TITLE PAGEWhat is SUNTECH 3Global Operation 3Investors 3How is the company today? 4The Product: The solar Panel 5Why is a good Product? 6Is Sri Lanka an opportunity to our 7company?Economic Environment 7Cultural Environment 9Technological Environment 10Political Environment 12Other advantages of Sri Lanka 13OUR STRATEGY 14Standardization Vs. Adaptation: 14Objectives: 14Target: 15How to enter the market? 15Greenfield InvestmentCompetition: 16Price 16Media and Channels of distribution: 17Conclusion 18Bibliography 19
Suntech Power Holdings Co., Ltd. (NYSE: STP) is the worlds largest producer of solar panels, with 1,800MW of annual production capacity by the end of 2010. With offices or production facilities in every major market, Suntech has delivered more than 13,000,000 solar panels to thousands of companies in more than 80 countries around the world. As the centre for the companys global operations, Suntech headquarters, in Wuxi, China, features the worlds largest building integrated solar façade. Founder Dr Shi Zhengrong is the founder, chairman and chief executive officer of Suntech Power. He is a graduate of the University of NSWs School of Photovoltaic and Renewable Energy Engineering. At UNSW, Dr. Shi studied under Professor Martin Green and met Stuart Wenham, now Suntechs Chief Technology Officer.Suntech Power has representative offices in China, Australia, the United States,Switzerland, Spain, Italy, Germany, Japan, and Dubai, as well as production facilitiesin Wuxi, Luoyang, Qinghai,Shanghai, Germany, Japan, and Goodyear, Arizona.Before going public on the NYSE in 2005, Suntech was funded by a consortium ofprivate equity firms, including Actis Capital and Goldman Sachs. The consolidatedprivate equity investment into Suntech is generally considered to be one of Chinasmost profitable private equity investments ever, as each firm is thought to havemade gains well over 10x on their original investments.
Prior to 2010, Suntech Power Holdings only had manufacturing facilities in China.However, the company has opened its first U.S. plant in Arizona. The state hasactively promoted and supported clean energy companies with its Renewable EnergyTax Incentive Program, which offers a refundable income tax credit of up to 10percent and a 75-percent reduction on real and personal property taxes torenewable-energy companies in Arizona. Suntech Powers Arizona plant will becapable of assembling 30 megawatts of solar panels annually. Suntech is consideringsetting up more manufacturing facilities globally to tap international markets, easeforeign political pressure, and mitigate currency volatility.Suntech is evaluating manufacturing opportunities in Europe, Asia and NorthAmerica. Though, it is more expensive to produce overseas than in China, Suntechcan compensate by selling the product at a higher price because it is a local product.Exchange rate fluctuations also make it beneficial to manufacture in the samecountry in which the products are sold. Demand in Europe, the worlds largestmarket for solar energy consumption, is expected to grow at a more moderate 20%partly due to cuts in government subsidies. But the U.S., Asia Pacific, Middle East,and African markets are expected to double by next year. Consumption in China isalso expected to double to around 1 gigawatt this year. In response, Suntech isramping up production, planning to expand production capacity to 2.5 gigawattsfrom 1.8 gigawatts. As a result of its location in the path of major sea routes, SriLanka is a strategic naval link between West Asia and South East Asia. It was animportant stop on the ancient Silk Road.
A solar panel or photovoltaic module is composed of individual PV cells. This crystalline-silicon panel has an aluminum A solar panel. The solar panel can be used as a component of a larger photovoltaic system to generate and supply electricity in commercial and residential applications. Because a single solar panel can produce only a limited amount of power, many installations contain several panels. A photovoltaic system typically includes an array of solar panels, an inverter, and sometimes a battery and interconnection wiring.Solar panels use light energy from the sun to generate electricity throughthe photovoltaic effect. The structural (load carrying) member of a module caneither be the top layer or the back layer. The majority of modules use wafer-based crystalline silicon cells or thin-film cells based on cadmiumtelluride or silicon. The conductingwires that take the current off thepanels may contain silver, copper orother non-magneticconductive transition metals. Thecells must be connected electricallyto one another and to the rest of thesystem. Cells must also be protectedfrom mechanical damage andmoisture. Most solar panels are rigid,but semi-flexible ones are available,based on thin-film cells.
One of the most pressing issues associated with energy production is global climatechange, caused by the warming of the earths atmosphere. The vast majority ofclimate scientists agree that global warming is human-caused and can be stopped bydrastically reducing the amount of greenhouse gas (carbon dioxide, ozone, water vapor, etc.) emissions. Education on the issue is creating pressure for governments and energy companies to regulate greenhouse emissions. This movement is having a worldwide impact on energy regulation in the form of increased government subsidies for clean energy sources and global emissions caps. Even China has begun to implement similar standards. Suntech is well positioned to take advantage of this trend in the long run.
