PV Technologies, Inc.: Were they asleep at the switch?

What do you think these companies have in common? 1st 5th

3rd

2nd 4th They are the Top Five Fortune 500 Companies using Solar Power* With “green” being all the rage these days, many Fortune 500 companies are making the switch to solar power by partnering with solar power companies and using solar energy to power their offices and retail establishments. A voluntary program called “The Green Power Partnership” encourages organizations to go green and tracks their annual green power purchases.
1 *http://www.solarenergy.net/News/2010051301-the-top-five-fortune-500-companies-using-solar-power.aspx

• Unstable oil market.4% CAGR in the US between 2010 and 2015. • New competitors focusing on low prices. • Public policies in favour of green energies:  Subsidies drive the market growth in Europe.  Federal program in the US : satisfy 80% of the electricity demand with green energy by 2035.Green Energy Sector • Shrinking supply sources. MARKET EVOLUTION • Expected 30. • Increasing environmental awareness. DEVELOPMENT FACTORS • Rising costs of traditional energy sources. 2 .

Installations of PV Tech and market projections 2009: 477 MW for PV Tech 2010: 878 MW for PV Tech Market by 2015: 1906 MW US MARKET SIZE EVOLUTION 3 . PV Technologies could take advantage of it due to its position of leader.The US ‘Green Market’ Even if it gets more and more challenging. the market is growing at a very high rate.

PV Technologies AT A GLANCE % of Revenues (2010) 8% 12% 34% Industrial Automation Process Management Network Power 24% Drive Technology • • • • Solid balance sheet Strong Profitability High Cash Flow Investments in R&D and Technology 22% Industry leader in Climate Technologies • Founded in 1993 in San Francisco • Specialist in RENEWABLE ENERGIES • $30 billion in revenues (2010) • 25 countries • • • PRODUCT INNOVATIVENESS QUALITY PERFORMANCE 4 .

Growing market (+66% in 2009/2010). No international standards of quality and efficiency. Solenergy Development LLC • Major developer of energy generation systems • Among the biggest customers of PVT’s solar energy business unit • Strong relationship with senior management team The project : • Construction of a PV solar energy power plant in Barstow (California) • Looking for a supplier of utility scale central inverter 5 .Current situation THE PRODUCT THE CUSTOMER Photovoltaic Inverters convert the direct current output of a solar panel into alternative current that is compatible with residential or commercial use. Fundamental components in a PV system. supported by strong government incentives.

GOOD EVALUATION of its projects in order to get the contract and to confirm its leadership. 6 . Solenergy often includes its comments and opinions in press releases. Morgan judgements are highly influential throughout the entire industry. chief electrical engineer at Solenergy and very respected among the industry.Solenergy’s evaluation Evaluations are conducted by Greg Morgan. PV Tech needs to get a Solenergy is used to evaluating the companies they invite to bid on their major projects.

• • Solenergy was about to conclude the selection process. Inferior performance could be compensated developing an enhanced maintenance schedule and a proactive quality control program. The evaluation was mainly based on prices. MORGAN’S EVALUATION Solenergy was committed to cut costs among the company. OUR BELIEF PROBLEM: the evaluation had not been published • • Information only based on rumours. Salvatori heard that Morgan’s evaluation was bad for PVT.The problem PVT’s prices are significantly higher than competitors ones. Hard to contact Morgan. 7 . PVT’s better quality could explain the difference but Morgan was surprised of the spread being so wide.

Initiate a DIALOGUE with Morgan to find out the real output of the evaluation 8 .5% efficiency) 4. Offer to extend the original WARRANTY at internal cost from 10 to 20 years 2.25 MW with 98.Different alternatives 1. Offer a 99% UPTIME GUARANTEE at no cost for the customer 3. Accellerate the introduction of the NEW INVERTER (1.

