Preface: Management summary memo
The purpose of this memo is to show the effect of a shift that an Australian automobile company is planning to make; from dealing with ordinary cars to dealing with hybrid brands. One of the best way of improving corporate image is by ensuring that the company fully satisfies the needs of consumers. These needs would include the utility derived from such a product, the safety assurance of the brand and the overall best performance in the lifetime assessment as for the environmental effects. There is a global concern over the carbon dioxide emission in the Automobile industry and the consumers are now given a chance to adopt a lifestyle which is caring to the environment. Hybrid brand have promised to take over the traditional cars because they not only safe on fuel but are very friendly to the environment. This shift can not only be economical but beneficial to the mankind and their future generations which are expecting us to pass on the best of the environment we can afford. Today most government agencies are willing to subsidize the taxes for those companies dealing with hybrid vehicles because they have realized the cost saving of such brands in their overall GNP and GDP. As the demand of the green hybrid cars goes up, there is a need to make the best possible decisions at the policy level in order to ensure that what the company offers is truly what the consumer expects. In line with this need the company is shifting its interest and with a bid to boost its corporate image, plans to deal with hybrid brands in its fleet. I Propose therefore that the automobile company be very much concerned with this fact and arrange to evaluate all the brands and offer the best and safest promises to consumers. I also propose that the manufacturers of such brands to be evaluated so that they provide the company with all relevant information concerning their hybrid brand.
Introduction
Corporate image is the picture that investors and customers have in mind concerning the corporation in question. Corporate image is the duty of marketing experts and is usually done through public relations (Weygandt et al., 2007). In the corporate world, maintaining a good company image is important because without it, corporate run companies would not get anywhere. When a company is strewn with bad image, there is a likelihood of the company undergoing receivership or even a complete closure because of the damaging effects that such bad image brings (Weygandt et al., 2007). Many corporate companies ensure that they create good image in the public in a way that influences them to adopt the brand thus facilitating sales performance. An Australian multinational automobile company is planning to improve its corporate image by shifting its corporate fleet into hybrid vehicles such as Prius and Camry. This paper will examine the resulting effects of that shift in the company’s cost and credentials as well as on the environment; cradle to grave assessment.
Effect on the company’s net cost
Net cost is usually calculated by subtracting income generated from the total cost of buying an asset (English, 2008). For our multinational automobile company this will also be an equivalent of the true cost of the hybrid fleet. One most important thing to notice is that there is an increasing demand of hybrid cars due to the attention on green issues and the need to care for our planet (English, 2008). Because of this factor, the cost of acquiring the hybrid vehicle by the company will be high but on the other hand these cars go at higher prices because their demand is high due to their good consumer image. For this case a hybrid car like Prius is driven by twin engines; an ordinary 76 horsepower and the second 1.5-liter gas engine which is similar to ones found in non hybrid brands and a nickel 12 voltage battery charged engine that gives 67 horse power and a 295ft/lbs of torque which is below two thousand revolutions per minute (Anderson, 2005).
Effect on the acquisition cost
The acquisition cost for this automobile company will be the cost of the hybrid fleet after adjustments for incentives, discounts and before any sales tax (Weygandt et al., 2007). In fact the cost of acquiring hybrid fleet would be higher compared to ordinary cars but most countries have promised incentives for dealers of hybrid vehicles and this can reduce the acquisition cost (Weygandt et al., 2007). This was reported on October 2006 by Inchcape Toyota, the largest fleet business centre in the United Kingdom (CNW Marketing Research, 2006). According to the report Adam Gregory, the fleet manager at Inchcape Toyota in Derby said that they are able to minimize fleet running costs and reduce the company’s tax burden. However acquisition cost and operation expenses are high for most hybrid cars and therefore may not offer total cost advantage compared to non-hybrids.
Running cost
The running costs is the amount of money that a company needs in order to be operative and these included costs like electricity costs, employees costs, resources et cetera (Weygandt et al., 2007). They are just day to day running costs of the company where for the fleet company; the running cost for hybrid vehicles will be relatively higher. This is because of the insurance; security and other risk related costs because hybrid vehicles like Toyota Prius are expensive to manage (Anderson, 2005).
