Solar Energy Business Model Based in Melbourne

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Table of Contents

Introduction
Thesis Statement
Discussion
Industry /Market Analysis
References

Introduction

In the contemporary world, human beings have identified solar power as one of the most essential sources of electricity power. Therefore, they have harnessed the radiant heat, in addition to, light from the sun in a process that uses a wide scope of technologies, which are ever evolving.

According to the findings of the research conducted by Schaper & Volery (2007, p. 55), it is indicated that some of the technologies largely attributed with solar energy include solar thermal electricity, solar architecture as well as solar photovoltaic among other crucial technologies.

Sometimes, many regions of the world experience urgent problems relating to power but considering the solar technologies, they can be of great help during such times.

With the advent of solar technology, many solar energy consultancy groups have surfaced, not only in Australia but in the entire world, as well. Solar energy consultancy groups play a key role in the solar energy industry.

One of the major contributions that the solar energy consultancy groups make includes conducting household inspection and thereby giving the clients a report indicating the solar options for their particular households, in addition to sites.

This can indeed range full-fledged general solar installation that generates electricity to simple solar walk away lighting (Galbraith, 2001, p. 43).

Thesis Statement

Due to the rising demands for alternative energy in households and factories, there is a need to establish a consultancy business in the field of solar energy. Therefore, the purpose of this paper is to formulate a solar energy business model based in Melbourne, Australia.

For the purpose of a comprehensive coverage of all the areas required for the establishment of a solar energy consulting business, several aspects will be considered. These will include; a clear and precise of a solar energy business concept, declaration as well as an explanation of the mission statement, industry as well as market analysis, identifying the management team, development of products and services, the financial considerations, timelines and finally assumptions.

Discussion

The concept solar energy consultancy business

Energy Saving

Efficient energy use is a commonly used term and it refers to the target of attempts aimed at mitigating the energy amount necessary to offer both goods as well as services. Renewable energy such as solar energy is attributed largely to the efficient use of energy.

Timmons & Spinelli (2007, p. 89) indeed supported this by indicating in his research findings that energy efficiency, in addition to, renewable energy is twin pillars of sustainable energy. Solar energy is largely used as an alternative due to its efficiency.

Households and industries in Melbourne, Australia that use solar energy can be identified as using energy efficiently because, as compared to other non-renewable sources of energy, the use of costs as well as resources is greatly mitigated.

Indeed, the only cost involved is during buying and installation, in addition to maintaining the installation, which is done rarely.

With many households and industries in Melbourne adopting the efficient use of energy, there is a need to provide consultancy services, which include installation, servicing among other consultancy services.

For a person intending to become a consultant in the field of solar energy in Australia, it is herculean important, to start by seeking employment in a company that deals with solar products. The rationale for this is that the person will become knowledgeable in the field of solar energy and as such, it is the start point on route to become a solar energy consultant.

Once a person establishes himself as a solar energy consultant in the Australian market, it is indicated in the findings of the research conducted by Grave & Zacharakis (2008, p. 77) that, one should not become affiliated with any one company or even product. Further, Grave & Zacharakis (2008, p. 79) asserts that, once a person becomes a solar energy industry consultant, he must be able to recommend, not only products but options, as well, across the field of solar energy.

Vision Statement

The objective of this solar energy consultancy is to provide a low level cost, environmentally friendly, in addition to, an innovative energy power to consumers within Melbourne and its environs through energy generating systems which are not only highly efficient, but cost effective, as well (Horngren, 2002, p. 24).

Industry /Market Analysis

The solar energy industry’s background and its present status

The consultancy business will be based on the Australian energy industry. To be more precise, the business competes in the non-renewable segment of the energy industry in Australia. In the last four years, the business has had average annual sales of $ 1,000,000.

The last four years have been important for the business. As such, the business has experienced tremendous growth and this has been evidenced by the amount of sales made in the past four years. Generally, the sales have been increasing each year and this is a clear implication that the company is gaining ground.

Based on the current growth experience, it is being forecasted that the trend will continue as long as the current practices are not only maintained but be continuously improved, as well.

The consultancy business, having been established six years ago, can be identified as in the rapid growth stage. This assertion is evident considering the last four years. Currently, the management of the business has embarked on development plans where is wants to invest further in renewable power generating program.

However, several issues are currently facing the business. Foremost, the competent service men are less in number. However, the management has established a viable plan through which the most competent consultancy servicemen will be recruited to form part of the team. The solar energy consultancy business can be identified as currently being dominated by Melbourne’s open markets.

