This report aims at analysing the business strategy of Vestas, a company headquartered in Aarhus, Denmark, and the world leader since 2013 in the design, engineering, manufacturing and selling of wind turbines around the world.

1. STRATEGIC PLAN FOR VESTAS 2035
BIRADAR Nitin, DI PACE Victoria, LOTZ Edouard, MAAROUFI Akrem, REMANDA
Daniele, SOARES-DAMIAO Alexandre
Supervised by SOLA Davide

2. CONTENTS
1. EXECUTIVE SUMMARY 1
1.1. COMPANY’S MISSION, VISION AND LEVEL OF AMBITION 2
2. EXTERNAL ANALYSIS 3
2.1. OVERVIEW OF THE WIND INDUSTRY IN SELECTED MARKETS 3
2.1.1. IMPACT ON PRICE, VOLUME AND COSTS 3
2.2. THE INTENSITY OF RIVALRY IN THE RENEWABLE ENERGY SECTOR 7
2.2.1. THE FIVE FORCES 7
2.2.1. IMPACT ON PROFIT 9
3. INTERNAL ANALYSIS 9
3.1. DEFINING THE COMPETITIVE ADVANTAGE 9
3.1.1. BREAKDOWN ANALYSIS OF THE INDUSTRY STRUCTURE 9
3.1.2. VESTAS’ COMPETITIVE ADVANTAGE 10
3.1.3. SOURCES OF COMPETITIVE ADVANTAGE FOR VESTAS 11
3.2. UNDERSTANDING THE STRENGTHS AND WEAKNESSES 11
3.2.1. KEY ACTIVITIES FOR VALUE PROPOSITION 11
3.2.1. KEY RESOURCES AND COMPETENCES 13
4. RECOMMENDED INITIATIVES 14
4.1. CORE CHALLENGES AND STRATEGIC OBJECTIVES 14
4.1.1. IDENTIFICATION OF THE CORE CHALLENGES 14
4.1.2. STRATEGIC OBJECTIVES 14
4.1.1. HORIZONS FOR IMPLEMENTATION 15
4.2. HOW TO MANAGE THE RISK? 16

3. 1
1. EXECUTIVE SUMMARY
This report aims at analysing the business strategy of Vestas, a company headquartered in
Aarhus, Denmark, and the world leader since 2013 in the design, engineering, manufacturing
and selling of wind turbines around the world.
Although Vestas stems from a blacksmith business founded at the beginning of the 20th
century, its entry into wind turbines came in the late 1970s, and only became its core operation
in the mid-1980s. Since then, Vestas has been riding the winds of change by developing its
wind turbines products and services as the need to reduce global C02 emissions has taken on a
greater urgency, and as more and more governments have begun mandating the installation of
clean and renewable energy sources. Today, the company operates in two market segments,
Power Solutions and Services. The Power Solutions segment sells wind power plants and wind
turbines. The Service segment specialises in the sale of service contracts, spare parts, and
related activities. As a structurally lean organisation, Vestas employs more than 23,000 people
globally and has offices in 24 countries with five strong regional sales business units in
Northern Central Europe, Americas, Mediterranean, and Asia Pacific, and China.
Vestas became the world leader wind power manufacturer in 2013 when the company merged
with another Danish wind energy giant Neg Micon. Today, Vestas has 92GW of wind power
capacity installed in 79 countries. In addition, the company has a consolidated 17% market
share, followed by its main competitor Siemens Gamesa (16%) and a total annual revenue of
9.9 billion in 2017. Nearly 50% of Vestas’ revenues are generated in Europe, and the United
States accounts for most of the rest (40% of total revenue) while revenues generated in Asia
are growing but are still relatively lower. Vestas is listed on the Copenhagen Stock Exchange.
Then, Vestas is also one of the wind turbine industry's primary innovators, with 225million
euros investments in R&D in 2017 (Vestas Annual Report, 2017) and innovative projects
including the development of hybrid smart solutions in Australia for instance.
After depicting Vestas’ core vision and mission this report provides an internal (2) and external
analysis (3) of the company’s business. Then, based on this analysis, some strategic
recommendations will be provided (4) regarding how to maintain and enhance Vestas’
competitive advantage in the future.

