MBA717: Strategic Plan for a New Solar Air Conditioner Venture

This report provides a comprehensive strategic business plan for a new venture, specifically focusing on a solar-powered air conditioner company. It begins with an introduction to strategic management in the context of new ventures, emphasizing the importance of planning and resource allocation. The report details the company's mission, internal and external analyses, including financial and human resources, physical resources, and a SWOT analysis. The external environment considers global, political, economic, social, technological, and industry factors. Strategic choices and long-term objectives are outlined, along with generic strategies, short-term objectives, functional tactics, and policies. The plan also covers strategic control, continuous improvement, and concludes with references, providing a complete guide to the venture's strategic development. The report adheres to the assignment brief's requirements for a strategic business plan, incorporating elements like mission, objectives, strategies, tactics, and financial considerations.

STRATEGIC
DEVELOPMENT

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Contents
Introduction...........................................................................................................................................1
New Venture.........................................................................................................................................1
Company mission..................................................................................................................................1
Internal analysis.....................................................................................................................................1
SWOT analysis..................................................................................................................................2
External environment............................................................................................................................3
Strategic analysis and choice.................................................................................................................5
Long-term objectives.............................................................................................................................6
Generic strategies..................................................................................................................................6
Short-term objectives.............................................................................................................................7
Functional tactics...................................................................................................................................7
Policies that empower action.................................................................................................................8
Strategic control and Continuous improvement.....................................................................................9
Conclusion.............................................................................................................................................9
References...........................................................................................................................................10

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Introduction
Strategic management becomes highly critical in the case of the new ventures especially
when the ideas are new. This is because there are several challenges that confront the
business model and hence proper planning of the strategies and the resource allocations need
to be done in order to ensure that business idea does not fails (Zemlickiene & Maditinos,
2012). There are various parameters that have to be given priority while opening the business
as these factors will have direct impact on the way an organisation will deal with the
challenges. Financial management is also critical for the new ventures as they do not have
higher financial capital and at the same time lags in advanced technologies so financial
planning gets difficult. This has a direct impact on the operations of the firm. In this report
the strategic management of new venture is illustrated along with the various resource
requirements of the new venture.
New Venture
The ‘A’ company has planned to bring new kinds of Air-conditioners in the market. This air-
conditioner will be operated through the solar energy. This product will be available in the
market as a replacement for the traditional Air-conditioners which consumes large amount of
electricity. It is seen the energy demand is increasing in different parts of the world and the
amount of energy that is consumed by the traditional air-conditioner is high. This solar air-
conditioner has greater chance to replace the air-conditioners that runs on the electricity.
Company mission
The mission of the firm is to be improving the lifestyle of the people by reducing the energy
usage of the individual today and tomorrow. They aim to emphasize on the energy needs of
the future society by reducing the dependence on the traditional or conventional energy
sources.
Internal analysis
The internal analysis can be understood with the help of resources they have. Some of the
resources are:

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 Financial resources: For the organisation that aims to bring the new venture into
existence it is critical that the firm makes the financial planning in an effective
manner. This is not only necessary for bringing smoothness in the development of the
business but it is also critical for ensuring that every department in the organisation is
adequately funded. They have good cash capital that will help them in funding their
operations.
 Human resource: Since it is a technology based product hence company will have to
hire those people that have research skills. Company also needs to set the salaries on
the higher side so as to attract the talented people in the organisation (Stanko, Molina‐
Castillo & Harmancioglu, 2015). They have an employee base of 250 employees.
 Physical resources: The physical resources of the firm includes infrastructure that will
improve the way in which they will manage their business operations. Their physical
resource includes equipment that enables them to do business in an effective manner.
They also have physical resources in the form of technology that helps them to bring
efficiency in their business process.
SWOT analysis
Strength
 The technology is innovative hence will make its own place in the market.
 The production cost of the company is on the lower side.
 Talented employee base gives them competitive advantage.
Weaknesses
 The cost of the products is on the higher side as the equipment and the technology that
is used in the product is also of higher cost.
 They also have the weakness in the areas like inexperience in the market and low
market share.
 It also lags in the amount of resources that its competitor firms have which could
result in stealing of the idea which will have direct impact on the growth rate of the
firm.
 They also do not have strong marketing channel when compared with their
competitors.
Opportunities

