Overview of the Solar Panel Industry

Global Business Operations solar adorn Industry Student Name student Number Introduction The solar jury sedulousness is a niche market dominated by a small derive of voluminous firms. Five out of the re acquire ten biggest players In the Industry argon Chinese firms. Solar circuit boards appropriate sunlight and convert It Into electricity, In angiotensin-converting enzyme of two forms industry, due to the giving market sh atomic number 18 dominated by a small number of players, further more(prenominal), the solar gore industry non only cooperates with, that too competes with other industries such as function yieldion and component manufacturing industries.The Solar Panel Industry The Shape of the Solar Panel Industry With cardinal out of the biggest solar control panel producers worldwide being Chinese, it is no strike that 45% of solar panel work across the globe is by Chinese firms. The solar panel industry is the fastest growing berth technology in the world , with reported y previous(predicate) increases in electrical condenser of 50%. Consisting of mainly 10 firms, the industry isnt large in terms of suppliers, til now, the feature taxations of these 10 firms account for $21. Ban, indeed the industry is large in revenue as well as payoff. Growth & Global Presence The maturation of the solar panel industry is fairly new, beginning in the premature sasss, consequently the industry is non only dominated by a few large players, but it is also maintaining its volume position as it is not going through consolidation and turning into a fall apart industry the large firms are still growing. Competition within the industry is tight, especially since all major firms subscribe a global presence.Any large firm involved in solar panel production without a global presence is sure to be overtaken by competitors. Product soma & Core Business Solar panels are generally a in truth homogeneous product, all firms that produce them apply esse ntially the same product with minor variations, this makes it even more difficult to fail a align 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 streams fill in from foreign solar panel retailers purchasing small orders and distributing them to private 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 rest real linear in terms of product innovation investments are heavy as yet no new technologies have yet been ascertained 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 an d competition tight but not extensive 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 adopt vertical desegregation from the raw materials to the finished product, whereas ground forces and Japanese firms, which are the other big players, tend to outsource nigh production as well as import components from suppliers such as Busch. This difference arises due to the exists involved in producing and assembling solar panels in China, availability of resources is very lofty, as well as meretricious labor and land, thus incurring less costs, hence why Chinese firms prefer to vertically integrate their production process.Whereas for American and Japanese firms, cut-price labor and production space is not available, thus it is more cost effective to outsource production and import components . Vertical integration itself is not a fully efficient way of production in the long run, as demonstrated by the automotive industry in the previous(predicate) 20th century. Ford adopted a full vertical integration production process, and while for years it remained the market leader in the the States, lastly 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 around 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 chain, any stair of the value chain from production to delivery becomes much cheaper per unit.Economies of scale acquired by solar panel producers are down to their rapid growth mainly due to their early admission 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 earlier to the strength and size of the competitors, which in turn relates to their economies of scale which allow them to sustain 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 gone down to be the 5th biggest firm. After a series of pecuniary troubles related to slacknessing 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 commutation in 2005, share price dropped 40% following its commencement exercise default on government bonds.The following diagram shows Sentences value chain process, which will be explained in more detail underneath the diagram The first segment of the value chain is inbound logistics, since Sunsets is a vertically compound 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 join business of Sunsets is the production of solar panels, without an impeccable product they would quickly step down to be one of the market leaders.The third step shown in the diagram is outbound logistics, this involves Sunsets distributing the finished product to its customers. Supply chain management is very import ant, especially since Sunsets is vertically integrated, they have their own distribution channels earlier than outsourcing them, thus their customers must receive their products on time and in vertical 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 concluding 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 borderline 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 stand for globally, with large volume sales to Australia, USA, China, Spain, AJAX, and Brazil, it is basically present in every continent. The main custom ers 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 excellent flavor 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. by of the top 10 dominating firms, only two firms are lead at a loss, one of which is Sunsets. Recommendat ions The main issue for Sunsets is mismanagement of funds, thus the main recommendations would be to change the CEO, which has actually been done.