Management Investigation and Recruitment - Essay Example

Management Investigation and Recruitment Report Introduction This report is based on analysis of solar energy industry, which involves the production, installation and maintenance of photovoltaic (PV) panels. To achieve this, the report is divided into sections that cover industry’s dominant economic features, porters’ five forces, and drivers for change in the broad environment, key success factors for competitive success and lastly analysis and summary of attractiveness and prospects for long-term profitability of the industry. 1. Industry’s Dominant Economic Features Demand for solar energy in a global scale has been growing at an average rate of 30 percent annually for the past 20 years. Growth in this industry has been stimulated by continued decline operation, associated equipment, sale of solar modules and installations costs and prices with the benefits being reflected in consumer expenditure. Companies in the industry have taken advantage of the economies of manufacturing scale, improvement in technology and improved efficiency of solar cells that has driven cost down. Therefore, 2009 saw the industry rake in an estimated 38.5 billion dollars in revenues globally. The growth in solar industry is projected to record growth with a projection of growth from 46.3 billion to 96.8 billion dollars for 2014 depending on the stability of various factors influencing the industry (Solarbuzz, 2014). Positive growth at a global scale has also been reflected in UK industry where large-scale installations rose by approximately 600 percent during 2013 alone. This shows positive sign for the industry as more households and businesses continue to embrace renewable energy in their daily operations (Colville, 2014). 2. Porters Five Forces Porters five competitive forces model is an important tool for the assessment of an organization’s competitive strength and the position held by the organization in the market. The model provides five levels that include existing rivalry in the competitive environment; threat of new entrants, power held by buyers, supplier power and threat posed by substitute products all that are important making an analysis of industry performance (Hill and Jones, 2007). Threat of Substitute Products Solar energy industry faces strong threat from substitute products developed in other industries. Firstly, within renewable energy sector, there are multiple alternatives for consumers, which might include wind, biomass, geothermal heat, rain and tides. The threat is increased by continued emphasis on use of green energy with consumers having multiple platforms on which to decide their favourite options. Although there have been recent emphasis on reduction of global reliance on fossil fuels, this remains the biggest source of energy for many companies and households. Solar energy is therefore facing challenges in convincing more consumers to adopt this method of energy generation. Therefore, the relatively high initial cost of installation increases chances that consumers will choose alternative sources of energy (Thøgersen, 2006). Threat of New Entrants Threat posed by new entrants into solar energy industry ranges from low to medium due to the industry being relatively new. The industry is growing a fast rate, which increases chances of new entrants finding it attractive for investment (Solarbuzz, 2014). New entrants into this industry will also be attracted by existing room for application of innovative ideas that would provide necessary motivation for customers to choose their services over those provided by rival firms. However, new entrants into the industry might not find it easy to compete with those that have been established over the years especially due to large funding needed to for setup and operations. For new entrants to be success in the market, they would also require an effective marketing and networking to ensure prospective customers access important information about their firm and the products offered including how the products are different from those available in the market (Scheer, 2013). Intensity of Competitive Rivalry in the Industry Rivalry in solar energy industry involves competition posed by different firms producing means for solar energy. The level of competition in this industry is low therefore making threat of rivalry to be low as well considering the rate of growth experienced in recent years. High growth rate means the market can accommodate new entrants in short time without increasing rivalry between firms in the industry. However, in the end, it is possible for rivalry to increase as many households continue to adopt alternative energy sources that might result in market saturation (Scheer, 2013). The Power of Buyers Buyers exercise strong force this industry due to the available choices they have over existing alternatives. Buyers in the industry include households and business organizations conducting a solar energy manufacturer or business organizations running installation facilities. Therefore, buyers have the choice over type of power is suitable to serve various energy needs while also considering available sources such as fossil fuels or green energy. Therefore, the choice over type of energy source will depend on consumer worldview especially based on whether they support initiatives aimed at solving problem of clime change. Additionally, financial implications of choosing the type of energy to use also give consumers a high power considering installation of solar energy is expensive but cheap in the end due to limited expenditure on recurrent costs (Hobson, 2006). The Power of Suppliers Suppliers hold medium to high power in the solar energy industry due to their relative flexibility in operations. High power of suppliers is derived from the fact that suppliers of the solar cell and panels can decide to run the entire industry without requiring the service of installation companies. The advantage for suppliers is also increased by the fact that there are few firms in UK producing the cell and panels, which implies demand for products from installation companies is high (Scheer, 2013). From the analysis of porter’s five forces, it is evident that most of the forces in solar energy industry range from medium to high meaning threats in the industry have may adversely affect profitability. The only are with low level of threat is rivalry, which has been attributed to the fact that the industry is still at growing at fast rate. Therefore, the potential for industry growth is an important motivation for firms to join the solar energy industry as new entrants are assured of attracting a segment of the market. 