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 Since the dependence on the traditional electrical energy has to be reduced hence
solar powered air-conditioner will have good opportunity in the market.
 They have wider scope in the international market both in the developed and
developing nation however their major focus should be on developed cities as it has
greater potential to generate higher revenues of the firm (Wilson, 2010).
 They also have opportunities in other technological areas as well especially in the
home appliances industry.
Threats
 There is higher in terms of increasing competition in the market.
 Large innovation in the solar technology areas will have direct impact on the growth
of the business.
 They are also facing threats in terms of the fact that there is downfall in the global
economic growth which has a direct impact on the growth of the organisation
(Prajogo, 2016).
External environment
Operating environment
 Global: Globalisation has increased the completion and it has taken it to the next
level. It is seen that there are many companies that are stealing the idea and the
business model and come up with their own product hence company needs to ensure
that till the time other competitors are actually able to launch their kind of product
they need to take maximum benefits from it. Global challenges such as climate
change will have positive impact on the development and growth of this product
(Bonner, 2010).
 Investment: Since it is a new kind of product idea and it is feasible also. In the coming
time the solar energy is going to the future of the equipment. At the same time the
Saudi Arabia has large amount of opportunities in solar energy hence investors are
also ready for investing in this area.
Remote factors
 Political: In then time when the political instability can be seen in different parts of
the world it is hard for this company to look for the political ties that could help in

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improving their expansion process. The political conflicts in middle-east and the trade
war between United States and China has greater impact on the growth of the
companies (Haider, Zafar, Khalid, Majid, Abdullah & Sarwar, 2017). However the
parent nation of this company i.e. Saudi Arab has a good political stability hence it
will provide a stable environment for the growth of the companies.
 Economic: The economic crisis in different parts of the world has increased. This
increase in the economic instability is not helping the innovation firms to grow at the
speed at which they could. Taxation and other types of economic barriers have
increased for the companies that aim to market its products by the help of export. The
development of economic downturn will have impact on the long term hence the
company will have to arrange finances from new sources (Stanko, Molina‐Castillo &
Munuera‐Aleman, 2012).
 Social: Society has changed and so is its demands related to the energy needs. Air-
conditioners are now only the equipment that is used in the public places or to certain
extent rather it has reached in the bedrooms of the people and it is not only the story
of the big households rather even the middle class people are making demands of the
air-conditioners. This increase in the demand has put pressure on the energy
requirement of the country (Helm, Bühren & Pabst, 2011). However this is an
opportunity for the company at the global levels.
 Technology: Since this product has technology that is innovative hence they will be
able to take the desired benefits from their products. It is also seen that technology
that is able to improve the life of the people are given higher importance. There must
be use of digital marketing mediums as well so as to reach to lager numbers of people
with limited amount of resources (Choudhury, Chatterjee & Sarkar, 2010). They need
to innovate their technology at regular interval so as to remain ahead of the
competitors.
Industry environment
 Bargaining power of suppliers: There are large numbers of suppliers available in the
Saudi Arab and other part of the world as well (Daut, Adzrie, Irwanto, Ibrahim &
Fitra, 2013). They just need to concentrate on the quality supplier and make healthy
relationship with them. This makes the bargaining power of the suppliers to go on the
moderate side.

