Electrochem, Inc.: Energy for a Clean Planet

Radha Jalan took over management of ElectroChem, a struggling company that researched and developed fuel cell technology, after the sudden death of her husband Vinod Jalan in 1992. She did so because she was intrigued by the possibility of participating in the early stages of a growth industry, and she looked forward to the intellectual stimulation and challenge. The biggest challenge she faced early on was funding, mostly because the company was not profitable and the government grants that had been keeping it afloat were quickly coming to an end.

When looking at ElectroChem from a SWOT analysis perspective we would like to start when Jalan was first faced with the decision to sell the business or continue as its president. There were many aspects of the company that Jalan was not familiar with, she was inexperienced in the technical side of the business and was unaware of company’s financial condition. However, having been raised in the Marwari community in India that believes in order to be a success a person must be practical, good in business and thrifty gave Jalan a strong desire to be successful in business as her father was.

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When analyzing Jalans decision we wanted to weigh out the internal strengths and weaknesses of the company and then compare them to the external opportunities and threats to the company. When considering strengths the most obvious one is that ElectroChem was in a revolutionary industry developing new energy through fuel cells, and while not profitable they remained a major competitor in the market. Another one of the obvious strengths would be the forecasted increased demand for fuel cells, meaning continued government interest and a steady flow of grants for fuel cell research and development.

The fact that many of the research companies in the fuel cell industry relied on government grants was an obvious weakness. Having to remain on the cutting edge of research in order to obtain government grants, means that a company cannot be profitable until their research yields a commercially marketable product. This situation puts the company and its employees in an extremely vulnerable position. One barrier to commercialization of fuel cells was the cost to produce them, the per-kilowatt cost for a fuel cell power plant was $3,000 – $4,000 and in order to be commercially viable the cost had to decrease to around $1,500.

It is often outside influences that determine a businesses fate, so we have to look at the external opportunities and threats that existed. The main opportunity is obvious and has already been discussed, the product itself is revolutionary and as former executive director of the U. S. Fuel Cell Council Gregory Dolan stated, when speaking about fuel cells “they are not just the wave of the future; they are the tsunami of the future”. There is a tremendous growth potential in the fuel cell market, global demand was projected to be $46 billion in 2011 and could reach $2. trillion by 2021. When considering threats to the company one does not have to look far, because the biggest concern is cash flow. The company was in a state of financial crisis, in fact Jalan had to use her husband’s life insurance settlement to meet payroll expense in the beginning. Also government grants are limited and there were several companies, most larger than ElectroChem, trying to obtain them in order to continue operating. After making the decision to take over control of the company, Jalan took many steps in an effort to turn it around financially.

She did not let anybody get in her way, made tough financial decisions, networked with others in same industry, participated in open communication, remained honest, secured bid and grants, made staffing decisions and most of all she learned from her mistakes. Jalan also demonstrated many of the key attributes that are common with successful entrepreneurs. She is task oriented, she sets goals and puts forth the effort required to reach them and even in the face of adversity she continues to work and does not give up.

From the beginning Jalan was fighting an uphill battle, people in the company didn’t have faith in her ability to run it and as a result she lost two key employees. Although losing these employees was technically a setback, the loss of their salaries as a liability allowed the company to pay some past due expenses and continue operations. Another major turning point was when Jalan decided to fulfill a contract at cost, in order to build the companies reputation and keep the doors open until more contracts could be attained.

Jalan knew her husband was respected in the fuel cell industry and she saw an opportunity to take advantage of the contacts he has already made, as well and building new relationships of her own. When speaking to people about her company she always maintained an honest approach, even disclosing her lack of knowledge in the technical aspects of fuel cell technology. Her honesty helped her build credibility amongst influential contacts and eventually led to research and development contracts for ElectroChem.

The next step nobody could have see coming, Jalan met with a professional colleague of her late husbands, the owner of Global Technologies, Inc. George Landau who was looking at retiring. Together they discussed and settled on a merger of Global Technologies, Inc. and ElectroChem, Inc. meaning that Jalan had in one huge step increased her market share and eliminated a key competitor. One rival mentioned to Jalan, “It’s very interesting that you acquired Global Technologies. I would have thought it would have been the other way around. ”

In 1993 a friend introduced Jalan to Bill west, a PhD with a background in electronics. West had ideas about how to increase ElectroChem’s revenue and Jalan was much too eager to listen. She allowed West to influence her decisions and in the beginning his ideas appeared to be working and the company was bringing in more revenue, however their relationship would prove to be problematic and would end abruptly. Jalan was not weighing her options, she hired West without a contract and without checking to see if there were somebody more qualified to help guide her business.

Although West may have been qualified, he took advantage of Jalan by hiring a friend and moving the company in the wrong direction. The friend he hired, Peter Clinton, ended up costing Jalan and the company money when he decided to use equity investors to finance a division of the company and eventually demanded ownership for the investors. This situation could have possibly been avoided if she had taken the time to weigh her options instead of relying on a friend’s recommendation. Jalan’s last ten years as the leader of ElectroChem have not been easy.

The company has endured ever present cash flow deficits, trouble meeting short-term debt obligations, as well as staffing problems and struggle for control of the company. The company has seen dramatic highs and lows and has been rescued more than once by a last minute deal or government contract. However, when Jalan celebrated ten years as president in 2002 she could boast that she had decreased the company’s large debt, freed herself from a failed investor relationship and maintained her role as sole owner.

Some recommendations our group would have for Jalan to encourage ElectroChem’s continued success would be for her to continue seeking government funding through research and development contracts, seek out good publicity in order to increase the company’s market presence and keep current on the financial issues by reviewing statements regularly. In addition to these recommendations it is important that all employees of ElectroChem be well trained and versed on technological advances in their industry, in order to encourage innovation and keep up with the current trends.

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Electrochem, Inc.: Energy for a Clean Planet. (2017, Mar 16). Retrieved from https://graduateway.com/electrochem-inc-energy-for-a-clean-planet/