Friday, December 6, 2019
Analyzing Industries and Competitors - Free Samples to Students
Question: Discuss about the Analyzing Industries and Competitors. Answer: Introduction There is an increased demand for renewable energy and with an increased global population, the demand is expected to double or triple over the next few decades (Nanda et al., 2013). This presents a big business opportunity for the companies that produce energy. The Statistical Review of World Energy, 2012 highlighted that of all energy requirements, renewable energy contributed only to 8% of the energy produced, the rest coming from other non renewable sources like coal, natural gas and oil (Nanda et al., 2013). Apart from increased demand for energy, fossil fuels as an energy source cause damage to the environment through green house gases emissions thus leading to governments promoting use of alternative energy sources that do not contribute to emissions in the environment especially in the US and Europe. Non renewable energy is also limited in supply and the prices have been on the rise. Companies therefore need to be innovative in renewable energy production and supply in order t o enjoy the benefits. Origin Energy manufactures renewable energy from wind and solar and stores it then sells it as electricity. This paper will discuss innovation and entrepreneurship for Origin Energy. Innovation and Entrepreneurship for Renewable Energy According to Porter (1990), firms are competitive only through continuous innovation. For Origin Energy to survive and thrive in this industry it must be innovative and come up with new and unique products for customers. Innovation relates to new products but also to new ways of manufacturing, distribution and marketing of products. All competitors in the energy industry have an equal advantage for resources and innovation and thus competition is stiff. With ground breaking innovations and the ability to deliver first world products, solar companies have been successful in making the industry very competitive. Companies have to invest a lot in RD to ensure rapid innovations and remain the leaders in the industry (Kenney and Pon, 2011). Innovation in the energy sector will not only add the much required source of energy in the world, but it will also lead to better and efficient ways of production and distribution, and thus more benefits to both the company in terms of profits and to the consumers. Only through innovation will energy companies manage to compete with others in the industry and also change the energy focus from the non renewable sources and save the environment while saving on cost (Stern, 2005). Rosenberg, 1994, proposes that in order to make radical technological changes, the companies have to continue conducting economic experiments, in order to identify which innovations work best in this industry. Entrepreneurship directs whether a company will be successful or will exit the market. The companies that exist have to be innovative and come up with new customer solutions in order to compete. Buchholz and Rosenthal (2005) identify some qualities for entrepreneurship which include imagination, creativity, novelty. New businesses emerge from cutting edge innovation and technology leads to a paradigm shift leaving behind companies that do not invest in new and emerging technologies. Entrepreneurship is not limited to new ventures but to all companies that hope to remain competitive. It involves generation of new resource combination to extend the organizations competence (Burgelman, 1984). Drucker (1985) argued that innovation is a factor of entrepreneurship and they both demand us of creativity. A business that has entrepreneurship is concerned about developing new products, new processes or new markets. This company adapts to a changing business environment, challenges the status quo and considers other alternative approaches to doing things. Innovation uses new ideas to create value for customers. A company that does not innovate becomes obsolete. Companies worldwide are facing challenges arising from competition, high costs, new technologies, automation, among others. They must therefore become highly innovative with new products in order to survive. Some innovations in the renewable energy are helping to revolutionize the world and Origin Energy can continue to enhance these innovations to remain competitive in the industry. The innovations include development of new products and also in the way f distribution of the renewable energy. The innovations also include the way consumers pay for the products including use of mobile commerce, sharing payments and others. These innovations will keep the businesses on a growth path while those that are left behind will not survive. Below are some of the innovations in the energy industry that are having big impact in the world. The solar dishes are being used to increase the conversion of the suns energy in to electricity thus contributing to worlds manufacture of clean energy. The use of solar powered batteries is another innovation in the renewable energy industry that can also allow electricity to be shared with neighbors making it cost effective to the consumers. Portable solar also enables access to consumers of energy source that is mobile. This is very helpful for example in disaster situations when infrastructure has been destroyed like in an earthquake situation. Solar energy can also be used for desalination of water, thus using the suns ultra violet rays water which was not fit for consumption is purified and a solar powered machine used to remove excessive salt from the water. Solar transportation is another innovation where solar roads can generate extra energy. The Solar Impulse 2was the worlds first solar plane which can sustain travel at night using only solar energy (Chow, 2015). There are also solar windows which have been invented allowing for production of electricity. These windows have ability to convert the suns rays in to energy. Solar balloons are used to harvest solar energy from directing solar energy on to solar cells. Using nano-technology, light absorbing nano-wires absorb the suns energy better than silicon and thus it becomes more efficient. Residential houses use the inverter which transforms DC power from solar panels in to AC power which is used in the residential houses. With Microinverters, a residential house can use just one panel to generate solar power. Theories and Models of Industry Analysis There are several theories and models that can be used to analyze the renewable energy industry to enable the company develop strategies for success. These include PESTEL Analysis and Porters five forces model among others. The analysis assists the company to understand its internal environment and the environment it is operating in order to formulate ways in which to overcome any challenges that may exist and also exploit the opportunities that exist for success. PESTEL analysis involves analysis of the external environment that the company or industry operates in. The PESTEL factors include Political, Economic, Social, Technological, Environmental and Legal