BETTER PLACE CASE STUDY - Essay Example

? Better place case study al Affiliation) Key words: Strategy, Better Place Mission, Vision, and Stakeholders Mission Themission of the organization was “To reduce and eventually eliminate the automobile industry’s oil dependence”. The dependence of automobile industry’s on oil has caused several negative effects on the environment and that is the reason why Better Place comes in with the technology of electric vehicles to curb of the effects. The mission was to be achieved by forming partnerships with other companies and the Israeli government which would help launches a network of electric vehicles nationally and eventually it would be extended to the whole world after forming partnerships with other governments Vision The vision of Better Place was, “to create linkages between car companies, battery companies, utilities and consumers in a manner that would enable electric vehicles to attain widespread adoption”. Creating links with the car companies will help in modification of the cars so that electrical vehicles are attained. The battery companies will help to provide the rechargeable batteries for the vehicles Stakeholders Better Place formed partnerships with the following: Venture Capital firms Corporate clients Israel’s national electric utility Car manufacturers Battery companies Israeli government Suppliers and Service providers Consumers The organization had also announced partnership with firms and governments in: Denmark Australia United states Japan Canada and engaged in conversations with 25 other governments around the world. The stakeholders of Better Place play a great role in making the organization achieve its mission. For example; the Israel government as a stakeholder of the organization helps it to launch a nationwide network of electric vehicles. Other stakeholders like the firms and other governments across the globe similarly would help the organization to launch a global network of electrical vehicles. Governments on the other hand are able to reduce the greenhouse gases and other effects caused by the Inte1rnal Combustion Engines, and also reduce the amount of oil consumption (Bogue & Buffa, 1986). Stakeholders like the Israel’s national electric utility will help to increase the mobility of the electric vehicles so that they are not limited to 100 miles as they currently. They will help in the creation of recharging spots all over to replace the gas stations. In return, the national electric utility is able to have an increased amount of income (McLaughlin & Maloney, 1999). The battery companies provide rechargeable batteries for the organization thus they get ready market for their products. The other stakeholders included suppliers and service providers e.g. Electric Recharge Grid Operator. “ERGO” helped “Better Place” by providing recharging services to electric vehicles belonging to subscribers. The presence of ERGO made the services readily available. On the other hand, they were competitors of Better Place since they offered the same service that Better Place could offer, and the drivers were either to subscribe to either Better Place or ERGO. They partnered with suppliers like the car manufacturing companies to provide them with modified vehicles, the electric vehicles. The consumers as important stakeholders to the company were very eager to use the technology. 57% of Israel drivers, 40% of Denmark drivers, 39% of Australia drivers among others wanted the electric powered vehicles. At the time of launching the technology in Israel, 20,000 Israel drivers were very willing to purchase the electric vehicles. They benefit on the comfort and advantages of electric vehicles over internal combustion engine vehicles as Better Place gets its market. A summary of main stakeholders are outlined in the diagram below. Level of Interest Low Power/ LoI High LoI Government Venture Capital Firms Consumers Supplier High Power Industry and Scenario Analysis The automobile industry uses the five forces of analysis to identify the competitive advantage of its firm. “Better Place” uses the driving forces of the industry to support its analysis. The company uses the information from the five forces of analysis to make proper decisions. The automobile industry uses the structure of Michael porters for its analysis. They include the threat of new entrants, suppliers bargaining power, customers bargaining power, substitute’s threat, and the competitive competition between the industry players. The industry has lower threats of new players. It is difficult for entrants into the industry because of the brand loyalty of clients. Low threat of new players is attributed to the strong barriers like very high capital requirement, licensing and technology requirement. Competition among the firms is very strong. The competition has rendered the market to be unfriendly to many new firms. The foreign entrant’s expansion reduces the markets for “Better Place”. The industry has lower bargaining power of its suppliers. This is because various suppliers depend on some of the common manufacturers to purchase their commodities. Every producer and manufacturer has various suppliers. For instance, Toyota