Black Ocean Strategy in a Green Hydrogen Ecosystem

The Case of Strategic Positioning of an International MNC in the Green Hydrogen & Renewables Sector in Southeast Asia

The Green Hydrogen & Renewables sector presents immense potential for innovation and growth, particularly and in context of our new and strong interest - is through the adoption of Proton Exchange Membrane (PEM) technology for hydrogen synthesis. For an international MNC aiming to penetrate this market, particularly in Southeast Asia, a well-defined Black Ocean Strategy can provide a competitive edge. This involves leveraging unconventional and high-risk approaches to navigate the complex and rapidly evolving energy landscape.

The Black Ocean Strategy involves leveraging unconventional, innovative, and often high-risk approaches to achieve organizational success, targeting markets deemed too risky or challenging by competitors. For Technology OEMs, particularly when dealing with National Oil Companies (NOCs) and State-Owned Enterprises (SOEs) in Southeast Asia, this strategy can be especially relevant. This region presents unique opportunities due to its rapid economic growth, evolving regulatory environments, and substantial state involvement in key industries.

Strategic impacts for MNCs exploring the Black Ocean Strategy in ASEAN include:

1. Market Penetration: Enables entry into markets with less competition, leveraging unique technology solutions.

2. Innovation Leadership: Encourages the development of cutting-edge technologies tailored to specific regional challenges.

3. Risk Management: Balances high-risk ventures with the potential for high rewards, fostering resilience in volatile markets.

4. Policy Influence: Positions the MNC as a strategic partner to governments, influencing policy and regulatory frameworks.

5. Long-term Growth: Builds strong, enduring relationships with key industry players, ensuring sustainable business growth in emerging markets.

These impacts align with the research findings by Aithal & Kumar (2015) and Nithisathian et al. (2020), highlighting the strategy's potential for breakthrough growth in complex and high-potential regions like Southeast Asia.

Strategic Position & Actions Evaluation (SPACE) Exploration

The Strategic Position and Action Evaluation (SPACE) analysis is a vital tool for the MNC aiming to penetrate the Green Hydrogen & Renewables sector in Southeast Asia. It offers a comprehensive framework to assess the company’s strategic posture and determine the most effective tactical plans. Here’s why SPACE analysis is crucial:

1. Strategic Position Assessment

- Internal Capabilities: SPACE analysis helps the MNC evaluate its internal strengths and weaknesses, such as its technological expertise in PEM stacks. Understanding these internal factors is essential for crafting unique value propositions that leverage the company's core competencies.

- External Opportunities: It allows the MNC to identify external opportunities and threats, such as the growing demand for renewable energy in Southeast Asia and potential regulatory challenges. This assessment ensures the company can align its value propositions with market needs and navigate potential obstacles effectively.

2. Competitive Actions Formulation

- Market Dynamics: By analyzing industry competition and market dynamics, SPACE helps the MNC understand where it stands relative to competitors. This insight is critical for developing strategies that differentiate the MNC's offerings, such as superior PEM technology and comprehensive support services.

- Innovative Approaches: The analysis encourages the identification of innovative and high-risk approaches that competitors may overlook. For example, targeting underserved markets or developing strategic alliances with local NOCs and SOEs can provide a competitive edge.

3. Environmental Stability Consideration

- Regulatory Environment: SPACE analysis evaluates the stability and predictability of the external environment, including political, economic, and regulatory factors. Understanding these elements is crucial for the MNC to tailor its strategies to local conditions, ensuring compliance and fostering positive government relations.

- Adaptability: It highlights the need for adaptability in the face of changing external conditions. This is particularly important in the fast-evolving renewable energy sector, where policy shifts and technological advancements can significantly impact strategic plans.

4. Strategic Posture Development

- Balanced Approach: SPACE analysis guides the MNC in developing a balanced strategic posture that considers aggressive growth opportunities while managing risks. This balanced approach ensures the company can pursue ambitious goals without overextending itself.

- Resource Allocation: It aids in the effective allocation of resources by identifying areas where investments can yield the highest returns. For instance, prioritizing R&D for PEM technology enhancements or expanding production capacity in strategic locations.

5. Tactical Plan Optimization

- Actionable Insights: The insights gained from SPACE analysis provide a foundation for actionable tactical plans. These plans can include specific initiatives such as launching pilot projects, forming strategic alliances, or establishing localized production hubs.

- Performance Metrics: SPACE analysis helps define clear performance metrics and milestones, allowing the MNC to track progress and adjust strategies as needed. This ensures continuous improvement and alignment with strategic goals.

In summary, SPACE analysis is vital for the MNC as it offers a structured approach to understanding its strategic position, formulating competitive actions, considering environmental stability, and developing a balanced strategic posture. This comprehensive understanding is crucial for crafting unique value propositions and optimizing tactical plans, ultimately driving successful market penetration and growth in the Southeast Asian Green Hydrogen & Renewables sector.