4. 2
1.1. COMPANY’S MISSION, VISION AND LEVEL OF AMBITION
In this part, we outline Vestas’ vision and mission as well as a break-down of relevant
indicators providing evidence of these statements.
The figures presented in Figure 2 mostly stem from Vestas’ company’s website as well as a
report produced by Xerfi (2017).
Figure 1 Vestas' Mission and Vision (source: Vestas Annual Report 2017 and team analysis)
Figure 2 Vestas' Level of Ambition (source: Vestas Annual Report 2017 and team simulations)

5. 3
Some estimates for the year 2035 provided by ESCP team analysis are explained below:
• Vestas’ market share in 2035 reflects the fact that even though competition is becoming
harder over time, Vestas is consolidating its market share through a strategy of
acquisition. For instance, Vestas acquired Utopus Insights in February 2018 in order to
excel in analytics and integrated energy software solutions. Also, our estimate is based
on projections of wind power market growth in Asia (Vestas, 2017).
• Vestas’ presence indicator for 2035 reflects the company’s growing presence in
emerging markets such as India (Vestas, 2017).
• Vestas’ know-how estimate is increasing over the year due to a consolidated experience
in hybrid projects (Vestas, 2017).
• The compounded growth rate is increasing as there is a high growth potential for O&M
services, offshore wind power, as well as a stable forecasted growth for onshore wind
power (Vestas, 2017).
• In 2017, Vestas delivered 8,779 MW over 11,176 MW of order intakes, hence 78% of
delivery efficiency (Vestas, 2017). We estimated that it will reach 99% in 2035 with
continuous improvement in value chain optimisation.
• In terms of R&D patents, the company delivers 360 patents on average per year so that
will give us 8000 patents in 2035 (Vestas, 2017).
• Vestas has a carbon footprint objective of 10% reduction by 2020 of reduction carbon,
so we estimate the target will double by 2035 (Vestas, 2017).
2. EXTERNAL ANALYSIS
2.1. OVERVIEW OF THE WIND INDUSTRY IN SELECTED MARKETS
Vestas is currently the leading company in France in terms of installed wind capacity with
2,710 MW installed (Statista, 2017). However, Vestas’ market share in China is relatively low.
These two markets are relatively different, but they have both been appointed as a top wind
market according to a recent study (Deloitte, 2018). They define top-wind markets as countries
where “wind and solar power have become competitive with conventional generation
technologies, even without subsidies”.
2.1.1. IMPACT ON PRICE, VOLUME AND COSTS

6. 4

7. 5

8. 6
In France, there are three main threats are driving the perspective of sales volumes down.
Indeed, the French government, is encouraging nuclear power and developing next generation
nuclear projects (AFP, 2018). Also, the citizen’s contestation against wind power in the French
countryside is increasing(The Local, 2018). It could drive volumes down due to the increased
difficulty to find implementation sites. In addition, the heavy procedures in France are a
consequent barrier to install new wind power.
However, the environment is mainly favourable due to current political discussions on
including renewables in the mix, namely the 2030 Energy Strategy of the European
Commission (2014), but also due to the increasing levels of foreign investments in France,
mainly coming from the United States (Le Figaro, 2018). Even if Vestas has a leading position
in the onshore market in France, there are still opportunities to grow due to the ageing fleet of
the currently installed wind turbines, and due to the new offshore projects, that are being
developed (Renewables Now, 2018).
The private sector will also be driving the renewable electricity demand up too, Purchasing
Power Agreements have been rising and are still expected to grow in the coming years in
France (Deloitte, 2018). Moreover, the private sector has also been democratising the electric
vehicles use, which may be powered by renewables and thus could drive the volumes up.
Technological improvements have also been happening. In addition to the development of
smart technologies, bigger and more powerful turbines are being developed
As for China, the market is favourable for already established players. The main threats are
regarding the steep decrease in feed-in-tariffs, which makes entering the market more
complicated than it was before, and which one of the reasons why Vestas’ market share
stagnated in China.
Another major threat is the slowing economy in China, this stresses even more the importance
of entering the market now to be able to take advantage of the growth caused by
industrialisation and climate concerns.
In the “Global Renewable Energy Trends” study (Deloitte, 2018), two key factors are being
highlighted too: the increasing role of private companies (through the rise of Purchasing Power
Agreements and groupings like the RE100), and the decreasing costs of lithium-ion batteries,
central to provide wind projects combining storage.
The volume of the sales will be mainly be driven up due to the favourable environment, and
hence the costs will go down.

