Rotterdam school of Management, Erasmus University compact logo

Citation Note

Based on published sources; 23 pages.

Follow the 'handle' link to access the Case Study on RePub.

For EUR staff members: the Teaching Note is available on request, you can contact us at rsm.nl/cdc/contact/

For external users: follow the link to purchase the Case Study and the Teaching Note.

description

The leading green energy storage company, A123 Systems, had to balance overhead, production, and development costs against revenues received within an undeveloped market. How should A123 Systems diversify its business strategy to minimize the risks caused by the potential market development and government policy change regarding subsidies?

Abstract

A123 Systems, founded in 2001, is a company built on green energy storage technology, using proprietary Nanophosphate® technology to produce lithium-ion batteries for use in portable tools, electric cars, and electric grids. The company’s main competitive advantages lie in its access to proprietary technology licensing from MIT, production facilities located in or close to potentially vast markets (the U.S. and China), joint venture agreements, partnerships and alliances with main players in the automotive market, and access to lucrative government grants and loans in the U.S. The company’s short ten-year history exemplifies both the benefits and risks inherent in nascent industries. Strategically, A123 must balance overhead, production, and development costs against revenues received within an undeveloped market. While government incentives abound within this newly emerging industry, the company must align strategy and operations with the realization that these incentives will not always be available to subsidize its operations. In addition, A123 will have to make important decisions with respect to utilizing and diversifying the application of specialized advanced technology in order to minimize or forestall many of the risks it may face in the future.

usage

This case is written in a way that complex strategic decisions can easily be analyzed during limited classroom discussion time. Professors have commented that the case has worked well in their classrooms.

Type
Case Study