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 Bargaining power of customers: The options of such products available with the
people are very less hence their bargaining power will remain on the lower side.
However in the coming years this will increase when more such products will come in
the market hence company will have to concentrate to take maximum benefits before
this.
 Threat of competition: Almost no company has similar kinds of products available
with them. However there are many in direct competitors of this firm in the form of
the companies that makes Air-conditioner that runs on conventional energy (Cheng &
Zhang, 2013). This makes the threats to be moderate in nature. Diakin, Voltas, LG are
some of the major competitors of the company.
 Threat of substitution: It is seen that large numbers of innovations are going on in the
consumer electronics industry which can lead to generation of new product. There are
substitute products such as coolers and air-conditioners running on conventional
energy are present which are continuously being updated to use lesser amount of
energy for operating. It is due to this that the threat of substitution is on the higher
side.
 Threat of new entrants: It is seen that there are many new investors that aims to come
in the consumer electronics industry (Hoppmann, Peters, Schneider & Hoffmann,
2013). Apart from this there are many innovations that are going on in the
technologies. This will boost the investors to make money and hence will enhance the
threat of new entrants.
Strategic analysis and choice
The innovations that are going on in the industry are very fast and it is critical for the
management to look at different aspects of the strategic choices available with the firm ‘A’ in
order to compete with their rival firms. This company needs to move more in one direction
i.e. they need to ensure that the technology that they are using is highly innovative and
provides value for the money. They need to ensure that they continuously innovate their
products so as to ensure that no other company will be able to come ahead of the company
‘A’. There must be making of the strategies that concentrates on making of products that are
more energy efficient and can work even on the days when there is lesser sunlight. There is
an option with the company that they can collaborate with the marketing firms to ensure that
the awareness gets spread in different parts of the world at much faster rate (Nielsen,

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Cruickshank, Foged, Thorsen & Krebs, 2010). This company can also work with e-commerce
websites like Amazon which would help them in their sales at global levels. They need to
become a research oriented company that is able to improve its technology on the regular
basis.
Long-term objectives
There are different long term objectives that this company can make:
 They aim to enhance the profits by 20% by the end of 2021.
 They aim to become one of the top five companies in the Air-conditioner industry of
Saudi-Arab by the end of 2021.
 They also aim to become the technological leader in the industry by the end of 2021.
Generic strategies
Among the different generic strategies that this company can use the strategies such as:
 Differentiation strategy: This is a very critical strategy that this organisation must be
able to use. This can be understood in terms of the fact that if the company is able to
differentiate its products from their rival firms then they will be able to achieve the
desired benefits in a proper manner. Differentiation can also empower the
organisation in terms of the fact that it will help the organisation in attracting new set
of customers and will also help in providing them leadership in technology (Hirth,
2014). For this they need to continuously fund their research program and improve the
research skills of their employees regularly. This is necessary for ensuring that
sustainability of the companies remains on the higher side.
 Focus differentiation strategy: They need to utilise focus strategy on the customers
that they are targeting. Focus needs to be on the middle class people that are in huge
numbers in different parts of the world. Focusing on specific target segment will
allow the organisation to know their demands and work accordingly so as to achieve
the desired benefits (Kar, Sharma & Roy, 2016). Focused differentiation strategy will
allow the organisation to reduce the chances of failure as the products will be
developed according to the demands of the customers which again has a critical role
in the success of the firm.

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Apart from these generic strategies, the grand strategies that this company would make it are
as follows:
 Open innovation platform: This Company should invite the research talents from all
across the globe to ensure that they will be able to innovate the products at regular
intervals. This will not only give the organisation a stable platform where they can
test their products but at the same time they will also ensure that products that are
available in the market are reliable and provides the value that company’s demand for
(La,Dai, Li, Ge & Wang, 2011).
 Digital marketing campaign: They need to integrate all their marketing
communication mediums so as to ensure that they are able to reach to larger consumer
segment with minimum efforts and at lowest of cost. The marketing campaign should
be inclined towards green planet and it must illustrate the environment friendliness of
the product (Mohr, Sengupta & Slater, 2010). The use of social media can be highly
effective in order to ensure that the product details reaches to the person at higher
levels.
Short-term objectives
 They aim to enhance the sales by 10% at the end of the 2020.
 To enhance the workforce base by 20% at the end of 2020.
 To enhance their site visibility by 40% at the end of 2020.
 To interlink all their marketing and sales channels so that the customers will make the
purchase when they see the products.
Functional tactics
There are different kinds of things on which this company needs to be concentrated upon:
 Hiring best talents: They need to ensure that they have culturally fit employees that
are highly talented and are research oriented. This is also necessary for improving the
performance of different organisational units. It is critical that these employees are
given training about the objectives and the values of the firm so that while developing
the products they remain aware of it.

