Quantum Energy Limited: Economics for a Sustainable World

Quantum Energy Limited is a manufacturing company that produces and sells energy-saving hot water, heating and cooling systems for both domestic and commercial markets. They have a mission to develop and build infrastructure and renewable sources of energy which are economically viable, sustainable and which will preserve and conserve natural resources and the environment. The company operates in a perfectly competitive market and employs land, labor, capital, and entrepreneurship as factors of production. The macroeconomic environment, including political stability, exchange rates, inflation, interest rates, unemployment, and the business cycle, affects the company's success. The company also faces externalities, and measures need to be put in place to mitigate them.

Running Head: ECONOMICS FOR A SUSTAINABLE WORLD
ECONOMICS FOR A SUSTAINABLE WORLD
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ECONOMICS FOR A SUSTAINABLE WORLD
Quantum Energy Limited
Business description
Quantum energy limited is a private limited company which is located in Newsouth
Wales, Australia. The company was co-founded by S. Will VanLoh, Jnr and Tobby Neugebauer
in the year 1975. It is a subsidiary company of Crisp Holdings.
It is a manufacturing company which deals in the production of and selling of energy
saving hot water, heating and cooling systems for both the domestic home use and also
commercial markets in the mother country, Thailand, China and Korea nations. Its CEO is Mr.
John Walstab and the General Manager is Mr. Steve Charlton. Quantum Energy Limited is found
in the household appliances industry and in the consumer durables sector (Bahadori, 2015).
The executive members are thus John Walstab who is the managing director and Youngchun
Kim who is the director of medical imaging. The board members are Dren Anthony Townsend,
John Walstab of Quantum Energy ltd and Alan McCarthy of Alpenglow Australia Pty Limited.
Company’s mission
To develop and build infrastructure and renewable sources of energy which are
economically viable, sustainable and which will preserve and conserve natural resources and the
environment.

ECONOMICS FOR A SUSTAINABLE WORLD
Company’s vision
To be recognized all over the globe as a firm which has come up with extremely
sustainable and viable added value by a way of using best engineering, environmental and
management practices and a company which applies ethical behaviors in a constant innovation of
the solutions (Charcosset, 2015).
The company’s core values
Quantum Energy Limited prides itself with the experience exhibited and required of its
workers, the know-how, the self-driven motivation of its workers, the quality and unique on the
activities performed by its staff in accordance with the integrity required of them in the course of
running the activities of the firm in order to offer their customers the best experience and success
in the use of their services and products (Charcosset, 2015).
Products
Among its products are; domestic heat pumps, commercial heaters, government rebates
and solar hot water which doesn’t necessarily need roof panels, gas water heaters. The
company’s products are favored as a result of their ease in fixation, they have low noise rating,
are ideal for use in areas with poor water quality, they have been designed and manufactured in
accordance to Australian standards and they do not need booster components thus have minimal
running cost. It also manufactures swimming pool heaters which do not use direct sunlight but
uses the ambient air (Boyle, 2015).

ECONOMICS FOR A SUSTAINABLE WORLD
Quantum also offers radiology services within its many facilities in Korea, china, Thailand and
Australia. Radiology is a medical specialty that applies medical screening and imaging to
diagnose and find cure for diseases.
It deals with several imaging techniques such as x-ray, ultrasound, computed topography,
offers nuclear medicine which includes positron emission tomography. Quantum performs
medical procedures using its technology in imaging (Bahadori, 2015).
The firm also runs an oncology Centre where it offers its customers the services such as the
prevention, diagnosis and the treatment of cancer. Its medical distribution is mainly around
china, Korea and Thailand.
The company transacts through two segments which are the environmental division and the
medical divisions. The company, besides offering the domestic and the commercial heat pumps,
also distributes medical products majorly in the areas of radiology, nuclear medicine, oncology
and ladies’ health. The manufacturing of its products mainly happens in China, with distribution
in Thailand, Australia and internationally (Bahadori, 2015).
Identification of customers and competitors
Among the company’s competitors are; A.H Beard Holdings Pty Limited from the Asian
region, Acme Furniture P/L from Asia, Acoustic 3D Holdings Limited from Asia, Aeratron Pty
Ltd from Asia and ALM Consulting also from Asian region. It has a market capitalization of
AU$19.35M in the industry.
Insider ownership takes about 18.29% shares in Quantum Energy Limited. This is a very
important group of owners of a company as they take charge of day today running of the

