Value Proposition canvas- Customer needs and pains
Suntech in sri lanka
1.
2. TITLE PAGE
What is SUNTECH 3
Global Operation 3
Investors 3
How is the company today? 4
The Product: The solar Panel 5
Why is a good Product? 6
Is Sri Lanka an opportunity to our 7
company?
Economic Environment 7
Cultural Environment 9
Technological Environment 10
Political Environment 12
Other advantages of Sri Lanka 13
OUR STRATEGY 14
Standardization Vs. Adaptation: 14
Objectives: 14
Target: 15
How to enter the market? 15
Greenfield Investment
Competition: 16
Price 16
Media and Channels of distribution: 17
Conclusion 18
Bibliography 19
3. Suntech Power Holdings Co., Ltd. (NYSE: STP) is the
world's largest producer of solar panels, with
1,800MW of annual production capacity by the end
of 2010. With offices or production facilities in every
major market, Suntech has delivered more than
13,000,000 solar panels to thousands of companies
in more than 80 countries around the world. As the
centre for the company's global operations, Suntech
headquarters, in Wuxi, China, features the world's
largest building integrated solar façade.
Founder
Dr Shi Zhengrong is the founder, chairman and chief
executive officer of Suntech Power. He is a graduate
of the University of NSW's School of Photovoltaic and
Renewable Energy Engineering. At UNSW, Dr. Shi
studied under Professor Martin Green and met Stuart
Wenham, now Suntech's Chief Technology Officer.
Suntech Power has representative offices in China, Australia, the United States,
Switzerland, Spain, Italy, Germany, Japan, and Dubai, as well as production facilities
in Wuxi, Luoyang, Qinghai,Shanghai, Germany, Japan, and Goodyear, Arizona.
Before going public on the NYSE in 2005, Suntech was funded by a consortium of
private equity firms, including Actis Capital and Goldman Sachs. The consolidated
private equity investment into Suntech is generally considered to be one of China's
most profitable private equity investments ever, as each firm is thought to have
made gains well over 10x on their original investments.
4. Prior to 2010, Suntech Power Holdings only had manufacturing facilities in China.
However, the company has opened its first U.S. plant in Arizona. The state has
actively promoted and supported clean energy companies with its Renewable Energy
Tax Incentive Program, which offers a refundable income tax credit of up to 10
percent and a 75-percent reduction on real and personal property taxes to
renewable-energy companies in Arizona. Suntech Power's Arizona plant will be
capable of assembling 30 megawatts of solar panels annually. Suntech is considering
setting up more manufacturing facilities globally to tap international markets, ease
foreign political pressure, and mitigate currency volatility.
Suntech is evaluating manufacturing opportunities in Europe, Asia and North
America. Though, it is more expensive to produce overseas than in China, Suntech
can compensate by selling the product at a higher price because it is a local product.
Exchange rate fluctuations also make it beneficial to manufacture in the same
country in which the products are sold. Demand in Europe, the world's largest
market for solar energy consumption, is expected to grow at a more moderate 20%
partly due to cuts in government subsidies. But the U.S., Asia Pacific, Middle East,
and African markets are expected to double by next year. Consumption in China is
also expected to double to around 1 gigawatt this year. In response, Suntech is
ramping up production, planning to expand production capacity to 2.5 gigawatts
from 1.8 gigawatts. As a result of its location in the path of major sea routes, Sri
Lanka is a strategic naval link between West Asia and South East Asia. It was an
important stop on the ancient Silk Road.
5. A solar panel or photovoltaic module is
composed of individual PV cells. This
crystalline-silicon panel has an aluminum
A solar panel. The solar panel can be
used as a component of a larger
photovoltaic system to generate and
supply electricity in commercial and
residential applications. Because a single
solar panel can produce only a limited
amount of power, many installations
contain several panels. A photovoltaic
system typically includes an array of
solar panels, an inverter, and sometimes
a battery and interconnection wiring.
