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A Better Solar Company: Rachel Chamberland, Alex Diaz, Amanda Lui, Kevin Satre
A Better Solar Company: Rachel Chamberland, Alex Diaz, Amanda Lui, Kevin Satre
Coal
Gas
Hydroelectric
Geothermal
Oil
Solar 0.1%
35000
30000
25000
Total World (MW)
20000
Policy-Driven
15000 Moderate
10000
5000
0
2010 2011 2012 2013 2014
Source: European Photovoltaic Industry Global Market Outlook
http://www.epia.org/fileadmin/EPIA_docs/public/Global_Market_Outlook_for_Photovoltaics_until_2014.pdf
Global Trends: Government Initiatives
Germany 2009:
Germany 2010: €100
€20 billion for
million for solar R&D
renewable
US 2009: 10 energy
million Solar Japan 2009: $21 billion for
Roofs Act residential solar power
US 2010: $6 billion
world’s largest France 2010: €1.35
solar plant billion clean energy S Korea2010: $36 billion
US 2009: $52.5 for clean energy
million for R&D
China: planned
$739 billion
North Africa 2009: $5
investment into
billion solar energy
renewable
energy
Recommendations
Analysis
Recommendations
Financials
Timeline
Conclusion
• Higher cost
Weaknesses • Lower market share
• Lack of Canada government subsidies
• Global trends
Opportunities • Expanding market
• Currency
Threats •
•
Possible lack of Financing
Possible lack of government subsidies
Competitive Advantage
Low Cost Higher Cost
Cost Leadership
Broad
Strategy Differentiation
CHINESE
Target Market
COMPANIES:
PRICE WARS
Focus Strategy Focus Strategy
Narrow
Financing Currency
Liability of
Risks
Foreignness
7000
6000
5000
Market Size
4000
3000
2000
1000
0
2010 2011 2012 2013 2014
2500
2000
1500
Market Size
1000
500
0
2010 2011 2012 2013 2014
Superior Product
• Porter’s generic strategy
Total $(1,120,000)
3.5
3
2.5
2
1.5
1
0.5
0
Yr1 Yr2 Yr3 Yr4 Yr5
25
Yearly Net Gains (in millions)
20
15
10
0
Yr1 Yr2 Yr3 Yr4 Yr5
Assumption:
Assumption: acquisition
acquisition of
of one
one company
company per
per year
year
Analysis Recommendations Financials Timeline Conclusion
Conclusion
Timeline: 2010-2015
Your
Evaluate
Future
is Bright
Contest
United States
?
France
High
Market Growth Rate
Germany
Canada
Low
China
Spain
Appendix: Future Market
Boston Consulting Group Analysis
?
France
High
Market Growth Rate
Germany
Spain
Canada
Low
Czech Republic
China
Japan
Italy
Appendix: Evolution of PV Market
Appendix: The Market
Appendix: Entry Mode Selection
Equity Non-equity
Liability of ●
Informal institutions in Italy
Foreignness
Currency ●
Strength of Euro
Financing ●
●
●
●
Interest Rates
Loosening credit for solar projects
Availability ●Global government stimulus efforts
●
Governmental ●
Possible reduction of FiT in Italy
Policy ●
US Government policy?
Appendix: Currency
CAD to Euro—5 years
Appendix: Currency
CAD to USD—5 years
Appendix: Your Future is Bright Contest
Suntech
First Solar Yingli Sharp
Differentiation
Trina Solar Sanyo
Sunpower
Appendix: Financials
U.S. ROI
• Judging by the total of 850 billion worth of acquired private companies, and a total
of 10,013 companies having been acquired (avg. of $85 million per company), we
judge that the companies we would acquire would be between $45-$60 million.
• In United States, with acquisitions we would capture another 2% of the market
share. In 2009 we had revenues of almost $37 million in the United States (with a
4% market share) and with an additional 2% of the market share we could increase
revenues by $55 million every year.
• In 2009, US spent $18.6 billion on renewable energy. Approximately 30% of that
was solar power (.3*18.6= $2.75 billion). Our approximated gain in market share of
2% gets us another $55 million in revenue each year from the United States alone.
• This increases our yearly revenue from United States to about $92 million dollars
(almost a 250% increase in revenue).
– Additional Note: United States is a rapidly expanding market for solar power.
• We could potentially break even after the first year, depending on the size of
acquisition.
Appendix: Financials
Italy Campaign Costs
• Advertising Campaign in Italy- $20,000 per regional winner (5 total regional winners)
– Five biggest regions – Lombardy*, Sicily, Lazio, Compania, Veneto.