The fundamental idea of this project is to understand the opportunities that theglobal market is offering us. Today, international companies have managed toincrease their income and increase their market share by investing in developingcountries, while they meet new customers’ expectations and needs. For this reason,in order to see if Sri Lanka is an opportunity for us, let see the following elements:Sri Lanka is a country off the southern coast of the Indian subcontinent in SouthAsia, is an island surrounded by the Indian Ocean, the Gulf of Mannar, the PalkStrait, and lies in the vicinity of India and the Maldives.As a result of its location in the path of major sea routes, Sri Lanka is a strategicnaval link between West Asia and South East Asia. The country is famous for theproduction and export of tea, coffee, coconuts, rubber and cinnamon, the last ofwhich is native to the country. Today, Sri Lanka is a founding member state of
SAARC and a member United Nations, Commonwealth of Nations, G77 and Non-Aligned Movement. As of 2010, Sri Lanka was one of the fastest growing economiesof the world. Its stock exchange was Asias best performing stock market during2009 and 2010.According to the International Monetary Fund, Sri Lanka claims has the followingeconomic aspects, which shows the opportunities of the country: It has a GDP of US$106.5 billion in terms of purchasing power parity. Is next only to Maldives in the South Asian region in terms of per capita income, with a nominal value of US$2,435 and PPP value of US$5,220. It recorded a GDP growth of 8.2% in 2010 and it is estimated that GDP will grow by 9.5% in 2011, becoming one of the fastest growing economies of the world.While the production and export of tea, rubber, coffee, sugar and other agriculturalcommodities remains important, the nation has moved steadily towards anindustrialized economy with the development of food processing, textiles,telecommunications and finance. An element that is crucial for SUNTECH interests,as we are looking for emerging economies.In 2010 the service sector makes up 60% of GDP, industrial sector 28% andagriculture sector 12%. Private sector accounts for 85% of the economy and India isthe largest trading partner. Following with this information, it is important to seehow the economy is growing in terms of its Gross Domestic Products price (seeGraph # 1).Graph # 1:Gross Domestic Product, Price of Sri LankaThis Graph represents the gross domestic product of the country since 1980 to 2010,showing that in the last years the GDP has increased considerable in the last year,an opportunity that the company has to take advantage of.
In order to see if the products offered by SUNTECH can introduce easily in thiscountry, it is important to include that 90% of the households in Sri Lanka areelectrified and Income inequality has dropped in recent years, indicated by a ginicoefficient of 0.36 in 2010. As well, The Global Competitiveness Report, published bythe World Economic Forum has listed Sri Lanka as a transitive economy, from factor-driven stage to efficiency-driven stage, ranking 52nd in the global competitiveness.It also ranked in: 45th in health and primary education, 32nd in business sophistication, 42nd in innovation 41st in goods market efficiency out of the 142 countries surveyed. 8th in the World Giving Index, registering high levels of contentment and charitable behavior in its society.Some other positive elements of Sri Lanka, can also include that since 2005 the percapital income has doubled. During the same period, poverty has dropped from15.2% to 7.6%, unemployment has dropped from 7.2% to 4.9%, marketcapitalization of CSE has quadrupled and budget deficit has doubled.The culture of Sri Lanka has been influenced by many things in the past, but hasmanaged to retain much of its ancient, rich aspects. Mostly it has been influenced byits rich history, diversity, and religious beliefs. The country has a rich artistictradition, embracing the fine arts, including music, dance, and visual arts. Sri Lankan lifestyle is reflected in the cuisine, festivals, and sports. South Indian influences are visible in many aspects. There are also some influences from colonization by the Dutch, the Portuguese and the British. Sri Lankan culture is best known abroad for its cricket, food, and cultural exports, like tea. SriLankan culture is diverse, as it varies from region to region.
Age structure Age Percentage Male Female0-14 26% 2,605,251 2,490,41615-64 67% 6,285,118 6,606,19665 years and 7% 602,470 649,124over Telephones Main lines in use: 3,145,957 Est(2008) Mobile cellular in use: 9,253,067 Est (2008) Telephone system Very inadequate domestic service, particularly in rural areas; some hope for improvement with privatization of national telephone company and encouragement to private investment; good internationalservice (1999). The latest trend is the CDMA technology, because of this technologymany Sri Lankans who live in rural areas can now communicate with each otherfaster and easier than before.DomesticThe national trunk network consists mostly of digital microwave radio relay; fiber-optic links are now in use in the Colombo area and two fixed wireless local loopshave been installed. Competition is strong in mobile cellular systems butthe teledensity rate remains as low as 16.6 phone lines per 100 persons (2004).Although the reported phone line teledensity is 16.6 (2004) fixed phone lineteledensity remains as low as 5.1, where cellular teledensity is 11.4. ReflectedCellular phone teledensity is misleading because some people have more than onephone. Therefore true teledensity remains at a very low figure.
