IKEA 2010 Actual Presentation (FINAL)

A Better Solar CompanyRachel Chamberland, Alex Diaz, Amanda Lui, Kevin Satre

Global Trends: World Energy Consumption

Oil

Gas

Coal

Hydroelectric

Nuclear

Geo-thermal

Solar 0.1%

Source: Energy Information Administrationhttp://www.eia.doe.gov/emeu/aer/pdf/pages/sec11_3.pdf

$44 billion

2010 2011 2012 2013 20140

5000

10000

15000

20000

25000

30000

35000

Policy-DrivenModerate

Tota

l Wor

ld (M

W)

Global Trends: Market Outlook

Source: European Photovoltaic Industry Global Market Outlookhttp://www.epia.org/fileadmin/EPIA_docs/public/Global_Market_Outlook_for_Photovoltaics_until_2014.pdf

Global Trends: Government Initiatives

Germany 2010: €100 million for solar R&D

US 2010: $6 billion world’s largest solar plant

US 2009: $52.5 million for R&D

US 2009: 10 million Solar Roofs Act

China: planned $739 billion

investment into renewable

energy

Germany 2009: €20 billion for renewable energy

S Korea2010: $36 billion for clean energy

Japan 2009: $21 billion for residential solar power

France 2010: €1.35 billion clean energy

North Africa 2009: $5 billion solar energy

Acquisition: U.S.• Largest global energy

consumer• Market expansion

opportunity

Brand Building: Italy• Expand presence• Differentiation

Analysis Financials Timeline ConclusionRecommendations

Recommendations

Analysis

Recommendations

Financials

Timeline

Conclusion


Agenda


SWOT Analysis

• Inverted Flexible Vertical Integration• Warranty• High Quality • Western engineering & Chinese manufacturing

Strengths

• Higher cost• Lower market share• Lack of Canada government subsidies

Weaknesses

• Global trends• Expanding marketOpportunities

• Currency• Possible lack of Financing• Possible lack of government subsidies

Threats


Competitive Advantage: Porter’s

Cost Leadership Strategy

Focus Strategy (low cost)

Focus Strategy(differentiation)

Differentiation

Broa

dN

arro

w

Targ

et M

arke

tLow Cost Higher Cost

Competitive Advantage

CHINESE COMPANIES:

PRICE WARS


Macro Factors Considered


Financing

Government Policies

Risks

Currency

Liability of Foreignness

Entry Mode Method

Recommendations:U.S. Acquisition


United States Market Outlook

2010 2011 2012 2013 20140

1000

2000

3000

4000

5000

6000

7000M

arke

t Siz

e


RecommendationsAnalysis Financials Timeline Conclusion

Acquisition: Project Developers

Recommendations:Brand Building in Italy

RecommendationsAnalysis Financials Timeline Conclusion

Italy Market Outlook


2010 2011 2012 2013 20140

500

1000

1500

2000

2500M

arke

t Siz

e


Italy: Expand Presence

July 10: New office

• Addition of new sales representation

• After Sales Support

The Future is Bright High School Contest

• Promote recycling, compost, energy saving

• $20,000 solar panels prize

• Positive community connection

Brand Advertising

• Trade shows• Advertisements

After Sales Support• Support center for customers in Italy

Superior Product• Porter’s generic strategy

Italy: Differentiation


Financial Implications

Financials: Italy Costs


Your Future is Bright Contest

Additional Sales Representation

Lombardy* $20,000

Sicily $20,000

Lazio $20,000

Compania $20,000

Veneta $20,000

Additional Advertising $20,000

Investment $1,000,000

Total $(1,120,000)

Financials: Italy ROIIncrease in Projected Revenue


Yr1 Yr2 Yr3 Yr4 Yr50

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Reve

nue

Incr

ease

(mill

ions

)

Financials: United States Costs


Acquisition Cost $40-$45 millionCanadian Solar Ideal

Acquisition Cost $85 million

Average Acquisition Size

Financials: United States ROI


Yr1 Yr2 Yr3 Yr4 Yr50

5

10

15

20

25Ye

arly

Net

Gai

ns (i

n m

illio

ns)

Assumption: acquisition of one company per year

Conclusion

Timeline: 2010-2015

2010 2011 2012 2013 2014

Sales Force Expansion

Your Future

is Bright Contest

Possible project

development acquisitions

Acquire project

developer

Acquire project

developer

Harness project pipeline

Harness project pipeline

Reduce expansion

efforts


2015

Evaluate

Conclusion


I think that our fundamental belief is that, for us, growth is a way of life and we must grow at all times.

- Mukesh Ambani

Questions?

Many thanks to our Research Associate Pascale Chamberland!