• Additional $20,000 for getting the word out about competition.
• Judging by the total of $850 billion worth of acquired private companies, and a total
of 10,013 companies having been acquired, we judge that the companies we would
acquire would be between $70-$85 million.
*Lombardy will be the starting point. Assuming “Your Future is Bright” goes well, there
will be four more contests implemented over the course of a year.
-Return on Investment- Matching these “advertising expenses” against the revenues
they generate is nearly impossible and susceptible to poor estimates and “bad
accounting”
-However, it is possible that increasing our investment in the sales force in Italy will
double or even triple our market share if we act quickly.
• Additional $1,000,000 for more in the sales force in Rome, Italy.
Appendix: Market in Germany
●
Sales office located in Germany
Strengths
●
●
● Strong brand
●
● Top five customers are in Germany
Weaknesses ●
● Ability to differentiate from competition?
●
● FiT
Opportunities
●
● Largest PV market in world
●
● Availability of Financing
●
● Entrenchment of solar energy
●
● Demand concentration issues
OLI Advantages ●
● Ownership: proven success in market
Appendix: Market in China
Production facilities
Strengths
●
●
●
Government instability
Threats
●
●
●Demand concentration
●Collectivist society: government favoritism for local companies
●
●
●Location-specific: Vertical FDI, natural resources
OLI Advantages ●Internalization: IPR
●
Appendix: Market in Japan
Strong brand
Strengths
●
●
●
●
High-quality
●
Ability to differentiate and compete against
Weaknesses
●
●
●Aggressive climate policies
Opportunities ●Large residential market
●
Threats
●
●
●
●Competition
●High quality standards
●
●
●Location-specific: Reputation for quality
OLI Advantages ●Internalization: develop quality
●
Appendix: Market in United States
●
●Proximity to headquarters
Strengths ●
●Reduced liability of foreignness
●Western engineering with Chinese production
●
Weaknesses ●
Price war with Chinese manufacturers
●
●Large potential market, lags behind Europe
Opportunities ●
●Stimulus money
●CA: Million Solar Roofs Initative
●
●
●
US entrenchment in oil industry
●
●Ownership: Differentiation
OLI Advantages ●Location-specific: horizontal FDI
●
Appendix: Market in Italy
Strengths Brand
●
●
●
● Quality
●
● Competition: U.S.
●
● Subsidies of up to 80% of end user’s costs
●
● Net-metering
●
● Lack of energy sources & no import trade limitations
●
Government budget imbalance
Threats
●
●
● Slow reduction of FiT
●
● Eventual market saturation?
OLI Advantages ●
● Ownership: VRIO resources, Canadian Solar local offices
Appendix: Market in South Korea
●
Higher price
Weaknesses
●
●Competition
●
●
●High 2008 market growth
Opportunities ●FiT
●
●
Slowdown in 2009 solar market
Threats
●
●
●Strong currency
●FiT cap
●
●
● Ownership: Western engineering with Chinese
OLI Advantages manufacturing
Appendix: Market in Czech Republic
●
Higher price
Weaknesses
●
●Liability of Foreignness
●
●
●Huge growth
Opportunities ●
●FiT: willing to invest more
●Simple administrative procedures
●
●
Speculation that growth will be unsustainable
Threats
●
●
●Taxpayers: negative PV image
●Cutting subsidies
●
●
● Ownership: Western engineering with Chinese
OLI Advantages manufacturing
Appendix: Market in France
Western company
Strengths
●
●
●
Higher price
Weaknesses
●
●Liability of Foreignness
●
●
●Favorable government policies
Opportunities ●
●Further opportunity for growth
●FiT
●
●
Ownership: Strong brand with high quality reputation
OLI Advantages
●
●
Western company
Strengths
●
●
●Reputation for quality
●Proximity to Europe offices
●
●
Ability to differentiate?
Weaknesses
●
●Higher price
●
●
●2008 world leader in solar panels
Opportunities ●FiT
●
●
Heavy cuts to FiT (2009 market: 69MW)
Threats
●
●
●Economic slowdown
●Heavy competition
●
●
Ownership: Strong brand with high quality reputation
OLI Advantages
●
●
Lowest liability of foreignness
Strengths
●
●
●Local company
●Low transportation costs
●
●
Higher price
Weaknesses
●
●Liability of Foreignness
●
Opportunities ●
Ontario FiT
Smaller market, population
Threats
●
●
●
●Ownership: Western engineering, “home turf”
OLI Advantages ●Location-specific: Proximity to headquarters
●
Appendix: Main Sources