Alternative Energy Production Module

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


Weakness Low reliability on company reputation Quite high investment


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


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


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


PricePrice PricePrice

•Low investment •Reasonable price•High financial return

•Low investment •Reasonable price•High financial return

MachineMachine

Competitively lower priceCompetitively lower price

Ethanol Ethanol


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

http://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