Competitiveness

The concentration of solar energy consultancy industry

Industry concentration is a term used to define the measure of the number of organizations as well as the size of the organizations, which are considered predominant in the given industry. In a more precise way, industry concentration describes the nature of the competition within a particular industry.

In the case of Australian solar energy consultancy industry, there are a number of key players. Among the big consultancy groups include Adopt a Light consultancy group, Glowing Light Consultants LTD as well as The Renewable Consultants Limited. Considering these consultancy firms, they rule a considerable market share.

According to the conclusions of the research conducted by Knight and Thomas (2012, p. 23), it is indicated that Adopt a Light consultancy group commands a 20 percent market share while Glowing Light Consultants LTD commands a 15 percent market share.

In a similar research conducted by Wade (2008, p. 177), it is indicated in the findings that The Renewable Consultants Limited has taken up a massive 22 percent of the market share in the solar energy consultancy industry.

Generally, there are a significant number of solar energy consultancy firms. However, these firms are perceived as not posing a significant threat to this company. Clearly, the Renewable Consultants Limited is the dominant leader in the solar energy consultancy industry. However, the other two consultancy groups as well as our company pose as a threat to the proclaimed industry leader.

Competition from other products

Our products as well as services are competitive in nature. However, according to a recent research conducted by this consultancy group, it was found out that there are other consultancy groups within Melbourne that offer the same competitive services as well as products that we offer to the clients.

Therefore, the management of this consultancy business quickly acted on the recommendations indicated in the research by establishing measures to differentiate the business’ products and services from competitive ones in the eyes of the solar energy clients (Inwood, 2007, p. 16). As such, the top management of this group embarked on the branding differentiation strategy.

Barriers to entry

Generally, there are few requirements that a company must comply with before being granted entry into the consultancy industry in Australia. Further, one must provide sufficient proof to show that he has a considerable knowledge and experience with the solar energy products and services.

This implies that the entry to the industry is relatively less complicated. This is the possible reason why there are various consultancy groups in the industry. The easiness to admission favors new entrants, who are considered to be prospective competitors, as they enters the solar energy market during the periods in which high profits are being achieved and therefore expanding the capacity to produce.

This is a major drawback to the existing businesses as it leads to prices of the consultancy products as well as services to be driven down and similarly, the profitability level lowers down.

However, the government realized that there is a condition of unhealthy competition and as such, it has established new regulations that will ensure that the entry to the industry is complicated (Shapiro, 2002, p. 54).

This implies that the competitors will find it hard to enter into the industry and as such, the profit margin of this consultancy group will remain favorable. Some of the new requirements that the government has established include;

Limited access to market

This will greatly favor the group as it has products as well services that are not only well branded but well established, as well. If a new competitor is lucky enough to gain entry, it will have to spend a considerable amount of time money as well as efforts in an effort towards establishing a successful product as well as the service (Barber, 2011, p. 559).

Limited access to technology

The Australian government has sought to limit the patent technology, in addition to, other intellectual property and as such, it is a great boost to this company as new competition is not imminent.

Supply chain concentration

Industry rivalry

The rivalry between the consultancy groups in the Australian industry, especially in Melbourne, is intense. This means that the company must be continually vigilant on the improved practices that the competitors are engaging in and therefore establish practices that are more viable in an effort towards vending competition off (Altman, 2008, p. 600)

Market Trends

In the recent past, the sensitivity of the price of solar energy consultancy products as well as services has changed in a significant way. Further, the demand for a variety as well as the level of emphasis on consultancy service, in addition to, support has changed.

Another relevant change that has taken place in the near past is regional trends. This consultancy group sees these changes as vital since, through them, it is easy to establish new opportunities, in addition top, threats.

Key Success Factors

This consultancy group has access to essential resources, which are unique. In addition to this, the group has the capabilities of achieving economies of scale in the solar energy consultancy industry. The group also has an access to solar energy consultancy services and products’ distribution channel.

Further, the group has experienced an excellent technological progress. The company sees these as key success factors and as such, they are essential, as they will assist the company in its efforts towards achieving the marketing objectives.

However, the company is aware that these key success factors will change going into the future, especially as the consultancy products as well as the service progresses through their life cycle (Mills, 2008, p. 55).

Distribution Channels

Existing channels of distribution

The consultancy group ensures that it contacts its clients in a direct manner.

Trends and emerging Distribution channels

The company has recently embarked on efforts aimed at discovering new distribution channels for its consultancy products as well as services in an effort towards developing a competitive advantage, in addition to, enhancing its market share.