Effect on the net environmental harm in the form of carbon out put
In the wake of global environmental concern hybrid cars are kinder to the environment because they limit the emissions especially in the world where endless roads, constant car travel are harming the ozone layer at a high rate. Hybrid vehicles offer customers with a benefit because they consume les fuel and are less harmful to the environment due to their less carbon dioxide emission (Toyota Motor Corporation (2008). The hybrids have been reported to benefit customer by reducing noise, vibration and harshness and more on the satisfaction on the increased social benefit. According to the advertising standards authority in the United Kingdom, it was established that the hybrid brand Toyota Prius was not truly advertised because the advert held that the brand emits about one tone less carbon dioxide per year and this was marked as a breach of rules concerning misleading advertisement (CNW Marketing Research, 2006). The carbon emission of the hybrid cars is higher although the figure varies according to reports.
However the fact remains that by avoiding full time reliance on combustion engine the hybrid cars have less carbon dioxide emission compare to ordinary non hybrid cars powered by the internal combustion engine full time (Anderson, 2005). In 2008 the British government and media challenged the manufacturer of hybrid cars to give a detailed data that could support the claims that the life time amount of energy used by the hybrid brands such as Prius. This requirement called for inclusion of environmental cost due to nickel metal battery disposal and how outweighs the reduced lifetime fuel consumption by the brands (English, 2008). It was later stated that cradle to grave carbon dioxide saving for most hybrid brands is about 43 per cent. This claim is supported by the United Kingdom government car service that runs the largest fleet company with hybrids ranking the lowest carbon dioxide emissions (CNW Marketing Research, 2006). The underlying factor is that owners of hybrid cars burn less gas when using the car and therefore leading to less release of carbon dioxide (CO2).
The following table shows a comparison of the fuel costs for four hybrid cars:
Table 1 
Effect on the net environmental harm in the form of fuel use
Hybrid cars as we saw above are propelled by two engines and essentially their drive system is able to propel the hybrid car from a state of rest to about 30mph (Anderson, 2005). According to many critic of hybrid cars this is the point where most energy is consumed especially the gas. The idea behind this is a matter of physics that it will take greater energy to set a body on motion than to keep it in motion. The battery, which is used by such hybrid cars like the Prius is recharged by the braking system and by the gasoline engine whenever it moves at a speed of 30mph. While this seems as if it is energy saving and thus environmentally friendly, it is not because energy is used to charge the battery. As a result hybrid cars are fuel guzzlers. However according to the analysis of the premier General motor forum conducted on the internet in 2008 the GmInsidenews.com reported that 72 per cent of people were interested in buying hybrid cars while an average hybrid costs $5,000 more than a regular car (Toyota Motor Corporation (2008).
The following table shows the annual sales of a hybrid brand the Toyota Prius by regions from 2000 to date.
Table 2
The reason for this high demand and increasing good market performance is that the image created for hybrid brands is about saving fuel and subsequently environment. According to the online forum many experts argued that the hybrid high demand is due to selling the image because people think that the hybrid cars save fuel and protect the environment and that this is not true according to the real EPA tests which proves that most hybrid brands have actually a highway speeds of 80mph and accelerations of about 8mph per second (CNW Marketing Research, 2006). This is contrary to what is marketed as the true EPA ratings of highway speed that do not exceed 55mph and acceleration of only 3.3 mph per second.