Solar panels use light energy from the sun to generate electricity through
the photovoltaic effect. The structural (load carrying) member of a module can
either be the top layer or the back layer. The majority of modules use wafer-
based crystalline silicon cells or thin-
film cells based on cadmium
telluride or silicon. The conducting
wires that take the current off the
panels may contain silver, copper or
other non-magnetic
conductive transition metals. The
cells must be connected electrically
to one another and to the rest of the
system. Cells must also be protected
from mechanical damage and
moisture. Most solar panels are rigid,
but semi-flexible ones are available,
based on thin-film cells.
6. One of the most pressing issues associated with energy production is global climate
change, caused by the warming of the earth's atmosphere. The vast majority of
climate scientists agree that global warming is human-caused and can be stopped by
drastically reducing the amount of greenhouse gas (carbon dioxide, ozone, water
vapor, etc.) emissions. Education on the
issue is creating pressure for governments
and energy companies to regulate
greenhouse emissions. This movement is
having a worldwide impact on energy
regulation in the form of increased
government subsidies for clean energy
sources and global emissions caps. Even
China has begun to implement similar
standards. Suntech is well positioned to
take advantage of this trend in the long
run.
7. The fundamental idea of this project is to understand the opportunities that the
global market is offering us. Today, international companies have managed to
increase their income and increase their market share by investing in developing
countries, while they meet new customers’ expectations and needs. For this reason,
in order to see if Sri Lanka is an opportunity for us, let see the following elements:
Sri Lanka is a country off the southern coast of the Indian subcontinent in South
Asia, is an island surrounded by the Indian Ocean, the Gulf of Mannar, the Palk
Strait, and lies in the vicinity of India and the Maldives.
As a result of its location in the path of major sea routes, Sri Lanka is a strategic
naval link between West Asia and South East Asia. The country is famous for the
production and export of tea, coffee, coconuts, rubber and cinnamon, the last of
which is native to the country. Today, Sri Lanka is a founding member state of
8. SAARC and a member United Nations, Commonwealth of Nations, G77 and Non-
Aligned Movement. As of 2010, Sri Lanka was one of the fastest growing economies
of the world. Its stock exchange was Asia's best performing stock market during
2009 and 2010.
According to the International Monetary Fund, Sri Lanka claims has the following
economic aspects, which shows the opportunities of the country:
It has a GDP of US$106.5 billion in terms of purchasing power parity.
Is next only to Maldives in the South Asian region in terms of per capita
income, with a nominal value of US$2,435 and PPP value of US$5,220.
It recorded a GDP growth of 8.2% in 2010 and it is estimated that GDP will
grow by 9.5% in 2011, becoming one of the fastest growing economies of the
world.
While the production and export of tea, rubber, coffee, sugar and other agricultural
commodities remains important, the nation has moved steadily towards an
industrialized economy with the development of food processing, textiles,
telecommunications and finance. An element that is crucial for SUNTECH interests,
as we are looking for emerging economies.
In 2010 the service sector makes up 60% of GDP, industrial sector 28% and
agriculture sector 12%. Private sector accounts for 85% of the economy and India is
the largest trading partner. Following with this information, it is important to see
how the economy is growing in terms of its Gross Domestic Products price (see
Graph # 1).
Graph # 1:
Gross Domestic Product, Price of Sri Lanka
This Graph represents the gross domestic product of the country since 1980 to 2010,
showing that in the last years the GDP has increased considerable in the last year,
an opportunity that the company has to take advantage of.
9. In order to see if the products offered by SUNTECH can introduce easily in this
country, it is important to include that 90% of the households in Sri Lanka are
electrified and Income inequality has dropped in recent years, indicated by a gini
coefficient of 0.36 in 2010. As well, The Global Competitiveness Report, published by
the World Economic Forum has listed Sri Lanka as a transitive economy, from factor-
driven stage to efficiency-driven stage, ranking 52nd in the global competitiveness.
It also ranked in:
45th in health and primary education,
32nd in business sophistication,
42nd in innovation
41st in goods market efficiency out of the 142 countries surveyed.
