Overview Of The Business Model Of Future Fuels

It is important to continuously adapt to the needs, wants and beliefs of the ever-changing consumer market. As the world progresses, companies must grow and expand with it. In a competitive market such as the oil business, it is vital that Future Fuels continues to do research on the wants of those they are targeting. This research will then be assessed to adaptations can be made. That is why the time to invest in going “green” is now more than ever. In this day and age millennials have grown older and are becoming the main spenders within this economy.

According to Forbes, “Millennials prefer to do business with corporations and brands with pro-social messages, sustainable manufacturing methods and ethical business standards”.

Therefore, it is time for Future Fuel to start investing in becoming a sustainable and innovative company. The current plan to becoming more sustainable is two-fold: seeking alternative sources of energy and installing solar panels and wind power generators at eight main Future Fuel sites in the west. In doing so, they are directly connecting with today’s consumers. With citizens starting to hold companies accountable for the effects of their business, along with having much higher standards than in the past, corporate social responsibility is an extremely important part of any business, especially at Future Fuel. Oil is a valuable, irreplaceable resource. There are many businesses – large and small – who provide oil as well. In order to stay competitive and satisfy the needs of consumers, being socially responsible is key. According to an article from The Journal of World Energy Law & Business, having corporate social responsibility means to “assist in addressing many of the world's most pressing problems” which includes tackling environmental issues. Especially with climate change being at the forefront of the news lately, it is extremely important that Future Fuels proves to consumers that they are doing everything they can to protect the environment. That is why the Board believes participating in sustainable activities such as preserving oil, finding alternatives and utilizing other energy resources (such as solar wind powered) are all important for the progressive oil company. It is also crucial that research continues to be done in order to stay-to-date with the issues in society in order to stay ahead of everyone else. Being sustainable can also be helpful to the company in many ways. According to the Huffington Post, there are six benefits of business sustainability: license to operate, cost reduction or avoidance, market opportunity/advantage, employee engagement, ability to seize the innovation high ground and access to investment capital. Cost reductions will be seen immediately, despite the initial up-fronting of more money. Previous quarters have shown that the methods being utilized now are yielding minimal profit. Therefore the template being used needs to be changed.

Future Fuel and its stakeholders will be able to see both immediate financial benefits as well as ones in the long haul. The second part of the Boards proposal is to install solar panels and wind power generators at eight main sites. The installation of these panels provides the company with a more affordable, resourceful form of electricity, instantly saving money on utility bills and is more effective for long term usage. Market opportunities can also be utilized right away. John Friedman of the Huffington Post states, “Brand reputation or ‘goodwill’ is arguably the most valuable asset a company has over the long term. Therefore, while more money is needed up front, an increase from 22-24% to 35%, stakeholders will see that money back and much more profit than ever before. Returns on investment should be seen in the near future as Future Fuel differentiates from the competition all while using more long-term, affordable methods of production. Being sustainable means value has been added to the company. Not only will the company be saving money, Future Fuels should see greater investment from the millennial market due to them valuing green companies more than non-green, environmentally friendly competition. While there is not a specific number or equation that will show the return on our investment, steady increase in profit will be the main indicator. The return on investment does act as a means to support the changes that the Board is planning to make, but will bring maximized profits to stakeholders as well. According to Investopedia, it should be noted that ROI is a create tool for investing profits on investments, but that it should be used in “conjunction with other financial ratios to give you a complete picture of an investment potential”. In addition, stakeholders can gain an understanding of the benefits of their investments by comparing the profits of other small oil companies who have not chosen to be more sustainable. The Board believes that the needs of shareholders and innovation can easily go hand in hand. Innovation is crucial to the success of any business and can be achieved in many ways. As explained by Forbes, one form of innovation is “modifying business models and adapting to changes to achieve better products and services”.

With the recent issues seen in the last three quarters, the business model of Future Fuels must shift. In becoming more appealing to the consumers and cutting long-term costs, shareholders will start to see profits rise and consumers will be more pleased. Based on the benefits presented, the budget increase to the research and development section, up to 35%, and the installations of solar panels and wind generators is a no brainer. Both the company and the stakeholders will see increases in profits. The company will become more valuable in the eyes of the consumer and long-term costs will decrease. While more money is needed up front, these effective changes will prove to be advantageous in the fourth quarter and forward.

03 December 2019
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