InternationalSubmarine cables to Indonesia and Djibouti; satellite earth stations - 2 Intelsat(Indian Ocean) (1999)Broadband Internet accessADSL was introduced in Sri Lanka in 2003 by Sri Lanka Telecom.The average speedis 512/128 kbit/s, costing Rs. 1600+VAT(US$ 16 approx.) per month for anunmetered flat rate. This is the standard for SLT and resellers. Faster connections upto 2 Mbit/s are available, but the price is considerably higher (Rs. 6500 for 2 Mbit/s(0.25 MB/s))(US$ 65 approx.). In peak hours there are lot of complaints fromcustomers that they are not able to achieve these speeds. The service is availablewithin the Greater Colombo area, Kandy, Galle and is currently being extended.Recently Sri Lanka Telecom has introduced a new plan where one can transfer up to1.5GB of data per month for Rs. 500/- (US$ 5 approx.) at speeds of 256kb upload /1Mbit/s download. Charge for each additional 1MB is Rs. 0.35. Radio broadcast stations: AM 15, FM 50, shortwave Radio: Est Number of Radio sets: 12 million Television broadcast stations: 21 (1997) Televisions: Est 5 million( including B & W sets)
Sri Lankan politics, since independence, have been strongly democratic. Two majorparties, the United National Party (UNP) and the Sri Lanka Freedom Party (SLFP),have generally alternated rule. In 1972, a new constitution is introduced .Thecountry’s name changes, Buddhism became a constitutional principle and privatelarge plantations are nationalized.Historical divisions continue to have an impact on the society and the country.Sinhalese majority have abused the rights of Tamil, Tamil also protested against thegovernments’ educational policies and subsidized in the agriculture to farmers in thesouth in order to be an irrigated land. In 1991, a peace deal has been signed withthe parties to cease the conflicts and improve the economic condition in Srilanka.Under the 1978 constitution, the president of the republic, directly elected for a 6-year term, is chief of state, head of government, and commander in chief of thearmed forces. Responsible to Parliament for the exercise of duties under theconstitution and laws, the president may be removed from office by a two-thirdsvote of Parliament with the concurrence of the Supreme Court. Sri Lankas judiciaryconsists of a Supreme Court, Court of Appeal, High Court, and a number ofsubordinate courts. Sri Lankas legal system reflects diverse cultural influences. Criminal law is fundamentally British. Basic civil law is Roman- Dutch. Laws pertaining to marriage, divorce, and inheritance are communal. Under British rule, the Charter of Justice of 1801 ensured the continuation of the laws that were in force at that time. These applicable laws were all of the following: Roman-Dutch principles brought into force by the Dutch, 1. Kandyan Law that applied to the Kandyan provinces, 2. Thesawalamai Law (also spelt as ‘Tesawalamai’) that applied to the Jaffna Tamils in the Jaffna province, 3. Muslim Law that applied to the Muslims, 4. Limited body of Buddhist and Hindu Law applicable mainly to Buddhist and Hindu religious property and customs.
1. Governments worldwide increasingly provide financial incentives to solar manufacturers specially in developing economies of China and India.2. Sri Lanka relies on tourism a lot and post end of civil war there is lot of developmental activities on going Sri Lanka and keeping tourism as a key player in economy Sri Lankan government gives huge subsidies in green projects.3. One of the most pressing issues associated with energy production is global climate change, caused by the warming of the earths atmosphere. The vast majority of climate scientists agree that global warming is human-caused and can be stopped by drastically reducing the amount of greenhouse gas (carbon dioxide, ozone, water vapor, etc.) emissions. Education on the issue is creating pressure for governments and energy companies to regulate greenhouse emissions. This movement is having a worldwide impact on energy regulation in the form of increased government subsidies for clean energy sources and global emissions caps. Even China has begun to implement similar standards.
After analyzing the benefits of Sri Lanka’s Market and seeing that Suntech will havethe opportunity to find great advantages, the following strategy could be anexcellent approach to achieve the mains goals of the company; be one of thebiggest Solar panel companies in the world, who understand how to help theworldwide environment.In terms of product technology its usage and implementation, Suntech will take anstandardise approach, however due to different economy, PPP country underdevelopmental stage and difference in culture Suntech will take governments help toreach to customers and will take an adapted approach in pricing promotion andmarketing. 1. Suntech expects sales in China to rise to 20% of its total sales by 2012.  2. Suntech has started expanding a plant in Jiangsu Province in order to increase production capacity by 300% to 2000 MW in three years. The Chinese governments subsidy program to buildings powered by solar energy is expected to stimulate the photovoltaic industry in China 3. For 2015 install the 20% of the solar panels to provide Sri Lanka with energy. 4. By 2020 become the company with the biggest market share in solar panels of Sri Lanka, with a percentage of 50% of the whole market. At the same time, start to sell the solar panels to customers who think that this new way to achieve energy is appropriate and beneficial to the environment.