ECONOMICS FOR A SUSTAINABLE WORLD
company and also makes the important decision on the use of the company’s capital. They form
a very integral link between the management and the rest of the shareholders (Zoellner, 2013).
Estimation of market share
The company has been noted to be able to grown the owner’s capital with a hurdle rate
that depends on the other possibilities of return. The company uses return on capital abbreviated
as ROCE and it helps in gauging how much income can be created from the funds that can be
used in operating the business. The return on capital is calculated by:
Degree of profitability/ profit per unit or else return on capital employed= earnings before tax
/capital (Transparency Market Research, 2017).
The company has been noted to be able to grow the owner’s capital with a hurdle rate
that depends on the other possibilities of return. The company uses return on capital abbreviated
as ROCE and it helps in gauging how much income can be created from the funds that can be
used in operating the business. The return on capital is calculated by:
The degree of profitability/ profit per unit or else return on capital employed= earnings before
tax /capital.
Capital employed =total assets –total liabilities (Transparency Market Research, 2017).
ROCE= AU$ 7.1 m / (AU$ 70.2 -31.5m) = 18.2%
The above is an indication that for every $ 100 invested, the company creates $ 18.2.
Given that the company will operate at this rate in the future, the capital will enlarge and
therefore the firm will be attractive over time.

ECONOMICS FOR A SUSTAINABLE WORLD
( Walter , 2018).
The growth in ROCE is good news for Quantum Energy investors since it is probably
going to maintain to make huge earnings. In the last three years, research shows that the
Company has made a rise from – 8.4% and this shows that the capital returns have strengthened.
The earnings have increased from -AU $ 2.7 TO AU$ 7.1 M and the capital employed has gone
up by a lesser volume. Investment is part of the company’s DAMO (Discovery, adventure,
outlook and momentum) ( Walter , 2018). This includes opening new tabs in different places
such as Singapore, Moscow, China and California. Currently, the company is segmented in
North America, Europe, Asia, the Middle East and South America. Some of the primary players
in the computing market for this company include IBM Corporation, the D-wave systems, the
sparrow Quantum, and the Tokyo Quantum company among many others ( Walter , 2018).
Identification of the market structure and the justification

ECONOMICS FOR A SUSTAINABLE WORLD
Quantum energy ltd operates in a perfectly competitive market where it competes evenly
with other firms such as Armada solar, Easy Being Green, EnviroMission, Regen power and
many others. Since there are many providers of the products such as those being provided by
Quantum Company, we can say the market is a perfectly competitive.
This implies that Quantum Energy Limited makes normal profits. The graph of its marginal cost,
marginal revenue, average revenue and the prices with different quantities would appear as
shown below.
(Bahadori, 2015).
Identification of required factors of production

ECONOMICS FOR A SUSTAINABLE WORLD
The most evident factors of production for Quantum Energy Limited are land, labor,
capital and entrepreneurship. Land refers to all natural resources used in production. Quantum
energy uses renewable resources which makes its products healthy and user friendly.
Labor refers to human input in the production process, both physical and mental.
Quantum employs a good number of employees to help in the production process and thus it
helps to curtail unemployment problems (Bahadori, 2015).
Quantum employs a lot of capital in its production process. Capital ranges from the
machines used in production process to the cans used in the distribution of the products.
Quantum Energy Limited employs capital intensive production method (Bartelmus, 2015).
Classification and analysis of fixed and variable costs
In the course of its production process, the firm incurs various costs, both fixed and
variable costs. The fixed costs range from rent, administration costs, depreciation costs to
salaries paid to the management of Quantum Energy limited. These fixed costs are independent
of production quantity (Charcosset, 2015).
There are also variable costs which entirely depend on the production process and level.
These are the costs of raw materials, the costs of energy, the labor costs. These costs vary with
the manufacture of products (Costanza, Natural capital and sustainable development, 2013).
Description and analysis of macroeconomic environment
Macroeconomic environment is very important in the success of any business. It consists
of political stability, exchange rates, inflation, interest rates, unemployment and the business
cycle itself (Goodland , 2016).

