In September 2011, the CEO of First Energy Private Ltd., a startup company in the alternative energy industry in India, with a view to a flash point. The company has sold the technology of biomass stoves and has been, since 2007, clean and affordable cooking solutions for customers in rural India. A marginal hike in the price of biomass in the spring of 2011, however, has led to a sharp decline in demand make the continuance of rural households in the market is not sustainable. The company … Read more »

In September 2011, the CEO of First Energy Private Ltd., a startup company in the alternative energy industry in India, with a view to a flash point. The company has sold the technology of biomass stoves and has been, since 2007, clean and affordable cooking solutions for customers in rural India. A marginal hike in the price of biomass in the spring of 2011, however, has led to a sharp decline in demand make the continuance of rural households in the market is not sustainable. The company does not have a level playing field in the household segment, because the competitor product, enjoys liquefied petroleum gas (LPG) price subsidy from the federal government provided. FirstEnergy has quickly his camp by finding a niche market in the urban commercial market, consisting of restaurants, restaurants and hostels. While margins in this segment are high, volumes are low. The company must therefore build scale to be able to serve the investment in plant capacity, which is underused. The case allows students to come up with strategies for market expansion for the CEO. They will also make a call whether to leave or hold to the budget segment in which the margins are low, but the volumes in light of the upcoming de-subsidization of LPG would be high.
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from
Ramasastry Chandrasekhar,
Niraj Dawar
Source: Ivey Publishing
13 pages.
Release Date: 17 February 2012. Prod #: W12705-PDF-ENG
FirstEnergy HBR case solution