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 Marketing activity: marketing activity of the firm includes giving priority sales
promotions. In this regards the company will illustrate about the benefits that
company provides when the purchase is made.
 Price reduction: The prices of the products in the starting phase needs to be reduced
and it must be at the lowest of levels which is critical for ensuring that sales can be
maximum even when the company might not be able to generate the profits as
expected (Lee & Hsieh, 2010). This will be a short-term marketing strategy.
 Inventory reduction: They need to look at reducing the inventory. This can be done by
the company with the help of technology as technology will enhance the inventory
lifetime. With the help of data, they can forecast the demand in the market and
accordingly they will invest their raw materials to produce desired products.
 Team work: This Company needs to concentrate on the team work where they can
make smaller teams which will allow the organisation in achieving the short term
goals on time.
Policies that empower action
 Cultural policies: Company needs to bring customer oriented policy within the
organisation which will ensure that all the activities that will be done in the
organisation seeing the challenges that is faced by the customers.
 Performance appraisal policy: This Company needs to make appraisal policy that will
take the support of the performance management system. The employees that have
actually contributed to the innovation done by the company needs to be given first
priority while doing appraisals.
 Marketing policy: This Company needs to concentrate on ethical marketing where
they will ensure that company would not violate ethics and sustainability within the
organisation (Hoffmann & Broekhuizen, 2010). For this data security is critical so that
safety of the data can be ensured.
 Collaborative decision making: This Company needs to make the policy where they
need to make decisions in collaboration with all the stakeholders so that views of all
the stakeholders can be heard. For this representation of every stakeholder’s group is
ensured in the board.

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Strategic control and Continuous improvement
Team of people that are highly experienced needs to be made. They will take the feedbacks
from the stakeholders and accordingly they will check whether they will have to continue
with their strategies or not. The use of technology will help in accumulating data from
different functional units that will ensure that strategies are going in the direction where other
firms are not. Strategic control needs to be given in terms of adding more numbers of
stakeholders in the business that will allow the firm to gain stability. There must be regular
audit of the raw materials that are coming in the organisation. The product quality can be
ensured by utilisation of TQM in the organisation.
They will also have to develop the policy of continuous improvement where they need to
accelerate the skills of the individuals and continuously invest on the research so that
continuous improvement can be ensured. They also need to upgrade their technology on the
regular basis so as to ensure that all their strategies are applied effectively in the organisation
while ensuring that performance remains growing. The use of Kaizan theory is critical in this
regards as it improves the overall productivity of the organisation (Mohr, Sengupta & Slater,
2010).
Conclusion
From the above based report it can be concluded that energy needs of the people in different
parts of the world has increased. This has resulted in the increase in development of those
products that runs on renewable sources of energy. The solar powered Air-conditioner can be
an effective option especially in the time when not only rich people but the middle class
people are also demanding for such air-conditioner. The external and internal environment of
the company supports the firm’s plan especially in terms of the fact that it is environment
friendly product and enhances the standards of life of the people. This company aims to
enhance the profits hence they need to concentrate on differentiation strategy along with
digital marketing campaign that would help in improving their performance at the global
levels. For strategic control they need to make the team of the experts that evaluates the
strategy on the basis of data and feedbacks.

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References
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Cheng, Q., & Zhang, X. (2013). Review of solar regeneration methods for liquid desiccant
air-conditioning system. Energy and Buildings, 67, 426-433.
Choudhury, B., Chatterjee, P. K., & Sarkar, J. P. (2010). Review paper on solar-powered air-
conditioning through adsorption route. Renewable and sustainable energy
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Daut, I., Adzrie, M., Irwanto, M., Ibrahim, P., & Fitra, M. (2013). Solar powered air
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Haider, A. A., Zafar, A., Khalid, A., Majid, A., Abdullah, M. A., & Sarwar, M. B. (2017).
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Hoppmann, J., Peters, M., Schneider, M., & Hoffmann, V. H. (2013). The two faces of
market support—How deployment policies affect technological exploration and
exploitation in the solar photovoltaic industry. Research Policy, 42(4), 989-1003.
Kar, S. K., Sharma, A., & Roy, B. (2016). Solar energy market developments in
India. Renewable and sustainable energy reviews, 62, 121-133.