Channel power structure

The brands that the consultancy owns have little brand equity. This implies that the consultancy group has power over the manufacturers and therefore, the company has the ability to capture higher margins.

The Consultancy’s management team

Foremost, the company had adopted a hierarchical structure. A hierarchical organizational structure is essential as it helps the personnel understand where they fit in the organizational hierarchy as well as where they can move after they are moved from their positions.

Analysts

These are junior most employees in the company. Each analyst of the consultancy holds a bachelor’s degree from a university having majored in a field, which is business related.

The company acknowledges this as the entry-level position and as such, the position offers the ability to further move up within the consultancy business after a specified period. In this case, the company requires that for one to be promoted, he must have been an analyst in the same company for a period of two years.

Consultants

According to Engestrom (2005), consultants are key elements as they form the bulk of any consultancy business. The people in this position were either former analysts or they were admitted directly to this position having met the company’s requirements for this position, that is, holding a Maters in Business Administration.

Partners

This is where the top management team falls. Partners are the senior most members of any particular consultancy business. In this company, the partners act as consultants, in addition to, assuming a managerial role.

The most important thing is that partners are part of the owners of the consultancy business and therefore, they have a share in the revenues of the business. Below is the full list as well as the roles of the partners.

The chief Executive Officer

The Chief Executive Officer has been mandated with the responsibilities of helping the households as well as the industries that use solar energy to face the unique challenges emanating from the adoption of solar power as the source of energy.

He ensures this by leading in solar energy’s planning retreats, facilitates meetings, in addition to, conducting surveys of both the employees as well as the customers.

The chief executive officer is involved in a number of roundtable energy saving education sessions. In addition to this, he chairs and speaks at many seminars covering solar energy industry strategies to success as well as solar methodologies suitable for energy consultancy business (Ayres, 2004, p. 28).

Further, the chief executive officer of this company develops and monitors the company’s marketing strategies for the solar energy clients.

Director of finance

The person occupying this position is required to optimize the cash flows. Further, he is required to streamline the financial processes of the company. In addition, he is responsible with productivity enhancement, introduction of improvements in the processes as well as implementing solutions through technology.

Operations Manager

This docket concerns several management aspects, which include operations and implementation, management of finance, management of products and services both strategic planning and positioning and technology development, in addition to, support.

Human Resources Manager

The person in this position will be responsible for the management of the employees of the company. However, he will be required to focus keenly on the management of benefits, relations as well as payrolls of the employees. He will oversee the human resource functions in this company (Brigham, 2004, p. 233).

Information Technology Manager

A person who is considered a pragmatic technologist holds this position and as such, he is responsible with the application of technology for the sake of the company’s value, in addition to advantage.

Business development manager

This position is responsible for the performance of the sales quota, development of new businesses, founding and building strong relationships with the company’s customers, as well as, the effective management of territories, time and working teams.

Service manager

This position is responsible with the maintenance of a special focus on the management of information.

Service Development

It is made clear by Vaughan (2007, p. 55) that successive product and service development does not necessarily have to do with products. Rather, it involves the establishment of the needs, which the customer may not even be aware of and thereby developing solutions in an effort towards meeting those needs.

This consultancy group will mainly dwell on service offerings. As such, the company will provide a solar energy consultancy service to its clients. For precision, the company will offer advice to the solar energy clients regarding the efficient way to save energy. As such, saving energy is the hidden need that the solar energy clients are not aware.

In order to provide the best consultancy solution to this need, the company will adopt the ideation session technique. As such, the company will embark on conducting internal ideation sessions, that is, with the company employees, as well as external sessions, that is with the potential customers, in order to explore what might be possible (Krishna, 2001, p. 13).

Further, the ideation session will be effective in understanding the goals of the customers as well as the most effective way to meet these goals. In addition to this, the ideation sessions will be essential, as it will be used to establish the best practices that the consultancy can apply in both the short term as well as in the long term.

Further service development strategies, the consultancy business will engage in intermediary services whereby it will sell energy services from big companies at discounted rates. However, in doing this, the top management team will ensure that there is no instance the company will become affiliated with any one company.

Through this, the top management team will have acknowledged the rule of consultancy, which states that; to be a consultant, it is not recommended to become affiliated with any one company or product.

Financial Considerations

Initial start up costs

Since the company has no operating premises of its own, renting is inevitable. A team will be assigned the duty of identifying a building to set up the consultancy business premises. As such, the identified place should be rational in terms of costs, in addition to, being at strategic points where it is easily accessible.

