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Siam Bio Energy machine provides the ethanol processing machines that add values to agricultural products by converting raw materials into ethanol of 75 % purity.
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Project Feasibility and Business DevelopmentProject Feasibility and Business Development
Siam Bio Energy Co. Ltd Siam Bio Energy Co. Ltd
Group MemberGroup Member
Mr. Bundit Jumras Mr. Assanai Wongwichian Mr. Chaowatchai Thambanchacheep Mr. Nazrul Islam Biswas Miss Nucharee Laplamool Miss Sukhawadee Sirijunpen Miss Tuangruk Laoongsri
MBA in Management
Shinawatra University, Bangkok, Thailand
Company MissionCompany Mission
“We are the solution of alternative energy”“We are the solution of alternative energy”
Bio Energy Co.,Ltd. MissionBio Energy Co.,Ltd. Mission
Product descriptionProduct description
Ethanol Processing Machine is the equipment that converts the agricultural product to ethanol at purity of 60-95% and also provide the by product as a animal feed
Agricultural product such as rice corn or cassava
Ethanol 60-95%
Animal Feed and other by product
Business ModelBusiness ModelGas
Station
Mol lash
Corn Rice
Cassava
Gas Station
Gas Station
Petroleum Tank Farm
Ethanol Ethanol distillation distillation
centercenter
Target market customerTarget market customer
The target market customer can be divided into 2 main groups The equipment customer such as co-operative
farmer, local investor who do the agricultural business and local government agency.
The ethanol customer such as petroleum company (PTT, shell or Bangjak)
Six Force Model (Porter’s Model)Six Force Model (Porter’s Model)
1. Firm Rivalry
2. Threat of entry by new competitors2. Threat of entry
by new competitors
3. Threat of substitute products
3. Threat of substitute products
4. Bargaining power of customers
4. Bargaining power of customers
5. Bargaining power of suppliers
5. Bargaining power of suppliers
6. Bargaining power of complementors
6. Bargaining power of complementors
1: Firm rivalry1: Firm rivalry
Only Large scale of ethanol producer and small of numbers, No Small and medium machine producer in the market
New segment in the market for smaller size of product, easy to use, and flexible as well
Because of small size thus better in penetration to the raw material source than the big producer
2: Threat of entry by new competitors2: Threat of entry by new competitors
Strong relation ship between company and customer of equipment.
Quite strong relationship with the petroleum company such as PTT, Bangjak or Shell by contract supply of ethanol
3: Threat of substitute products3: Threat of substitute products
The most possible substitute product is NGV. NGV need some engine modification but gasohol
no need for that. NGV also have limitation of Gas Station in suburb
area. The consumer confident to performance of
gasohol is higher than NGV.
4: Bargaining of Customer4: Bargaining of Customer
Equipment customer (Investor)Low bargaining power due to very low cost of
agricultural product and no process to add more value to those product. The switching cost of customer is moderate.
Ethanol customer (Petroleum company)Moderate power due to the current situation of
ethanol shortage but there are many existing company. The switching cost of customer is low.
5: Bargaining of Supplier5: Bargaining of Supplier
Equipment SupplierLow bargaining power due to many engineering
company in the machine industry and by the specific design of the machine.
Ethanol raw material supplier Low bargaining power due to the same reason of
low cost agricultural product.
6: Bargaining of Complementors6: Bargaining of Complementors
The complementors or complementary product can be gasoline, gasoline car and food product that made from agricultural product.
The bargaining power of complementors is low due to the uncontrollable fuel price following with lower sale of gasoline car and saturated of food product technology.
Six force summarySix force summary
Force Strength
Firm rivalry Low
Threat of entry by new competitors Moderate
Threat of substitute products Low
Bargaining of Customer Lowest
Bargaining of Supplier Low
Bargaining of Complementors Moderate
SWOT analysisSWOT analysis
Strength High performance equipment with module
concept easy to installation and movable High performance staff and service Strong relationship with the customer High customer satisfaction due to benefit of
value added agricultural product Low logistic cost
SWOT analysisSWOT analysis
Weakness Low reliability on company reputation Quite high investment
SWOT analysisSWOT analysis
Opportunity Variety of raw material supply Variety of target customer (both equipment and
petroleum industry) Unlimited demand of gasohol Other kind of alternative energy (NGV and Biodiesel)
have low successful possibility in short term) National Policy in promotion of gasohol consumtion
SWOT analysisSWOT analysis
Threat Higher cost of raw material by the mechanism of
demand and supply Risk of national policy to promote other alternative fuel The regulation of alcohol transportation.