9. 7
2.2. THE INTENSITY OF RIVALRY IN THE RENEWABLE ENERGY SECTOR
2.2.1. THE FIVE FORCES
• Existing Rivalry:
There is a high competition in the Wind Energy Industry with 46 players in the whole market,
and 10 consolidated players, sharing 78% of the business in 2016, while they represented 69%
of the market in 2014 (Xerfi, 2017). Moreover, this consolidation is even more important since
2017, with the acquisition of Gamesa by Siemens Wind Power.
It is also interesting to outline the increasing threat of Chinese companies benefitting from their
government investment, trusting 4 spots in the 2016 top 10, while none of them were in this
ranking in 2006
• Threat of New Entrants:
The wind energy industry is not a sector easy to penetrate. Indeed, the R&D department is
colossal in each company (EUR 235m spent by Vestas in 2017), and this industry requires
considerable investment to acquire the machinery and the ensure a good maintenance.
Moreover, the biggest companies have a strategy of vertical integration, which increase their
cost efficiency, hence their competitivity. However, the wind industry has grown steadily by
16% each year between 2004 and 2016, proving that it is an unsaturated and immature market,
allowing a new competitor to seize a considerable share of market if they have the possibility
to invest massively, like Goldwind and other Chinese companies did, also with the help of
positive incentive from their government. In addition to the technological barriers, you also
Existing
rivalry: High
-Lot of
competitors
-Consolidated
Industry
Suppliers'
pressure: Low-
Medium
-Vertical
organisation
strategies
-Raw material
scarcity
Substitution
threat: High
-Low share in global
energy mix even
though renewable
market share is
growing
Buyers'
pressure: High
-Auctions
-Goverments
incentives dependent
New entrants
threat: Low-
Medium
-Massive entry costs
-Immature and
unsaturated market

10. 8
have important legal constraints (in France for example) and mechanisms to favour local
companies, in China for example.
• Threat of substitute products or services
Globally, the share of renewable energies in the primary energy consumption mix is small
compared to the other sources of energy. Oil (33.3%) is the main dominant fuel, followed by
coal (28.1%), natural gas (24.1%), hydro-electric (6.9%), nuclear energy (4.5%), and
renewables (3.2%). As a result, the switching cost of governments (which control the energy
policy of their country for the majority of them) stay at a low level.
As part of the renewable energy share, hydro is the main dominant source of energy, followed
by wind and solar. However, in terms of consumption of primary energy growth, renewable
energies are predicted to have the fastest growth rate (7.1%) between 2015-2035, compared to
oil (0.7%).
• Buyer’s pressure
Electricity prices are either established through a system of auctions of by the governments
themselves, giving high power the buyers. Moreover, the wind energy sector is profoundly
dependant of the governments incentives, which is a Damocles sword for the industry if these
incentives are cancelled.
• Suppliers’ pressure
Vestas, like most of its competitors, invested in a vertical organisation strategy, allowing them
to control the overall production of their machinery. Some raw materials used for wind power
generation are however rare and becoming scarce, which is why suppliers can have an impact
on the performance of the companies.
0: low – 10: high
Rivalry
Substitute threat
Supplier's powerBuyer's power
Entry threat
2018 2035