To start, SUNTECH is willing to attract the government of Sri Lanka in order toprovide the country’s public energy with solar panels. However, in the long runSUNTECH is willing to sell their products to persons between 30 to 40 years, that arebuying their first and new home, and that are interested on helping environment.Governments has made new policies to encourage the use of renewable energy bycompanies such as The RERED Project that can help alleviate the burden a businesshas in making the initial capital outlay for energy efficiency investments. Anybusiness operating in Sri Lanka is potentially eligible for financial assistance underthe RERED Project. Finance facilities are available at favorable interest rates withtenures as long as 10 years including a grace period of 2 years. Srilanka lacks ofhighly technical skilled labor, for that reason we are planning to open a new plantfrom the scratch. The production of solar panels requires specific processes,methods and techniques. In that way, to better keep the know-how strategy whichcritical in the survival growth of our enterprise, Greenfield investment is the bestoption.
In order to see how easy it will be for the company to enter the market, analyzingthe competition is very important. Today Sri Lanka has two big companies that offersolar panels:Company Company Description Business type: manufacturer, retail sales, wholesale supplier, exporter, importer. Product types: solar collectors evacuated tube, photovoltaic Vinseth Solar Pvt Ltd systems, solar water pumping systems, LED light bulbs, solar street lighting, solar lighting systems. Specialized in installation of the very latest solar photovoltaic (PV) electricity systems with the firm commitment to excellent customer service, quality J Lanka Technologies (Private) Limited products and clean energy. JLT provides the most cost effective and easy to maintain solar energy systems that will reduce energy bills. Business type: engineering and development, solar PV system distributor Product types: solar electric grid-tie power systems, photovoltaic modules, photovoltaic systems residential, photovoltaic systems commercial, DC to AC power inverters sine wave, solar street lighting.The price has an ambiguous meaning. Simply the price is the amount of money orother valuable features that are required to purchase a product. Many companieswant that the price increases their revenue or simply increase their market share.Given that SUNTECH is a company well positioned in the market and that its aim isto dominate the world market, starting with the developing countries, the price that
shall be established in Sri Lanka must be put according to the competition and thecosts. In Diagram # 1, we can see Suntech’s price in the market. However, seeingthat the competitors in Sri Lanka sell solar panels as an exclusive product at a veryhigh, then the main idea is to reduce 10%, the price of the world’s market and inthat way increase the Market Share of the company. In other words, this will be theprice of Sri Lanka. Product PriceSTP005B $22,95STP020B $79,2STP030D $115,2STP040D $152,2STP180S $361,422STP205 $367,155STP185S $371,466STP225 $428,49STP275 $523,71Diagram # 1:
As it was explained in the “Technological Environment”, where it was expose theadvantages and disadvantages of the different media and channels of distribution,we believe that to begin with our strategy, it is important to enter the mediumthrough a ATL (Above the line) strategy. In other words, we will show our customersthe products by TV and billboards, representing the how important is theenvironment and how solar panels can save the world from burning. It is importantto add that this is a Long-term strategy, in order to start entering our consumersmind, as our strategy will first aims to start selling the panels to supply the publicelectricity service.Given that Sri Lanka is a country with a high potential, as we could see from thisanalysis, SUNTHECH must take advantage of the excellent opportunities that thecountry is offering to the world. Sri Lanka, has an outstanding economic growth, andis now investing in stainable projects. In other words, Sri Lanka is the door forSUNTHECH to increase, not only as a company, but to open its market share alongthe Asia continent, as it has been doing during the last years.
The strategy that was presented, which showed the strength, weaknesses, threatsand opportunities of this project, focusing on a marketing mix strategy, is a goodexample of how a company can work in order to achieve its goals: be the biggestcompany in the world, helping the world. 1. http://en.wikipedia.org/wiki/Economy_of_Sri_Lanka 2. http://www.nationmaster.com/country/ce-sri-lanka/eco-economy 3. http://www.theodora.com/wfbcurrent/sri_lanka/sri_lanka_economy.html 4. http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Sri- Lanka-OVERVIEW-OF-ECONOMY.html 5. http://www.indexmundi.com/sri_lanka/gdp_real_growth_rate.html 6. http://www.energymatters.com.au/images/suntech/STP085S-12Bb.pdf 7. http://eu.suntech-power.com/en/products/download-center.html 8. http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Sri- Lanka-OVERVIEW-OF-ECONOMY.html 9. http://www.solarpanelinfo.com/ 10.http://am.suntech-power.com/ 11.http://www.suntechgroup.com/ 12.http://us.sunpowercorp.com/