Executive Summary:
The competition in the market is growing and energy sector is not an exception. The saturation of the players is high and thus the intensity of competition is high. Windflow is a Company that has been serving its client since a long time; however the Company has not been able to set any competitive advantage in relation to the industry.
In this scenario on the business level, there are two open options for the business. They are either to enter into a new market category or to create a unique strategy of positioning in the market. There are two strategic options for the business, which has been derived based on the SWOT analysis and the outbound logistics analysis of the Company. The first is to focus on the human resource development and the other is to strengthen the overall situation of marketing, sales and distribution.
The final advice would be to choose the development of the marketing and sales activities for the time being as they drive the performance of the Company. A strategic change is seriously needed in this area if the Company actually wants to progress.
Background of the Industry:
The composition of energy industry includes people and companies who identify the resources of fuel and harness the same or remove these resources from the globe. The resources are then processed and distributed for using. At the global scale, this industry is considered one of the most dynamic, largest and most controversial.
The energy demand had its beginning from the time with the discovery that fire could keep them warm and can be used for cooking. The evolvement of resources has followed suit and there has been dramatic change in the generation, distribution and delivery of energy. This evolvement creates the need for companies to have unique strategies to tackle competition and create competitive advantage.
Company Introduction:
The headquarters of Windflow Technologies is in Christchurch, New Zealand. The Company is basically related to design and similarly the assembly of wind turbines. The major capacities of the organization can be identified. They are:
Manufacturing of wind turbines
The design engineering, related research and development activities
Activities of production engineering
The operations, maintenance and development of wind farms
The leader of the staffs at Windflow is the CEO or Director of the Company, Geoff Henderson. The existing annual production capacity of the Company is sixty turbines and the maximum expansion of capacity can be up to two hundred turbines annually (Wind Turbine Manufacturer Windflow — Windflow Technology Ltd, 2016).
The year of established of the Company is 2000 and the Company has been listed in public on the alternative market of the New Zealand Exchange, by the name of NZAX (WTL).
The vision of the Company is stated as:
'To be a global leader in wind turbine technology innovation'
The other important aspect of the company culture is its commitment that all the organization affiliates have towards the quality. Achievement of the highest quality standards is one of the major aspirations that the Company has established for itself.
It was the September of 2010 when the Lloyd’s Register decided to award the Certificate of Type Approval to the turbine named Windflow 500. This means that there is conformity of the products or turbines meeting the Class 1A quality of the standards set by foremost International Electrotechnical Commission (IEC). This belongs to the standard of IEC 61400-1. If there is class 1A certification, it means that the operation of Windflow 500 will continue for higher than twenty years in the form of the most robust, and turbulent regime of wind in the classification of IEC.
It was the June of 2008 when the Company was able to gain the certification of ISO 9001:2008 for the design of Windflow 500 wind turbine and its production, development and additional activities for the installing and servicing of the turbines. These are done in the wind farms like Te Rere Hau, which lie towards the outskirts of area of Palmerton North. The receiving of the ISO certification was a clear indication that the products met the standards of International Electrotechnical Commission (IEC) for wind turbines.
Strategic management is the process of identifying the correct strategies for the development of a business by assessing the position of the business and the industry so that competitive advantage can be created for the best of interests of the company.
There are a number of analyses that can be performed for assessing the industry and business positions.
VRIO Analysis:
It involves assessing the organization on the basis of the various activities that it does and the value chain that it follows (Jurevicius, 2016).
SWOT Analysis
Strengths:
Comparatively a new market and thus easier to influence and convince.
The Government has been supporting various alternative energy activities for a long time now
There are apt opportunities for differentiation initiatives
The Company is heavily based on technology, which has great hype
Weaknesses:
The origin of the industry is quite new
Costs that are needed for developing differentiation may be high
There is lack of experience in the Company
Opportunities:
Increasing popularity for alternative sources of energy
The opportunities of expansion
Substantial loss in sustainable energy sources’ alternatives
Threats:
The level of competition in the market is increasing
The activities of Differentiation are tough to be carried out
High imitation power
Value Chain Analysis: Outbound Logistics
Outbound Logistics
Logistics is the efficient management of the storage and movement of products and information within a supply chain. There are two types of logistics that are inbound and outbound. Outbound logistics refers specifically to the planning and implementation of the distribution of goods to a business buyer or consumer. Windflow uses outbound logistics. The outbound logistics involves:
Storage and Retrieval
Being highly risky and heavy nature of product, it cannot be store for long period but high capacities and numbers. High storage costs are thus involved.
Transportation
Transportation is an integral element of logistics. It is often the most expensive part and requires much of the planning time for logistics managers. The general goal is to move goods as efficiently and affordably as possible.
Confirmation and Payment
Outbound logistics continues all the way through the point of arrival and receipt by the buyer. Strategic Alternatives and Solution
As per the analysis, there are two basic strategic choices for the company at the moment:
Option 1: Focus on improving the current Human resource needs of the company
Option 2: Focus on strengthening the sales and distribution of the products
Option 1: The focus of the HR part can be done with the following criteria and component considerations.