Strategy FormulationStrategy FormulationStrength-High performance equipment with module concept easy to installation and movable-High performance staff and service-Strong relationship with the customer-High customer satisfaction due to benefit of value added agricultural product-Low logistic cost
Opportunity-Variety of raw material supply-Variety of target customer (both equipment and petroleum industry)-Unlimited demand of gasohol-Other kind of alternative energy (NGV and Bio-diesel) have low successful possibility in short term)-National Policy in promotion of gasohol consumption
SO Strategies-Budget, planning and find money for investment.-Build factory for assembly ethanol processing machine.-Build factory for purifying ethanol 60-95% to 99%-Provide employees and training them for mission in 2 kind factories.-Provide surveyors to find potential agricultural area for raw material.-Provide marketer and staff who give knowledge about agriculture and process of business to give knowledge & information to investors and farmer.
Strategy FormulationStrategy FormulationOpportunity-Variety of raw material supply-Variety of target customer (both equipment and petroleum industry)-Unlimited demand of gasohol-Other kind of alternative energy (NGV and Bio-diesel) have low successful possibility in short term)-National Policy in promotion of gasohol consumption
Weakness-Low reliability on company reputation-Quite high investment
WO Strategies-Joint in seminar that target customer interest.-Open boot in exhibition product.-Find joint venture or business allies.-Work in to contact to farmer group, co-operative farmer for give necessaries business knowledge to them
Strategy FormulationStrategy FormulationWeakness-Low reliability on company reputation-Quite high investment
Threat-Higher cost of raw material by the mechanism of demand and supply-Risk of national policy to promote other alternative fuel-The regulation of alcohol transportation.
WT Strategies-Sign agree contract concern price and supplier.-Submit business plan for finance investment to customer.
Strategy FormulationStrategy FormulationStrength-High performance equipment with module concept easy to installation and movable-High performance staff and service-Strong relationship with the customer-High customer satisfaction due to benefit of value added agricultural product-Low logistic cost
Threat-Higher cost of raw material by the mechanism of demand and supply-Risk of national policy to promote other alternative fuel-The regulation of alcohol transportation.
ST Strategies-Provide safety car or safety system to meet with national standard for transportation.-Sign agree contract concern price and supplier.
ProductProduct
EquipmentEquipment Ethanol Ethanol
Customer & Product Customer & Product
1) Ethanol-Pro 30002) Ethanol-Pro 6000
1) High purity ethanol2) Technical grade
ethanol
Local Investor or farmer cooperative
Local Investor or farmer cooperative
Petroleum company(PTT, Bangchak, Shell or Jet)
Petroleum company(PTT, Bangchak, Shell or Jet)
CustomerCustomer
Five Key ValuesFive Key Values
ProductProduct
ServiceService
PricePrice
AccessAccess
ExperienceExperience
•High performance machine •Compact size•Easy to installation•High flexibility of raw material•Easily to move to other potential area•Fully automatic operation •Low labor cost•To produce potential Ethanol •Sustainable reliable •Less sound pollution
•High performance machine •Compact size•Easy to installation•High flexibility of raw material•Easily to move to other potential area•Fully automatic operation •Low labor cost•To produce potential Ethanol •Sustainable reliable •Less sound pollution
Five Key ValuesFive Key Values
ProductProduct ProductProduct
MachineMachineMachineMachine
•To produce 80% to 95% •ethanol•Less carbon dioxide•Less air pollution•Would be high demanded
•To produce 80% to 95% •ethanol•Less carbon dioxide•Less air pollution•Would be high demanded
EthanolEthanol EthanolEthanol
Five Key ValuesFive Key Values
PricePrice PricePrice
•Low investment •Reasonable price•High financial return
•Low investment •Reasonable price•High financial return
MachineMachine
Competitively lower priceCompetitively lower price
Ethanol Ethanol
Five Key ValuesFive Key Values
AccessAccess AccessAccess