Effect on the net environmental harm in the form of maintenance (including a battery)
Building hybrid cars like Prius has been said to cause more environmental damage than it is thought because the hybrid vehicle is partly propelled by a nickel battery and this nickel is mined by a firm located in Sudbury, Ontario (CNW Marketing Research, 2006). The nickel mining plant is rated to have caused massive damage to the environment and thus the area around the firm has been used by NASA for testing moon rovers (CNW Marketing Research, 2006). It has been proved that because of this effect there are miles around this plant where life can not be supported. All the nickel used in the batteries of Toyota hybrid cars is bought from this firm in thousands per year. Moreover, this plant has contributed to the highest spread of sulphur dioxide across northern Ontario and thus it has become and environmental nightmare (CNW Marketing Research, 2006). In the process of manufacturing the hybrid car battery, the nickel produced is shipped in big containers to the world renown nickel refinery found in Europe, then it goes to china to make nickel foam then taken to Japan where the complete battery is made and taken to the United States. This is a complete around the world trip that comes up with the final battery which is used in hybrid cars like Prius and others. In summary by the automobile multinational shifting to hybrid cars fleet, they will be aiming at improving their corporate image because such vehicles are held with prestige, but according to the above reports, they are a curse in disguise as far as environment safety is concerned. The cars may be effective in themselves but their process of manufacture causes more choke to the environment than it is claimed. According to the summery of Prius chat forum reported on 2010, the small 12 voltage battery discharges very quickly when the car is not in use for over ten days and this calls for disconnecting the battery when you are not using it (Anderson, 2005). These maintenance precautions are costly when not observed.
Effect of the shift on the credentials of the firm as a caring green company
Shifting to dealing with hybrid brands by our multinational automobile company therefore is as for now going to boost its credentials as such brands are popular among the consumers who care about the environment. This can be supported by the existing data that compares the overall environmental risks that are attributed to the brands in order to check on the process and make a better basis for informed strategic decisions (English, 2008). However there is little future for the hybrid brands as far as there is a lot of interest for the life cycle assessment that call for holistic critical assessment of the raw material production, manufacture and distribution all the way to the usage and finally the disposal (English, 2008). Most critical have claimed that although hybrid cars emit less carbon dioxide as compare to non hybrids, this end should not obscure the means to that end which are more harmful that are more harmful than meets the eye. The credentials of the firm as an environmental caring company will obviously improve but as long as the company producing the brands can convince consumers, the government and other stakeholders that their brands cradle to grave assessment performs better than it is being claimed by the critics.
Conclusion
The company therefore, in a bid to improve its corporate image by shifting from non-hybrid to hybrid fleet will have to incur extra net cost of the fleet because hybrid cars are costly as well as acquisition cost and subsequently the overall running cost. They will have to invest some relatively higher capital in the new shift. Since the hybrid cars have a good public image even in the government who are concerned with the environment, the brands are expected to have a good performance in the market and less will be used in advertising. There are also some government agencies which are willing to subsidize such dealers who are environmentally conscious in their business. The report has also found pout that hybrid cars have a history of low carbon dioxide emission thus are friendly to the environment. However there are criticisms which can not go without trial regarding the holistic cradle to grave assessment as opposed to short effect of the lifetime of the hybrid cars. The assessment of the manufacturer of the raw materials and other parts required by the hybrid brands like the nickel battery and others still compromise the viability of the hybrid cars. Therefore the multinational dealer should do a lot of assessment so that they deal with brands whose life time assessment effect is beyond questions and which can pass the test of critics. Knowing the facts about the brands will also safe the dealer from the conflict of law especially when advertising they will aim at giving true information which is not misleading. The shift will also put the government into the task of ascertaining the viability of the hybrid cars and weigh out the cost they can incur in embracing such a shift. The sustainability of the firm’s reputation therefore will depend on its ability to assess the manufacturer of the cars they will deal with. The best will be achieved when they make a choice of a brand beyond retribution and allusive to environmental criticisms.
References
Anderson, K. (2005). Hybrid cars take hold in US. BBC News Website, Web.
CNW Marketing Research. (2006). Dust to Dust. Web.
English, A.. (2008). Toyota Prius – green winner or loser? Web.
Toyota Motor Corporation. (2008). Worldwide Prius Sales Top 1 Million. Web.
Weygandt et al. (2007). Managerial Accounting: Tools for Business. New York: John Wiley & Sons.