Suntech Solar Strategic Analysis
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Suntech Solar Strategic Analysis

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BUS 890: Culminating Experience in Strategic Management, FALL 2010...

BUS 890: Culminating Experience in Strategic Management, FALL 2010

The culminating project is an in-depth case analysis of Suntech Power Holdings Co., Ltd. The analysis includes multiple concepts from the course to help explain the strategies, actions and performance of the company.

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  • BUS 890: Culminating Experience in Strategic Management, FALL 2010The culminating project is an in-depth case analysis of Suntech Power Holdings Co., Ltd. The analysis includes multiple concepts from the course to help explain the strategies, actions and performance of the company.

Transcript

  • 1. Michael Camarena, Eric LeDuc, Teo Tertel
  • 2. Company Profile
    • World’s largest producer of silicon PV modules and solar panels
    Suntech designs, develops, manufactures, and markets solar power products
    Applications include off-grid systems, homes, and solar power plants
    Mission
    Promote the global adoption of solar power
  • 3. Company Profile
  • 4. Strategic Intent
    Suntech’s top priorities
    Superior technology and superior value
    High quality, low cost solar solutions
    Cost and scale leadership
    Achieve grid parity
    Suntech’s goal is to drive the cost per watt of their solar panels below $1 by 2012
  • 5. Brief History
    Founded in 2001 by solar Dr. Zhengrong Shi
    Solar manufacturing in China was nonexistent
    Public traded company in 2005
    Volatile oil prices fueled concerns for renewable energy
    12 million panels in 80 countries
    Production capacity increased to 1400MW in 2010
  • 6. Challenges
    Demand for their products exceeds their ability to supply due to capacity constraints
    Solar PV technologies are not commercially viable without government incentives
    Rapid technological advancements
    Reducing downstream costs
  • 7. External Environment
    Market Volatility
    Industry wide shortage of polysilicon in 2008
    Industry Demand
    Demand fluctuates with market prices
    Technological Uncertainty
    No dominant technology
    Government Support
    Crucial towards growth of solar energy output
  • 8. Porters 5-Forces Model
    Threat of Buyers
    Strong
    Threat of Entry
    Moderate
    Threat of Substitutes
    Strong
    Rivalry
    Strong
    Threat of Suppliers
    Strong
  • 9. Internal Environment
    Strong Market Growth Outlook
    Leading Market Position
    Leading R&D Capabilities
    Quality Commitment
    Strong Supplier Relationships
    Broad Product Portfolio
    International Management Team
  • 10. Elements of Strategy
  • 11. Where is Suntech Active?
    Design, Development, Marketing & Manufacturing of silicon based PV products
    Worldwide residential, commercial, industrial, and public utility applications and systems integration services
    Key solar energy markets
    US, Germay, China, Australia, Spain, Middle East, South Korea, Japan, Italy
  • 12. How Will Suntech Get There?
    Focused efforts on internal developments
    Increasing efficiency of manufacturing
    R&D to increase cell efficiency
    Cost reductions
    Capacity expansion
    Strategic acquisitions & Joint Ventures
  • 13. How Will Suntech Win?
    Product Differentiation
    High conversion efficiency
    Manufacturing quality
    Warranty certified power output
    Credit for customers
  • 14. What’s Suntech’s Staging?
    Solar Cells->
    Solar solutions: modules, systems, systems integrations
    Staggering Speed
    Production capacities have doubled every year since 2004
  • 15. What’s Suntech’s Economic Logic?
    Heart of Suntech’s product strategy
    Low cost & high conversion efficiency
    Superior consumer value
    Focus on enduring capabilities
    Leveraging low cost production
    Creating scale economies
    Rapid innovation
  • 16. Corporate Strategy
    Corporate umbrella for over 36 different subsidiaries in operation
    A result of strategic acquisitions and investments
    Strengthen Suntech’s position in vertical chain
    Upstream: Key access to high quality supplies
    Downstream: Systems integrations and project development
  • 17. Key Mergers & Acquisitions
    Aggressive targeting of suppliers and manufacturers of solar technology
    KSL-Kutler, increase expertise in manufacturing
    Luoyong China Silicon, secure silicon supplies for solar cells
  • 18. International Strategy Analysis
    Operate manufacturing, distribution, and sales offices worldwide
    HQs: Asia, America, and Europe
    Promote adoption of solar power
    Become energy leader in solar technologies
    Requires converting global presence into a global competitive advantage
  • 19. International Strategy Analysis
    Adapting to local market differences
    Building relationships with customer base
    Distribution and subsidies
    Exploiting economies of global scale
    Largest producer of silicon solar products
    Spread fixed costs over a larger volume
    Exploiting economies of global scope
    Deliver same quality and level of service regardless of location
  • 20. International Strategy Analysis
    Tapping optimal locations
    Leverage locations with access to low cost resources and clean energy mandates
    Maximizing knowledge transfer
    36 subsidiary organizations and 13 sales offices
    Manufacturing and R&D locations in China
  • 21. Cooperative Strategy Analysis
    Partnerships & Alliances
    Strengthen core business, solar developments, enhance R&D, and secure supplies
    University of New South Wales: solar cell efficiency
    Calisolar Inc. to secure solar silicon manuf. facility
    Secure development of smart panel technology
  • 22. Recommendations
    Expand Capacity, Reduce Supplier Dependencies
    Demand continues to increase, as costs are reduced and efficiencies increase
    Rapidly expand into new facilities that generate needed capacity and satisfy local requirements for government subsidies
    Acquire/Partner with silicon suppliers to reduce supply shortages and obtain cost advantages
  • 23. Recommendations
    Proactively Reduce Downstream Costs
    Reach grid parity and mitigate risks of reliance on government subsidies
    Reduce downstream costs
    Certified Value Added Resellers (VARs)
    • Impose Guidelines, Create Incentives, Evaluation Criteria
  • Recommendations
    Engage Stakeholders
    Engage gatekeepers for new energy infrastructure and government subsidies
    Advocate renewable energy and committing resources to gain favorable outcomes
    Building brand awareness to increase visibility and prepare for new customer markets
  • 24. QUESTIONS?