Appendix• Global Trends:

• World Energy Consumption• Market Outlook• Government Initiatives

• Agenda• Analysis

• SWOT• Porter’s generic strategies

• Recommendations• Factors Considered• U.S. Acquisition

• Market Outlook• Potential Project Developers

• Italy Brand Building• Market Outlook• Expand Presence• Differentiation

• Financials:• Italy: Costs, ROI• US: Costs, ROI

• Timeline

Appendix• Boston Consulting Group Analysis• Evolution of PV Market• The Market• Entry Mode Selection• Risks• Currency: CAD/EUR, CAD/USD• Your Future is Bright Contest• U.S. Acquisition Opportunities• Vocabulary• International Trade Shows• Competition• Additional Financials• SWOT Analysis

• Germany• China• Japan• United States• Italy• South Korea• Czech Republic• France• Spain• Canada

Hig

hLo

wMar

ket G

row

th R

ate

High LowRelative Market Share

Italy ?United States

FranceCzech Republic

South KoreaJapan

GermanyCanadaChinaSpain

Appendix: Current MarketBoston Consulting Group Analysis

Hig

hLo

wMar

ket G

row

th R

ate

High LowRelative Market Share

United States ?FranceSouth Korea

GermanyCanadaChinaItaly

SpainCzech Republic

Japan

Appendix: Future MarketBoston Consulting Group Analysis

Appendix: Evolution of PV Market

Appendix: The Market

Appendix: Entry Mode Selection

Strategic Goals & Location-specific

Advantages

Equity Non-equity

Contractual agreements

ExportsPartially owned subsidies

Wholly owned subsidiaries

Source: Peng, Michael. Global Business (2008).

Appendix: Risks

•Informal institutions in ItalyLiability of Foreignness

•Strength of EuroCurrency•Interest Rates•Loosening credit for solar projects•Global government stimulus efforts

Financing Availability

•Possible reduction of FiT in Italy•US Government policy?

GovernmentalPolicy

Appendix: CurrencyCAD to Euro—5 years

Appendix: CurrencyCAD to USD—5 years

• Contest to promote environmental awareness in high schools as well as brand recognition for Canadian Solar.– Host in 5 most populous regions regions:

• Lombardy, Sicily, Lazio, Compania, Veneto– Judge based on 1 month:

• Recycling• Composting• Energy SavingSchools will fill out weekly progress profiles with details and pictures of the initiatives

they have taken.Best school will be selected by managers in the Rome office and will win solar panel

installation worth $20,000 for their school

Appendix: Your Future is Bright Contest

• Enerize Corporation- Florida• Gold Coast Solar- California• Emmy Energy- New York• Home Energy New York – New York• Clean Power Design- Missouri• Green Wind and Solar- Oklahoma

Appendix: U.S. Acquisition Opportunities

• Net-Metering Scheme: Owners of renewable energy sources collect retail credit for any excess energy they produce.

• Grid Access: network connecting consumers and suppliers

• Feed-in Tariff: Political policy to encourage use of renewable energy:– Subsidies for participating companies– Grid access for renewable energy– Net-metering– Enacted in 63 jurisdictions as of 2009

Appendix: Vocabulary

Appendix: International Trade Shows

December 2010: CanSIA Solar Conference Ontario, Canada(plans to attend)

May 2011: Solar Expo Verona, ItalyInternational Exhibition & Conference on Renewable Energy and Distributed Generation

June 2011: Intersolar Europe Munich, Germany

Nov 2011: International Solar Energy Exhibition Milan, Italy

Appendix: Competition Trends

First SolarSuntech

Sharp

Sunpower SanyoYingli

Trina Solar

Solar World, Q-Cells

Differentiation

Appendix: FinancialsU.S. ROI

• Judging by the total of 850 billion worth of acquired private companies, and a total of 10,013 companies having been acquired (avg. of $85 million per company), we judge that the companies we would acquire would be between $45-$60 million.

• In United States, with acquisitions we would capture another 2% of the market share. In 2009 we had revenues of almost $37 million in the United States (with a 4% market share) and with an additional 2% of the market share we could increase revenues by $55 million every year.

• In 2009, US spent $18.6 billion on renewable energy. Approximately 30% of that was solar power (.3*18.6= $2.75 billion). Our approximated gain in market share of 2% gets us another $55 million in revenue each year from the United States alone.

• This increases our yearly revenue from United States to about $92 million dollars (almost a 250% increase in revenue).– Additional Note: United States is a rapidly expanding market for solar power.

• We could potentially break even after the first year, depending on the size of acquisition.

Appendix: FinancialsItaly Campaign Costs

• Advertising Campaign in Italy- $20,000 per regional winner (5 total regional winners)– Five biggest regions – Lombardy*, Sicily, Lazio, Compania, Veneto.

• Additional $20,000 for getting the word out about competition.• Judging by the total of $850 billion worth of acquired private companies, and a

total of 10,013 companies having been acquired, we judge that the companies we would acquire would be between $70-$85 million.