ECONOMICS FOR A SUSTAINABLE WORLD
Political stability plays a great role in the success of any business in that peace is a very
important factor or necessity in running of profitable entities (Bartelmus, 2015). The favorable
political goodwill enjoyed in Australia, china and Korea has played a great role in the success of
Quantum Energy Limited. Production and distribution has been made easy due to good relations
between the governments of these nations where Quantum Energy ltd transacts its activities
(Charcosset, 2015).
Political stability plays a great role in the success of any business in that peace is a very
important factor or necessity in running of profitable entities (Bartelmus, 2015). The favorable
political goodwill enjoyed in Australia, china and Korea has played a great role in the success of
Quantum Energy Limited. Production and distribution has been made easy due to good relations
between the government of these nations where Quantum Energy ltd transacts its activities
(Charcosset, 2015)
The exchange rate and inflation also have a great impact on success of a firm. Quantum is
a company which operates internationally, thus the constant fluctuation of exchange rates affects
its operations constantly. For example, when the exchange rates appreciate, prices of Quantum’s
imported products reduces thus affecting the revenue realized (Allcot , 2015). An increase in
exchange rates makes it difficult for Quantum to sell overseas since it makes relative prices to go
up. When a currency depreciates, the prices of imports goes up and thus make them
unaffordable. Success of an entity such as Quantum thus require a stable exchange rate and
currency (Fuad-luke, 2013).
Australian dollar over the years has been very popular and this popularity can be
attributed to the fact that the country is well endowed with varieties of natural resources and
precious metals, the country neighbors some of the major countries and also that it has a very

ECONOMICS FOR A SUSTAINABLE WORLD
stable government regime (Costanza, Natural capital and sustainable development, 2013). These
factors have made it possible or rather has presented the Quantum Energy Ltd with a very good
enabling environment to transact its activities (Charcosset, 2015).
Interest rates as a component of macroeconomic environment also play a role in the
success of firms. High interest rates leads to less demand of products, especially the luxury
products. This is because the rise in interest rates makes borrowing difficult and when it arises,
the consumers cuts their spending on luxury goods, of which are the types of goods that
Quantum produces (Boyle, 2015). High interest rates also makes it difficult for firms to take
loans for expansion. Lowering the interest rates makes it possible for businesses and individuals
to take loans and thus boosts aggregate demand on goods and services. It currently stands at
3.7% for home loans in Australia (Zoellner, 2013).
It has been a bit steady and low in Australia and this has enabled companies and individuals to
access loans (Mohanty, 2014).
Below is a graph of the interest rates in Australia showing its trends for the couple of months
ago. It has been quite steady and predictable (Jackson, 2015)

ECONOMICS FOR A SUSTAINABLE WORLD
(Bahadori, 2015).
Unemployment rate is another macroeconomic factor of concern to firms such as Quantum
Energy Ltd. Currently, it stands at 5% in Australia.
Unemployment has its own positivity and negativities. On the positive side it creates
entrepreneurship but on the negative side it weakens the purchasing power of an economy. This
affects businesses in that the aggregate demand is heavily cut down (Bahadori, 2015).
A change in any of the above macroeconomic variables would affect the firm either
negatively or positively. Political stability is essential for smooth operations and thus when there
are skirmishes the company will record loses (Costanza, Natural capital and sustainable
development, 2013). A fluctuating exchange rate is not good for the company since it operates
internationally and thus its profitability depends on these various exchange rates. High interest
rates are not favorable to the company as its customers’ purchasing powers are reduced
(Bartelmus, 2015).
Identification of externalities and mitigating measures(production)

