Overview of the Solar Panel Industry

Global Business Operations solar Panel Industry Student Name student Number Introduction The solar gameboard manufacturing is a niche market dominated by a sm on the whole number of macro firms. tail fin out of the top ten biggest players In the Industry are Chinese firms. Solar bloodsheds capture sunlight and convert It Into electricity, In one of two forms persistence, overdue to the large market share dominated by a small number of players, furthermore, the solar panel industry non nevertheless cooperates with, just to a fault competes with other industries such as power occupation and component manufacturing industries.The Solar Panel Industry The form of the Solar Panel Industry With five out of the biggest solar panel producers worldwide being Chinese, it is no surprise that 45% of solar panel output across the globe is by Chinese firms. The solar panel industry is the fastest festering power technology in the world, with reported y too soon increases in capacit y of 50%. Consisting of mainly 10 firms, the industry isnt large in terms of suppliers, in time, the combined revenues of these 10 firms account for $21. exile, thus the industry is large in revenue as well as production. harvest-tide & Global Presence The growth of the solar panel industry is fairly new, beginning in the early sasss, thus the industry is not only dominated by a few large players, but it is also maintaining its volume position as it is not going through consolidation and play into a fragmented industry the large firms are still growing. Competition indoors the industry is tight, especially since all major firms sport a global presence.Any large firm involved in solar panel production without a global presence is sure to be overtaken by competitors. Product Variety & incumbrance Business Solar panels are generally a in truth homogeneous product, all firms that produce them consecrate essentially the same product with minor variations, this makes it even more difficult to develop a unbowed competitive advantage within the industry. The industry is mainly based on business-to-business sales power production firms order solar panels from the producers.Other revenue blows come from foreign solar panel retailers purchasing small orders and distributing them to cloistered buyers such as homes or offices. Innovation, R&D, and Demand conditions In order to develop and maintain a competitive advantage within the solar panel industry, it is paramount to invest in innovating and research & development. As it stands, the industry remains very linear in terms of product innovation investments are morose except no new technologies give yet been discovered or implemented.Since its inception, the technology implemented within solar panels has definitely increased, however there have been no significant breakthroughs that would fairly stable prices have been more or less constant and competition tight but not drawn-out as the players arent many. The industry took a blow in 2007 following the global crisis, however it recovered in 2010 and has been growing more than ever at an unprecedented pace.Vertical Integration & Production Process The Chinese firms mainly seize on upended integration from the raw materials to the finished product, whereas USA and Japanese firms, which are the other big players, pitch to outsource some production as well as import components from suppliers such as Busch. This diversity arises due to the embodys involved in producing and assembling solar panels in China, availability of resources is very high, as well as cheap labor and land, thus incurring less costs, hence why Chinese firms prefer to vertically integrate their production process.Whereas for American and Japanese firms, cheap labor and production spot is not available, thus it is more cost effective to outsource production and import components. Vertical integration itself is not a profusey efficient way of production in the lon g run, as present by the automotive industry in the early 20th century. Ford take a full vertical integration production process, and while for years it remained the market leader in the USA, eventually Toyota adopted a Just-in-time production process and overtook Ford in USA market share.This is mainly due to the incurred sots of vertical integration at an early stage of an industry as a whole, vertical integration is cheaper, however as an industry and its accompanying technologies advance, third-party firms enter niche markets of component production and it eventually becomes cheaper to outsource more or less of the production process. Economies of Scale The biggest advantages to the large solar panel producers arise due to their economies of scale. With a huge production capacity and an efficient supply string, every step of the value chain from production to delivery becomes ofttimes cheaper per unit.Economies of scale acquired by solar panel producers are d admit to their rapid growth mainly due to their early gateway into the market. There are no physical barriers to entering the solar panel industry governments actually subsidize firms who get involved in renewable energies through tax exemptions and monetary aid. However, the barriers to entry are known as natural barriers, meaning that the barriers to entry that do exist are not due to regulation, but rather to the strength and size of the competitors, which in turn relates to their economies of scale which allow them to induce production at such high capacity and cost efficiency.Value Chain Configuration Sunsets is Chinese solar panel producer, up to 2010 it was the world market leader in the solar panel industry, today it has at rest(p) down to be the 5th biggest firm. After a series of financial troubles related to defaulting on US government bonds in 2011, the firm has reported revenues of $3. 1 ban and net loss of $1 Ban (2011). Sunsets was founded in 2001 and went public on the New York Stock Exchange in 2005, share price dropped 40% following its first default on government bonds.The following diagram shows Sentences value chain process, which result be explained in more detail underneath the diagram The first segment of the value chain is inbound logistics, since Sunsets is a vertically integrated firm, it produces its own components which are later used in the production of solar panels. The next part of the value chain is operations this part is the most important in Sentences value chain as it is where production takes place. The core business of Sunsets is the production of solar panels, without an impeccable product they would quickly cease to be one of the market leaders.The third step shown in the diagram is outward-bound logistics, this involves Sunsets distributing the finished product to its customers. Supply chain management is very important, especially since Sunsets is vertically integrated, they have their own distribution channels rather than out sourcing them, thus their customers must receive their products on time and in dear(p) condition. Marketing and sales isnt such an integral part of the value chain, as the core revenue stream for solar panel producers is business-to-business sales rather than business-to-customer, thus jugular marketing methods are not as effective.The final step of the value chain is service, mainly involving post-sale service. Given the nature of the product, solar panels actually have an average life span of 25-30 years, thus minimal service is required, however, Sunsets focuses more on actually turning the service step into a long-term relationship with customers for repeat business and long-term contracts. Sunsets is present globally, with large volume sales to Australia, USA, China, Spain, AJAX, and Brazil, it is basically present in every continent. The main customers forSunsets and other solar panel producers are power plants and solar farms, who in turn sell on the electricity they produce with the solar panels. It is a large market with very few players as power production is one of the hardest markets to enter, with extensive barriers to entry. Sentences overall performance is dubious. On the one hand, it lead the market for many years due to its fine quality and reputation in production, and on the other hand, it crashed due to mismanagement of resources and financial troubles.In terms of cost efficiency, Sentences vertical integration is seemingly flawless as the hole production process is streamlined and very well coordinated, thus the conclusion in terms of performance is that operationally Sunsets is performing exceptionally well, however administratively it is performing horribly and is definitely behind its competitors. Out of the top 10 dominating firms, only two firms are running at a loss, one of which is Sunsets. Recommendations The main issue for Sunsets is mismanagement of funds, thus the main recommendations would be to change the CEO, which has actu ally been done.