11. 9
2.2.1. IMPACT ON PROFIT
All the forces are going to get less intense in 20 years, making it less hard for wind
manufacturers to make profit and to perform well, which is why it is crucial to achieve a
sustainable competitive advantage now.
• The intensity of rivalry will increase due a move towards a more consolidated market.
• The fossil fuels share is meant to decrease in the mix (IEA, 2018) and the share of the
renewables to increase, and price parity will be reached and will lower the substitute
threat.
• The players will be more established and more powerful, and the legislative
environment is not evolving, making it harder for new entrants.
• Even if the raw materials are scarce, the companies will gain more skills in managing
their supply chain through digital opportunities.
3. INTERNAL ANALYSIS
3.1. DEFINING THE COMPETITIVE ADVANTAGE
3.1.1. BREAKDOWN ANALYSIS OF THE INDUSTRY STRUCTURE

12. 10
• The Net Operating Profit clearly shows that only two of the main players manage
properly their production costs. Goldwind has the highest EBITDA margin but Vestas’
is still 3 times higher than GE and Siemens.
• The negative net invested capital shows massive divestment and capital depreciation
trends among the major players .
• Vestas is clearly the leader in revenues followed by General Electric, despite their low
volume of sales, which is why we can say that they have a competitive advantage
• Vestas and General Electric also have the highest costs of production in the wind
industry, probably due to the high level of technicity of their turbines. However, the
pricing strategy of Vestas appears more accurate as they manage to sell more turbines.
• If Vestas is the leader in revenues, Siemens Gamesa is doing better than Vestas in
terms of sales since the merger. This is due to the fact that their turbines are less
expensive than Vestas and they compete in the same markets.
• General Electric and Goldwind have the lowest volumes of turbines sold, but GE’s
revenue is way higher due to their pricing structure.
• Golwind has extremely low costs due to the major part of its turbines being produced
and shipped in China
• If Vestas is the leader in revenues, Siemens Gamesa is doing better than Vestas in
terms of sales since the merger. This is due to the fact that their turbines are less
expensive than Vestas and they compete in the same markets.
• General Electric and Goldwind have the lowest volumes of turbines sold, but GE’s
revenue is way higher due to their pricing structure.
3.1.2. VESTAS’ COMPETITIVE ADVANTAGE

13. 11
• Vestas has a price differentiation strategy, the data clearly shows that although Vestas
has the highest costs, it manages to sell its turbines at a higher price than those of the
competitors.
• If Vestas has the higher costs, it’s also because the company is offering high quality
wind turbines but only two different type of products: 2MW and 4MW turbines and
hybrid solutions. Golwind on the contrary offers a wider range of wind turbines: 1.5,
2.5, 3, 6 MW, due to its low O&M costs (the lowest in the market). Goldwind
manufactures and sells more than 90% of their wind turbines in China (source
Goldwind AR 2017), which helps them reducing the cost of the wind turbines.
• GE on the contrary is not a pure player like the others, which explains their high costs:
onshore offshore wind turbines but also hydropower plants.
3.1.3. SOURCES OF COMPETITIVE ADVANTAGE FOR VESTAS
The sources of competitive advantage for Vestas are mainly due to the execution of their
activities. They manage to make more money than the competition, even when the volume of
their sales decreases.
Also, they do possess a sense of foresight, that allowed them to reinvent themselves throughout
the years and to be one of the first players in the wind industry.
They also have structural strengths, such as a strong brand name, a vertical integration strategy,
and their global presence.
They manage to renew their competitive advantage at the same time through continuous
improvement and innovation.
They are constantly redeveloping their existing wind turbine range (adding variants to existing
turbines), for example, Vestas commercialises 5 types of 2MW turbines, contrary to the
competitors that typically have less flexibility.
On the other hand, they are also innovating a lot and pioneering the wind industry. The best
example for this is their hybrid wind and solar projects.
3.2. UNDERSTANDING THE STRENGTHS AND WEAKNESSES
3.2.1. KEY ACTIVITIES FOR VALUE PROPOSITION

