Strategic Management Analysis - Better Place - Essay Example

? ‘Better Place’ exam s Better Place ‘Better Place’ was a company that operated in the locomotive industry whose headquarters were based in California while department of research and development was based in Israel. Better Place’s missions: The Company rode on the main mission as being to reduce and ultimately stop the use of oil by vehicles (Etzion and Struben, 2011, p. 2). In a short exposition, the company operated within the locomotive industry and its motive was not really to realize profits but rather to bring about a solution to the global menace that results from the environmental degradation and contamination that is resultant of increased use of oil for powering locomotives. With the company being driven towards revolutionizing the locomotive industry by 2020, the company made a difference through offering alternative mechanisms of powering locomotives by use of electricity, which is seen to be less hazardous while compared to the fossil fuels commonly used. Despite the fact that the electricity technology for locomotive propulsion existed even prior to the combustion engine technology, the Better Place organization is celebrated for improving on these ideas and designing improved systems for revolutionizing the industry. This therefore imply that the absence of the organization would imply that no solution to the problem of green gas emissions highly contributed by the locomotive industry would have been found and no efforts would be pursued to make the world a better places as the organization envisions. Better Place’s Visions: the organization’s main vision had been to link together the main players within the locomotive industry globally for a more unified system in production and improvement of the locomotives produced. This meant that unification of customers, car companies, utilities as well as battery companies would ensure that the electric vehicles would be widely adopted. Besides, owing to the major hurdle that the EVs faced in reduced mobility, the company has a vision to improve on mobility of the EVs (Etzion and Struben, 2011, p. 5). Better Place’s stakeholders: The main stakeholders in the Better Place organization were the various governments that were supportive to the initiative and which are affiliated through registration and financial support, as well as general auto manufacturers interested into such a promising venture. Despite the governments contributing on financial resources, they also aided through policy frameworks to create an enabling environment in respective countries. Ideas and general infrastructure of manufacture of such vehicles was offered by the auto manufacturing companies affiliated to the ideology of better place on the planet. Scenarios and industry analysis: The locomotive industry has undergone great and notable steps over generations since the initial era when transportation was through animal driven locomotives. Technological advancement brought about the discovery of the steam engine, which was initially developed for farm mechanization but later it was adopted for personalized mobility. However, with basic notable shortcomings in use of steam engines for personalized movement, the electric vehicle was designed in the early years of 19th century. Preference of electric vehicles to steam vehicles was on cleanliness, little noise and general ease of use. It is worth noting that the EVs were more expensive to the steam ones but by the close of the 19th century, more EVs were sold. Henry Ford later invented the ‘assembly line’, which is equally celebrated as a remarkable step in revolutionizing the locomotive industry by reducing manufacture time as well as the related costs of labor. The Ford, Chrysler as well as the General motor companies was the dominant companies in the time, which specialized in manufacture of the ICE vehicles though others slowly came in. It is to be noted however that the effects of use of the fossil fuels by the ICE are adverse to human health and the environment and this discovery is what led to establishment of the Better Place Company. Comparatively, the industry had little competition in terms of substitution; the company faced no rivalry, low threat to entry into the industry by other companies and had a general high supplier as well as buyer power. The company focused on classy and trendy segment of the societies who valued ease of personal mobility and environmental conservation. In analyzing the company’s value chain, we would note that the company relied on affiliate car manufactures to manufacture the EVs while design was dependent on the target populations. Inequalities in resource endowment between the countries of manufacture would explain the pricing mechanism adopted for the EVs. The company specialized in instituting frameworks of charging systems across the countries and the high cost of installation explained the higher costs of the vehicles. The manufacturing companies had to incur costs in raw materials and assembly, which formed initial costs of the vehicles. Besides, the cost implication by instituting the charging grids across raised the final costs of the vehicles. Exploiting the economies of scale in manufacture and marketing of the EVs would be effective in minimizing costs of manufacturing the vehicles (Better Place, Inc. 2013, para 1-2). Resources and capabilities: Agassi, the founder of the company was driven by need to have the car companies, utility companies, battery companies as well as consumers linked in order to have the EVs appreciated across the globe. The venture by the company was capital intensive and this meant that the company had to source for funding from stakeholders such as respective governments affiliated to it as well as the other company affiliates, which take part in the locomotive industry. The partnerships gotten into by the company helped in amassing of the capital required for starting and running the company. Within two phases of seeking funding, the company was able to raise so much capital that it ranked second in the history of highly funded start-up ventures globally. However, the lack of additional funds as were necessary to accomplish on setting up the charging grades in Israel is blamed to have led to the failure of the company (Pearson and Stub, 2013, para 1-6). Other resource endowments notable in the company were such as the demonstration centre like the Israel one, which allowed visitors have a trial to the electric vehicles. The company had a great pool of employees due to its wide geographical coverage across nations and regions. The technology in use for recharging infrastructure was equally a notable resource, which improved and enabled the company to roll out its strategies in venturing into the industry. Nevertheless, the failure to be strategic in resource allocation saw the rise of financial constraint which lead to mass lay off, of employees in Israel and the subsequent liquidation of the company in 2013 (Parker, 2013, para 1-4). Business and corporate strategies: By applying the Ansoff matrix, Better Place Company had good command in market penetration for the goods and into markets that existed as well as for new goods and markets. Strategic development of new products (improved electric vehicles) saw the company successfully sell the idea to governments and to other stakeholders like the car manufactures. Besides, customer focus was on point as shown by the ease at which the company established links with markets from other countries. In considering the BCG matrix of growth share, it is clear that though the EVs posed as ‘cash cows’, the viability of the business in the industry was constrained by the poor management. Low relative share of market coupled with low annual real rate of growth of market would make us place the EVs as being ‘cash dogs’ within then matrix. The analysis therefore shows why the company management decided to liquefy it and its ultimate sale as was experienced in 2013. Although the company was initially formed through strategic alliances, over ambition and lack of capacity explains its collapse and ultimate dissolution (Cheslow, 2013, para 1-7). Bibliography Better Place, Inc. 2013. Company Overview of Better Place, Inc. Available at:< http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=38656695 >(Accessed on 1 January, 2014) Cheslow D., 2013. Electric-Car Company ‘Better Place’ Fails To Make It in the Start-Up Nation. Available at:< http://www.tabletmag.com/jewish-news-and-politics/135816/ev-better-place-agassi>(Accessed on 1 January, 2014) Etzion D. and Struben J., 2011. Better Place: Shifting paradigms in the automotive industry. Oikos free case collection. 1-37 Parker A., 2013. Battery Swapping Company Better Place Files For Bankruptcy. Available at:< http://www.ecopedia.com/transportation/battery-swapping-company-better-place-files-for-bankruptcy/> (Accessed on 1 January, 2014) Pearson D. and Stub S. T., 2013. Better Place's Failure Is Blow to Renault. Available at:< http://online.wsj.com/news/articles/SB10001424127887323855804578507263247107312> (Accessed on 1 January, 2014) Read More