8th in the World Giving Index, registering high levels of contentment and
charitable behavior in its society.
Some other positive elements of Sri Lanka, can also include that since 2005 the per
capital income has doubled. During the same period, poverty has dropped from
15.2% to 7.6%, unemployment has dropped from 7.2% to 4.9%, market
capitalization of CSE has quadrupled and budget deficit has doubled.
The culture of Sri Lanka has been influenced by many things in the past, but has
managed to retain much of its ancient, rich aspects. Mostly it has been influenced by
its rich history, diversity, and religious beliefs. The country has a rich artistic
tradition, embracing the fine arts, including music, dance, and visual arts. Sri Lankan
lifestyle is reflected in
the cuisine, festivals,
and sports. South
Indian influences are
visible in many
aspects. There are
also some influences
from colonization by
the Dutch,
the Portuguese and
the British. Sri Lankan
culture is best known
abroad for its cricket,
food, and cultural
exports, like tea. Sri
Lankan culture is diverse, as it varies from region to region.
10. Age structure
Age Percentage Male Female
0-14 26% 2,605,251 2,490,416
15-64 67% 6,285,118 6,606,196
65 years and 7% 602,470 649,124
over
Telephones
Main lines in use: 3,145,957
Est(2008)
Mobile cellular in use: 9,253,067 Est
(2008)
Telephone system
Very inadequate domestic service,
particularly in rural areas; some hope
for improvement with privatization of
national telephone company and
encouragement to private
investment; good international
service (1999). The latest trend is the CDMA technology, because of this technology
many Sri Lankans who live in rural areas can now communicate with each other
faster and easier than before.
Domestic
The national trunk network consists mostly of digital microwave radio relay; fiber-
optic links are now in use in the Colombo area and two fixed wireless local loops
have been installed. Competition is strong in mobile cellular systems but
the teledensity rate remains as low as 16.6 phone lines per 100 persons (2004).
Although the reported phone line teledensity is 16.6 (2004) fixed phone line
teledensity remains as low as 5.1, where cellular teledensity is 11.4. Reflected
Cellular phone teledensity is misleading because some people have more than one
phone. Therefore true teledensity remains at a very low figure.
11. International
Submarine cables to Indonesia and Djibouti; satellite earth stations - 2 Intelsat
(Indian Ocean) (1999)
Broadband Internet access
ADSL was introduced in Sri Lanka in 2003 by Sri Lanka Telecom.The average speed
is 512/128 kbit/s, costing Rs. 1600+VAT(US$ 16 approx.) per month for an
unmetered flat rate. This is the standard for SLT and resellers. Faster connections up
to 2 Mbit/s are available, but the price is considerably higher (Rs. 6500 for 2 Mbit/s
(0.25 MB/s))(US$ 65 approx.). In peak hours there are lot of complaints from
customers that they are not able to achieve these speeds. The service is available
within the Greater Colombo area, Kandy, Galle and is currently being extended.
Recently Sri Lanka Telecom has introduced a new plan where one can transfer up to
1.5GB of data per month for Rs. 500/- (US$ 5 approx.) at speeds of 256kb upload /1
Mbit/s download. Charge for each additional 1MB is Rs. 0.35.
Radio broadcast stations: AM 15, FM 50, shortwave
Radio: Est Number of Radio sets: 12 million
Television broadcast stations: 21 (1997)
Televisions: Est 5 million( including B & W sets)
12. Sri Lankan politics, since independence, have been strongly democratic. Two major
parties, the United National Party (UNP) and the Sri Lanka Freedom Party (SLFP),
have generally alternated rule. In 1972, a new constitution is introduced .The
country’s name changes, Buddhism became a constitutional principle and private
large plantations are nationalized.
Historical divisions continue to have an impact on the society and the country.
Sinhalese majority have abused the rights of Tamil, Tamil also protested against the
governments’ educational policies and subsidized in the agriculture to farmers in the
south in order to be an irrigated land. In 1991, a peace deal has been signed with
the parties to cease the conflicts and improve the economic condition in Srilanka.
