Bio Diesel Slides


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A case study on Biodieseal and its opportunity

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  • Bio Diesel Slides

    1. 1. Honor code <ul><li>Authorized Sources: You may refer to any of the E-145 books, readings, notes, etc. to do your analysis. You may also integrate learning from other courses, readings and speakers, such as those in the ETL series. Anything that you integrate should be footnoted, so that we can give you credit for having integrated the learning from multiple sources. You may not do web or library research, or speak with those who may be familiar with case issues. </li></ul><ul><li>The things considered to be violations of the Stanford Honor Code during this exam are shown below. </li></ul><ul><li>Delegating the exam to someone else without pulling your fair share of the work. </li></ul><ul><li>Unauthorized Sources : Discussing the case with anyone else but your final exam teammates, doing research to find out “what happened” from the company or any other source, talking to anyone currently or formerly associated with the company, visiting the company web site, or reading anything that anyone else has written about the company that is dated after the decision time in the case. </li></ul><ul><li>Failing to disclose that you have seen an exam case in some other setting. </li></ul><ul><li>Failing to give credit for a source with a footnote is a form of plagiarism, and we consider it a violation of the Stanford Honor Code. </li></ul>Wen Han, ZHOU Mobile: +1 (408) 203-3670 Email : [email_address] Biodiesel Take Home Paper
    2. 2. Offering Pure Biodiesel <ul><li>Main Advantage of Biodiesel </li></ul><ul><li>Reduction of emissions caused by diesel engines </li></ul><ul><li>The ability for it to work on current diesel engines. </li></ul><ul><li>Ability to grow Biodiesel as in areas where gasoline is not available </li></ul><ul><li>Decision </li></ul><ul><li>Sell Pure Biodiesel as a lesser emission fuel to Environmental Conscious Government willing to pay the premium </li></ul><ul><li>Produce & Process Biodiesel in rural places which increases wealth and energy availability </li></ul>Fuel Cost Emission Renewable Energy Security Existing Distribution Centres Petroleum Diesel + - - + Biodiesel Mix +/- +/- + - Pure Biodiesel - + + - Wind/Solar - + + -
    3. 3. Choosing Hong Kong as an Initial Market “ Reducing Emissions from Vehicles Motor vehicles, especially diesel vehicles, are the main causes of high concentrations of respirable suspended particulates (RSPs) and nitrogen oxides (NOx) at street level in Hong Kong.“ Environmental Protection Department, HK City Improvement in Air Quality Government Attention Bus Trip Per Capita Cost Increase Bearable America i.e.Los Angles Yes Y 0.13 Y Hong Kong Yes Y 0.71 Y Rio Marginal N 1 N
    4. 4. Government Gains $273 Million Environment Social Improvement Financial Cost Direct Effect Up to 50% reduction in Emissions Provides jobs through growing of Cash Crop Increased Cost of Subsidy for transport companies Benefits Reduction in Health Cost Better Quality of Life for both Crop growers and users of Biodiesel 20 -30 %Higher Cost of Transportation Energy Availability in Rural Area Bottom Line + 640 Million in Health Care Savings + 2 Million in extra Taxes -567 Million in Subsidies
    5. 5. Bowling Alley Market Penetration Main Proponent Government Bus Trains Cars Ships Industrial Generators Pure Biodiesel Mixed Biodiesel Distribution Network Narrow Wide spread Green Premium High Low TAM = $1.89 Trillion
    6. 6. Partners <ul><li>Biodiesel Cooperative </li></ul><ul><li>Recruit Farmers </li></ul><ul><li>Setup Processing Factory </li></ul><ul><li>Set Wholesale Prices </li></ul><ul><li>Provide Crop Seeds </li></ul><ul><li>Pay Profits from Sale </li></ul>Provide FeedStock Collect Biodiesel Sell to Consumers Pay for BioDiesel Government Clean Fuel Subsidy Lobby for subsidy & use of Biodiesel NGOs
    7. 7. Investment Required Initial Funding = $3.1 MM $50MM Funding for Biodiesel Processing Plant
    8. 8. Initial Funding Sources <ul><li>Advantages of Venture Philanthropy Funding </li></ul><ul><li>More long term focused </li></ul><ul><li>Less focus on profits & more focus on Triple bottom line </li></ul><ul><li>Easier to enlist NGO support </li></ul><ul><li>Easier to get government funding </li></ul><ul><li>  </li></ul>
    9. 9. Reality test Risk Mitigation Contingency Severity Probability Technological - Other forms of green fuel become cost competitive to Biodiesel Partner with other biodiesel companies to share research Transition Business model to that of new technology. i.e. instead of planting feedstock, plant solar panels High Low Market -Government unwilling to provide green fuel subsidy Educate consumers on importance of green fuel so they are willing to pay the premium Go for lower mix of biodiesel to reduce wholesale price so that it is near that of petroleum High Med Team -unable to recruit farmers due to lack of local knowledge Recruit local farmers to be advocates. Work with agriculture departments Start up own Farms Med Med Financial -unable to cover huge startup cost Get more support from large organizations Start small & Scale. Introduce small capacity biodiesel processing plants that can be used at home Med Low