Strategic Management Analysis - Essay Example

? Better Place Company Mission, Vision and Stakeholders Mission This is a company started by Shai Agassi, a young entrepreneur seeking to connect battery manufacturers, vehicle manufactures, accessory manufactures and vehicle customers. Through the Young Global Entrepreneurs seminar, Agassi believed that globalization of the Electric Vehicles (EVs) would greatly contribute to making the world a better place. The EVs use electricity for propulsion. Customers that purchased electric vehicles incurred problems such as: they were unable to use the cars for longer distances due to the limited capacity of the battery, the charge spots were few and the service costs for EV were high. Better Place came into business with the aim of popularizing the use EVs. The first thing the company worked on is a better battery that could last longer. Secondly, they increased the number of charging spot for the EV customers. They then introduced service packages that were suitable for all classes of customers. Without Better Place Company in business, there could be difficulties for EV users. Vision Agassi, in his bid to reduce pollution, vowed to only purchase electricity produced from the renewable sources of energy. Better Place believed that the EVs could significantly reduce the costs incurred by drivers. Feasibility studies conducted showed that electricity costs relatively cheaper than gasoline in most of the countries. Better Place Company is working to reduce the number of Internal Combustion Engines (ICEs) which will be replaced by EVs. With EVs, environmental degradation will be significantly reduced and motor vehicle costs reduced. Stakeholders The stakeholders in this industry include: car manufacturers, investors, customers who are basically drivers, electricity producers, electric recharge grid operators, governments, battery manufactures and car accessory manufacturers. Better Place came into business with the aim of facilitating EV operation through acting as an intermediary and facilitator among the stake holder Stake holder have different claims o the company: analysis of each stakeholder will reveal their importance to the firm. Investors: these are the people who fund the investment activities of the company. Investors can be individuals, financial institutions or corporate firms. The company entirely depends on investor for capital. This makes investors important stakeholders to the company. Investors influence the financial decisions of the company. The company cannot undertake any capital investment without investors’ approval. Investors will always check the financial performance of the company to ensure it is within track. Customers: these are the drivers, individuals, governments and firms who purchase the Better Place products. They are the major source of revenue to the company and the main reason why the company exists. Customer will always be concerned with product pricing and quality. The company will always produce high quality products and sell them at customer friendly prices so as to keep customers. Suppliers: this includes car manufactures, electricity producers, battery manufacturers and other suppliers to the company. Without these stakeholders, the company will neither produce nor sell. The company depends on the suppliers for resource inputs whereas the suppliers depend on the company as a market for their products. Governments: the company must relate well with the governments of the countries it establishes its business in. governments depend on the company for taxes and creation of employment opportunities. The company expects good business regulations in the country and a good economy to operate in. The company should always acts ethically in all decisions. To address stakeholder concerns, the company must ensure it adheres to the corporate social responsibility regulations. Stakeholder prioritization matrix High Power Low Interest High A stakeholder’s position on the grid shows the treatment they are given. For instance, those with high power and high interest should be always satisfied and in this case, the investor and customers lie here. Industry and scenario analyses The existence of Better Place Company is purely dependent on the EV market. Better Place is built on the Electric Vehicle industry that is marked with rapid growth. Better Place functions to facilitate a smooth transition from ICE to EV through providing the necessary EV accessories, infrastructure and software. In its entry to business, Better Place experienced a number of huddles. The first one was that Electric cars were not popular in many countries across the world. This meant that more costs could be incurred in creating awareness in the areas the company wanted to operate in. Secondly, the existing infrastructure did not support the use of EVs. This meant that Better Place Company had to incur expenses in building and installation of the charge spots and switching stations. Thirdly, the high competition the EVs received from the existing ICEs in the initial stages. Most people using ECE were content with their cars and were not willing to switch to EV. Their initial price was high hence most customers preferred ICEs. Fuel efficient ICE cars that emit a lesser proportion of greenhouse gases have been engineered. This means that such cars become an alternative to the use of EVs. EVs were invented with the view of reducing environmental degradation. EVs purely use electricity for engine propulsion hence lesser environmental pollution. This was the idea that Agassi used to come up with Better Place Company. With recent research and innovation, an environmental friendly ways of fuel combustion has been identified. This means that ICEs will have lesser environmental effect hence can compete with EVs. This means that with the hybrid ICEs, Better Place Company will experience challenges in trying to sell as EV and ICE are both environmental friendly. In terms of pricing, ICEs are considered cheaper on the initial cost. However, EVs are cheaper when it comes to operation costs as electricity costs cheaper than fossil fuels and gases. This gives Better Place a competitive advantage. The International Organizational standards (ISO) and other standard measuring bodies are yet to set up universal standards for EV manufacture and use. This means that all the EVs will have universal charge spots, plugs and equal electric intensity intake. This will facilitate the use of the already installed charge spot and switch stations. New entrants into the EV industry are likely to experience huddles due to the fact that Better Place is well established. The company has partnered with most vehicle manufactures and battery manufactures leaving lesser deals for new entrants. It has also established a wide market coverage and struck deals with EV customers. New entrants will have a very small market share therefore cannot compete with better place effectively. Better Place currently has little competition since it one of the pioneer companies in the EV industry. It is enjoying a larger market share due to its well establishment. As discussed earlier, EVs are being substituted with hybrid ICE that use eco-friendly fuels with lesser environmental effects. Resource and capabilities Better Place Company requires the