(Solved Homework): John Miggins was 12 years old when Neil Armstrong took his first steps on the moon. It was then…

John Miggins was 12 years old when Neil Armstrong took his first steps on the moon. It was then that John knew he wanted to be an astronaut. He spent all his free time reading and researching his future career. He thought one of the coolest things, aside from walking on the moon, was how they got electricity way up in space. As early as 1905, Einstein discussed harnessing the sun’s energy in a paper on the photoelectric effect; by 1964, NASA’s Nimbus spacecraft launch was powered by a solar array.

Flash forward about 25 years. Recently out of work and with a family to support, Miggins decided to start his own business. He purchased an 800-square-foot bungalow on a busy Tulsa street and opened Harvest Solar & Wind Power. Though consumers were aware of solar and wind power, for many it was little more than a solution to heat your pool. Miggins and his partner took plenty of calls, but few jobs panned out. On the jobs that did, they were always under the gun—scrambling to get what they needed, hiring extra hands and subcontractors, keeping just enough money in the bank to survive while putting in 80-hour weeks.

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In January 2008, Miggins received a call from Studio 804, a design group made up of students from the University of Kansas School of Architecture and Urban Planning. The students were on a semester-long project to build an art and community center in Greensburg, Kansas. The 547 Art Center, aptly named for the devastating tornado that struck the town on May 4, 2007, would be the town’s first completed building. As with most projects in Greensburg, they were looking for donations. They were hoping that John, who was still operating as Harvest Solar at the time, would be able to do the solar and wind power systems for the building. John was in no position to donate the $50,000 it would cost but submitted a bid and worked with the students because “it was cool.”

Around that time, an old friend called with an offer John couldn’t refuse. A new company named Standard Renewable Energy needed experienced regional sales managers to cover the Oklahoma and Kansas territories. Miggins knew the area and the technology, so it was a perfect fit. Standard Renewable could provide the corporate infrastructure, financial backing, logistics, and purchasing power Miggins lacked while allowing him freedoms he enjoyed while running his own show.

Although Miggins was happy with the new company, some customers were worried about the end of Miggins’ small business, Harvest Solar. Homeowner Emily Priddy purchased her system from Harvest Solar in early 2007 and was very happy with the level of personal service John had provided. But Emily, an ardent supporter of independent local businesses, had mixed feelings about large companies—and about John’s new job at a large company. Nevertheless, she eventually saw both sides of the argument: “When the big guys catch on, at least it makes the technology more widely available.” Miggins still services Priddy’s system, but as a Standard Renewable Energy representative.

On April 1, 2008, Studio 804 called again. They were ready to go and hoped John was still interested in engineering and installing a system. May 4, 2008 was to be the grand opening and everything had to be perfect. President George W. Bush was to be the guest of honor. They wanted the job done fast, and they wanted it done for free—at least in part. Standard Renewable Energy agreed that the Studio 804 project was a worthy cause and gave Miggins the green light.

The solar-powered building was the first of its kind in Kansas. Three wind turbines were so new that they had to be special ordered from South Africa and shipped by air to the rural Greensburg. But the extra effort paid off. John received additional projects from architects he met on the Greensburg assignment, and he’s hopeful the referrals will keep coming.

Answers to Questions for Critical Thinking

1. Compare the logistics and supply chain systems of Harvest Solar with that of Standard Renewable Energy.

2. What kind of marketing channel is Standard Renewable Energy?

3. Do you prefer to shop at big box stores, like Best Buy and Wal-Mart, or local independent merchants? What are the pros and cons of each?

Expert Answer

  1. The difference between Logistics and Supply chain system of Harvest Solar and Standard Renewable energy are:
  • Harvest solar was a small scale business with bare minimum capex inventory bought to start the business such as an 800 sq. ft. bungalow used as office. Standard Renewable energy on the other hand had heavy Capex investments so as to build a big corporate infrastructure for servicing almost all big cities.
  • While Miggins and his partner were the only two people available to take calls for getting new business in Harvest Solar, Standard Renewable energy was investing in hiring well experienced and skilled sales managers for covering the territories they had expertise in so as to get good Sales.
  • Harvest Solar was following a Just in time model for its Inventory where they hired few extra hands and subcontractors only from the extra money over and above their minimum Survival amount. They bought the bare minimum things as and when required and affordable compared to Standard Renewable energy who had more than enough financial backing and purchasing power to allows sales managers to run their own way of business in their territory.

2. Standard Renewable energy is a Direct Selling Marketing Channel where the company hires Region wise Sales Managers so that direct sales can be made to the customers. These regional sales representatives are familiar of their areas and are well versed in the product details so that they can give direct demonstrations and service to the customers for achieving good sales results.

3. I prefer to buy from big box stores instead of Local merchant as the buying experience is much easier but there are pros and Cons for each.

Pros for big box stores like Wal-Mart or Best Buy:

  1. All the brands for one items are arranged together to help the buyer make the choice after evaluating each brand
  2. All the groceries, apparels, accessories, electronics and other items are arranged in categories to help the customer experience where they can easily stroll the aisle and find the product as desired going through all possible option
  3. Bulk discounts are provided for bulk buys along with future discount coupons and offers which make items much below their MRP

Cons for big box stores like Wal-Mart or Best Buy:

  1. It is tedious task and waste of time if single purchase or few item purchase is too be done and you have to deal with long lines and crowded product aisles.
  2. Many types of apparel have common designs which will turn away many youngsters wanting their own unique fashion.

Pros of Local merchant:

  1. They give on time service for the desired product by searching for it themselves. The customer does not have to trouble himself with walking down multiple product aisles to find the correct item.

Cons of Local merchant:

  1. Less of brand options for customer
  2. On MRP sale so no special benefit for customer

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