Competitive Strategies and Government Policies

1735 words 7 pages
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Competitive Strategies and Government Policies

Team A

ECO/365

date
Instructor

Competitive Strategies and Government Policies Alternative fuel is a big issue becoming more of a common discussion topic among many firms around the world, along with politicians all over the world. There are many regulations and government policies that will come into play in the years to come for the fuel market and those involved. There will be negative and positive externalities involved, issues that will need to be adjusted to, for example new companies entering the market, globalization that will affect price and price sustainability of profit and different types of mergers that will be described in this …show more content…

“Feedstock costs are the most significant cost of biofuel production, ranging from 37 percent for sugarcane-based ethanol in Brazil in 2003-04 to 40-50 percent for corn-based ethanol in the United States. Sugar beets represented 34 percent of the cost of sugar-based ethanol production in the EU. With rising commodity prices, these cost shares are even higher now. Another major cost component is energy, which may account for as much as 20 percent of biofuel operating costs in some countries” (Biodiesel, 2010 Pg. na). As the demand for feedstock increases, the rising cost of food will also increase. This increase will become a result of limited food crops and the competition for water between food and biofuel crops. Plants are needed to sustain biofuels, but it may be insufficient to serve an increased population causing an increase demand for food. This trend may cause a competition between the demand for food and for biofuels (Kano, 2007). “The United Nations Food and Agriculture Organization, along with the Organization for Economic Cooperation and Development, issued a report saying that growing demand for biofuels will likely raise prices on farm commodities. As a result, the cost of food is likely to rise, particularly in poorer countries” (Kano, 2007). China is promoting feedstock that does not compete with food crops and have put a delay on the expanded use of corn. Nigeria is considering the use of biogas, which is

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