1.

Provide an overview of what markets First Solar operates in including predicted

growth and key purchasing consideration factors. What was First Solar’s competitive
advantage prior to 2011?

- Competitive advantage: In 2009, First Solar broke cost records by becoming the first
photovoltaic (PV) manufacturer to produce panels that generated a megawatt of power at
a manufacturing cost of less than $1.00 per watt.2 The company’s proprietary thin-film
cadmium telluride technology had made it the largest and lowest-cost producer for nearly
a decade (page 1)

- Markets:

+ photovoltaics market caters mainly to three segments of consumers which are

residential markets, commercial businesses, and utilities as well as utility markets.
+ There were three broad markets for solar power: residential homeowners, commercial
businesses, and utilities.
The residential segment represented 29% of the total market and was predicted to grow to
35%by 2020.
Commercial businesses comprised 40% of the market; this segment was expected to
shrink to 25% by 2020.
The utility market was predicted to be the fastest-growing segment, with an expected
increase in market share from 31% in 2011 to 40% by 2020.
In all three markets, there were numerous systems integrators.

2. Conduct an analysis using Porter’s 5 forces. List the relevant information from the
case study under each force.

- Threat of new entry: Chinese manufacturers flooded the market with lower produce and
sell’s costs (page 1)

- Bargaining power of suppliers:

+ Government incentives typically enhances the returns for solar providers in two ways :
either providing higher prices for solar power suppliers or requiring utilities to purchase a
specific amount of solar power (page 4)
+ eliminated the multiple supply chain operators and expensive and time consuming
batch processing steps that are used to produce crystalline silicon solar modules.” (page
7)

- Bargaining power of buyers: Customers in the market segments typically did not focus on
the technology or maker of their solar panels, but instead on the overall costs and benefits
of the installed system. They basically seeking to lower their operating expenses and
carbon footprints (page 5)
 - Threat of substitute products: An alternative to thin film is crystalline silicon. While thin
film is typically lower cost and required 98% less semiconductor material than traditional
c-Si ( cost advantage ) but result in lower efficiency in converting sunlight into power.
But crystalline silicon witnessed a rapid growth in demand, and silicon raw material
prices also falling => benefit First Solar’s competitors. (page 1+2+3)

- Rivalry among firms: have a range of strong worldwide competitors like the US and
China market (page 10+11)

3. What are the key challenges identifiable through the analysis? Do you believe the
industry is attractive?

- The threat of competitors from china

- nonrenewable energy sources such as natural gasses are
cheaper to generate energy, is reliable, and can be an easy substitute for
solar panels.
- there was a drop in European solar subsidies as well as a decrease
in the number of banks that were willing to finance solar projects
- Numerous First Solar competitors had filed for bankruptcy such as
Evergreen Solar and Solyndra.

 industry has lost its competitive edge to China manufacturers as well as

support from local government and is no longer an attractive industry,

4. Identify and explain a recommendation you would give Tymen deJong to guide First
Solar in order to improve their business model moving forward?
o This may include leaving certain markets
o Reducing their product offering
o Partnership
o Government involvement.

- Recommendation:
+ Offshoring => to reduce labor and production costs, tax subsidies => maximize profit
+ Invest in other technologies or alternatives resources to improve efficiency and become
more flexible in the market
+ understand customer’s needs and develop products that meet those needs