Hey, This is an example question from a past test. Could someone please give me
ID: 2790572 • Letter: H
Question
Hey, This is an example question from a past test. Could someone please give me an example of the structure of the written response and what my argument should be (like what points and backing i should talk about from a project management point of view) :)
Written response example
A manufacturing business is considering introducing a new design of solar panel into the Australian market, the technology is around 10% more efficient than existing models but is also slightly more expensive. Describe how the business could use Porters 5 forces model to understand their marketplace, to decide whether they should enter the Austraian market and how they should do so
Explanation / Answer
Different industries have different levels of sustainability, profitability and market share. This is due to the several factors that influence the companies in the business environment. The five forces model developed by Porter gives the five major competitive forces that a company has to take care of in order to enter into the market. These factors help to understand the intensity of the competition in the new place, attractiveness of the market and the profitability that the company can expect in the new place. The five forces are:
a) Competition in the industry:
The solar energy industry is a comparatively new industry. This industry has come into being due to the growing demand for renewable energy. With the depletion of non-renewable forms of energy, there was a need to develop the renewable forms of energy. In Australia the government has the aim of reaching 25% of the energy production should be by renewable energy. There are solar energy plants and solar cities in Australia which are working in collaboration with the private sector and local government.
b) Potential of new entrants in the industry:
There are several players in the solar energy sector. In fact, there are several companies who are interested to enter into this sector. The reason for this is that it is a sector which is in its nascent stages and in future it will have very good prospects. The future of the new entrants seems to be bright as there is a huge demand for solar energy and it is also easily available in large quantities. New entrants who are willing to experiment with the market and take risks can enter into the market. It can also be seen that some well-established companies have utilised a part of their profits towards clean energy generation. Thus, there is a huge potential for new entrants who can provide solar electricity at cheaper price. The given company in the question will lose out to such new entrants in the price aspect.
c) Power of Suppliers:
Suppliers are the people who provide the raw materials to the company for manufacturing products. In case of solar energy, the role of suppliers is minimal. This is because the supplier in this case is the sun and the solar energy is openly available at all places to all people. Thus, there are no suppliers here and they have no power at all.
d) Power of Customers:
Customers have buying power. The power of the customers affects the pricing of the product as well as the product quality. The customers’ power will be more when they are less in number while the sellers are more in number. However, in case of the solar panel there are a good number of customers who are willing to use solar energy as their energy resource. They are also willing to pay a little more to conserve the non-renewable forms of energy. There are also good numbers of companies who are able to provide solar energy to homes as well as offices. However, the comparatively high price of the energy generated by this particular manufacturing company may lead to losing out on a large customer base.
e) Threat of substitute products:
The substitute products are those that can fulfil the same requirements of the customers. In case of renewable energy, the substitutes are wind energy, geo-thermal energy, tidal energy etc. These are also present in the natural resources. But among all these resources the most widely found form of energy is solar energy. Thus, the threat of substitute products is valid as long as the substitute is pocket-friendly and the quality is better than the one provided by solar energy.
Conclusion:
The company should enter in to the Australian market as the time as well as the location is suitable for such kind of renewable energy based companies. The only point of consideration is the price of the service that it will provide. It has to understand the different segments of customers who are interested to use solar power. The ones who are rich can afford this company’s services and can have it as a status symbol. Then the marketing of the product also has to be done in that perspective. Moreover, the company can create more awareness about the need for switching to more renewable forms of energy than sticking on to the non-renewable forms of energy. This will help them to catch the attention of the prospective customers.