Strategic Alliance between Origin Energy and PowerPoint (Essay Sample)

STRATEGIC ALLIANCE BETWEEN ORIGIN ENERGY (AUSTRALIA) AND POWERPOINT (KENYA)
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Executive Summary
This document is a proposal for a strategic alliance between Origin Energy (Australia) and PowerPoint (Kenya) companies aimed at developing a working alliance to provide some renewable energy solutions to the African continent, at large, specifically starting within Kenya and the East African region. Both companies are in the Energy sector. They deal with a renewable energy solution. Origin Energy is to provide energy products in bulk for consumption in the target market, while PowerPoint will provide a distribution framework owing to its favourable ranking in its sector as well as a licensing platform for Origin Energy to enter a larger market.
Origin Energy will also provide funding for the alliance in order to advance larger sales drives and market penetration initiatives to the larger East African region and later to the African continent. The alliance is based on a sound international business idea of advancing Origin Energy’s operations in a renewable energy sector. This is the sector, which holds a very key future prospect globally and particularly in the African continent. There hydro and fossil fuel energy is still mainly used, and the larger percentage of the population is still without an access to electricity. The report has critically discussed various aspects of an international business arrangement, including a target industry, a target country, a choice of a business partner, and a choice of an entry mode and growth prospects for both partners.
Table of Contents
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Executive summary  PAGEREF _Toc383599659 \h
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Introduction  PAGEREF _Toc383599660 \h
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Data and Information Source and Collection Methods  PAGEREF _Toc383599661 \h
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Review of Current International Business and Economic Environment  PAGEREF _Toc383599662 \h
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Analysis, Evaluation and Justification of New Target Industry  PAGEREF _Toc383599663 \h
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Analysis, Evaluation and Justification of Most Important Target Country Location where Firm Can Enter Target Industry  PAGEREF _Toc383599664 \h
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Analysis, Evaluation and Justification of the Most Appropriate Entry Mode Strategy for the Target Market  PAGEREF _Toc383599665 \h
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How Best Origin Energy Can Position Itself to Compete Successfully in the New Industry  PAGEREF _Toc383599666 \h
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Conclusion and Recommendations  PAGEREF _Toc383599667 \h
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Reference List  PAGEREF _Toc383599668 \h
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Strategic Alliance between Origin Energy (Australia) and PowerPoint (Kenya)
Introduction
Origin Energy is an Australian energy generator and distributor as well as a leading renewable energy explorer and a developer company based in Australia. Headquartered in Sydney, Australia, the company is a giant in its sector, with its annual revenue upward of $ 14 trillion and an employee base of 6000. However, Origin Energy is facing competition challenges from other similarly mighty companies in its sector, notable from Oil Search Ltd, Santos Ltd, Woodside Petroleum, Worley Parsons Ltd and many other private and state energy corporations. In addition, the oil exploration and production business, which is its core operation, is gradually overtaken by renewable energy. It is related partly due to the rapidly declining global oil reserves as well as because of the global campaigns for clean energy (ASX 2014). To combat this problem, Origin Energy has already diversified into renewable green energy, with a moderate success in the Australian continent. As a result, the company needs to diversify its product range within the renewable sector industry as well as to explore the possibilities of internationalizing its business operations to suitable and high return regions. To achieve this end, Origin Energy can realize a high growth rate by collaborating with PowerPoint, a company of renewable energy products and services based in Kenya, East Africa. This report will explore the viability, methodology and a strategic mechanism of a proposed strategic business alliance between Origin Energy and PowerPoint, specifically in the area of renewable, green energy.
Data and Information Source and Collection Methods
To justify this proposal, numerous sources of information and other data relating to these two companies should be analysed. Besides, an operational and target market, a business and regulatory environment in Kenya and the greater Eastern African region as well as the future of renewable energy in the global and African perspectives will be used. The nature of data to be applied will be mainly the qualitative and quantitative secondary data from various websites. Such online sources will include the official Origin Energy website, the Australian Energy sector data from government websites and official reports, the Australian Securities Exchange data on major energy sector companies and other related websites. In addition, the similar data and information regarding the target country, region and continent will be used. Some of the websites to be used include the World Bank Reports on Kenya and East Africa in terms of doing international business easier. Kenya’s rating in terms of business and investor confidence and the human development indices will be involved into the report as well.
In addition, various international ratings of the target partner, PowerPoint, as conducted by independent and credible audit companies in terms of performance, strategic policies strength and future prospectus will be used. Further, the data and information on the future of renewable energy in Africa and Kenya, particularly in relation to Kenya’s continuing robust campaign to achieve industrialization and become a middle level income country in 2030 will be obtained. The information will be derived from the Ministry of Planning and vision 2030-year policy documents in Kenya, the Ministry of Energy in Kenya, and the Joint Commission on the development of the East African bloc. These policy documents will guide the research in relation to the role of renewable energy in Kenya in the next two decades. They will as well make a clear guideline on the expected business growth in the same period.
Review of Current International Business and Economic Environment
Most emerging opportunities in the international business environment are concentrated in the environmental conservation and reduction of emissions in all industrial and commercial activities. Vehicles are made with lower emissions as a priority in a rating system. Besides, companies are being encouraged to operate a paperless office structure. Many major industrial centres already have recycling initiatives to avoid the wastage. A new global campaign for use of biodegradable or otherwise recyclable materials is on also. This combination of events point towards a future that is tending to depart from heavy oils, which is a core product Origin Energy has traditionally relied on. Renewable energy, on the other hand, is proving a way to go by as far as meeting the future energy demands is concerned.
Economically, the global human development index remains far lower than the human development indices of the leading economies, including that of Australia. This means that to invest abroad, companies in the developed world will have to make decisions on the type of economies and the nature of products they should develop. The investment into renewable energy is more likely having higher returns and better growth opportunities in the selected developing nations. It is related to the fact that they have a favourable mix of: high-energy demand (since most of them have considerably high rural economies without connection to mains electricity), a high dependence on hydro or fossil fuel energy (whose trend globally is that of reduction), and the low purchasing power parity- PPP (and therefore need affordable products).
In addition, the new wave of globalization has made most countries to review their international investor policies to embrace changes and realign with the global trends spearheaded by online business presence. This is a concept that has broken a barrier for the international business. It is now easier to do business in most countries than it was a decade ago. The foreign investment restrictions are likely to become progressively fewer in the future. Origin Energy should take an advantage of this trend to find a niche in favourable international markets, with a view to expand its operations and realize a horizontal growth.
Analysis, Evaluation and Justification of New Target Industry
Renewable energy is not a new venture for Origin Energy, but its diversification into the African continent is. The renewable energy sector in Kenya and Africa, in general, is still a developing concept. It is partly due to a lack of proper investment in it by the few though rapidly increasing pioneers. It is also related to the fact of the low purchasing power of the majority of citizens living in the target region, the regions’ dependence on hydro and fossil fuel power, and the lack of proper and aggressive government policies to expand the renewable energy sector. Thus, in Africa and Kenya, in particular, renewable energy constitutes a very small portion of the overall energy type. Such a market could have very good potential returns for a right investor, strategically positioned to fill...