Case 3 SunPower

Case Study: SunPower
Course Title: Project Management
Course Code: MGT490

Section: 1
Semester- Spring 2020
Prepared For
Muhammad Maruf Ibne Wali
(MfW)
Department of Management,
School of Business&
Economics
North South University
Prepared By
NAME ID
Umme Marzina 1711538630
Mehedi Hassan 1610933030
Easha Imtiaz 1610131030
Sajid Kamal 1632479030
Rafiul Islam 1620913030
Date of Submission: 17th May, 2020
This study source was downloaded by 100000837832307 from CourseHero.com on 07-28-2022 12:42:13 GMT -05:00
https://www.coursehero.com/file/66120728/Case-3-SunPowerdocx/
Question: SunPower’s strategy focus on the pricing of modules? Or should it focus more on
investing in process improvements? Or should the strategy be some combination of the two?
If so, what was the right formula based on the multitude of variables that solar cell
producers like SunPower faced?
Answer:
To solve this case, first we have to understand and analyze the problems that SunPower is
facing. First of all SunPower is a solar energy company. They produce electricity from solar
power. In this case study it is shown that SunPower facing some problems. We must find the
root of the problems that SunPower is facing to solve this case:
 Traditionally generated electricity is still cheaper than solar power.
 Solar cell which is also known as photovoltaic (PV). Solar cell systems converted
energy from the sun into electricity. Currently the price of PV is increasing because
of the high competition in the market.
 Price of silicon that are used to make PV is increasing too because of higher
competition.
 Higher Competitions in the market. Companies like Sharp Solar, Q-Cells, SunTech
are the direct competitors of SunPower. They have their own competitive advantages
like unique technologies and methods. The cost of solar power has decreased
because of the high competition in the market.
 Lack of manufacturing initiatives and high manufacturing cost of PV in United
States.
Now we are going to analyze the advantages that SunPower have:
 SunPower manufactures solar cells with highest efficiency that gave them competitive
advantage in the market.
 SunPower has a unique and beautiful design for their solar panel. That gives an aesthetic
view.
 Growing market of Solar Energy in United Sates.
 Long Term of silicon supply from DC Chemical, a South Korean company.
 SunPower process development is accomplished in Philippines. There are low cost of
engineers and increased technical capabilities in Philippines.
 SunPower helped its installer partner to reduce installation and assembly cost of solar
panel. This policy reduced the overall installation cost of solar panel for the consumers.
 Governments around the world including United States have subsidy policy that
supporting solar companies like SunPower.
The SOWT Analysis:
So we have seen the problems that are faced by SunPower. We have also analyzed their
advantages. Now we will analyze SunPower’s strength, weakness, opportunities and threats so
that we can find a solution of these problems.
Strength
 The highest efficiency of Solar Cells
 Aesthetics Solar Cells
 Low installation cost
 High growth rate in local as well as global market
 Long Term Supplier of Silicon
Weakness
 Lack of manufacturing initiatives
 High manufacturing cost of PV
 Low Productivity
Opportunities
 Growth in Solar Energy Market
 Growth in consumer demand
 Subsidy Policy
Threats
 High Competition in Market
 Low Cost of Solar Power Because of high competition
 Increasing costs of PV and Silicon
Figure: SWOT Analysis of SunPower
Solutions
So, now the question is, Should SunPower focus more on the pricing of modules? Or should it
focus more on investing in process improvements?
After analyzing advantages and SWOT of SunPower, we are presenting our solutions:
SunPower should focus on pricing modules (e.g. lowering the price of PV) as well as they
should invest in process improvements and new technologies.
i. Lowering The Overall Price: SunPower can lower the price of PV. That will reduce the
cost for consumers. That means lower profit for SunPower. But if they can lower the cost,
more consumers will be interested in purchasing from SunPower. For examples, IPhone
is known for higher quality and beautiful design and longevity. IPhone cost more than
any other phones in the market. But recently IPhone has taken an initiative. Recently they
have launched new ‘IPhone SE’. IPhone SE cost less than usual IPhones in the market.
That way they can target a new segment of consumers. SunPower can take similar
initiatives. They can manufacture and install solar panels for people with lower income.
That way they will be able to target a new set of consumers. All the competitors (Sharp
Solar, Q-Cells, SunTech etc.) in the market produce PV at lower cost. So lowering cost
will be a game changing decision for SunPower.
ii. Invest More in Technology: SunPower produces PV that has higher efficiency than any
other PVs in the market which are produced by the competitors. But that should not be
the limit. All the other competitors of SunPower have their own and unique method and
technology. For examples, Sharp Solar produces a range of low volume and innovative
products like triangular modules to fit in tight corners and translucent solar window glass
with integrated LED lights (Henderson, Conkling, & Roberts, 2007). And Q-Cells
produces large format cells (8" square instead of the standard 5" or 6" squares) in order to
reduce processing cost per watt (Henderson, Conkling, & Roberts, 2007).
In the given case the author said that “PV efficiencies ranged from 10%-20% and some
scientists believed that further research, combined with advances in installation methods,
could push conversion efficiencies well over 20%, with 50% seen as the long-term "holy
grail” (Henderson, Conkling, & Roberts, 2007). So, if SunPower invest more in
technology, they may be able to increase the efficiency level of their PV more. That way
they will be able to gain a bigger competitive advantage in the market. They should also
continue investing on other aspects of technology so that in future they can be able to
come up with newer and better products and services for their consumers.
iii. Cost of Materials and Manufacturing: SunPower can switch to lower cost materials for
framing and packaging. That method will be helpful for reducing the manufacturing cost.
iv. Location of Manufacturing: Countries like China, India, Thailand, and Malaysia have
skilled labor with low wage rate. SunPower can move their manufacturing operations to
those countries.
v. Marketing Strategy: Most of their consumers are green-minded and aware of
environmental issues of fossil fuels. But many people who have the ability to purchase
solar cells are still unaware of the environmental issues of fossil fuel. So, SunPower
should invest more on marketing and awareness so that more people can understand the
value of solar energy. Besides SunPower should target wide range of consumers
including people with lower income.
Now here’s the last question: What was the right formula based on the multitude of
variables that solar cell producers like SunPower faced?
We have mentioned before that SunPower should focus on pricing modules as well as they
should invest in process improvements and technologies. But what is the right formula for
SunPower. There are many competitors in the Solar Energy market. This is a competitive
market. According to theory of perfectly competitive market, equilibrium price will be at
that point where aggregate demand is equal to aggregate supply. In perfectly competitive
market, price of a product determines through aggregate demand and aggregate supply.
There are many competitors like Sharp Solar, Q-Cells, SunTech in market of solar energy.
They all have the similar goals which is providing solar energy. They also target similar set
of consumers. What makes them different is the uniqueness of their product and service. For
examples, SunPower solar cells has highest efficiency and aesthetic view, Sharp Solar has
innovative products like triangular modules to fit in tight corners. In this type of market,
changing price will not be effective as there are many companies with similar services. But
uniqueness, efficiency, longevity and creativeness of the product will attract more consumers.
So, for SunPower the right formula based on the multitude of variables will be invest more
on their technologies and process improvements. Besides new process and better
technologies will help SunPower reducing the overall manufacturing cost of their products.
References
Henderson, R., Conkling, J., & Roberts, S. (2007). SunPower: Focused on the Future of Solar
Power. MIT Sloan School of Management.
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Case Study: SunPower