has over ten different suppliers in the United States. The apparent qualification of suppliers includes delivery of products, quality, and coat. If the suppliers do not meet the fundamental considerations it is difficult to survive (Grant & Jordan, 2012). The industry has a high bargaining power of its clients. There are numerous models and brands of Electric Vehicles to choose from. Some of the factors that impact clients to make purchasing decisions include; price, environmental effect, appearance, and quality. Clients have preferred taste on nice looking and new electric vehicles. The Electric Vehicles have to be efficient in terms of saving gas, protecting the safety, running at high speed. Consequently, the automobile industry has lower substitutes threat. It is obvious that there various transportation alternative automobiles. This includes the trains, buses, bicycles, and subways. The alternatives make the life of clients easy in cities. Conversely, those living in suburbs, electric vehicles are the main transportation instrument. Subsequently, the competitive rivalry between the current players is low. Competition among the companies in automobile industry is very high. This is because there are multiple choices for the clients. This causes the market to earn very little profits when the competition cost is high (Rothaermel, 2013). The suppliers of this industry make the industry to be very attractive, since they have very little power in the market. The clients have little loyalty and have greater powers by shifting from one brand to the other and incurring no cost hence, making the market very unattractive. Also, alternatives like motorcycles, planes, trains, and buses make the market to have a medium attractive. Generally, the automobile industry is very unattractive. The automobile industry has faced many challenges including efforts to reduce personal cars by governments so as to reduce oil consumption and emissions. They introduced highway tolls, congestion pricing, tax rebates on environmental preferable vehicle options and carpooling lanes on highways. Resources and Capabilities of “Better Place” The resources and capabilities of “Better Place” in terms of support activities include the firm infrastructure, human resource management, technology develops, and procurement. In terms of primary activities, “Better Place” is equipped with inbound logistics, operations, and outbound logistics, marketing and sales, and also service. The company has service plans where the drivers would sign up the plan with ERGO where the electricity will be sold to customers in miles. “ERGO” will offer a menu to its clients analogous to those provided by telephony operators. The company anticipated that its consumers would benefit from three service plans; fixed monthly fee, pay as you go, and all you can drive. All you can drive was meant for heavy users like the taxi drivers. For fixed monthly plan, the medium range drivers benefited since they are in a position to pre-determine their annual driving range. The service will be able to allocate the driver with the prior amount of miles (Grant & Jordan, 2012). The 3rd tier was pay as you go. Using this plan the clients will be able to buy miles in minimal quantities same to calling cards. Its limitation is exposed to dynamics in prices of electricity. Another capability that “Better Place” is enjoying is software and infrastructure. The company will be needed to develop and maintain the Electric Vehicle’s recharging infrastructure. The recharging infrastructure has two components that include the switching stations and charge spots. The charging spots would make drivers recharge vehicles in convenient places like the malls, grocery stores, sidewalks, and parking lots (Porter and Kramer, 2011.). When the vehicle’s batteries are fully charged, they need many hours to connect to a charge spot, thereby limiting mobility. This predicament is offset with the help of switching stations. The switching stations will analogous to the normal gas stations and would be of help to cars those transverse long distances. Inside the stations, there would be robotic cars that would replace the depleted batteries automatically in minimal time. The vehicles would be moving along the conveyor belt. Additionally, the vehicles will be installed with computers that will help in tracking the time to elapse, the covered distance, and the position of the switching stations (Barney, 1995). Moreover, the driving behavior data would be transferred to ERGO. This would make them place the vehicles in their priority for charging when the electricity demand rises. One of the key weaknesses is their renewable energy. Places that have lower production of renewable energy, the greenhouse gas production was transferred from the engine of taken to a bigger energy production instrument that converts feedstock that are carbon intensive like coal to electricity. The company has decided to buy clean electrons from purified renewable sources, the company believed this to be a cost effective strategy. Looking into the future, Electric Vehicles could provide additional importance as a mechanism to store and capture the renewable