factors (Yksel, 2012, p 52). The influence of the PESTEL factors implies that an organization has to take competitive actions and strategic choices to be successful (Howard, 2007). The diagram below represents the PESTEL factors. Political factors include government involvement in the industry, which affects the way business operates. The prices of non renewable energy including oil and gas have been on the increase and they are inadequate to meet the global demands. Most governments are therefore supporting a change to the renewable sources of energy. This presents a big opportunity for Origin energy in this industry. Governments are putting in place legislation to encourage use of renewable energy and reduce use of non renewable energy due to the negative effects it has on the environment. An example is The Climate Change Act 2008 in the UK which aims at reducing greenhouse gases emissions. It is also a key strategic initiative by the European Union to reduce the carbon emissions by adoption of low carbon emission energy sources (Arantegui, et al., 2011). Economic factors are those that affect peoples purchasing power, the currency exchange rates, interest rates and others that affect the way an organization conducts business. Renewable energy is cheaper than the traditional sources of energy and thus will be affordable to majority of the population. Companies make savings on energy costs by adopting either solar or wind energy. This offers an advantage to Origin Energy. Social factors are those shared beliefs in a community. Renewable energy may have some social consequences. These may arise due to the fact that the developments may take place in vast pieces of land which may displace people from their land. It may also affect the natural biodiversity. The company must be involved in social responsibility activities in order to show that it cares for the people and avoid negative publicity. Origin energy can also get involved in teaching people on the benefits of renewable energy as compared with non renewable energy in terms of prot ecting the environment to get their buy in. Technological factors include innovations in products, systems or other ways of doing business. The energy industry has seen a number of technological advancements that have impact in the world. Innovation makes a company cost effective thus passing the benefit of cost to the consumers. Success from innovation in a business results from new ideas that result in social and organizational benefit (Okpara, 2007). Origin Energy has to keep innovating in order to effectively compete in this industry. Origin energy should utilize the highly trained personnel who can continuously come up with innovative products that benefit the customers. There is current push by consumers worldwide for organizations to conduct businesses in ways that protect the environment. Renewable energy sources are seen as one way of protecting the environment and the scarce natural resources and are sustainable. The company needs to conduct environmental assessments by its projects to ensure there are no negative effects to the environment. Porter (1998) identified five forces for businesses to analyze the operating environment which are: Competition rivalry, Power of suppliers, Power of customers, Threat of substitutes and Potential of new entrants into the industry. This model assists to analyze the environment and develop strategies for competitive advantage. The business takes advantage of its strength and develops strategies for success as the collective strength of these forces determines if the business will make profits (Michael, 2014). Porters Five Forces Model Origin Energy faces stiff competition in this industry and rivalry among the competitors continues to increase. The major global players have invested a lot capital and have the manpower to continue with innovative ideas which increase the competition. Origin energy must also continue to invest in research and development in order to compete in this industry. Due to the increased support by governments of the renewable energy industry, this leads to a high threat of new entrants in to the industry. The huge start up costs are however an impediment for companies that may want to easily get on to the industry. Power of suppliers is high due to the specialized requirements of the industry leading to fewer suppliers. The buyer power is also high as the new technology has not been fully embraced by the people. The company will have to keep educating people on the advantage of using solar and wind energy in order to win many customers. Substitutes exist in the form of the traditional sources of energy. The focus on renewable sources of energy will continue to win many customers in the future leading to increased markets. Conclusion Origin Energy Company is operating in the renewable energy industry. The company has to be innovative and entrepreneurial in order to succeed in the highly competitive and technologically advancing industry. It is important to understand the environment using the available models and theories that include PESTEL and Porters five forces model. From the analysis, the industry is growing and has support from the governments due to the fact that it dies not harm the environment like the traditional energy sources. The rising prices of oil and gas energy sources give the renewable energy chance for a bright business future. This paper has discussed innovation and entrepreneurship in the renewable energy industry and concludes that Origin Energy has to invest highly in research and development to become innovative and entrepreneurial in order to remain competitive in this industry. References Arantegui, et al., (2011). Renewable Energy: Highlights on Technological Developments Beyond 2020. Research Gate. Retrieved May 8, 2017 from: https://www.researchgate.net/publication/276173647_Renewable_energy_Highlights_on_technological_developments_beyond_2020. Buchholz, R. Rosenthal, S. (2005). The Spirit of Entrepreneurship and the Qualities of Moral Decision Making. Journal of Business Ethics, 60, 307-315. Chow, L. (2015). Solar Innovations that are Revolutionizing the World. EcoWatch. Retrieved May 8, 2017 from: https://www.ecowatch.com/5-solar-innovations-that-are-revolutionizing-the-world-1882043841.html Climate Change Act, 2008. Retrieved May 8, 2007 from: https://www.legislation.gov.uk/ukpga/2008/27/contents Drucker P. (1985). Innovation and Entrepreneurship. London: Pan Books Ltd. Howard, T. (2007). An analysis of the Environment and Competitive Dynamics of Management Education.Journal of Management Development, Vol. 26 Issue: 1, pp.9-21. Kenney, M. Pon, B. (2011). Structuring the Smartphone Industry. The Research Institute of the Finnish Company. Michael, E. (2014). Guidelines for applying Porter's Five Forces Framework: A Set of Industry Analysis Templates.Competitiveness Review, Vol. 24 Issue: 1, pp.32-45. Nanda, R., Younge, K. Fleming, L. (2013). Innovation and Entrepreneurship in Renewable Energy. Fung Technical Report No. 2013.07.18. Buckley College of Engineering. 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