Analysis of key External Factors in the Market
Porter’s Five Forces Model
Porter’s five forces model is a strategic analytical framework for any market organization to study the various rivals in the market and determine their strengths and weaknesses. Every firm uses it to assess the amount of competition in the market for their products, as well as the level of profit they may accomplish with the strategic marketing models they develop. The amount of suppliers, distributors, competitors, and new businesses that emerge with fresh marketing trends and consumers continually look for alternatives for their products and are all factors that affect a company’s profitability. Profitability is determined not only by similar rivalry organizations, but also by organizations that manufacture alternative products. All of these factors are taken into account when analyzing the competitive market for renewable energy services in the energy sector.
Competitive Rivalry
Because most people haven’t grasped the benefits of using wind energy as a source of power, the electricity sector isn’t particularly competitive in the market. The product has minimal uniqueness and few characteristics to attract various clients. The only rivalry that may occur between the rivals is the pricing for the services, which is based on essential qualities such as environmental protection. Different forms of energy, such as nuclear, fossil, and geothermal, are highly competitive and key participants in the business. Similar services are provided by the providers, although in different formats. As of the state of the economy and the legislators’ and express offices’ have restrictive restrictions that aid contemporary progress, the miracle happens (Ciriminna and Pagliaro, 2020). There are low fixed costs and high trading costs, which makes contention easier. Given these factors, it’s clear that the industry isn’t particularly competitive.
Threats of New Entrants
New entrants to the market are often full of innovative ideas. They’ll have some solid plans in place. The majority of new entrants are firms that focus on the use of current technologies for energy generation or those that provide lower-cost services. The present industry has progressed to advanced technology via the use of various ways centered on success and the new concepts that have been implemented. In the market, new entrants face a variety of dangers. Fresh entrants pose a danger to new ideas and strategies for promoting the usage of wind energy since they already have competitors who are masters in power generation (Dobbs, 2014).
Threats of Substitution
There are just a few alternatives to these items. Renewable energy, for example, may be used to replace nonrenewable energy. Nonrenewable energy, on the other hand, cannot be reused, stored, or regenerated and is thus more expensive than wind energy, which can be stored and refreshed while also being environmentally friendly (Ivonkovic et al., 2017). Its replacement products determine the price elasticity of a product or service. Many electricity-generating companies are mandated to save the environment in order to help achieve the Sustainable Development Goals (Hussain Mirjat et.al, 2018). Renewable energy is a good alternative for nonrenewable energy since it is reliable, adequate, and environmentally benign.
Supplier Power
The firm must maintain strong connection with the supplier and should offer infrastructure for his stuff to be delivered to the business unit. The number of other suppliers in the market affects the supplier. Supplier power is closely tied to their ability to change prices, product quality, or reduce the quantity of raw materials they supply. NextEra is the sole provider of renewable energy in the United States. As a consequence, the firm is self-sufficient in terms of supplying renewable energy to its customers.
Buyer Power
In any business, buyer power is more crucial. Customers are impacted by a variety of circumstances, and these things discourage individuals from going to the marketplaces to buy goods. Firms should have a good understanding of buyer power, including his capabilities and the price they can pay in comparison to competing items. Individuals must grasp the value of renewable energy sources because of environmental concerns. The buyer power of NextEra is defined as the desire of customers to switch to wind-generated electricity.
Other Macro-environmental external factors
NextEra Energy Resource Company should focus on other macro-economic factors:
Political Factors: When the government changes, the electricity markets fluctuate. Political forces have a significant impact on the market and company. Every company must be aware of the political issues that influence their environment. The management should maintain solid relationships with political authorities in order to request assistance if a political event threatens to disrupt the normal energy supply.
Economic factors: The Corporation should keep an eye on the economic fundamentals at all times. Recessions cause businesses to fail, as well as the lives of its people. A company’s strategic plans should always be kept in mind in case of an economic downturn that affects their business operations; hence, directing clients to wind energy is about economic growth and long-term development.
Social factors: Social considerations have an impact on business. Different types of cultured individuals, for example, migrate from one nation to the next. Firms may utilize their cultural habits and way of life as a competitive advantage and base their business strategies on them, therefore planning on renewable energy is for people who care about the environment.
Technology: Many businesses sell their goods using a variety of technical tools. Firms concentrate on technology implementations in business domains in order to stay current and reach out to their clients quickly with their offerings. The employment of technology by NextEra Company is all about raising awareness about the company’s renewable energy sources.
Environmental: Natural catastrophes may occur regularly in the region where a company’s factory is located, and businesses should be aware of this. NexttEra is committed to environmental protection via the use of renewable energy sources.
Legal: Every company wishes to expand its operations internationally. Firms should be aware of the various legal phrases in the jurisdictions where they wish to conduct business. For instance, if a company seeks to open a business in another nation, it may be subject to differing legislative constraints inside the country. Varied labor laws, different labor rates, and so forth. Hiring a minor would be against the law. However, the need of adhering to legal standards and procedures will be emphasized..
Internal Resources Required and Competencies to Compete
A successful firm requires several competent internal resources. A company must stay technologically current with market trends by using new technical implementations in order to make their business more efficient. The infrastructure of NextEra Resource Company comprises renewable power transmission, which contributes to environmental sustainability. The corporation has efficient communication methods that aid with successful promotion of the organization’s services, and it advises clients to choose an environmentally friendly power source. NextEra is forward-thinking in every way to set new business trends. The goal is to get favorable feedback from their clients so that they can maintain their business and service distribution.
Licenses, Patents and Ruling to Compete in the Market
The installation of windmills to generate power is required for a company registration for the tax ID and license. Organizations require government-issued identity cards. All of NextEra’s equipment is maintained in a secure location.
References
Ciriminna, R., & Pagliaro, M. (2020). Biodegradable and compostable plastics: A critical perspective on the dawn of their global adoption. Chemistry Open, 9(1), 8-13.
Dobbs, M. E. (2014). Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review.
Hussain Mirjat, N., Uqaili, M. A., Harijan, K., Mustafa, M. W., Rahman, M., & Khan, M. (2018). Multi-criteria analysis of electricity generation scenarios for sustainable energy planning in Pakistan. Energies, 11(4), 757.
Ivonkovic, A., Zeljko, K., Talic, S., & Lasic, M. (2017). Biodegradable packaging in the food industry. Journal of Food Safety and Food Quality, 68, 26-38.
Janković, M., Mihajlović, M., & Cvetković, T. (2016). Influence of external factors on business of companies in Serbia. Ekonomika, 62(4), 31-38
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