Under the 1978 constitution, the president of the republic, directly elected for a 6-
year term, is chief of state, head of government, and commander in chief of the
armed forces. Responsible to Parliament for the exercise of duties under the
constitution and laws, the president may be removed from office by a two-thirds
vote of Parliament with the concurrence of the Supreme Court. Sri Lanka's judiciary
consists of a Supreme Court, Court of Appeal, High Court, and a number of
subordinate courts.
Sri Lanka's legal system reflects
diverse cultural influences.
Criminal law is fundamentally
British. Basic civil law is Roman-
Dutch. Laws pertaining to
marriage, divorce, and inheritance
are communal. Under British rule,
the Charter of Justice of 1801
ensured the continuation of the
laws that were in force at that
time. These applicable laws were
all of the following: Roman-Dutch
principles brought into force by the
Dutch,
1. Kandyan Law that applied
to the Kandyan provinces,
2. Thesawalamai Law (also
spelt as ‘Tesawalamai’) that
applied to the Jaffna Tamils in the
Jaffna province,
3. Muslim Law that applied to
the Muslims,
4. Limited body of Buddhist
and Hindu Law applicable mainly
to Buddhist and Hindu religious property and customs.
13. 1. Governments worldwide increasingly provide financial incentives to solar
manufacturers specially in developing economies of China and India.
2. Sri Lanka relies on tourism a lot and post end of civil war there is lot of
developmental activities on going Sri Lanka and keeping tourism as a
key player in economy Sri Lankan government gives huge subsidies in
green projects.
3. One of the most pressing issues associated with energy production is global
climate change, caused by the warming of the earth's atmosphere. The vast
majority of climate scientists agree that global warming is human-caused and
can be stopped by drastically reducing the amount of greenhouse gas (carbon
dioxide, ozone, water vapor, etc.) emissions. Education on the issue is creating
pressure for governments and energy companies to regulate greenhouse
emissions. This movement is having a worldwide impact on energy regulation in
the form of increased government subsidies for clean energy sources and global
emissions caps. Even China has begun to implement similar standards.
14. After analyzing the benefits of Sri Lanka’s Market and seeing that Suntech will have
the opportunity to find great advantages, the following strategy could be an
excellent approach to achieve the mains goals of the company; be one of the
biggest Solar panel companies in the world, who understand how to help the
worldwide environment.
In terms of product technology its usage and implementation, Suntech will take an
standardise approach, however due to different economy, PPP country under
developmental stage and difference in culture Suntech will take governments help to
reach to customers and will take an adapted approach in pricing promotion and
marketing.
1. Suntech expects sales in China to rise to 20% of its total sales by 2012. [5]
2. Suntech has started expanding a plant in Jiangsu Province in order to
increase production capacity by 300% to 2000 MW in three years.[6] The
Chinese government's subsidy program to buildings powered by solar energy
is expected to stimulate the photovoltaic industry in China
3. For 2015 install the 20% of the solar panels to provide Sri Lanka with energy.
4. By 2020 become the company with the biggest market share in solar panels
of Sri Lanka, with a percentage of 50% of the whole market. At the same
time, start to sell the solar panels to customers who think that this new way
to achieve energy is appropriate and beneficial to the environment.
15. To start, SUNTECH is willing to attract the government of Sri Lanka in order to
provide the country’s public energy with solar panels. However, in the long run
SUNTECH is willing to sell their products to persons between 30 to 40 years, that are
buying their first and new home, and that are interested on helping environment.
Governments has made new policies to encourage the use of renewable energy by
companies such as The RERED Project that can help alleviate the burden a business
has in making the initial capital outlay for energy efficiency investments. Any
business operating in Sri Lanka is potentially eligible for financial assistance under
the RERED Project. Finance facilities are available at favorable interest rates with
tenures as long as 10 years including a grace period of 2 years. Srilanka lacks of
highly technical skilled labor, for that reason we are planning to open a new plant
from the scratch. The production of solar panels requires specific processes,
methods and techniques. In that way, to better keep the know-how strategy which
critical in the survival growth of our enterprise, Greenfield investment is the best
option.
