery companies 5) Venture capitalists and Investors 6) Potential customers of electric cars 7) Local authorities 8) International firms 9) International Governments – United States, Japan, Canada, Denmark and Australia Stakeholder Mapping In order to conduct an effective analysis of Better Place’s stakeholders, the tool of stakeholder mapping can be implemented to 1) highlight the level of stakeholders’ interest in favoring or contesting a strategy that is forwarded by the firm and 2) identify the extent to which the organizations stakeholders have the power to do so (Johnson, Scholes and Whittington 2008, p. 156). The key benefit of categorizing the firm’s stakeholders on the basis of the variables of power and interest is that such knowledge is critical to the formulation of strategy as it reveals the firm’s true dependency on its stakeholders. The diagram presented below demonstrates the stakeholder mapping for Better Place. A: Minimal Effort B: Keep Informed Local authorities C: Keep Satisfied Venture capital firms Potential customers of electric cars D: Key Players Israeli government National electric utility International governments and firms Car manufacturers Battery companies Referring to the diagram, venture capitalists firms and potential investors must be kept satisfied with the progress of the project in order to ensure that continued funding is provided by the firms in the third and subsequent rounds of funding. The key players in the venture are external actors namely the Israeli government, international governments and firms. The feasibility and viability of the project is greatly dependent upon the establishment of partnerships with organizations such as the Big Three auto manufacturers in Detroit as well as Toyota which have access to a customer base that would be otherwise inaccessible to Better Place. A concluding assessment of the diagram demonstrates that Better Place exhibits dependency upon external partners who must be convinced regarding the viability of the venture to sustain long-term associations. Topic 2 – Industry and Scenario Analyses Porter Five Forces The assessment of the in which Better Place operates draws from the forces which exist in the automobile industry, the personal transportation industry and the EV market in specific. Discussing the current scenario with regards to the development of electric and fuel-efficient vehicles, Etzion and Struben (2011, p. 12) suggest that since GM’s withdrawal from the market, the entry of small-scale firms in the industry has been rather promising. Threat of New Entrants This notion highlights the strong influence of new entrants as a competitive force which has the potential to transform strategy (Porter 2008, p. 1). While, Better Place’s agenda appears to move ahead with the intention of revolutionizing the industry, current dynamics are indicative of the fact that the threat of new entrants in the EV market is posed by both small and large firms. Threats of Substitute products Large manufacturers in this case are dominated by names such as Toyota and Renault-Nissan which are seasoned players in the industry and thus, cannot be thwarted by adopting tactics such as escalating fixed costs as suggested by Porter (2008, p. 2). Bargaining Power of Buyers Similarly, the competitive rivalry from the supplier’s front has enhanced in recent years which is likely to diminish bargaining power but eliminate the entry of new firms in the industry at the same time. Nonetheless, recent developments in EV infrastructure which have been sparked by collaborations between large automotive manufacturers and photovoltaic companies such as Renault-Nissan and Elektromotive and Tesla Motors and SolarCity have enhanced supplier power. Bargaining Power of Suppliers Porter (2008, p. 2) understands that in order to eliminate the adverse impact of increasing supplier power, this factor can be ‘reshaped’ in the favor of the company by standardizing the components or specifications so as to provide a company with greater choice when it comes to opting for a supplier. Following this recommendation, Better Place has been a supporter of the standardization of EV infrastructure, the initiation of which has been demonstrated in Japan where major automobile manufacturers, battery producers and government agencies have been working towards the establishment of a countrywide standard (Etzion and Struben 2011, p. 14). Intensity of Competitive Rivalry From the point of view of customers, the greatest threat to the widespread success and global acceptance of EVs lies in consumer perception and their willingness to accept and acknowledge the advertised benefits of the technology. According to Porter (2008, p. 2), the factor of customer power can be eliminated by developing the range of services that are offered by the firm. In the case of Better Place, the firm understood the customer’s reservations regarding the long-distance capabilities of the vehicle and carried out a demonstration in Japan which showcased four taxis for period lasting 100 days to address customer concerns (Etzion and Struben 2011, p. 15). Topic 3 – Resources and Capabilities (Source: Grant and Jordan, 2012) Referring to the diagram presented above the resources and capabilities of a firm can be described as the basis for strategy formulation. According to Grant (1991, p. 115), the resource-based theory of competitive advantage highlights that existing resource and capabilities should be linked in such a manner so as to allow the establishment of a link with the prospects that are being presented by the external environment. As per the recommendations of the Better Place model, the resources of the organization can be identified in terms of the software and infrastructure that the firm intended to advance and develop in order to establish a viable network of electric vehicles that could be operated by the masses. Addressing the concerns of consumers