Question

Consumers face a series of important questions when shopping for a new vehicle: Electric or hybrid? Petrol or diesel? Powerful or fuel-efficient? Sporty or economical? Yet for eco-minded consumers who seek the ultimate in green motoring, the decision to purchase a vehicle often comes down to one simple question: Where do I fill it up?

Where to refuel is a perplexing issue for buyers of alternative-fuel vehicles. This is because cutting-edge green vehicles lack a nationwide fuelling infrastructure. The USA has more than 100 000 standard petrol stations, yet few are equipped to fuel vehicles that run on electricity, natural gas or biofuel. For most consumers, that's a deal breaker.

Despite the push for cleaner autos, today's car buyers find themselves in a Catch-22: an ecologically responsible vehicle might fit in with their needs and desires, but if there is no place to fill up, they can't drive it, so why consider buying one? A similar dilemma exists for fleet purchasers, automakers and gas station chains: why purchase or even manufacture alternative-fuel vehicles if there aren't any filling stations? On the other hand, why build filling stations if no one is purchasing or making alternative-fuel vehicles?

Fortunately for consumers and the environment, Clean Energy Fuels Corp. and Navistar International have a plan to solve this chicken-and-egg dilemma. In 2012, the California alternative fuels provider and the Illinois semi-trailer truck giant announced a strategic partnership to build America's Natural Gas Highway, a first-of-its-kind network of natural gas fuelling stations across the USA. Slated for completion by the end of 2013 and still under construction, America's Natural Gas Highway will feature 150 liquefied natural gas (LNG) filling stations in major metropolitan areas across the country – San Diego, Los Angeles and Las Vegas out west; Houston, San Antonio and Dallas in the Texas Triangle; New York in the east; and major cities in the Midwest and South. Well-placed stations on in-between routes will tie the whole network together, resulting in a coast-to-coast refuelling infrastructure for natural gas vehicles.

Top-level planners behind America's Natural Gas Highway say their goal is to offer transport companies a package deal made up of eco-friendly fleets, inexpensive fuel and reliable fuelling stations. ‘Navistar and Clean Energy have come up with a breakthrough programme that offers customers a quicker payback on their investment, plus added fuel cost savings from day one of operation,’ says Navistar CEO Dan Ustian. ‘Together our companies will demonstrate how a natural-gas-integrated vehicle offering the right distribution and fuelling solution can be integrated into a fleet's operations to reduce costs and drive efficiencies.’

For a natural gas highway to work, effective collaboration must occur between a truck maker, a fuel supplier, a truck stop chain and a natural gas driller. Navistar and Clean Energy have the first two bases covered: Navistar will sell its best-in-class LNG truck fleets to shippers, along with a mandatory 5-year fuel-purchase contract through Clean Energy. News releases indicate that two other companies are included in the plan. Pilot Flying J Travel Centers, the largest network of truck and travel stops, is providing service locations where trucks can refuel. Likewise, Chesapeake Energy, the No. 2 natural gas driller in the USA, is investing $150 million towards the initial rollout. So Navistar sells natural gas trucks to shippers, Clean Energy supplies the fuel, Pilot Flying J provides the fueling stations and Chesapeake drills natural gas and provides investment capital.

The plan sounds good on paper, but can it work? Clean Energy CEO Andrew Littlefair says America's Natural Gas Highway is already well underway. ‘Clean Energy has already engaged over 100 shippers, private fleets and for-hire carriers that have shared their operations to qualify for the economic opportunity of operating natural gas trucks. This has helped us in turn plan the first phase of the natural gas fuelling highway,’ Littlefair says. Clean Energy's chief marketing guru, Jim Harger, adds that the financial advantages of the plan are such that transport businesses simply can't refuse. ‘You get the same lease cost of a diesel truck and get fuel savings too,’ Harger says.

There are many good reasons to think that America's Natural Gas Highway will succeed. However, executives at Navistar and Clean Energy say their plan will work because natural gas is the energy of the future and requires no government subsidies. ‘We remain committed to provide natural gas fuel for transportation because it has genuinely proven to be the cleaner, cheaper, domestic alternative fuel choice,’ says Andrew Littlefair. Navistar's chief agrees, adding that natural gas is both economically sustainable and good for the environment. ‘The programme will allow the industry to transition to natural gas-powered vehicles without relying on government handouts,’ Ustian says. ‘This is going to work far differently than any other programme in this field for alternative fuels. It can stand on its own and stand very tall, and that's why it's going to be successful.’

1. Why do businesses form strategic partnerships? Does the creation of America's Natural Gas Highway require such a partnership? Why or why not?
2. What opportunities in the external environment may have led Navistar and Clean Energy to formulate their plan for America's Natural Gas Highway?
3. What threats in the external environment could cause this comprehensive natural gas strategy to fail? What can managers do to help ensure that the plan is executed successfully?

Answer 1

Answer:

Businesses form strategic partnerships to achieve the strategic business objective and drive the joint effort to implement major strategic business initiative so that jointly it can be implemented easily and then it can be partnered for adequate support and help.

Yes, the creation of America's Natural Gas Highway require such a partnership because this is big challenging project which needs larger help and support to make the project successful in the America. Hence the partnership is required for such giant project implementation in the America.

Following opportunities in the external environment may have led Navistar and Clean Energy to formulate their plan for America's Natural Gas Highway as below

• Opportunity to make the environment safer and greener in the coming future scenario. This will create branding impact to these businesses in future and will get lot of support for future developments.
• High commercial opportunity and leverage the business benefits from this expertise in the global market will make the major benefits for these partners.
• This is strategic projects which will help for large success and growth opportunity for these partners upon successful implementation f this project in America.
• These opportunities will increase the competitive edge of these companies in the global market.

Following threats in the external environment could cause this comprehensive natural gas strategy to fail as below

• High threat of joint efforts of all the suppliers jointly to make this project successful like manufacturer, filling station and consumers to buy these products.
• Major threat for this project is the filling station network in the region so that customer can get motivated to buy this product and manufacturers can ready to manufacturer these products looking into the need or desire of consumer purchase and feasibility in the market for adequate usage.

Managers can do to help ensure that the plan is executed successfully be facilitating the readiness required for making these essential things in the market. Like manufacturer to willing to manufacture, filling suppliers are ready to invest for making filling station and consumers are aware to buy these green vehicles.