Easy to purchase:•Purchase from local agents•Purchase from dealers•Purchase from website•Purchase fromrepresentative
Easy to purchase:•Purchase from local agents•Purchase from dealers•Purchase from website•Purchase fromrepresentative
MachineMachine
Sale to direct consumers in Thailand
Sale to direct consumers in Thailand
Ethanol Ethanol
Logistic Logistic Management Management
EthanolDistillation
Place
Distance Between EthanolDistillation Place
and Oil Terminal 50 or 60 Miles
EthanolDistillation
Machine would be Covered 30 or 40 Miles
Target Customer Groups
At Kala Sine or Sakon-Nakhon
in northeast Thailand
Logistic Cost AnalysisLogistic Cost Analysis
Khon Kaen
Bangkok
Rental Cost per Truck (10-12 tons, or 15 cubic meters)
Class 3 Class 4
Baht US$ Baht US$
Chiang Mai 586 14.95 511.80 13.05
Nakhon Ratchasima 229.20 5.85 199.40 5.10
Khon Kaen 372.50 9.50 324.30 8.30
Hat Yai (near Songkhla) 710.10 18.10 620.70 15.85
Eastern Seaboard (Map Ta Phut)
190.40 4.85 165.60 4.25
Chiang Chiang MaiMai
Average Cost Per Ton Per Mile Oil Carrying Cost at 1.66375 Baht between Bangkok to
Chiang Mai and Khon Kaen
Source: The Express TransportationOrganization of Thailand (August 8, 2005)Website: www.eto.mot.go.th
Logistic Cost AnalysisLogistic Cost Analysis
-1Year -2Year -3Year -4Year -5Year -6Year -7Year -8Year -9Year -10M MMMMMM Sells M MMM
s10 20 30 30 30 30 30 20 10 10
75% EthanolPpurchase (
s)
151
2
0
453,6
0
907,2
0
136,08
0
181,44
0
226,8
0
0
272,1
6
0
302,4
0
0
317,52
0
332,6
4
0
9 9. 5% Ethanol Pr oduction (Tons
)
113,9
7
341,9
1
683,8
2
102,57
3
136,76
4
170,9
5
5
205,1
4
6
227,9
4
0
239,33
7
250,7
3
4
Annually Ethanol Purchase and Purifying Production Annually Ethanol Purchase and Purifying Production
Ethanol Purchase and Selling
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
1 2 3 4 5 6 7 8 9 10
Years
Qua
ntity
of E
than
ol
Series1
Series3
Series-1 represent the 75% ethanol purchasing forecasting annually
Series-2 represent the 99.5% ethanol selling forecast annually
75% ethanol purchasing and 99.5% ethanol selling forecast to we have to analyzed logistic cost
Comparison Between the Distance Comparison Between the Distance 20+60, 30+50 and 40+40 Miles and Cost20+60, 30+50 and 40+40 Miles and Cost
Year-1 Year-2 Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 Year-9 Year-10
20 + 60 Miles ฿1.64 ฿4.92 ฿ 9.84 ฿14.7 ฿ 19.69 ฿ 24.61 ฿ 29.53 ฿ 32.82 ฿ 34.46 ฿ 36.10
30 + 50 Miles ฿ 1.74 ฿5.11 ฿10.22 ฿15.32 ฿20.4 ฿25.54 ฿30.65 ฿34.06 ฿35.76 ฿37.46
40 + 40 Miles ฿1.76 ฿5.29 ฿1059 ฿15.88 ฿21.18 ฿26.47 ฿13.76 ฿35.29 ฿37.06 ฿38.82
Total Transportation Cost
฿0.00
฿20.00
฿40.00
฿60.00
฿80.00
฿100.00
฿120.00
1 2 3 4 5 6 7 8 9 10
Years
Co
st o
f M
illio
n B
ath
Series3
Series2
Series1
Series-1 showed annual vehicle cost when showed annual vehicle cost when distance 20 + 60 milesdistance 20 + 60 miles
Series-2 showed annual vehicle cost when distance 30 + 50 miles
Series-3 showed annual vehicle cost when distance 40 + 40 miles
So, distillation machine would be setup around 20 miles of customers and 60 miles
of oil terminal
-1YearMillion
-2YearMillion
-3YearMillio
n
-4YearMillion
-5YearMillion
-6YearMillion
-7YearMillion
-8YearMillion
-9YearMillion
-10Million
75% EthanolTranspotation
M MMM ฿050
฿15.1
฿30.2
฿45.3
฿60.4
฿75.5
฿90.6
฿10.06
฿10.57
฿11.07
995. % EthanolTransportation Cost
฿11.4
฿34.1
฿68.3
฿10.24
฿13.65
฿17.07
฿20.48
฿22.75
฿23.89
฿25.03
Total Logistic Cost฿16.4
฿49.2
฿98.4
฿14.77
฿19.69
฿24.61
฿29.53
฿32.82
฿34.46
฿36.10
Annually Ethanol Carrying Cost When Distance 20 and 60 Miles
Our Decision that if we setup distillation Our Decision that if we setup distillation machine around 20 miles of customers groups machine around 20 miles of customers groups
and 60 miles of oil terminal it would be less and 60 miles of oil terminal it would be less transportation cost and convenience for transportation cost and convenience for
communication between customers and PTT communication between customers and PTT oil terminaloil terminal
When Transportation Distance 20 & 60 Miles
฿0.00
฿10.00
฿20.00
฿30.00
฿40.00
฿50.00
฿60.00
฿70.00
฿80.00
1 2 3 4 5 6 7 8 9 10
Years
Cot
s of
Mill
ion
Bah
t
Series3
Series2
Series1
Next timeNext time
Competitive advantage Create a vision Mission Statement State the value proposition Create the business model Describe the core competency and the
competitive advantage