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Alphabet Energy Case Solution

Solution Id Length Case Author Case Publisher
2113 728 Words (4 Pages) Beverly Alexander, Adam Boscoe, Mason Cabot, Philip Dawsey, Luc Emmanuel Barreau, Russell Griffith UC Berkeley - Haas School of Business : B5717
This solution includes: A Word File A Word File

The CEO of Alphabet Energy, Matt Scullin, was posed with a challenge that came with the development of a working prototype of a thermoelectric device. Its application feasible within four markets: Automotive, Aerospace and Defense, Power Generation, and Manufacturing. However, the new venture, with its constrained resources, couldn't pursue more than one of the markets initially. 

Following questions are answered in this case study solution

  1. Automotive

  2. Aerospace & Defense

  3. Power Generation

  4. Manufacturing

  5. Recommendations

Case Analysis for Alphabet Energy Case Solution

Which market(s) should Alphabet target was a critical question for Scullin, and hence, a situational analysis with respect to each opportunity is presented as follows:

1. Automotive

Thermoelectric generators presented a potential opportunity within this market as they had the ability to increase fuel economy by converting engine waste heat to electricity. A typical automobile only converted 30% fuel into propulsion. The technology could make cars 10% more fuel-efficient; however, the market presented lower margins (around $1 per watt) but had a large scale in terms of the new vehicle market in the U.S. and abroad. Global automotive sales were expected to reach 50 million vehicles by 2010. Further, the market required a small size of the thermoelectric system, which meant that the company would have to scale up quickly for mass production.

Another challenge that came with this market were the OEMs which restricted the potential of this market in following aspects: they were risk-averse and cost-conscious, longer sales cycle (5 to 7 years), partnership required with suppliers which would add on to transaction costs due to markups and loss of direct customer feedback. The advantages that the market presented were modular production, gross margin of 8%, which could be even higher with a superior product.

2. Aerospace & Defense

This presented a pioneering and potentially huge market for the application of thermodynamics with a multitude of applications. Gross margins within the sector exceeded 80%; however, each niche within the sector had specific engineering requirements. Much focus was placed on performance and weight rather than payback. The challenges it presented included: longer economic cycles and the Alphabet's corporate culture fit with this industry.

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