16. In order to see how easy it will be for the company to enter the market, analyzing
the competition is very important. Today Sri Lanka has two big companies that offer
solar panels:
Company Company Description
Business type: manufacturer, retail
sales, wholesale supplier, exporter,
importer.
Product types: solar collectors
evacuated tube, photovoltaic
Vinseth Solar Pvt Ltd systems, solar water pumping
systems, LED light bulbs, solar street
lighting, solar lighting systems.
Specialized in installation of the very
latest solar photovoltaic (PV) electricity
systems with the firm commitment to
excellent customer service, quality
J Lanka Technologies (Private) Limited products and clean energy. JLT provides
the most cost effective and easy to
maintain solar energy systems that will
reduce energy bills.
Business type: engineering and
development, solar PV system
distributor
Product types: solar electric grid-tie
power systems, photovoltaic
modules, photovoltaic systems
residential, photovoltaic systems
commercial, DC to AC power
inverters sine wave, solar street
lighting.
The price has an ambiguous meaning. Simply the price is the amount of money or
other valuable features that are required to purchase a product. Many companies
want that the price increases their revenue or simply increase their market share.
Given that SUNTECH is a company well positioned in the market and that its aim is
to dominate the world market, starting with the developing countries, the price that
17. shall be established in Sri Lanka must be put according to the competition and the
costs. In Diagram # 1, we can see Suntech’s price in the market. However, seeing
that the competitors in Sri Lanka sell solar panels as an exclusive product at a very
high, then the main idea is to reduce 10%, the price of the world’s market and in
that way increase the Market Share of the company. In other words, this will be the
price of Sri Lanka.
Product Price
STP005B $22,95
STP020B $79,2
STP030D $115,2
STP040D $152,2
STP180S $361,422
STP205 $367,155
STP185S $371,466
STP225 $428,49
STP275 $523,71
Diagram # 1:
18. As it was explained in the “Technological Environment”, where it was expose the
advantages and disadvantages of the different media and channels of distribution,
we believe that to begin with our strategy, it is important to enter the medium
through a ATL (Above the line) strategy. In other words, we will show our customers
the products by TV and billboards, representing the how important is the
environment and how solar panels can save the world from burning. It is important
to add that this is a Long-term strategy, in order to start entering our consumers
mind, as our strategy will first aims to start selling the panels to supply the public
electricity service.
Given that Sri Lanka is a country with a high potential, as we could see from this
analysis, SUNTHECH must take advantage of the excellent opportunities that the
country is offering to the world. Sri Lanka, has an outstanding economic growth, and
is now investing in stainable projects. In other words, Sri Lanka is the door for
SUNTHECH to increase, not only as a company, but to open its market share along
the Asia continent, as it has been doing during the last years.
19. The strategy that was presented, which showed the strength, weaknesses, threats
and opportunities of this project, focusing on a marketing mix strategy, is a good
example of how a company can work in order to achieve its goals: be the biggest
company in the world, helping the world.
1. http://en.wikipedia.org/wiki/Economy_of_Sri_Lanka
2. http://www.nationmaster.com/country/ce-sri-lanka/eco-economy
3. http://www.theodora.com/wfbcurrent/sri_lanka/sri_lanka_economy.html
4. http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Sri-
Lanka-OVERVIEW-OF-ECONOMY.html
5. http://www.indexmundi.com/sri_lanka/gdp_real_growth_rate.html
6. http://www.energymatters.com.au/images/suntech/STP085S-12Bb.pdf
7. http://eu.suntech-power.com/en/products/download-center.html
8. http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Sri-
Lanka-OVERVIEW-OF-ECONOMY.html
9. http://www.solarpanelinfo.com/
10.http://am.suntech-power.com/
11.http://www.suntechgroup.com/
12.http://us.sunpowercorp.com/