Management
SMGT4460: Individual Market Analysis and Recommendation Assignment (30%)
Due:
In this individual assignment, you will choose a product/company/industry/ and make an export
market recommendation.
1. Chose a product/company/industry (preferably not a professional services firm)
2. Chose two potential markets for your chosen product/company/industry
3. Email your instructor with a brief proposal listing your product/company/industry and
the two potential markets you will research (for approval).
4. You will be exporting from Edmonton.
5. Research and analyze each market:
a. Overview of the market
b. Specific market trends (CREST) (at least three)
c. In-market industry analysis (Porter’s 5)
d. Opportunities
e. Ease of doing business
f. Trade agreements
g. Cultural considerations
h. Risks and threats to consider or mitigate
6. Provide recommendations and supporting rationale for next actions based on your
research (not going to either market—and suggesting research on a completely different
market is a valid option).
Required Sections:
• Title page
• Table of contents
• Executive summary
• Introduction
• Description of the product/company/industry (including HS code)
• Analysis of market A
o Overview of the market
o Specific market trends (CREST)
o In-market industry analysis (Porter’s 5)
o Opportunities
o Ease of doing business
o Trade agreements
o Cultural considerations
o Risks and threats to consider or mitigate
• Analysis of market B
o Overview of the market
o Specific market trends (CREST)
o In-market industry analysis (Porter’s 5)
o Opportunities
o Ease of doing business
o Trade agreements
o Cultural considerations
o Risks and threats to consider or mitigate
• Recommendations
• Conclusion
• References
• Appendices (if required)
Please submit your completed assignment to the Moodle dropbox before the deadline. Your
submission must be in proper APA format and saved as an MS Word document.
ANSWER
Solar Panels Exports to China and USA
Contents
Analysis of the US Solar Market 4
Specific Market trends (CREST) 4
In market Industry Analysis (Porters 5) 4
Risks and threats to consider or mitigate. 6
Specific market trends (CREST) 7
In-market industry analysis (Porter’s 5) 7
Risks and threats to consider or mitigate. 8
Summary
Africa and the USA are among the markets experiencing quick growth within renewable energy. Choosing the two markets to export solar panels from Edmonton is a successful choice due to high acceptance in the market that has been contributed by them being environmentally conscious. However, some threats limit the quick integration of solar panels. Some existing suppliers offer high rates of competition. Price is also a factor considering that customers and suppliers may want to bargain and get a fair price. However, this affects the selling price while making the exports. Furthermore, with high rates of innovations globally, there are high chances that new products will be created that will replace solar panels. Operating the business in the two markets is not hard as long as a license is acquired; one can easily export the solar panels.
Introduction
Solar panels have been on the high rise in demand as countries continue to ensure that they get access to the cheap and environmentally conscious power supply. The USA is one of the countries that have focused on creating campaigns emphasizing people to invent alternative power supplies other than electricity. Many people are being seen shifting to solar panels as they install their panels on their rooftops. With the solar panels, residents can get cheap power that only requires the installation and slight maintenance as to electricity where they have to pay for each unit that has been used ten a bill is sent at the end of the month.
Africa is also another market with a high demand for solar panels. People in these markets, in general, have focused more on coming up with renewable energies. They majorly get their source of energy from geothermal sources which at many times are never reliable as there have been several cases of power breakdown. Hence people are making efforts to come up with reliable power. With solar panels slowly getting into these markets, this can be a good market to export the solar panels. In the analysis below, findings on the market of USA and Africa have been done to evaluate the export market considerations and come up with more recommendations.
Product Description
The solar panel market is aimed to grow to $223.3 by 2026, which shows that it is expected to grow at a CAGR of 20.5% within 7 years (Henriques, 2020). There have also been cases where water levels are decreasing, which is majorly pointing out that there could be challenges in producing geothermal power. This also indicates that the solar market demand is going to increase. Solar energy has been considered among the greenest and cheap sources of energy. Solar panels are panels that have been intended to soak up the rays from the sun, which is then used as a source of energy. The energy obtained can be used for the same functions as the electricity from geothermal sources. The solar panels work by generating electricity when sunlight particles, sometimes called photons, get in contact with free atoms, making them in motion. The motion flow of the atoms results in generating electricity, which is then captured by the solar panels, which then turns into useful electricity. While exporting solar panels, the Hs code 85414011 will be considered as the cells will either be assembled or not assembled in modules or panels while exporting (Sandor & Engel-Cox, 2017).
