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Suntech Solar Strategic Analysis

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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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Suntech Solar Strategic Analysis

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

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