Better Place Company Essay
1. Has the company chosen an attractive industry to be in? Why/why not? Explain your position
The company has not chosen an attractive industry to be in. While electric cars will be someday be great and a major hit in the automobile industry, now is not the time. Yes the electric car industry promises a bright future in motoring which includes lower carbon emissions and higher fuel efficiency. However, today, electric cars are described as being expensive and inconvenient. It is not a new industry. Pioneers such as Thomas Edison and Henry Ford did imagine an electric car. However,these cars remain quite unpopular with the consumers. Efforts have been made to increase the uptake of electric cars in various countries. For example, a number of developed countries such as Canada, Spain, Denmark and the United States offer subsidies for electric cars that amount to several thousands of dollars. However, this has not been enough since the number of electric cars sold in these countries is negligible. A number of factors that make the electric car unattractive to many motoring enthusiasts include range, charge time, infrastructure, cost, pollution, hydrogen, government and ease of gasoline. The production of fuel-efficient cars that run on gas such as the Chevrolet Cruze has also made it difficult for the electric cars to gain a meaningful market share in the automobile industry. Therefore, the electric car industry is not quite attractive for any new investor or entrepreneur.
2. How do the changes in the external (macro) environment affect the company? Do they create new opportunities for Better Place? If so, how? Do they instead introduce new threats? If so, how?
Changes in the external or macro environment do affect the company. The macro-environment comprises of political, economical, social, environmental and legal factors. Political factors include government policies that impact on the operations of a company. For example, Better Place could lobby for subsidies or tax rebates since the company is undertaking an initiative aimed at protecting the environment or reducing emissions. At the same time, Better Place did lobby various governments to ensure international standards were used so that recharge can be possible across charging networks. However, efforts at standardization did not yield global consensus and this was a blow to Better Place. Economical factors include taxation rates, interest rates and economic growth. With a global financial crisis, many people would not have been able to purchase the rather expensive electric cars. This reduces the number of battery sales that Better Place can make. Social factors also affect a company. For example, many people are into fast cars which are mainly fuel guzzlers. Therefore, this means that Better Place’s products might not command a significant market share. Therefore, macro-environment factors can bring opportunities as well as threats to the company. For example, Better Place can capitalize on the commitments of many governments to increase the number of electric cars on the roads and create more partnerships with car manufacturers to achieve estimates projected by governments. Better Place can also capitalize on the environmental threat posed by pollution caused by gas to make a case for their technology.
3. Does Better Place have resources, competencies and capabilities to take advantage of those opportunities and/or to neutralize threats? What are they? Can any result in the sustainable competitive advantage? How and why?
Better Place does have the resources, competencies and capabilities to capitalize on the advantage of these opportunities. First is the company’s business model. The business model of Better Place is based on customers entering into subscriptions whereby customers buy driving distance just like mobile phone users buy airtime. The advantage of this is that a customer only pays for what he or she only needs to use, just like buying petrol. At the same time, Better Place’s technology would make it possible for electric cars to be manufactured and sold separately from their standardized batteries. Better Place also made this possible by building charging networks and battery-switching stations all over a particular country. At the same time, the company had attracted a myriad of investors who were ready to make the venture a success. These investors were from all over the world. For the threats posed by being a new player in the market, Better Place did forge partnerships with industry players such as Renault-Nissan. This can result in sustainable competitive advantage because unlike other electric cars which go for prices way higher than gasoline vehicles, cars running Better Places batter technology would go at a lower price. At the same time, customers could be able to subscribe to per-driving distance just as those using gasoline vehicles.
4. How likely is Better Place to face retaliation from competitors? Why/why not? Who is most likely to act/respond? Why?
Better Place is likely to face retaliation from competitors. This is because their technology creates greater competitive advantage over other battery and electric car manufacturers. Other battery manufacturers could introduce their own technologies that rival Better Place’s. Also, electric car manufacturers might view Better Place’s technology as a threat to their business, and thus develop their own battery technologies that rival Better Place’s. The most likely competitors to respond to this technology would be manufacturers of fuel-powered vehicles. Just as they have responded to electric hybrids with fuel-efficient vehicles that register higher fuel efficiency and lower carbon emissions, they would further their technologies to ensure that they remain ahead of Better Place.
5. Think about the vision and mission of Better Place. What implications do you think those have for different groups of stakeholders? Identify major groups of stakeholders and analyze how the firm affects them
While the company’s vision and mission are not explicitly stated, the drive behind the company’s inception can be deduced. On its website, the statement “there is a will and now there is a way” is clearly stated. Also, another statement that stands out is “a world without gas, it is simpler than you think”. These have clear statement on various stakeholders, both internal and external. For internal stakeholders such as employees, the managers and the board, it means that the company has to invest resources in creating a relatively new product, a product that has not been used before. This is more of a risk. For the external stakeholders such as partners, governments, customers and media, the company has to be able to meet their expectations on the new technology. For example, the success of the technology could mean a breakthrough for electric car enthusiasts. This also means increased uptake of electric cars and thus reduced carbon emissions, a priority for many developed governments. For the company’s employees, management and the board, it would mean the building of a long lasting brand. Partners would also leverage on the new switchable battery technology in developing their electric cars.