Examples of Effective Implementation of Black Ocean Strategy Approach

1. Localized Production Hubs: Establish production facilities in strategic locations within Southeast Asia to minimize logistics costs and foster local partnerships.

2. Strategic Alliances: Form alliances with regional NOCs and SOEs to gain insights into local market dynamics and secure initial projects.

3. Pilot Projects: Launch pilot projects in collaboration with local governments to demonstrate the viability and benefits of PEM technology in the renewable energy mix.

A Black Ocean Strategy involves entering high-risk, untapped markets with innovative solutions, where competitors fear to tread. It leverages unique strengths and adaptability to capitalize on significant growth opportunities in challenging environments.        

Time-bounded Strategic Planning Imperatives

Strategic planning accuracy is vital for the international MNC because it ensures that the company’s unique value propositions are precisely aligned with market needs and opportunities, particularly in high-risk sectors like green hydrogen. Accurate planning allows the MNC to effectively allocate resources, manage risks, and capitalize on growth opportunities. It helps in understanding internal capabilities and external market dynamics, enabling the formulation of competitive and innovative strategies.

Accurate strategic planning also ensures compliance with regulatory environments and fosters positive relationships with local stakeholders. This time-boundedness and? precision in planning aids in developing actionable tactical plans, setting clear performance metrics, and adapting strategies as needed, which is essential for successful market penetration and long-term growth in complex and evolving markets like Southeast Asia’s renewable energy sector.

Immediate Horizon:

- Resource Management: Focus on human capital by recruiting local talent and training them in PEM technology. Secure initial financial capital through strategic investments and partnerships.

- Strategic Goals: Establish a local presence and initiate pilot projects within 6-12 months.

- Measurable Actions: Recruit a core team of local experts, secure funding for initial projects, and launch the first pilot within a year.

Progressive Horizon:

- Resource Management: Scale up physical capital by expanding production facilities and infrastructure. Enhance intellectual capital through continuous R&D.

- Strategic Goals: Achieve operational scalability and establish a strong market presence within 2-3 years.

- Measurable Actions: Double production capacity, increase the number of local partnerships, and secure long-term contracts with major energy players.

Future Horizon:

- Resource Management: Optimize natural capital by ensuring sustainable sourcing and production processes. Strengthen social and relational capital through community engagement and CSR initiatives.

- Strategic Goals: Become a market leader in the Southeast Asian green hydrogen sector within 5-10 years.

- Measurable Actions: Achieve a significant market share, lead industry standards, and become a key influencer in regional energy policies.

Key Competencies and Dynamic Capabilities are Vital for Success

A Black Ocean Strategy must align with the MNC’s key competencies and dynamic capabilities to ensure successful market penetration. The strategy leverages the MNC's advanced technological expertise, such as PEM technology for hydrogen synthesis, and its capacity for continuous innovation. It requires the organization to be highly adaptable, effectively managing high-risk environments and rapidly evolving markets, specifically in terms of:

- Technological Expertise: Mastery of PEM technology and continuous innovation to stay ahead of the competition.

- Market Adaptability: Ability to rapidly adapt to market changes and regulatory shifts.

- Collaborative Synergy: Establishing strong collaborations with Balance of Project (BOP) partners, such as engineering and construction service providers, to ensure comprehensive project delivery.

By aligning with these strengths, the MNC can offer unique value propositions, navigate regulatory complexities, and build strong local partnerships. This alignment ensures that the MNC can capitalize on untapped market opportunities while sustaining competitive advantage and achieving long-term growth.

Business Model and Collaborative Strategies

The MNC should adopt a hybrid business model focusing on both product and service offerings. This includes providing PEM stacks and offering comprehensive support services, such as installation, maintenance, and training.

Collaborations with BOP partners are crucial: They ensure end-to-end project management, leveraging the engineering and construction expertise of partners to deliver turnkey solutions. This holistic approach not only ensures successful project execution but also builds long-term relationships with clients, driving sustained growth and market presence.

In conclusion, the strategic approach combining the Black Ocean Strategy with a robust SPACE evaluation, effective resource management, and strong collaborative partnerships, will position the MNC for successful market penetration and long-term growth in the Southeast Asian green hydrogen sector.

References:

• Aithal, P. S., & Kumar, P. M. (2015). Black Ocean Strategy-A Probe into a new type of Strategy used for Organizational Success.?GE-International Journal of Management Research (GE-IJMR),?3(8), 45-65.
• Nithisathian, K. (2016). Black Ocean strategy: Empirical Research.?Pacific Business Review International,?1(3), 107-115.
• Nithisathian, K., Takala, J., Srisuk, T., Cai, Y., Goerlich, M., & Daengrasmisopon, T. (2020). The black ocean strategy in Thailand logistic industry.
• Scarlat, C., & Panduru, D. A. (2021). The Purple Ocean: Revisiting the Blue Ocean Strategy.?J. East. Eur. Res. Bus. Econ,?2021, 165416.