INTRODUCTION – Q1

• So here, in this case study we analyze the various challenges Betafuel should be aware of
before entering in Bhutan.
• We have used the PESTEL analysis to check out for various political, legal, economic and
social factors which could be faced by the company in Bhutan
 POLITICAL

• As per World Bank reports, Bhutan’s political environment has been stable and economic
conditions have improved in recent years. Since Bhutan shifted to a democratic
constitutional monarchy in 2008, the country has developed a solid development
management system founded on the principle of GNH. The country successfully
completed its third parliamentary elections in 2018 and the new government has
endorsed the 12th FYP for 2018-2023. Hence, there is no political risk.
 ECONOMIC

• Bhutan has become a lower-middle income country and poverty has been cut by two-thirds in
the last decade. Average annual growth of Gross Domestic Product (GDP) has been 7.5
percent since the early 1980s, making Bhutan one of the fastest growing economies in the
world. Gross National Income (GNI) per capita, at $3,080 in 2018, is now three times
the threshold for lower middle-income countries and only 10 percent below the threshold
for upper-middle income countries. Poverty measured using the $3.20 poverty line (in 2011
PPP terms) has declined from 36 percent in 2007 to 12 percent in 2017. There was
good progress in shared prosperity, though the pace of progress slowed down in recent years.
• With increased development, import dependence on oil is growing at a very fast pace
which is a serious threat to Bhutan’s biomass and biofuel industry.
 SOCIAL, TECHNOLOGICAL AND GEOGRAPHICAL

• The social, technological and geographical issue faced by Bhutan is that it is very prone to many natural calamities like floods,
earthquakes and landslides.
• Several earthquakes above magnitude 6.0 have occurred over the past 40 years. In 2009 and 2011, Bhutan was struck by two
high-magnitude earthquakes. According to a GFDRR-supported rapid needs assessment, the 2009 earthquake caused damages
and losses of over $52 million and needs over $45 million. Estimates indicate over 4,000 households were affected and over
7,000 people were left without adequate shelter. As a result of climate change, the frequency and intensity of climate and
weather hazards are expected to increase.
• Also, the mountain terrain has kept the country away from modernization and development. And many development and
infrastructure processes even today are difficult and time consuming.
• Therefore, Bhutan has many unfavourable geographical conditions and regular natural calamities which makes foreign investors
vary of investing here.
• Also, burning of firewood and animal dung for cooking and various purposes causes pollution and heavy burden on poor
women and children.
 LEGAL

• Energy sector of Bhutan is administered by 2 ministries, viz. Ministry of Agriculture

and Ministry of Economic Affairs. The later is associated with the administration of
biomass whereas the former is associated with policy formation, planning and
implementation of conventional energy generation.
• As of date, there is no policy framework to guide energy sector of Bhutan.
 PORTER’S 5 FORCES MODEL

1. Threat of new entrants: As given in the question, there are considerable barriers
to enter in the fuel market. So, there is not a much of threat of new entrants.
2. Existing competitive rivalry: Existing competitive rivalry is almost non-existent in
biomass fuel industry.
3. Threat of substitutes: Fuel cookies have potential substitutes. There is an ongoing
technological shift in urban sectors of Bhutan where LPG and electricity are used for
heating and cooking.
4. Bargaining power of suppliers:
• Few large suppliers
• Supply driven
• Control of raw materials
• Many small and mid-sized suppliers
• Demand driven
5. Bargaining power of buyers:
• Few mid and large-sized buyers
• No easy substitute for biomass
• Low elasticity of demand
Q2 SOURCES OF FUNDING

1. Grants:
• Asian Development Bank (ADB)
• United Nations Development Program(UNDP)
• Biomass Research and Development Initiative (BRDi)
• Biomass Crop Assistance Program (BCAP)
2. Government Funding:
• US Department of Energy Biomass Program Solicitations
 USP

• The USP would be the various entrepreneurship awards and the award for ‘Innovation
Against Poverty’ granted by government development agency.
• Also since, 91% household in Bhutan uses biomass fuel for cooking, lighting and heating,
and there is very less competition in this industry as seen in the Porter’s 5 Forces
Analysis.
• Due to climate change effect, Bhutan is going to face more floods and other natural
calamities, so pitching to the people of Bhutan that and showing that how their product
protects the environment and helps to fight against the climate change, it’s demand will
increase a lot and people will buy it to secure their future.