Strategic Business Analysis, First Solar Inc, transformations
The U.S solar industry has grown of age as part of the global industry estimated at $77 billions, following increasing solar installation demand every year. The new trend arises from government incentive programs, declining installation prices and stiff competition in the market. As the world switch to renewable energy sources, companies have to deal with slashed profit margin owing to declining product prices leaving companies such as Q-cells SE into bankruptcy despite benefiting installers such as such as Solarcity and SunPower. Nevertheless, the anticipated global recovery in the industry has left companies with diversified operations including project development and utility-scale plants, SunPower and First Solar prime beneficiaries.
In response, transformations driven by the invisible force of technology-based innovation have left competitors better to pace the industry. For instance, more startups have been acquired by large operators to boost their performance such as the NRG Energy Inc. acquisition of Solar Power Partners and First solar Inc. acquisition of NextLight and TetraSun Technologies. Surviving the global market approaching saturation with cheap panels from Chinese manufacturing counterparts demand strategic restructuring of operations in First Solar Inc. segments comprising component and system segment.
[...] These enable the company profit from avenues beyond the usual manufacturing of PV panels and obtain income from power plants built, operated and sold to other investors. Similarly, the company applies applicable production activities streamlining entire manufacturing process into an adjustable system in response to increased demand. STRATEGIC BUSINESS ANALYSIS: FIRST SOLAR INC Sustenance of Long-Term Supply Contracts 27 The company maintains a pre-sold capacity under lengthy supply contracts which provide a predictable platform for the company meet their expansion plans timely while producing en mass to benefit from economies of large scale. [...]
[...] In spite of that, buyers remain powerful and price sensitive to pressure reduced installation costs since they believe they possess ability to locate an equivalent product in the market. As such influence is affecting the substantial international operation of most companies owing to difficulty in negotiating a successful collective bargaining agreement in applicable foreign jurisdictions (First Solar, 2013). On the other hand, the market is getting saturated with substitute's products reshaping the competitive environment as customers are more informed and always desiring cheaper, efficient and quality products in the market. [...]
[...] Top 10 Technology Advances in Renewable Energy . Retrieved July from http://gogreencyclopedia.blogspot.com/2012/04/top-10-technologyadvances-in-renewable.html GTM. (2013, March). U.S Solar Market Insight Report. Retrieved July from http://www.altaenergy.com/reports/U.S.Solar%20Mkt%20Insight%202012%20Year%20in%20Review% 20ExecSum%20Mar2013.pdf Henry, A. (2008). Understanding Strategic Management. New York: Oxford University Press. [...]
[...] This has assisted First Solar safeguard CdTe module technology with proven advantages over crystalline poly-silicon modules used by competitors. In this far, the company holds over 33 patents expiring in 2023 and 19 pending applications in the U.S alongside 17 patents and over 30 pending applications annexed to the ‘First Solar' and ‘First Solar and Design' trademarks in foreign jurisdictions (First Solar, 2013) Capabilities Financial The company financial strength is distinctively capable through the adequate cash balance as indicative of the company's potential to innovatively invest in new technologies and market diversification while maintaining its liquidity. [...]
[...] In particular, suppliers of tellurium, a primary component in solar panels charges high prices owing to its rare nature. The future growth of companies such as First solar may find it facing stiff competition from electronic industry affecting their productivity and profits owing to increasing global prices of tellurium (First Solar, 2013). In particular, the future supply of cadmium Telluride as the primary raw material single-sourced from copper refineries, expose the company to risk given that increasing demand of the First Solar products may not be manufacturers. [...]
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