1. What are the key factors in determining if this is a viable business opportunity for Josh, Hannah and Matthew

The first step that everyone should go through is to ask the question, is the market real? In order to do so, the first thing you want to do is conduct what we call a customer analysis. You can do that perhaps in a very technical way, by conducting surveys. Or perhaps, in a less technical way, you can attempt to answer the question, “Who is my customer?” What does the customer want to buy? When does the customer want to buy? What price is the customer willing to pay? So, asking the “W questions” — who, where, what, when — is the first step. At the end of the day, the one thing every entrepreneur is looking for is revenue, and the revenue will come from customers. That is why you need to ask yourself, is there a market here?
The second thing you want to ask yourself is, who else is supplying that particular market? That is what we call competitor analysis. Ask yourself who else is in this market, and what are they doing for the customers. Are they supplying a similar substitute product or service as you have in mind? That is the second thing you have to establish, and by doing that, you can understand better what need is not met at the moment. That will also give you the opportunity to zero in on the price points and feature points of where you can differentiate yourself from existing players in the market.
You also need to conduct a broader industry analysis to understand the attractiveness of the industry you’re going to enter. Is the industry growing or shrinking? What power do the suppliers have in this industry? How many buyers are there? Are there substitute products? Are there any barriers to entry? If so, what are they? That is very important for you to understand, because it will help you realize whether the industry you’re thinking of entering is attractive.
In addition, you may want to look at regulations that affect that industry. Are there any regulations that you would be subject to? This especially applies in the life sciences sector, where there are strict regulations that control the supply of products into the market. In the United States, the FDA, the Food and Drug Administration, is a significant regulator. Every country around the world has a regulator in the life science sector. So, these are the high level questions that you may want to ask yourself.
Once you answer these questions, and you identify the need, given the competition and all the regulatory constraints that exist in that market, that will provide you with the opportunity to tailor your service or product — or combination of the service and product — to that marketplace. The logic we are suggesting here is to understand the need, and tailor the product and/or service to that need, as opposed to saying, “Well, I have an idea. And now let me think how I can shove it down the distribution channel.” More often than not, the latter doesn’t work. More often than not, the former approach works. This is the approach where you identify the need, do a rigorous analysis of understanding who else is out there, and what constraints exist, and how you could differentiate yourself in a meaningful way. When you approach a new opportunity this way, when you introduce your product and/or service, you can expect to have substantial sales and growth for your company. http://knowledge.wharton.upenn.edu/article/how-entrepreneurs-identify-new-business-opportunities/ 2. What market drivers should the reach and aware of?
Market drivers can exist in the form of * Capability Push: the opportunity flows from a capability or resource availability * Opportunity Pull: the opportunity emerges from a need or problem that cries out for a solution

3. What are the flaws of current business strategy * Number of members There must be a minimum of five member * Limited profit distribution There is a usually a limited distribution of surplus (profits) to members/shareholders and some cooperatives may prohibit the distribution of any exceed to members/shareholders * Difficulty attracting members As cooperatives are formed to provide a service to their members rather than a return on investment, it may be difficult to attract potential members/shareholders whose primary interest is a financial return. * One vote problem Even though some shareholders may have a greater involvement or investment than others, they still only get one vote. * Ongoing educational requirements
Cooperatives require ongoing cooperative education programs for members. * Generic Marketing
The disadvantage of marketing through a cooperative is you may lose control of your unique branding for your business. If the marketing purchases include advertising for all members of the cooperative, you may get lumped in with competitors or businesses you don't want to be associated with in your consumer's perceptions. Your unique message can get lost if the cooperative advertising message represents the whole group. * Sharing Pricing with Competition
Purchasing through a co-operative is that you and your competitors share the same pricing and products. You don't have an edge over your competition if you join the same cooperative together. The cooperative not only levels the playing field between you and large corporations, it levels the field between you and other small businesses.