3 Drivers for Change in the Broad Environment There are a number of drivers for change including economic climate, legal trends, cultural trends, political conditions, environmental considerations and technological trends, which have implication on the solar energy industry. Political situation at a global level has a greater implication on the solar energy industry. Jaffe, Newell and Stavins (2005) note the connection between cost of subsiding technology that reduces greenhouse gases and political will of the government. The political stability of different countries supplying oil and gas to the UK is a matter of concern for the country. There are threats of disruption in supply due issues such as terrorism which has affected many countries exporting fossil fuels. Additionally, there has been increased competition for energy especially from emerging countries such as China (Beck, 2013). These countries have increased their consumption of available sources of energy as they strive to achieve the status of a developed economy. However, this has a negative impact for others countries as it has led to the rise of energy prices while also increasing the risk of extinction. Consequently, there has been increased pressure from politicians that the UK must now invest in alternative energy sources with solar energy emerging as an important source of this energy. Solar energy is perceived as an important source of alternative energy that will ensure the country achieves independence from reliance on supply from oil and gas producing countries therefore safeguarding the economy from both foreseeable and unforeseeable dangers of importing energy sources (Scheer, 2013). Solar energy is has also taken centre stage due to savings derived from its application by households and businesses. The importance of solar energy is seen in the ability of the energy source to save costs incurred on electricity bills especially in the long term. Solar energy has low financial burden on consumers, as they do not require regular maintenance except when there have been damages by other factors. Additionally, the industry is an important source of employment for many people who have contracted to serve in manufacturing, distribution and installation. Therefore, investment in the solar energy industry has positive impact on the economy of the country and that of individual households with installations (Cronin, 2010). Environmental concerns have also played a major role in adoption of solar energy by households and businesses. There has been increased concern about the effect of reliance on energy generated from burning fossil fuels. This is due to continued climate change that has had adverse effects in different parts of the world where some regions have experienced changes in weather patterns, adverse effects such as floods and increased temperatures have been reported. Therefore, solar energy has been adopted as part of green energy solution efforts seen as important in environmental conservation through usage of clean energy, which is renewable (Hobson, 2006). Technology has affected the solar energy sectors which seen increased investments by companies which have seen potential grins from the industry. The result of technological advancement in this area is that consumers are increasingly, enjoying extended high quality services that also cost less. However, there are still a lot of areas to be covered in technology to make the industry more sustainable for businesses and users (Scheer, 2013). Given the changes in climate, manufacturers must invest more in R&D to ensure creation of products that will serve users for a long period while also cutting cost of purchase, installation and maintenance. 4. Key Success Factors for Competitive Success (KSFs) Success and profitability in solar energy industry depends on government policies, number of households and businesses keen to introduce renewable energy into their practices, technological innovations and competition posed by rival firms inside and outside the industry. The government has driven adoption of solar energy by various segments of the industry through introduction of favourable policies including Feed-in tariff (FIT) that have subsidized the cost of operations (Torbati, 2012). Such policies have led to accelerations of investment in the industry as manufacturers and producers of green energy solutions strive to enter into long term contracts with the government. Given low rate of consumption for green energy compared to fossil fuels, there is need for greater awareness for consumers to adopt solar energy as an important source of alternative energy. On the other hand, technological innovation in the industry will be an important factor in profitability of the industry especially in creating products that will ensure sustainability for the customers. Potential customers are concern about ability of solar energy to satisfy their energy demands for various purposes ranging from light household to heavy usage in manufacturing and other industries. These factors are likely to record positive improvement in long-term due to projected increase in consumer adoption of solar energy, the existing political goodwill from the government and continued technological improvements. The implication of this evolution in the energy sector is that manufactures and businesses dealing with installation and maintenance of these facilities will continue to have more customers in need of their services and products. 5. Analysis and Summary - Industry’s Attractiveness and Prospects for Long-Term Profitability From the study of the solar energy industry, a number of issues have risen with implications on attractiveness and long-term prospects for investors. Solar energy industry is one with a high growth potential due to increased customer awareness on both economic and environmental implications of adopting the technology. Potential customers have continued to have increased desire to adopt renewable sources of energy with specific interest on solar energy as costs of installations continue to reduce. Many have also been attracted due to increased awareness about importance of environmental conservation, which has now been a concern for all regardless of the level of energy consumption. Due to the attractiveness of the industry, competitive forces will get stronger in the long-term as new firms continue to enter the industry as either manufacturers or installation companies. However, firms are not likely to experience this as the competition is reduced by a further increase in demand for products and services. Additionally, the driving forces will not reduce profitability in the end as firms continue to reduce costs of operation through adoption of improved technology while governments are also showing political goodwill to support the industry through introduction of favourable policies (Jaffe, Newell and Stavins, 2005). However, there are some levels of uncertainties in the industry because it is dependent on weather and climate, which have continued to be unpredictable over the years due to global warming; overall, a firm can participate in this attractive industry. References Beck, M. 2013. The Renewable Energy Directive and the Challenges for the Biodiesel Industry: Insigths Into a Dynamic and Opaque Industry. Hamburg: Diplomica Verlag. Colville, F., 2014. UK solar PV demand reached 1.45GW in 2013: large-scale grows by 600%. Solar Power Portal [Online] Available at: http://www.solarpowerportal.co.uk/guest_blog/uk_large_scale_solar_pv_grew_by_600_in_2013_with_annual_demand_reaching_1.4 Accessed 28 Aug. 2014. Cronin, M. J., 2010. Smart products, smarter services: strategies for embedded control. Cambridge: Cambridge University Press. Hill, C., & Jones, G., 2007. Strategic management: An integrated approach. Stamford, CT: Cengage Learning. Hobson, K., 2006. Bins, bulbs, and shower timers: on the ‘techno-ethics’ of sustainable living. Ethics Place and Environment, 9(3), 317-336. Jaffe, A. B., Newell, R. G., & Stavins, R. N. (2005) A tale of two market failures: Technology and environmental policy. Ecological Economics, 54(2), 164-174. Scheer, H., 2013. The solar economy: Renewable energy for a sustainable global future. London: Routledge. Solarbuzz, 2014. Solar Energy Market Growth. Available at: http://www.solarbuzz.com/facts-and-figures/markets-growth/market-growth. Accessed 28 Aug. 2014. Torbati, Y., 2012. UK wants sustained cuts to solar panel tariffs. Reuters, [Online] Available at: http://uk.reuters.com/article/2012/02/09/uk-solar-tariff-idUKTRE8180XS20120209 Accessed 28 Aug. 2014. Thøgersen, J., 2006. Media attention and the market for ‘green’consumer products. Business Strategy and the Environment, 15(3), 145-156. Read More