ECONOMICS FOR A SUSTAINABLE WORLD
By definition, an externality may be referred to as a cost or a benefit that accrues to a party
who didn’t necessarily decide to incur such a cost or a benefit. Governments usually try to do
what economists call ‘internalizing an externality’, whereby measures are put in place to make
sure that costs and benefits are only and strictly born by those particular parties who choose to
incur them (Allcot , 2015).
These externalities may be positive or they may be negative. Positive externalities involve
the external benefits enjoyed by parties who shouldn’t be enjoying the benefits. Negative
externalities on the other hand involves the external costs being incurred by parties who should
not be incurring such costs (Meadow, 2014).
Positive externalities as a result of Quantum production activities are the control of pollution
in its areas of operation. Quantum Energy limited engages in several activities of social
responsibilities. It makes attempts to control environmental pollution of the areas around its
operations and provides the neighboring community with clean refined water (Zoellner, 2013).
Positive externalities as a result of Quantum production activities are the control of pollution
in its areas of operation. Quantum Energy limited engages in several activities of social
responsibilities. It makes attempts to control environmental pollution of the areas around its
operations and provides the neighboring community with clean refined water (Zoellner, 2013)
Negative externalities are the greatest area of concern in any production process. Quantum
Energy Limited tries to minimize this by doing proper monitoring and disposal of its both solid
wastes and gaseous wastes. Proper management of these wastes is necessary because if they are
left to find their way into rivers and the environment at large they could be very damaging to the
ecosystem (Jackson, 2015).

ECONOMICS FOR A SUSTAINABLE WORLD
Quantum Energy Limited heat pumps are fitted with sound power levels to reduce the
noise pollution that would result to negative externality (Manzano, 2015).
The diagram below shows a negative externality and how the government can respond to
it. It levies a per unit tax in production and this tax revenue is used to cater for the external
damage caused by the production of that particular commodity (Goodland , 2016).
(Allcot , 2015).
For efficiency, it requires that the marginal social cost of production be equal to marginal
social cost. The implication of an externality to Quantum Energy Limited is that when its
marginal social benefits are greater than or outweighs the marginal social cost, it should increase
its production since the additional benefits outweighs the extra cost. On the contrary, when the
marginal social benefit is less than the marginal social cost, then it should reduce its production
in order to mitigate the problem of marginal efficiencies (Costanza, Natural capital and
sustainable development, 2013).

ECONOMICS FOR A SUSTAINABLE WORLD
Below diagram shows the positive externality in production
(Allcot , 2015).
It shows the excess social benefit accruing to the community around the production area over the
social cost of production (Horstman, 2013).
Consumption externalities
(Bahadori,
2015).
The deadweight welfare loss implies the externality.

ECONOMICS FOR A SUSTAINABLE WORLD
Consumption externality occurs where the consumption of a good causes either a positive
or negative externality to a third party who might not be using it at that moment (Manzano,
2015).
The above diagram shows positive externality. Quantum services consumption has a lot
of positive consumption externalities such as the conservation of environment through reduced
and control of pollution (Pearce D. W., 2013).
Negative externalities may also arise from the consumption of Quantum Energy Limited
products, though they are so minimal because the company takes the necessary measures to
mitigate them. Example is the noise produced by the heat pump, which is one of the products
produced by the Quantum Energy Limited. It is very minimal though. The following graph
shows negative consumption externality illustration (Charcosset, 2015)
(Bahadori, 2015).
Evaluation of the impacts of externalities on long term business viability

ECONOMICS FOR A SUSTAINABLE WORLD
Externalities have a take on how a business does its allocation of resources since the
market usually do not fully address the external effects that arises from the production activities
of firms (Fuad-luke, 2013). This is so, since the prices charged on commodities by their vendors
are only majorly based on the satisfaction that the buyer would derive from the intake of such a
commodity, but usual fails to take in the cost incurred by the third parties who gets affected by
such consumption or production of such a good (Meadow, 2014).
Prices should usually address or rather portray the true cost of economic activity so that
the private costs do not vary from the social cost (Costanza, Natural capital and sustainable
development, 2013). Inefficient allocation of resources would occur when resources are allocated
on the basis of private consumption and private production and not on the basis of social welfare
to the community. Quantum Energy Limited tries to do social welfare allocation of its resources
to mitigate such effects (Boyle, 2015).
Conclusion
Quantum Energy Limited has been able to establish itself as one of the giants in the
manufacturing and distribution of household appliances. The company has been able to produce
products that are user friendly and that has greatly reduced environmental pollution. Its products
which mainly rely on renewable sources of energy for production has taken over the industry by
a storm. Its medical products and services has so far over the years, been rated one for the best
by their consumers. The company is set to continue to grow as it ponders on opening other
foreign markets, due to the recognition that its products has received globally.
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ECONOMICS FOR A SUSTAINABLE WORLD
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