regarding the drawback that is associated with EVs for long distance travelling which has the potential to greatly hinder mobility, the Better Place model identified the recharging infrastructure as a key resource. Comprising of two critical components – the charging spot and switching stations devised by the Better Place model enhanced the viability of mass usage of EVs by proposing the installation of these stations at primary spots across the area as well as the user’s home for an additional fee (Etzion and Struben 2011, p. 6). The resource inputs which have been identified as charging spots and switching stations are fundamental to the maintenance of a vehicle’s long-distance capabilities, the absence of which has been highlighted as a cause of concern for most customers who are hesitant of accepting the EV alternative by forgoing fuel driven vehicles. The second resource input that comprises of the Better Place model is that of a computer software which is installed in the vehicles to aid the driver by 1) providing notifications regarding power usage 2) the distance that the vehicle is expected to travel until the next recharge or battery change and 3) highlighting the location of the nearest charging spot (Etzion and Struben 2011, p. 7). Unlike larger manufacturers such as Toyota and Renault-Nissan whose EV capabilities are limited to the collaboration that is established with the respective suppliers, the Better Place model rests on a comprehensive network that is aided by partnerships with local authorities and national electric corporations. However, the competitive advantage that is offered by the organization lies in the cost-efficiency that is being offered through a maximization of resource potential. For example, Better Place that it would buy electricity at wholesale prices from renewable channels in areas where it commences operations or launches its EVs (Etzion and Struben 2011, p. 8). Topic 4 – Business and Corporation Strategies Recommendations to achieve competitive advantage Barney (1991, p. 99) notes that once a firm has been able to identify the competitive advantage that it can offer, this factor can only be maintained by developing strategies which benefit from internal strengths and the prospects or opportunities that are being provided by forces in the external environment. In the case of an organization such as Better Place, the key driver of internal strength is technology. Thus, in the given scenario capitalizing on strength implies that the firm should establish such strategies which develop and advance technology so that it is applied in form of supply side and demand side policies. As demonstrated by the following diagram, the generated knowledge must be applied to strategic formulation which in turn aids the creation of competitive advantage. (Source: Grant, 2013) According to Johnson, Whittington and Scholes (2011, p. 332), the demand side variables of innovation diffusion encompass market awareness and customer innovativeness. Abiding by this theory Better Place targeted Israel as the location where the model was inaugurated as a consumer survey found that 57% of car owners intended to own an EV as their next automobile (Etzion and Struben 2011, p. 15). Strategies followed by Better Place The cost advantages that Better Place intended to provide to potential customers was a matter of concern for analysts and researchers alike who believed that this element would act as a potential deterrent for customers in their decision to switch to an EV. Addressing this matter, Better Place capitalized on its most important resource, the ERGO software to determine the patterns of electricity demand and consumption. This allowed the company to establish estimates regarding the timings of maximum and minimum usage (Etzion and Struben 2011, p. 15). Moreover, identifying the opportunity for cost reduction by keeping track of demand, the organization also established software to develop an interaction with the grid so that electricity could be supplied in alignment with changes in demand thereby, avoiding volatility in demand for electricity (Etzion and Struben 2011, p. 15). In addition with the utilization of resources for boosting cost reduction measures, Better Place found another prospect of controlling cost by receiving cooperation from one of its stakeholders – the Israeli government. For instance, the government of the state proposed that while, it taxed ICEs at a rate of 70% EVs would be taxed at 10%. Moreover, similar, measures were proposed by the governments of Denmark and USA (Etzion and Struben 2011, p.15). In comparison with competing projects, Better Place proposed the establishment of a cost-effective project that could be implemented on a large scale. Through the creation of partnership with local authorities and in alignment with the innovative infrastructure and software that the firm held, the use of EVs was deemed as viable, practical and manageable by promoting innovation in the automobile industry. References Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of management, 17(1), 99-120. Etzion, D., & Struben, J. (2011). Better Place: Shifting Paradigms in the Automotive Industry. Gossy, G. (2008). A Stakeholder Rationale for Risk Management: Implications for Corporate Finance Decisions. Springer. Grant, R. M. (1991). The resource-based theory of competitive advantage: implications for strategy formulation (pp. 114-135). California Management Review, University of California. Grant, R. M., & Jordan, J. 2012. Foundations of strategy. Chichester: John Wiley and Sons. Grant, R.M., 2013. Contemporary strategy analysis: Text and cases. 8th ed. Chichester: John Wiley and Sons. Johnson, G., Scholes, K., & Whittington, R. (2008). Exploring corporate strategy: Text and cases. Pearson Education. Porter, M. E. (2008). The five competitive forces that shape strategy. Boston, MA: Harvard Business School Publishing. Read More