SELCO ANALYSIS

Managers at Selco Harish need to examine three inter-related environments in order to

come up with an effective strategy. The three inter-related environments are – industry
environment in which the company operates in, the geographic market or country in which
company operates, and wider socio economic / macro environment. SELCO has
successfully grown many folds over the years while promoting energy services like solar
power to the rural poor. It has maintained modest profits in the last 8 years with growth rates
at an annual average of 20%. It has reinvested its profits back into the company for further
growth.

Regarding the Strategy Horizon, i think that Selco in is the third horizon, of Seed and
experiment, trying to find new ways of making money, after completing a cycle of ups and
downs since its creation.

STRATEGIC POSITION

· Context

PESTEL ANALYSIS

Political Factors
· The country has a vibrant civil society community and Selco should build bridges with
them and seek out areas of co-operations. Civil society groups are influential not only in
policy making but also in building a society wide narrative We don’t think that Selco
business operations are facing any dangers from any kind of civil unrest or internal
militant operations in the country.

Economic Factors
 · Employment Rate: If the employment rate is high then it will impact Selco
strategies in two ways – it will provide enough customers for Selco products, and
secondly it will make it expensive for Selco to hire talented & skillful employees.
· GDP Trend & Rate of Economic Growth – The higher GDP growth rate signals
growing demand in the economy. India has a fast growing GDP in the last 20
years. Selco can leverage this trend by expanding its product range and targeting
new customers. One way to start is by closely mapping the changes in –
consumer buying behaviour and emerging value proposition.

Social Factors
· Power Structure in Society – Selco should carefully analyze both - What is the power
structure in the society? How it impacts the demand in the economy? India’s
developmental problems were daunting; over 400 million individuals were in poverty.

· Attitude towards Health & Safety – The attitude towards health and safety is often
reflected in the quality of the products and cost structures of manufacturing processes.
Selco has stringent norms for health and safety norms so in emerging economies it may
have to compete with players who don’t have high cost structures that of Selco.

· Birth Rate – Birth rate is also a good indicator of future demand. India has one of the
greatest birth rates in the world.

Technological Factors
· Research and Development Investment Levels – If there is high level of investment in
technology development sector then there are high chances of building a self sustaining
ecosystem that drives innovation. Selco Harish can leverage such a situation to hire the
best people in business.

· Transparency & Digital Drive – Selco Harish can use digitalization of various
processes to overcome corruption in the local economy.

Environmental Factors
· Per Capita and National Carbon Emission – What is the per capita carbon emission
of the country and what is the overall level of carbon emissions of the country. This will
help in better predicting the environment policy of the country. India, in 2019, has 1.9
metric tons of carbon dioxide per capita.

· Environmental Standards and Regulations both at National & Local Levels – Often
the environment policy at national and local level can be different. This can help Selco in
numerous decisions such as plant location, product development, and pricing strategy.~
 · Influence of Climate Change – How climate change will impact Selco business model
and supply chain. For example if the supply chain is not flexible it can lead to bottlenecks
if shipments from one part of the world are delayed because of sudden climate shift.

Legal Factors
· Business Laws – Before entering into new market – Selco has to assess what are the
business laws and how they are different from home market.

· - Consumer Protection Laws – Selco Harish needs to know what are the consumer
laws, what is the rate of enforcement, what is the attitude of authorities towards
consumer protection laws, and what is the role activist groups in enforcement of
consumer protection laws.

· - Employment Laws – What are the employment laws in the country and are they
consistent with the business model of Selco Harish. For example Uber
employment system is not consistent with French laws and it is facing challenges
in the country.

VUCA Analysis
Volatility- It is a business that depends on the solar energy, so the weather has some
influence in the possible use of the product.

Complexity – It is a complex market, and the costs to educate low income people to trust
renewable energies are high, and the process is long.

Competitor Analysis
· C1 - I don t think there is

· C2 - PNG Solar, Sungold

· C3 – Tesla

· C4 – Renault, Microsoft

· Capabilities

Gary Hamel:

· Critical Assets : recognitions of the management, brand credibility

 · Distinguish capabilities : provide photovoltaic energy to the poor

· Privileged Relationships: Selco cultivated good relations with the International

Finance Corporation and with India’s banks and microfinance organizations, convincing
them of the efficacy of the solar power.

VRIN

· Value: Provides a fountain of energy for poor populations.

· Rarity: There are no competitors in the same market.

· Inimitability: It is possible, but it depends on external factors, which makes it hard to

do

· Non-substitutability: There are other ways to produce energy beside the fossil fuels,
but are probably not in the financial range of this populations.

· Purpose

Vision : SELCO Foundation envisions a socially sustainable society.

Mission: Selco seeks to create avenues for asset building, enhancement in quality of life
and wealth creation that will uplift deprived sections of society through sustainable
development solutions.
Values: They strive to embody the values of inclusive impact by ensuring internal
processes and practices to counter the inequities inside and outside the organization over
time. Staff at SELCO reflects a mix of the society: in terms of gender, caste, color and
religion and more importantly over 90% of SELCO’s 450 employees are from the local areas
they serve. As a result there is a reinforcement of mutual trust, empathy and sensitivity
between the client base and SELCO. These values are further imprinted with a lot of upward
mobility of our people within the organization.

THE PATHWAY

SWOT Analysis

SWOT Analysis stands for – Strengths, Weaknesses, Opportunities, and Threats that Selco
Harish encounters both internally and in macro environment that it operates in. Strengths
and Weaknesses are often restricted to company’s internal - resources, skills and
limitations. The strengths are related to the innovation component, as the company is doing
something revolutionary. The weakness is related to the possibility of achieving the company
´s mission, as the low income population of India is not educated or wealthy enough to
adquire the product.

Opportunities and Threats are factors that are analyzed in view of the prevalent market
forces and other factors such as political, economic , social, health & safety, technological,
and legal & environmental. The new market, with omre than 1 billion people is a truly unique
opportunity and the growing run against climate change make this kind of businesses always
attractive for investors and consumers. However, it Selco cannot communicate with banks
and instituitions about the benefits and possibilities of the product, others can do the same
and be a problem.

Align

With the help of the World Bank’s commercial finance arm, the International Finance
Corporation (IFC), Hande was able to restructure the company in 2008. SELCO remained a
for-profit business, but Hande was able to seek new investors more aligned with its mission.
In addition, Hande was able to keep his sales and service organization intact, complete with
its core of highly motivated employees.

STRATEGIC CHOICES
SELCO has created long-standing partnerships with similar minded organizations like
financial institutions, micro-finance institutions and NGOS in order to scale up its ability to
reach the poor.

· Business Strategy

Ashridge Matrix

Selco is ahead of the competition, in terms of credibility and in terms of key relationships
with important economic and institutional partners. I think it a sector of low potential, due to
the difficulty of entering and managing to provide this products for the target public. I would
classify it as “facing headwinds”

Value Curves

For the value curves, the valued customers are the poor people in Índia who need a reliable
energy source and the value proposition is about delivering a fount of energy to a large
number of people, improving their dayli-life and working towards a better planet.

· Corporate Strategy

BCG Matrix

The business of the photovoltaic panels is a question mark. There is a high potential for the
market to grow, however there are risks associated with it and the market share is still low. It
is needed a risk prone manager, curious and open to try new methods and approaches.

· Innovation
SELCO was able to continue devising innovative solar solutions. The company had become
known for redesigning off-the-shelf solar electric components to suit the particular needs of
the urban and rural poor. Here, we can distinguish a product innovation, yet to be launched