14. 12
• Research and Development
Vestas has 8 research centres worldwide but only has 1300 employee dedicated in R&D.
General Electric on the contrary has the same number of R&D centres, but more employees
dedicated to it (1500). Siemens Gamesa and Goldwind both have 7 centres throughout the
world and more than 2800 employees working in R&D. .
Vestas has recently been acquiring Utopus Insights, an energy analytics provider in 2018 help
in acquiring data, as well as its analysis provides with the computing power to speed up the
calculations.
For the field development, Vestas has a strong Brand reputation that help the company perform
well, and a growing solvency ratio (29%). They also have a lot of engineers who are involved
in the site analysis and landscape modelling of the to be wind farm. They have a pivotal role
in the development.
Patents are also really important and being pioneers in this industry, they have acquired a lot
of knowledge.
• Manufacturing and Design
Sourcing is an important part for any OEM in wind energy market, as the company cannot have
everything being manufactured at centralized plants. But they source around 90% from tier 2
and tier 3 suppliers or integrator companies and the rest 10% from tier 1 suppliers.
The design of the equipment needed is carried out by the OEM's. Whereas, most of the
manufacturing is carried out by the Tier 1, Tier 2, Tier 3 etc. suppliers in the market. Therefore,
there has to be stringent procedures in place to the selection of the supplier based on the
knowledge they have, standards they maintain and deadlines they meet.
Vestas has 8 Manufacturing plants throughout the world, but high production costs that show
the processes are not optimized.
• Logistics and Supply Chain
As stated by WindEurope CEO, raw materials such as rare earths (neodymium and dysprosium)
for the production of direct drive generators are critical notably in offshore wind. Europe needs
to ensure that its industry can easily access raw materials from countries such as China to
remain cost competitive. Goldwind is extremely smart in reducing their procurement price.
There is a lot of discrepancy the number of turbines produced, and number of turbines shipped:
only 78% of the turbines orders are being processed, and this number has been decreasing. In
2014, this ratio was equal to 91% which shows decreasing performances from Vestas. Thus,
this is one of the key areas for Vestas to focus on.
Vestas has excellent partnerships with logistics companies to ship their product to the site for
installations. They have a separate division which manages and optimizes the transport. They
believe in, “one ship, one project”, philosophy. Installation and assembling and testing is a key
aspect in the development of a wind farm, as it determines if the wind turbine can deliver the

15. 13
rated efficiency or not. If not, then it would lead to lot of losses. Vestas has developed a
standardized procedure to test the turbines after installation and is called the HALT process to
test WT (+ 4 testing processes).
• Operations and Maintenance
The company provides maintenance and gives services to 82 GW of wind turbines throughout
the world. But the service is not global because of which the company has acquired Availon in
2016 (German service provider) and Upwind solutions in 2015 to serve the US market and
improve the revenues from services. Also, its partnership with ZF ( in 2018) helps in servicing
the gearbox without the removal of the gear box from its location thus reducing the turnaround
time.
3.2.1. KEY RESOURCES AND COMPETENCES
Value Proposition: A commitment to continuous improvement in technologies in order to be
the best wind turbine manufacturer in terms of quality, delivery and guidance after
installation
Competence or Resource Activities
1. Research and development
Resource - R&D centres
Resource - Researchers
Resource - Environmental studies and publications
Resource - Software and data processing solutions
- Patents and intellectual property rights
Competence - Financing
- Credit-worthiness
Competence - Legal and statutory framework
Competence - Grid planning
Competence - Gathering and assessment of environmental data
Competence - Site analysis and landscape modelling
Resource - Front End Engineers
2. Manufacturing and Design
C3 Design Competence - Design of permanent equipment
Competence - Manufacturing of components
Competence - Sourcing
Resource - Manufacturing plants
Resource - Manufacturing processes and standardisation
Resource - Partnerships
Competence - Quality Control
3. Logistics and Supply chain
R5 Technologies and software
Resource - Technologies and software
Resource - Raw materials procurement
Resource - Components procurement
Competence - Inventory Control
Competence - Order processing
Resource - Exceptional convoy equipment
Competence - Design of solutions for transport and installation of permanent equipment
- Long term supply partnerships
C7 Installation Competence - Installation of turbines and accessories
C8 Assembling and testing Competence - Assembling and Testing
4. Operations and Maintenance
Competence - Operation of wind farms
Competence - Maintenance
- Fleet optimisation (Repowering)
5. End-User
Competence - Power
Competence - Grid compliance
Competence - Service and solutions
Resource - Global customer service
C6 Transport
Transport
C9 Services
Procurement
R6 Procurement resources
Logistics
C5 Logistics management
Design
Manufacturing
C4 Manufacturing
R4 Sourcing resources
C1 Financing & Legal
C2 Grid Planning
R3 Engineers
Research
R1 Research resources
R2 Datasets acquisition
Field Development

