Thursday, May 23, 2013

Solar world USA

Solar world USA Introduction: The solar world USA has been in existence in the production of the solar energy in the industry for a quite long time. However, it has faced various challenges from the Chinese competitors who have over saturated the market with their cheap products and thus acting as a thereat to them. There have also been various issues affecting the operations of the firm like limited subsidies from the government and operational costs (Devabhaktuni et al, 2013) . This essay is a case study of the solar world USA and will provide an insight of the overall market challenges and trends of the solar energy industry. The essay will also try to explain the challenges that the company faces in the industry through an analysis of their limiting factors and also their strengths through analysis of the resources and capabilities that they posses. Furthermore, the essay is going to analyze the strategies of the companies in the industry and what factors have shaped them to act that way. More so, the writer is going to provide a brief overview of recommendations for both the Chinese company and the solar world USA. Finally, a conclusion to give a brief overview will be provided. Analysis The efficiency of the solar industry and technology is getting better with time though it still mostly depends on the incentives offered by the government. However, being that the technology majorly relies on the solar energy output, in regards to depends on the solar panels to rely electricity, it means that there will reach a point where the source of energy can be a very viable competing source. However the decision of the government to offer subsidies and the fact that people are putting up the panels for reasons that are not economically based means that the energy is still not sufficient enough (Osuagwu et al,2011). Other factors that aft the transmission of this source of energy ids the energy prices of other sources of energy which at times are way lower than the cost of buying a panel and setting it up for use(CNBC ,2013). A major competing factor is the fact that there is also a major economic recession that is making people lees interested in spending their money especially for an energy source that has many alternatives like the solar energy. In the United States the manufacturing costs of the solar power per watts is so high than their Chinese competitors that the country either has to consider exiting the market or attaining acquisitions. There is also the fact that the Chinese government has decided to offer loans to the Chinese companies dealing with the production of solar power thus making them more competitive and better leveraged in the market than the United States counter parts(CNBC ,2013).. The other factor altogether is the issues of price where the Chinese companies are able to offer the energy more cheaply something that the United States is not able to compete with keeping in mind the costs that are involved make it quite difficult to offer the service at a lower cost (CNBC ,2013). In regards to resources and capabilities of solar world USA, the company stands at a better position than that of its main stream competitors through the following ways: The company has an advantage of being able to produce quality solar energy that is different in standards as compared to the other competitors in the production of the same in the market. The fact that the company is highly automated with the use if computers at every stage, so at to ensure manufacturing protocols through stringent control measures have been put in place (Solar world USA,2013). This way, the process is characterized by un -parrarel precision during the assembling time with process being supervised by the use of computers and simultaneously double checks being done by human beings. The company also benefits form the fact that it has a full solar value chain system with modern factories for all the production phases with proper technologies at all in-house facilities, being the first of the United States companies to run a fully integrated solar manufacturing process (Solar world USA,2013).. The main forces that have affected the industry leading to an new evolution and trend is the case of weather where in the European continent most operations have been brought to a halt due to the snowy conditions that have ked to the delays in the installation process (CNBC ,2013). . There have also been high doubts in the industry due to the fact there have been rumors alleging that there is an energy conservation devices bankruptcy therefore causing many manufactures to halt their processes. Industry forces, such as over capacity and competition mainly form the Chinese firms; have led to a sharp decline in the prices of the solar panels and energy thus leading to lower levels of profitability (Solar world USA ,2013). The high cost of the raw materials for the energy source has also been another force altogether. For instance, the price of the high efficiency PV modules has been constantly at the rise and has remained at very high levels ( Pride & Ferrell 2011)). Furthermore the industry is also griped with the issue of government incentives and subsidies that have affected the performance of most if not all the companies being that they have to incur high operational costs of maintenance and being that the industry is over capacitated. The above factors have shaped the strategic behaviors of the firms in the sense that many companies are either exiting when the cost are too high while other firms are acquiring mergers and acquisitions in order to keep up the costs so as not to be outcompeted (CNBC ,2013). . In the case of the price fluctuations, firms are trying to compete in terms of quality so that they may attain a bigger market share though it is quite difficult being that the Chinese products are very cheap. Additionally, firms are also pushing for anti dumping tariffs against the Chinese products so that they can attain a completive market for which their products can successfully compete (CNBC ,2013). I recommend that solar world USA continues to push that proper laws are put in place to avoid the issue dumping from the Chinese companies that may lead to their out competition. I also insist that the company devices a range of products that can be able to meet the different needs of the consumers and thus use price discrimination so as to acquire higher profits for better products (Konrad, 2013). The company could also try setting up a manufacturing plant in a country where the labor is cheap like in India so that they can be able to successful;;y compete in terms of costs with the Chinese products. For the Chinese solar companies I would recommend that they start top look out for more innovation strategies that can improve on the quality of their products because the end of the day, price is not only the important aspect in generating high sales and revenues. Additionally the company could try setting up multinational companies that can be able to be allowed to operate in the aspect of fair trade with the locally available companies, this way it can be able to avoid the issue of being charged very high taxes and tariffs. Conclusion It is evident that despite the recent growth of the solar power in the world, the industry is still very much crippled with many factors that are limiting the exploration of its full potential. In the case study above, the full perspective of the solar world company USA is brought into light for a thorough analysis. It is evidenced that the main challenges to the industry is the competition that it faces from the other sources of energy like coal and gas respectively. Solar world USA On the other hand faces the main challenge of competition from China through the production of cheap products. The company has however maintained a strong market base due to the quality of solar panels that it offers and through diversification.Howver.it is very important that the company starts analyzing strategies like cheap production countries to be able to compete effectively with the Chinese companies in terms of costs. References Bandt, T, (2011),Business analysis project Solar Industry, New Jersey, Grin Verlag. CNBC(2013),Research and Mrakets:Analysis of solar world AG.Retrieved from www.cnbc.com/id/100467622/Research_and_Markets_Analysis_of_SolarWorld_AG Devabhaktuni, V., Alam, M., Shekara Sreenadh Reddy Depuru, S., Green, R. C., Nims, D., & Near, C. (2013). Solar energy: Trends and enabling technologies. Renewable & Sustainable Energy Reviews, 19555-564. doi:10.1016/j.rser.2012.11.024 Konrad,T,(2013)Solar Headwinds part II constraining factors limitind solar profitability.Retrieved fromseekingalpha.com/article/193470-solar-headwinds-part-ii competitive-forces-constraining-industry-profitability Osuagwu, O. E., Agbakwuru, A., & Chinedu, P. (2011). SOLAR POWER AS ALTERNATIVE ENERGY TO DRIVE NFORMATION TECHNOLOGY DIFFUSION IN NIGERIA: A COMPARATIVE ANALYSIS OF COST EFFECTIVENESS OF SOLAR OVER THERMAL ENERGY (SOLAR ENERGY & INDUSTRIAL GENERATORS). Journal Of Mathematics & Technology, 2(3), Pride,W,M, & Ferrell ,O,C, (2011)Marketing,New york,Cengage Learning Solar world USA(2013), About SolarWorld - manufacturer of solar panels for residential ... Rerievd From: www.solarworld-usa.com/about-solarworld.aspx