*Lombardy will be the starting point. Assuming “Your Future is Bright” goes well, there will be four more contests implemented over the course of a year.

-Return on Investment- Matching these “advertising expenses” against the revenues they generate is nearly impossible and susceptible to poor estimates and “bad accounting”-However, it is possible that increasing our investment in the sales force in Italy will double or even triple our market share if we act quickly.

• Additional $1,000,000 for more in the sales force in Rome, Italy.

Appendix: Market in Germany

• Sales office located in Germany• Strong brand• Top five customers are in GermanyStrengths• Ability to differentiate from competition?Weaknesses• FiT• Largest PV market in world• Availability of Financing• Entrenchment of solar energy

Opportunities

• Expected cuts to solar PV tariffs• Demand concentration issuesThreats• Ownership: proven success in marketOLI Advantages

Appendix: Market in China

•Production facilities•Strategic alliance with Guodian Power Development Strengths•Higher priceWeaknesses•Large burgeoning population•Government subsidies•Low interest loans

Opportunities

•Government instability•Demand concentration•Collectivist society: government favoritism for local companiesThreats•Location-specific: Vertical FDI, natural resources•Internalization: IPROLI Advantages

Appendix: Market in Japan

•Strong brand•High-qualityStrengths•Ability to differentiate and compete against quality of Japanese companiesWeaknesses•Aggressive climate policies•Large residential marketOpportunities

•Strong brand loyalty•Competition•High quality standardsThreats•Location-specific: Reputation for quality•Internalization: develop qualityOLI Advantages

Appendix: Market in United States

•Proximity to headquarters•Reduced liability of foreignness•Western engineering with Chinese productionStrengths•Price war with Chinese manufacturersWeaknesses•Large potential market, lags behind Europe•Stimulus money•CA: Million Solar Roofs Initative

Opportunities

•Policies of political party in control•US entrenchment in oil industryThreats•Ownership: Differentiation•Location-specific: horizontal FDIOLI Advantages

Appendix: Market in Italy

• Brand• QualityStrengths• Higher price• Competition: U.S.Weaknesses• Subsidies of up to 80% of end user’s costs• FiT (and no FiT cap)• Net-metering• Lack of energy sources & no import trade limitations

Opportunities• Government budget imbalance• Slow reduction of FiT• Eventual market saturation?Threats• Ownership: VRIO resources, Canadian Solar local officesOLI Advantages

Appendix: Market in South Korea

•Proximity to China: reduced transportation costs•Western engineering with Chinese manufacturingStrengths•Higher price•CompetitionWeaknesses•High 2008 market growth•FiTOpportunities

•Slowdown in 2009 solar market•Strong currency•FiT capThreats•Ownership: Western engineering with Chinese manufacturingOLI Advantages

Appendix: Market in Czech Republic

•Western engineering with Chinese manufacturing•Reputation for QualityStrengths•Higher price•Liability of ForeignnessWeaknesses•Huge growth•FiT: willing to invest more•Simple administrative procedures

Opportunities

•Speculation that growth will be unsustainable•Taxpayers: negative PV image•Cutting subsidiesThreats•Ownership: Western engineering with Chinese manufacturingOLI Advantages

Appendix: Market in France

•Western company•Reputation for qualityStrengths•Higher price•Liability of ForeignnessWeaknesses•Favorable government policies•Further opportunity for growth•FiT

Opportunities

•Grid connectivity issues•Slow administrative proceduresThreats•Ownership: Strong brand with high quality reputation•Location-specific: Proximity to potentially large new marketOLI Advantages

Appendix: Market in Spain

•Western company•Reputation for quality•Proximity to Europe officesStrengths•Ability to differentiate?•Higher priceWeaknesses•2008 world leader in solar panels•FiTOpportunities

•Heavy cuts to FiT (2009 market: 69MW)•Economic slowdown•Heavy competitionThreats•Ownership: Strong brand with high quality reputation•Location-specific: Proximity to potentially large new marketOLI Advantages

Appendix: Market in Canada

•Lowest liability of foreignness•Local company•Low transportation costsStrengths•Higher price•Liability of ForeignnessWeaknesses

•Ontario FiTOpportunities

•Smaller market, population•FiT: domestic content requirementThreats•Ownership: Western engineering, “home turf”•Location-specific: Proximity to headquartersOLI Advantages

• US Energy Market World Data, 2th Edition, SBI, June 2010

• Canadian Solar Website & Financial Statements

• Renewable Energy Country Attractiveness Indices, Ernst & Young, August 2010

• Global Outlook for Photovoltaic Until 2014, EPIA, May 2010

Appendix: Main Sources

Date post:	26-Nov-2014
Category:	Documents
Upload:	diazalex88
View:	114 times
Download:	0 times

IKEA 2010 Actual Presentation (FINAL)

Documents