Course Title: Project Management

Course Code: MGT490

North South University

Date of Submission: 17th May, 2020

producers like SunPower faced?

root of the problems that SunPower is facing to solve this case:

 Traditionally generated electricity is still cheaper than solar power.

of the high competition in the market.

because of the high competition in the market.

 Lack of manufacturing initiatives and high manufacturing cost of PV in United

advantage in the market.

 Growing market of Solar Energy in United Sates.

 Long Term of silicon supply from DC Chemical, a South Korean company.

 SunPower process development is accomplished in Philippines. There are low cost of

engineers and increased technical capabilities in Philippines.

supporting solar companies like SunPower.

that we can find a solution of these problems.

 The highest efficiency of Solar Cells

 Aesthetics Solar Cells

 Low installation cost

 High growth rate in local as well as global market

 Long Term Supplier of Silicon

 Lack of manufacturing initiatives

 High manufacturing cost of PV

 Growth in Solar Energy Market

 Growth in consumer demand

 High Competition in Market

 Low Cost of Solar Power Because of high competition

 Increasing costs of PV and Silicon

Figure: SWOT Analysis of SunPower

focus more on investing in process improvements?

should invest in process improvements and new technologies.

will be a game changing decision for SunPower.

v. Marketing Strategy: Most of their consumers are green-minded and aware of

including people with lower income.

variables that solar cell producers like SunPower faced?

market. According to theory of perfectly competitive market, equilibrium price will be at

Power. MIT Sloan School of Management.

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