Factors affecting alternative automotive fuel industry

Abstract: Environmental protection, shrinking of fossil fuels and problems like energy security has resulted in emergence of a rapid growing alternate automotive fuel industry. This research is pursued to identify and describe factors that affect sustainable growth of alternative automotive fuel industry and advice firms in their strategy development for sustainable growth. The theoretical framework includes theories including different internal and external possible factors that may affect an emerging industry. The research methodology of this study constitutes of qualitative research approach, comprising of both primary and secondary data. Primary data for this study is collected by conducting a total of 9 interviews with officials from three Swedish alternate diesel engine oil manufacturing companies. An overall industry analysis is conducted through PEST analysis, data for this PEST analysis is gathered through official government websites, press releases, newspapers, educational and environmental institute websites and scientific journals. Interviews conducted with company officials also served the purpose. The analysis of this study shows that government policies and subsidies have played an important part to make these companies enter this market. Two of the companies included in the case study were already active in closely related fields for a number of years and only entered this market when favorable government regulations were available. The future of these companies is very much associated with government regulations and companies those fall beyond these regulations face difficulties to get subsidies and therefore in their growth. Awareness of people about cleaner fuels is brought through media, education and government policies that include taxes and tax rebates on different kind of fuels. The companies bet on new technologies to resolve concerns generated by their fuels i.e. food versus fuel debate. The authors analyzed technology to be an important factor if companies want to remain in alternate fuel business for a long period of time. The authors suggest companies to build their tangible and intangible resources i.e. raw material, technologies, human resource flexibly to adopt diversified businesses in case if some radical changes in fuel industry seizes their growth. It has also been seen that standardization of products can prove helpful for companies to produce a working market.