Case Report 3

1. What was First Solar’s business- level strategy?

First Solar has adopted a cost leadership business-level strategy in the field of solar

energy production with the goal of outperforming its competitors in terms of economic returns

through the production of solar panels at a much lower cost. First Solar's historic achievement in

2009—becoming the first solar producer to produce panels generating a megawatt of power at a

production cost of less than $1.00 per watt—substantiates this strategy. This noteworthy

accomplishment demonstrates the company's dedication to cost-effectiveness and its

manufacturing core competency. The goal of the business-level strategy is to offer a large market

a more reasonably priced solar energy option.

2. What was the best evidence of this strategy?

The capacity of First Solar to produce solar panels at an industry-low cost of $.75 per

watt is the most persuasive evidence supporting their cost leadership strategy. This

accomplishment not only demonstrates the company's dedication to core efficiency but also

establishes it as a powerful competitor in the solar energy market. The company's historical

emphasis on exploiting patented thin-film cadmium telluride technology, which lowers

production costs compared to typical crystalline-silicon solar panels, is evident in its cost

leadership strategy.

3. Did First Solar have the core competencies to support its strategy? What were they?

Key cost leadership competencies form the foundation of First Solar's cost leadership

strategy. One essential core strength is the capacity to produce solar panels for an industry-low

$.75/watt. This entails making use of supply chain efficiency, technical innovation, and
sophisticated production techniques. Furthermore, the company's cost leadership strategy is

supported by its core competency of vertical integration. First Solar is able to optimize efficiency

and reduce costs at different points in the process by controlling the whole value chain, from the

production of solar cells and modules to the engineering, procurement, building, operations,

maintenance, and development of solar power plants.

4. What was First Solar’s competitive advantage, if any?

The capacity of First Solar to provide solar panels at a cheaper cost than competitors is a

key factor in its competitive advantage. The company sells its products at a market price while

keeping production costs lower, according to its cost leadership strategy, which enables it to earn

a greater profit margin. This competitive advantage is backed by ongoing efforts to optimize

manufacturing processes and control costs throughout the value chain, in addition to being

evident in the previous achievement of producing a megawatt of power at less than $1.00 per

watt.

Financial Analysis Exhibits:

Financial statements and pertinent exhibits are taken into consideration based on several

factors. To evaluate the cost competitiveness of First Solar's products, it is essential to look at

Exhibit 7, which displays the manufacturing costs per watt of competitors. To help comprehend

the company's cost advantage, this display offers a comparative analysis. Furthermore, based on

its lower output/ft2 than its competitors, exhibit 3 indicates that First Solar may be strategically

focusing on market sectors or distinctive product attributes that support the cost leadership

strategy.
 A thorough examination of the financial statements—especially Exhibit 9—enables one

to comprehend First Solar's financial situation and strategic choices on a deeper level. The $393

million goodwill impairment charge in 2011 emphasizes First Solar's past experience with

vertical integration through acquisitions. It is described as a non-cash charge that adjusts earlier

acquisition overpayments. This is consistent with the business's strategy to manage the full value

chain, from system integration and development to component manufacture. In addition, the

restructuring charge and the notable rise in research and development (R&D) expenses in 2011

are noteworthy factors to consider when evaluating the fall in the company's profits. These

investments highlight First Solar's strategic positioning for long-term success by demonstrating a

dedication to innovation and market dynamics.

Other Relevant Considerations:

First Solar's ongoing work can be understood by comparing the project assets and balance

sheets to those of its competitors, as stated in the lawsuit. First Solar may be a more appealing

vendor with more projects in development than its competitors, according to the different

amounts of "project assets." Providing engineering, procurement, construction, and project

finance for solar power plants is the company's core strength, and this component fits in with

that.

First Solar's impressive rise in the utility-scale systems business, which accounted for

25% of total sales between 2009 and 2011, is a testament to the company's effective market

integration. By providing a holistic solution spanning from manufacturing to system

development, this expansion strengthens the company's competitive position and is in line with

its vertical integration strategy.

 The competitive landscape and market dynamics are important factors to consider when

analyzing First Solar's strategic posture, in addition to financial data. The company's noteworthy

market share suggests that its cost benefits may contribute to its appeal as a vendor. The

difficulties presented by Chinese competitors flooding the market with inexpensive solar panels

made of crystalline silicon highlight the necessity for First Solar to retain its cost leadership to

maintain its competitive advantage.

In conclusion, First Solar has established and maintained a competitive advantage in the

solar energy market thanks to its cost leadership business-level strategy, which is bolstered by

core competencies in low-cost manufacturing and vertical integration. The company is

positioned as a leader in the sector since it can provide solar panels at a lower cost than its

competitors. A thorough understanding of First Solar's competitive stance and strategic choices is

provided by the examination of pertinent exhibits, market dynamics, and financial statement

analysis. The company is positioned favorably for long-term success due to its commitment to

cost efficiency and continual innovation, even in the face of headwinds in the solar industry.