energy. One of the greatest challenges of this energy is that solar and wind energy is intermittent. Therefore, to maximize this, the company will require larger batteries to store the energy when their production is very low. Business and Corporate Strategy “Better Place” uses the porter’s five forces of analysis to evaluate and gain competitive advantage. With the help of the forces, “Better Place” combination of forces is not based on profitability as this would render the company unattractive. “Better Place” has examined the three horizontal forces in its strategy: the threat of established rivals, new entrants, and substitute products. Additionally, the company examined the bargaining capabilities of the clients and the suppliers. From the case study of “Better Place”, the company experiences a medium threat to new market entrants. This is because of the brand loyalty that company has created to its clients. The bargaining power of suppliers is low. The suppliers have very little power in the firm. This is attributed to numerous suppliers who buy their products for the company. The main attributes for the suppliers include cost, quality, and product delivery (Abernathy & Utterback, 1975). “Better Place” has a high bargaining power of its clients. There are various models of the product that the company offers. The factors affecting the clients include the environmental effect, quality, and price. “Better Place” has a lower threat to substitute goods. Additionally, the suppliers have lower bargaining capabilities and a significant rate of rivalry among the competitors. The competition between the current companies is higher because of considerable number of choices for the clients. This may pose a negative influence on the company’s profit when competition is high (Johnson, Whittington & Scholes, 2001). Therefore, the company has gained competitive advantage by choosing a challenging and broad problem that will ensure that the outcome makes a true difference. They have embraced a notion of no half measures and small tweaks. Additionally, the company has strived for solutions that are pertinent today. This has been achieved by creating instantly realistic solution. Consequently, the company has defined solutions as business model. This became accessible to various stakeholders such as the customers, investors, and government. “Better Place” has formed strong partnership, ambitious goals, and unique competencies, thereby placing them in front of its competitors. “Better Place” has carried many activities that are linked to achieve competitive advantage. For instance, the company has outperformed its rivals by seeking cost leadership. This has been achieved by reducing the cost that are linked with the activities of Value chain, hence a reduced cost in the quality of resources used. The company has concentrated on areas that have higher client consciousness and a stronger demand for Electric Vehicles. For instance, in Israel more than half of the drivers wanted their cars to be electricity powered. This same applies to the US, Denmark, Canada, and Australia. To set out the technology and business model in a more congenial setting, the company has come up various small islands and countries. The company’s management has planned to roll out the charging infrastructure in Copenhagen (Rothaermel, 2013). Additionally, “Better Place” has partnered with Islands such as San Francisco and Hawaii. Hawaii imports oil to meet the needs of its energy with higher prices of gasoline of any United States state. “Better Place” has an interest in Australia because it has three urban centers that are connected with one freeway, making it suitable for the company’s model. Other countries that the company has had an interest with are Portugal and Spain. The two countries have a higher demand for plug in electric vehicles. The company has also established partnerships and conducted the market studies to evaluate the feasibility of entry into the region having fewer boundaries. To reduce cost, the company has developed software used in tracking data, communicating with the grid, and dispensing the electricity when the demand fluctuates. To manage the process of data flow, the computerized computers will be connected to a data system that will recognize when the vehicle is hooked to the grid (Abernathy & Utterback, 1975). The company is working as per with utilities to come up with investment plans that are long term in clean and renewable energy. For instance, Israel has developed goals to have ten per cent of its energy from renewable energy and solar power. To help utilities to attain goals of renewable energy, some nations have offered tax rebates on EV. Israel has taxed Internal Combustion Engines agreed to tax vehicles at 10%. On the other hand, the United States has offered rebates that range from 3200 to 7500 dollars on the capacity of batteries. Consequently, “Better Place” is in talks with auto manufacturer but none of the partnership has materialized (Johnson, Whittington & Scholes, 2001). Reference Abernathy, J., & Utterback, W. 1975. A dynamic model of process and product innovation. 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