4. What type of financing should they use if they choose to go forward with this
A. Directly from members
Members help finance the operations and growth of the cooperative through:
· one-time or annual membership fees
· member contributions with no individual ownership attached, such as service fees.
· member share capital
· individual member deposits with the cooperative which may be used for business
· deferred payment to members for part or all of their produce delivered to the cooperative
Member share capital represents individual member commitment to the cooperative form of business. It also identifies the individual member’s financial stake. It is withdrawn only when the member leaves the cooperative. Some other forms of member contributions, usually related to patronage, are more variable but once given cannot be withdrawn and hence are a particularly useful form of cooperative capital.
B. From cooperative business surpluses
Funds created through the retention of cooperative business surpluses that are not directly allocated to members are another important source of cooperative capital. This is a long term source of funds since most cooperatives’ rules allow these funds to be distributed only when a cooperative is liquidated. Unlike loans, or individual member deposits, the cooperative does not have to pay interest to use these funds. Of course, retaining such funds by the cooperative also represents a cost to the individual members who otherwise would have had that portion of the surplus allocated to them. Members willingly accept this cost when the benefits it creates for them are clear and worthwhile.
This source of funds from retained surpluses is often called “institutional capital” and represents the collectively-owned wealth of the cooperative.
C. From outsiders
In addition to institutional capital and member capital, cooperatives often make use of external sources of funds to run their operations or to finance investments. These non-member sources of funds may include cooperative or commercial banks, suppliers, government or donor agencies. External funding may be provided in different ways:
· as a grant
· as a short-term loan
· as a long-term loan
· as trade credit offered by a supplier.
Commercial providers of funds, such as banks, generally provide credit or loans that are legally secured by collateral (pledged assets of the cooperative). They are motivated by profit and seek to minimise risk. Non-commercial providers, such as governments or donors, generally provide credit on more generous terms at below market rates of interest or provide grants. Their motivations may be social, political or economic - often a mixture of all three. http://www.fao.org/docrep/003/w5069e/w5069e06.htm 5. What types of distribution channels should they go into?
During the initial phases of the corporation, distribution of biodiesel should be focused on meeting the requirements of bulk buyers such as the government or commercial industry sectors. These targeted buyers usually have their own blending tank, and the corporation should be able to provide those required facilities to them. Distribution can be carried out in the terms of trucking deliveries, tanker truck that have built-in blending mechanism, distribution by train and also piping if it is viable.
However, in focusing of utilizing the available infrastructure, retailing gas stations should be considered as part of distribution channel in reaching individual consumers. As biodiesel in nature itself if similar to petroleum based fuels, this method is deemed viable. The challenge arise when it comes to convincing market leading retailers in incorporating biodiesel as part of their gas station selling agenda. For example, SeQuential-Pacific has developed several strategies regarding to this effort.
“Recognizing that wholesalers were invaluable to our ability to move product, we decided to redefine our partnerships to maintain wholesaler relationships while offering greater direct access to retailers. Instead of relying on the distributor to order fuel, SeQuential-Pacific approached retailers directly, highlighting the benefits of offering biodiesel at their stations. Interested retailers would then purchase SeQuential-Pacific product through one of our partner distributors. This simple shift opened up a host of new retail sales opportunities for SeQuential-Pacific while also enabling us to provide personalized topnotch customer service, and the ability to quickly address any concerns coming from retailers before larger issues arise. Moreover, it also proved to be a fruitful strategy for nonretail sales. SeQuential-Pacific Biodiesel has partnered with local distributors to provide fuel to a variety of industry segments, including the Washington State Ferry System, which was among the first major maritime fleets to run on biodiesel.” http://www.biodieselmagazine.com/articles/9216/expanding-distribution-channels-by-thinking-outside-the-box 6. How can they improve their chances for success?
In general term, biodiesel to be a economically competitive business corporation, the company in the effort of selling them should consider several critical aspects , in order to overcome the obvious disadvantage, In the current and future market.
In order to maximize production per day from the corporation facilities, research should be focused on crops that gave the highest yield of biodiesel, in the measurement of kg/ha or litre/ha. Consuming food crop will affect the crop market price, and research should be initialized in order to ensure the feedstock price is stable. Biodiesel selling are market competitive if and only if it is subsidies. Thus, only in those countries where legislation and promotion for green energy usage is deemed economically competitive.
In order to solve this, it is wise for the corporation to hire agricultural experts and market analyzer and incorporate them into board members or directing-level personnel assets.
In energy markets, liquid biofuels such as ethanol and biodiesel are direct competitors with petroleum-based petrol and diesel. Policies such as mandated blending of biofuels with petrol and diesel, subsidies and tax incentives can encourage biofuel use, while technical constraints such as a lack of vehicles that run on biofuel blends can discourage their use. Leaving aside such factors for the moment, biofuels and fossil fuelscompete on the basis of their energy content, and their prices generally move together. http://www.greenfacts.org/en/biofuels/l-3/2-economic-policy-factors.htm 7. What is their next step?
Devise a business plan. From an entrepreneur point of view, this biodiesel corporation proposal had all the requirements needed for them to take the next step. Business plan will thoroughly envisage a clear framework to work on to, and furthermore, create a more realistic profit vs risk assessment. Josh, Hannah and Matthew had covered the important part, a valid research into biodiesel production itself and the science of why consumer would need alternatives to fossil fuels.