Canadian Solar Case Analysis

Introduction

Canadian Solar was established in 2001 by Dr Shawn Qu. Canadian Solar is a leading manufacturer of PV components for solar energy. They have experienced significant growth over the past five years increasing revenues from 9.7 million to 705 million. This growth is due to the government incentive programs encouraging the adoption of solar PV (photovoltaic) technology. Canadian solar is a globally situated firm with a head office in Canada, branch offices in other countries and seven manufacturing facilities of which some are located in China.

External analysis

Canadian Solar and its subsidiary companies have many components making up the external threats and opportunities. All of these have the capacity to hinder or help the company and are out of the company's control.

Factors such as socio cultural tendencies and trends are a big influence for Canadian Solar, being in the renewable energy field, green supply is being viewed as a way of the future and is being embraced by developers as well as consumers. Even though in 2008 the tariff return not being equal to the actual cost of other energy sources, the expectation was that they would be equal or that solar would be less expensive than regular energy in the next 3 to 5 years.

The Political and legal aspects are one of the external influences that has proven to be, in this case, a real positive aspect of the growth of the company. Government incentives and the tariffs being offered to attain eventual grid parity is a positive for this company. Even though the government incentives did stop on 2006 in Japan, they are still being offered by other governments.

Economically there have been difficulties in regards to prices for the raw materials. Being so dependent on Silicone and having to endure such a high fluctuation has had an impact on the company and being able to establish fixed prices. Having to offer clients between 10% to 30% discounts on orders means there is always the possibility that you could lose potential sales.

From a physical point, Canadian Solar is well established, with offices throughout the world but being mainly established in Canada and China, this allows the company to transact with the CIDA as well as be eligible to partake in Canadian tariff offers, all the while continuing to produce and take advantage of low cost labour in China.

The threat of new entrants could be a high threat to current PV manufacturing companies as the entry barriers were considered low in this market. However, the need for a longer warranty supplied by the manufacturers was protecting the market from new entrants as well.

Within the existing manufacturers, there is there is a strong rivalry. There is a low switching cost to the buyer, where switching from one manufacturer