following resources for its daily operations: Tangible resource that include: electricity, financial resources such as securities, bonds and cash and also physical resources such as the charge spots, plant and equipment, switch stations and solar energy equipment. Intangible resources: these include technology, organizational culture and the company’s reputation. Human resources such as personnel skill and motivational factors. Capabilities These are the superior skills that are possessed by Better Place Company that enable it to perform its corporate functions efficiently. Agassi is a software developer and has successfully developed software for EV use. As one of the pioneer companies in the EV industry, Better Place Company has an upper hand in marketing due to its acknowledgement in the countries of operation. Its services and cheap prices have been an outstanding marketing strategy since its inception. Production efficiency and innovation by this company can be viewed as capabilities. Appraisal of the resources The resources are important aspects that facilitate the company’s operations. Analysis of the individual resources will reveal the importance of each one of them. Tangible resources Electricity: Better Place purchases electricity produced from clean energy to run the charge spots. Since Better Place Company runs in the EV industry, electricity is a major resource for its operations. Electricity is measure in Kilowatt Hours but for the purpose of EV users, Better Place sells electric units in terms of kilowatts per mile. This makes it cheaper for EV users. Financial resources: for any business to run, financial resources are mandatory. These include stockholder equity, loan capital, bonds and securities. From the case study, Better Place Company is sourcing financial capital to finance its new venture in Israel. Financial resources are shown by the market value of the company, the cash-flows and the general financial statements. Physical resources: these include the charge spots, switch stations, plant and equipment, land and buildings. These are also essential for the operations of the company. Better Place Has high quality equipment that work to ensure efficiency. Human resources Personnel skills: these are the skills possessed by the qualified staff employed by the company. Ranging from accountants to computer experts, the company’s human resource ensure that the best staff is recruited and effectively remunerated so as to keep its competitive advantage. Once new employees join better place, they undergo training and orientation. Intangible assets Good reputation: this is the good name created by the company through its customer and environmental friendly policies. For instance, the company has a good reputation due to its policy of buying electricity generated from clean energy. Its low prices and good customer services have also contributed to its good reputation. A good reputation is an attraction to investors. Governments will always allow companies with good reputations to establish their services. Technology is another resource at Better Place’s disposal. The company is headed by a lead software developer and other technology experts who have worked to come up with the most efficient EVs and EV accessories. Technology is the major strength for better place. The company has over time used technology to increase efficiency of the EVs, for instance, re-engineering the EV to make it power efficient. Research and innovation are likely to keep the company at the top in the industry as it will lead to new technologies. Business and Corporate Strategies For continuous growth and expansion, the company continues to formulate and roll out new strategies. Business level strategies enable the firm to stand out building its competitive advantage at the same time. Better Place is one of the pioneer companies in the EV service industry. It has a strategy of establishing new connections to countries with high EV demand. This strategy is aimed at expanding the current market coverage of Better Place Company. If well implemented, this strategy will be a major revenue source. In a bid to establish its competitive advantage, better place is devoted to becoming a technology leader. This is a move that will increase operational efficiency. Technological advancement will also increase customer satisfaction thereby attracting more customers to purchase EVs and using the Better Place products and services. The company has also engaged in stakeholder in all aspect as it rolls out its strategic plans. Stakeholder engagement is a strategy that works to facilitate the expansion of the company. For instance, engaging the investors by providing them with its strategic investment plans is a strategy aimed at wooing the investors to invest in the company. This has also made access to capital relatively easy for the company. Engaging customers is a key strategy aimed at increasing customer satisfaction and improving service delivery. Engaging governments and political authorities is a strategy that has worked by enabling the company to establish operations in new countries, for instance Israel. Engaging suppliers such as electricity produces is a strategy that enable the company to run its charge spots and switch stations efficiently. This also helps them identify electricity produced from clean energy. Low Pricing is another strategy employed by the company in a bid to attract more customers to use EVs. Through market research, the company has produced cost effective equipment such as batteries. These are sold at relatively cheap prices and last longer than the previous ones. The cost of electricity charged to EV customers is also effective compared to petrol and other fuels used in ICEs. Differentiation is another strategy employed by Better Place in its products. With the best technicians, its high technology products are superfluous. It has manufactured long life batteries and developed charge sports that are differentiated due to their high quality and efficiency. This has increased the company’s competitive advantage. References Etizon Dror & Struben Jeroen. 2011. Better Place: Shifting Paradigms in Automotive Industry. Mcgill University. Freyssenet Michael. 2002. The Second Automobile Revolution. London: Macmillan Publishers Grant Robert. 2001. Resource based theory of competitive advantage: implication for strategy formulation. Available at: Hubbell Pamela. 2012. Industry Analyses. CGU Writing Center. Available at: http://www.cgu.edu/pages/848.asp (Accessed 3 January 2014) Paul Peter and Samuel Certo. 1988. Strategic Management: Concepts and Applications. New York: Random House. Porter Michael. 2006. The Five Competitive Forces That Shape Strategy. Harvard Business Reviews, 25/12. Available at: https://www.dropbox.com/sh/1gaiykankxtzs5n/Jmk8Vw_hP-/porter-fivecompetitiveforcesthatshapestrategy.pdf (Accessed 3 January 2014) Stephen Robinson. 1988. Management Concepts and Applications. Englewood Cliffs: Prentice-Hall The Open Group. 2011. Stakeholder Management. The Open Group. Available at: https://www.dropbox.com/sh/1gaiykankxtzs5n/S7V1rrYRgO/Grant1_NB.pdf (Accessed 3 January 2014) Thompson Rachel. 2013. Stakeholder Analysis. Mind Tools. Available at: http://www.mindtools.com/pages/article/newPPM_07.htm (Accessed 3 January 2014) Read More