Analysis of the US Solar Market
Market overview
The USA has installed 5.4 gigawatts of solar PV capacity in the third quarter of 2021, which amounts to 113.5 gigawatts of the total amount that has been installed (Knüpfer & Ishihara, 2021). This shows that within every year, there is an increase in the installments of the solar panels hence increases in the solar market. Up to 21.8 million homes have installed solar panels with more than 130,000 systems in a single quarter, the highest number within the industry ever recorded. This shows that there are higher chances that there will be an increase in market demand. However, the utility-scale of installing has also recorded new numbers in history by having 3.8 gigawatts. Factors such as supply chain constraints are among the factors that are continuing to place strain on close deployment. However, the forecast remains positive that movements such as the Build Back Better movement will help increase the deployment.
Specific Market trends (CREST)
Through CREST analysis, the competitive environment, economic environment and technological environment will be analyzed.
Competitive environment: With already other companies and also other manufacturers such as Crossroad solar and also first solar, which has already created a name in the market, there is a need for a high level of marketing to penetrate through the market
Economic environment: with a good growth of the economy, there are high success rates. With cases such as the impact of Covid, where the economy has dropped, it becomes hard to successfully thrive through the market.
Technological environment: High technological advanced researchers in the country may come up with new replacements of solar; hence people will shift if the developed offers more value than the solar.
In market Industry Analysis (Porters 5)
Within this section, a discussion of the threat of new entrance, bargaining power of suppliers, bargaining power of buyers, threat from substitute products, and competition of the US solar market will be analyzed.
The threat of new entrants
The fact that there are high innovation rates in the US, and many people are making innovations in the semiconductor industry puts pressure on exporting the solar panels to the market, as the new entrances come with incentives such as reduced costs, and also they work on ensuring that the customers receive value.
Bargaining power of suppliers
The fact that the products will be coming from suppliers in Edmonton, the price that will be given might affect the acceptance of solar in the market. If they give with the high price, there is a high chance that the prices offered in the USA market won’t be affordable.
Bargaining power of buyers
Apart from the prices offered by the suppliers, it also comes to the point of prices offered to the market. Will the customers in the market take it positively? They might bargain to lower costs that will not benefit the company while doing the exports. It is difficult to satisfy all the buyers; they will want to have their prices.
Threats of Substitute Products
Customers have different needs; with the high rates of innovation, there are chances that people will come out with new products that might replace the solar panels. If any products with a higher value than the solar come, then there is a high risk of the products being in the market.
Competition
Already people are supplying solar panels in the US markets; they have already set their competition. Hence it won’t be easy to come through the market and start making quick sales.
Opportunities
The launch of the Build Back Better Act offers an opportunity in the market as it emphasizes people to be more green to use renewable energy. With this movement, there are higher chances that people will shift to using solar panels energy which is greener than geothermal energy.
In the US, people are looking for more affordable energy as normal geothermal energy is an opportunity that when we enter the market, people will buy solar panels. With the low prices of the batteries and the solar panels, there are high chances that the entry in the market will pick.
Ease of doing business
Doing business in the US is no longer a problem if you attain a license as an exporter/. It will require obtaining the PAPS number and filling out the customs forms. Doing business will be easy as we can also connect with brokers. It is also easy as we do not need trucks to transport them as there are shipping agents, and it will be easy to do business with duty-free exporting.
Trade agreements
The USMCA, which consists of the US, Mexico and Canada, launched on July 1st 2020, that replaced NAFTA, offers free tariff goods; hence exploring products will be easy. With this trade agreement, the CUTFA has been superseded, which has helped improve the foundation of Canada’s success.
Cultural considerations
The culture of being more green, which has been recently included in the American lifestyle, is an advantage to the solar market as it attracts more buyers. This also applies to ethics, where they have to take care of their environment; hence, coming in with a product that supports their ethics is an added advantage.
Risks and threats to consider or mitigate
The risk of high competition from already existing companies and manufacturers of solar panels should be considered to ensure that the exports made end up being sold and not just being stocked. Furthermore, threats of new entrants also have to be mitigated to ensure that the company remains solid even if other suppliers come in.
Recommendations
I would recommend going and making exports into the market as there are high opportunity rates. To ensure that the company remains solid despite the existing competitors, high quality and customer satisfaction will be put in place. Hence The USA market is a worth it market to export to.
AFRICA MARKET
Market overview
According to statistics, power generated from solar panels has decreased from as low as 61 per cent from 2012 to $ 1.30 per watt, which compares to the global price of $1.80; this shows that there has been experienced growth of solar energy power (Beach & McGuire, 2017). This also shows that the demand for solar panels is also increasing. Homes that have installed solar panels have testified to getting high-quality power at lower prices, just as power generated from geothermal. For installation, prices have gone up to $1.90 per watt for all the more than 200 kilowatts systems. In comparison, solar panels provide power home needs for up to $46 per year. By 2030, estimation has been made that Africa could house up to 70 gigawatts of solar (Amankwah‐Amoah, 2015).
Specific market trends (CREST)
Through CREST analysis, the competitive environment, economic environment and technological environment will be analyzed.