Option 2:
There is a difference at various levels of branding elements when it comes to targeting affluent and other groups. The criteria for buying a product are different for various groups, which justifies the need for separate marketing when each group is concerned. Especially when it comes to energy sectors, a number of alternatives are growing, thus, AIDA principle should be well utilized in packaging so that purchase probability is increased.
The objectives of the marketing, sales and distribution plan can also be summarized as:
The selling process of Windflow products can be differentiated into two categories. The first category consists selling to small and medium retailers. And another category is B2C by selling product directly to the customers.
The number of sales centers is to be increased so as to achieve the sales targets. Thus, the broader category for the purpose of an effective profiling would be:
Profiling for Existing Channel Intermediaries
The profiling of these intermediaries will comprise the following considerations:
Whether the intermediary is able to give significant sales return to the Company as per the objectives set out for the year.
Whether the costs associated with the intermediary are within the budgetary constraints of the Company for that year.
Past record of the intermediaries
Whether the intermediary will be able to promote the other concerned products
Profiling for New Channel Intermediaries
The profiling of these intermediaries will comprise the following considerations:
The relation of the intermediary with competitors and the sales and promotion of the competitor’s product.
The ability of the intermediary to sell its products, by maintaining quality and consumer preferences (Staff, 2016).
Past record of the intermediaries
Whether the intermediary will be able to give returns in relation to the costs incurred in its establishment, functioning and promotion.
The criteria that may be fixed for making sure that the association with trade partners of the Company will be fruitful may be mentioned as:
Collaboration in areas with strong control potential:
This includes making sure that the use of intermediaries fills the lack of competitive advantage that Windflow as a Company lacks. Capitalizing on the partner’s competencies rather than weaknesses would be the suggested way. The prospects of real time data sharing and effective utilization of data are also areas which should be taken into consideration.
Use of the right benefit-sharing model:
Having symmetric and systematic collaborations with the channel partners is the most effective way of having benefit sharing models. Thus, Windflow will follow more improved system of discounts or increased margins, so that the channels have adequate motive to keep the distribution channel strong.
Selection of partners on the basis of capability and potential of value delivery:
There is a difference between the right and the biggest partner for a potential collaboration. In order to identify the correct partners for Windflow, the following three queries shall be well considered:
Will the partner exhibit enough potential in meriting the efforts for the success of the collaboration?
The level of strategic support between Windflow and the potential marketing partner.
The infrastructure and processes of the potential partners.
5. System of joint performance-management:
Keeping a long term project in track is one of the luxuries experienced with an effective performance-management system. By using a number of similar targets and metrics, Windflow can be able to avoid crooked incentives (Volkman, 2016). Keeping a joint performance management with bigger retailers will help understand the loopholes in the whole value delivery process to the end consumers, rather than just the Company.
Suggested Alternative:
The advice would be to choose the development of the marketing and sales activities for the time being as they drive the performance of the Company. A strategic change is seriously needed in this area if the Company actually wants to progress.
The effect on the Industry because of the alternative that the Company chooses could be summarized in the following ways:
The competition of the Company will shift from just production to marketing and promotional activities.
The use of technology in the energy sector companies as a whole will increase.
The innovation in advertising and sales and distribution will increase at the industry level if the company successfully executes this strategy.
The culture and structure that will support these suggested strategies are:
A flat organization culture at the top level and extended structure at the sales level.
Sales focus at all levels so that direct sales processes are supported by all departments.
Use of technology for the tracing of sales effectiveness.
The number of salespersons in the company has to be assessed with utmost care and integrity.
Conclusion:
Thus, Windflow as an organization has a lot of potential to achieve higher sales, not just in one product category, but across all the varied products that it has. The need is to understand the strength and weaknesses of the distribution channels and syringe resources to make sales happen to eventually enjoy profit. This should be the strategic focus of the Company.
This strategy will help the Company come up with better schemes for better selling of all product ranges, given that the implementation is ensured.
References
Jurevicius, O. (2016). VRIO framework explained | Strategic Management Insight.Strategicmanagementinsight.com. Retrieved 28 May 2016, from https://www.strategicmanagementinsight.com/tools/vrio.html
News — Windflow Technology Ltd. (2016). Windflow.co.nz. Retrieved 28 May 2016, from http://www.windflow.co.nz/news
Staff, E. (2016). Distribution Models. Entrepreneur. Retrieved 28 May 2016, from https://www.entrepreneur.com/encyclopedia/distribution-models
SWOT Analysis: Discover New Opportunities, Manage and Eliminate Threats. (2016). Mindtools.com. Retrieved 28 May 2016, from https://www.mindtools.com/pages/article/newTMC_05.htm
Value Chain Analysis: Achieving Excellence in the Things That Really Matter. (2016). Mindtools.com. Retrieved 28 May 2016, from https://www.mindtools.com/pages/article/newTMC_10.htm
Volkman, E. (2016). Instant Analysis: Linn Energy and LinnCo. The Motley Fool. Retrieved 28 May 2016, from http://www.fool.com/investing/general/2016/02/08/instant-analysis-linnco-exploring-strategic-altern.aspx
Wind Turbine Manufacturer Windflow — Windflow Technology Ltd. (2016). Windflow.co.nz. Retrieved 28 May 2016, from http://www.windflow.co.nz/