The equipments needed for this consultancy business operation includes computers, furniture, stationeries, safes, printers and photocopiers, among other equipments. These equipments will be essential in supporting the consultancy activities. The general outlay to be provided in order to acquire these equipments is approximated to be sixteen million dollars.

In order to come up with the prices that will be charged for the services rendered to the clients, the company will establish a team to conduct an intensive research on the prices that other similar businesses charge for their services. However, during an initial research done by the company, it was established that the charges depend on the complexity of the issue at hand.

Generally, the solar energy consultancy services range from as low as a hundred dollars to as high as a thousand dollars. Other costs that the clients will incur apart from the consultancy service charges will include installation costs as well as maintenance costs.

As a way to market the company towards reaching a competitive advantage, the top management team will identify activities, which will be offered for free and as such, they will be considered as after sales services. Such will include clean up of the installed system among other activities. These events will not be included in the financial reports of the companies after the end of a financial year.

Profit margin

The company is targeting a profit margin of one million dollars after all the deductions have been made, that is, after considering tax on returns and interests to shareholders, among other deductions.

In order to realize this budget, the financial department will be required to come up with a focused budget showing how processes will be funded. In addition to this, the financial department will have to come up with a budget that clearly outlines the sources of cash flows.

The group’s future planning Time Line

The essence of developing a future planning time line is to help the consultancy business focus on the prize irrespective of the stage that the company is in currently.

First year

After the end of the first year, the business plan of this consultancy group that it intends to start with will be re-read. The rationale behind re-reading it in after the first year is that updates will be made, and if there is a need, the goals or even schedules of the company will be revised.

In addition to this, re-reading the business plan will ensure that the management of the company is re-acquainted with the goals that were made at the starting point, which the management lost touch with during the cumbersome startup days. Going into the second year, these goals will be fixed.

Second through to the fifth year

Both the processes as well as the procedures that the company will have developed during the first year will be formalized in this period. In this period, the basic goal will be getting adequate information from the people and putting it on paper.

Further, the procedures for operations will be written down in a manual during this period and this will prove to be of great importance. It is being considered that it will assist in helping the management of the company to think through the elements associated with the critical tasks of the consultancy business (Hirt, 2012, p, 71).

It is advisable to have a system in the organization, which is not only rational but reputable, as well. Such a system is of great value as the business plan for the first phase of sustained growth.

After entering the first growth phase, that is, in the third year the company will begin the process of hiring people in large numbers that it will have done before.

This process of bringing new people will be fool proofed by the management team embarking on writing down job descriptions for each and every position, whether existing or newly established.

Kerzner (2009, p. 19) states that a well documented and thought of job descriptions is essential, as they help in identifying and hiring the most suitable people for the right jobs.

During this period, the top management will have to consider the face that this consultancy business will present to the customers. Messages, images, in addition to other viable marketing materials will be codified. As such, the processes used in sales and marketing will be standardized.

When the company grows too large at some particular point such that it will not be possible to manage in the hands-on way it was initially done, it will be taken as a call to bring in a management team.

As the company grows during this period, it will need bigger capital and the initial sources will not be appealing. Therefore, the company will turn to banks and other lending facilities. By this time, the company will have grown larger and as such, the issue of creditworthiness will not be a problem (Matt, 2009, p. 33).

As the company progresses, there will be a need for documentations. Therefore, bookkeeping procedures will have to be adopted. Further, there will be generation of not only regular but accurate financial reports, as well. These will include cash flow projections, income statements, in addition to balance sheets.

Fifth to tenth year

The company will embark on more sophisticated business operations such as mergers and acquisitions.

Assumptions

The main assumption is that the accumulated funds will favor an effective entry into the solar energy consultancy business. Further, it is postulated that the current growth pattern of the consultancy industry will remain the same especially at the time this business will be making an entry.

References

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Schaper, M. & Volery, T. 2007, Entrepreneurship and Small Business, John Wiley and Sons, Milton QLD.

Shapiro, A. C. 2002, Foundations of Multinational Management, Wiley, London, UK.

Timmons, J. & Spinelli, S. 2007, New Venture Creation: Entrepreneurship for the 21^st Century, McGraw-Hill/Irwin, Boston, MA.

Vaughan, D. 2007. The Challenger Launch Decision: Technology, Culture, and Management, Springer, London, UK.

Wade, D. 2008, How to deal with competition, ProQuest, Michigan.

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