16. 14
4. RECOMMENDED INITIATIVES
4.1. CORE CHALLENGES AND STRATEGIC OBJECTIVES
4.1.1. IDENTIFICATION OF THE CORE CHALLENGES
4.1.2. STRATEGIC OBJECTIVES
• Expansion and Growth challenges

17. 15
• Cost Competitiveness Challenge
4.1.1. HORIZONS FOR IMPLEMENTATION
The different objectives have been prioritised depending on their R&D budget and the impact
they will have on the revenue if implemented. As a result, the projects in the top-right corner
are the highest priority and belong to the horizon 3, whereas the projects in the bottom-left
corner belong to the horizon 1. In horizon 3, Vestas would really be shaping the future of
sustainable energy solutions through pioneering projects like floating offshore wind turbines
that are more cost-efficient, drone power delivery (i.e. start-up Twingtec), modulable wind
turbines and innovative solutions for electricity storage like wind-hydro hybrid projects.

18. 16
4.2. HOW TO MANAGE THE RISK?
This aims at reducing the uncertainty linked to our core challenges: expansion, cost-
competitiveness, improving services revenues. For its horizon 3, Vestas has to test new
products through experimentation in order to reduce the risk associated with the uncertain
environment of this particular horizon.
To achieve this, the company has created a MVP (Minimum-viable Project) in order to test the
dimensions of value, growth, and sustainability of their hybrid wind-solar and storage projects.
These are key for Vestas’ ambition to become a leader in sustainable energy solutions. These
solutions have now been proved to be viable and now need to be scaled up. A similar
methodology could be applied to test wind-hydro hybrid projects, more innovative, where the
water acts as a giant battery that discharge when the wind stops blowing.
The goal of those projects is to reduce intermittence and to increase flexibility of electricity
production. With the hybrid system, it’s possible to produce both wind and solar, or only wind
when it’s not sunny, or solar when it’s not windy, and to store the electricity produced and
deliver it on the grid when it’s needed.
è In terms of expansion, it can help Vestas to deliver energy solutions in countries suspicious
of the reliability of renewables and avoid intermittence in the same time.
è In terms of services, Vestas can increase its portfolio, by including consulting solutions,
grid analysis and maintenance for both wind, solar and battery concerning the hybrid projects.
It gives more opportunity to strengthen the skills & knowledge of Vestas in this sector.

19. 17
REFERENCES
Deloitte (2018) Global Renewable Energy Trends
GE. (2017). Annual Report.
Goldwind. (2015). Annual Report.
Goldwind. (2017). Annual Report.
Siemens Gamesa. (2017). Annual Report.
Statista. (2017). Offshore Wind Power Globally.
Statista. (2017). Vestas.
Vestas. (2015). Life Cycle Assessment of Electricity Production From an Onshore V110-2.0 MW Wind
Plant.
Vestas. (2017). Annual Report.
Xerfi. (2016). Electrical Equipment Groups - World.
Xerfi. (2017). Leading Players of the Global Renewable Energy Equipment Industry