Competitive environment: With already other companies that have started exporting solar systems into Africa and have already created a high brand in the market, it becomes hard for one to get through the market quickly. Hence the need for strategic entry with a higher value is required.
Economic environment: with a growth of economy being experienced although slow rates, there are high rates of success aftermarket penetration. With cases such as the impact of Covid, where the economy has dropped, it becomes hard to successfully thrive through the market.
Technological environment: Despite Africa’s lack of resources, there are high levels of creative minds who might replace the solar panels if resources and funding aids adapt their projects.
In-market industry analysis (Porter’s 5)
Below is Porter’s Five market Analysis.
The threat of new entrants
Because there are high rates of success aftermarket penetration, many exporters are being lured into the African markets. Even if a successful entry is experienced, there are chances that others who will offer more value will come and replace the business.
Bargaining power of suppliers
The fact that the products will be coming from suppliers in Edmonton, the price that will be given might affect the acceptance of solar in the market. If they give at a high price, there is a high chance that the prices offered in the African market won’t be affordable, considering that people from Africa are not well developed economically. The business might end up with stocked solar panels if the prices are high.
Bargaining power of buyers
Customers might bargain to lower costs that will not benefit the company while doing the exports.
Threats of Substitute Products
With the high rates of global innovation, there are high chances that other products that can offer higher value than solar will be developed, hence replacing the solar panels.
Competition
Existing businesses supplying solar panels in the African markets have already acquired a larger number of audiences; hence it will be a challenge if no strategic planning is done well to get our potential customers.
Opportunities
Africa being a continent with growing economies, there are higher chances that the company can achieve high success.
With people looking for more affordable and reliable power, offering solar panels at a lower price gives the business the advantage of getting more customers as geothermal power is still expensive and unreliable.
Ease of doing business
Exporting solar panels in Africa is not hard; it all needs to convince the governments that the solar panels will help solve the unreliability experienced by geothermal power. It also requires acquiring a certified license that will allow the solar panels in the countries. So, it is not hard to export solar panels in Africa.
Trade agreements
ACFTA is one of the trade agreements that will help ease the shipping as it allows continental free trade (Signé & Van der Ven, 2019). The trade agreement brings together all the people in the continent and offers free trade; hence it is also one of the trade agreements with many countries.
Cultural considerations
Africa is a continent with environmental consciousness; coming in with a product that supports this will be easy to accept. In Africa, they have majorly based that natural resources belong to the gods; hence anything that destroys them is not good. Hence coming with solar, which will outdo the water pollution caused by geothermal power mining, will also increase the product acceptance.
Risks and threats to consider or mitigate
Despite the fact that many countries have not gotten into solar energy, there is a high rate of the products being declined in some countries. The fact that they might fail to understand the operation and other cultures believe there are chances that the products will be declined, especially in countries where it is their first time hearing about the solar panels.
Recommendations
To succeed in this market, proper introduction of the products in the markets should be considered if proper explanation and high value are demonstrated when there is a high rate of success in the product exporting.
Conclusion
In conclusion, Africa and the USA are among the lucrative markets to export solar panels. Considering their high value of environmental concern, introducing solar panels in the market has a high chance of acceptance and high rates of success. However, while making the exports, factors such as culture have to be considered. The available threat has to be mitigated such that the creation of high value has to be done to increase high rates of success because ether is already existing exporters in the markets. Threats such as new entrance and creation of new products that will replace the solar are among the top threats which can be mitigated by ensuring that the value of the solar panels is high, and also by creating a brand that people will believe in; it will become hard for them to shift to another product after installation
.
References
Amankwah‐Amoah, J. (2015). Solar energy in sub‐Saharan Africa: The challenges and opportunities of technological leapfrogging. Thunderbird International Business Review, 57(1), 15-31.
Beach, R. T., & McGuire, P. G. (2017). The Benefits and Costs of Net Metering Solar Distributed Generation on the System of Entergy Arkansas, Inc. Crossborder Energy.[Online]. Available.
Henriques, R. J. F. (2020). Tesla, Inc.: the new era of tesla (Doctoral dissertation).
Knüpfer, K., Dumlao, S. M. G., Esteban, M., Shibayama, T., & Ishihara, K. N. (2021). Analysis of PV Subsidy Schemes, Installed Capacity and Their Electricity Generation in Japan. Energies, 14(8), 2128.
Sandor, D., Chung, D., Keyser, D., Mann, M., & Engel-Cox, J. (2017). Clean energy manufacturing analysis centre benchmark report: framework and methodologies (No. NREL/TP-6A50-67666). National Renewable Energy Lab. (NREL), Golden, CO (United States).
Signé, L., & Van der Ven, C. (2019). Keys to success for the AfCFTA negotiations.