2 $187500 Effective Power Output Expected Lifetime Power Output List price/Exp. Lifetime Power Output 0.5 13.0 MW 96.2 $180000 PV Tech 2 1.0 10.0 MW 95.2525 11536.25 MW 98.23125 16.5 13.95 10.7 $160000 PV Tech 1 1.68 PRICE is not the only element to take in consideration when evaluating a product 9 .01 1.87 13860.5 12.26 0.0 MW 97.965 12.975 12.165 15740.0625 14093.Are PVTs products really more expensive? COMPETITIVE ANALYSIS OF THE PRODUCTS SOMA Energy Nominal AC output power Efficiency rate Expected life service List price 1.28 0.5 $170000 BJ Solar 1.

PROs • • • CONs • Relatively costly. Reliable: sign of good quality.Alternative 1: extending the warranty to 20 years S. production and engineering department think: competitive advantage already in place (10 instead of 5 years). Warranty doesn’t always mean quality 10 . Assure it will not break. • • Marketing and sales department: high economic value for Solenergy. Finance. Higher standard • • Warranty is not a key factor. Would contractually prepay the warranty at the rate of 18% of the purchase price Extending the product warranty to 20 years while the industry standard is 5 years.

• Economic impact • CONs • • • Too costly. Short-term solution non sustainable in the future. 11 . the market is more and more focusing on low cost solutions.Alternative 2: Uptime Guarantee Uptime Guarantee 99% PROs • The offer would be unmatchable by the competitors. It will increase even more the quality and superiority of PV Technologies’ products. high impact on the profit. Signal of high reliability. Other customers would ask for it.

5MW Model Profitability would be in line with the other options and it would be the most efficient and reliable inverter on the market PROs: No change in pricing strategy. this is what the sector is looking for BUT Extremely risky & Expensive 12 .Alternative 3: Investment in a new model Alternative 3: Introdudction of the new 2.

Call for help could make us appear as desperate • • 13 . PROs • More personal approach: we demonstrate we are ready to personalize our product for them. First step to build a long term relationship • CONs We rely on not public information.Alternative 4: direct approach to Morgan One possibility is to approach Morgan directly in order to understand the situation and underlining our skills.

PVT is not competitive for Solenergy 1 Criteria are not aligned From PVT’s perspective these are elements that real add value to the customers into the long run 2 The B2B relationship is not managed properly Relevant criteria for PVT: • • • Efficiency. Productivity Relevant criteria for Solenergy: • Price Due to new cost cutting strategy. Solenergy has developed different priorities Salvatori discovers that PVT is going to lose the auction 14 . Reliability.

Which one do you think is the best solution? 15 .

one. after proving him successful company. problem and figure his with him a solution.superiority of understand the rootsadopt a If we do not managethat the evaluation is the we should not be considered begging. Morgan confirms based on NETWORKING. we can of the Customer relationshipneeds to sell our fundamental to build a that our product is the best strategy based on out management is products.The strategy Speak with Morgan Understand if the evaluation is real and what his real needs are Adopt an ad hoc strategy B2B marketing is allto convince him about real. 16 . it should the product.

Is this situation just a "brush fire" or an important problem? 17 .

the economic loss is not incredibly significant. 4% Inverters’ sales account for only 4. Photovoltaic Inverters Other 96% IMPACT ON PROFIT 18 .1% of total revenues.Impact on the company IMPACT ON IMAGE Losing an important and powerful client can certainly have an impact on the overall reputation of the company.

There is no contingency plan 3. Salvatori is the only one responsible for KAM 2. Focus on COMMUNICATION 19 . Hire more trained sales people SOLUTION 2. The quality perceived is not as excellent 1. Develop a contingency plan 3.What should the company do now? SERIOUS ISSUES 1.

” Hubertus Kuelps Head of Global Communications 20 .000 employees as communicator.General Approach B2B Communication PERSONAL SELLING TRADE SHOWS & EXHIBITIONS PUBLIC RELATIONS DIRECT MARKETING ADVERTISING SALES PROMOTION “It’s not about the seven spokespeople in our PR department but in how we can use our 60.

Excellence in Managing the B2B Customer Relationship Obviously there’s been a communicational issue between Salvatori and Morgan. Good communication is key to success: • • • • • Avoid an intense sales-based culture Don’t talk big and deliver small Be flexible and responsive Regular. at the right level and consistent KAM development cycle 21 .

Thank you for your attention 22 .

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