FIRST SOLAR
The world relies on fossil fuels as the primary source of energy. With a growing international population and economy, fossil fuels would not replenish to maintain pace with the rising energy requirements (Burke &Emerick, 2016). The fuels contribute to the greenhouse gas emissions in the atmosphere causing global warming and change of climate. Renewable energy includes wind, solar, and geothermal extracted from never-ending and abundant resources. Solar energy has a huge potential in the emerging market. The research paper seeks to analyze First Solar, Inc. as the current energy generation company.
Executive Overview
First Solar Inc. is the leading international manufacturer and supplier of photovoltaic (PV) solar systems. The company utilizes cadmium telluride technologies to manufacture its products. In recent times, the energy generation industry has witnessed a considerable decrease in costs, increased competition, improved efficiencies, and quick expansions in globalization, capacity, and government support. The trends would continue making solar energy a significant player in the future of global power. First Solar Inc owns superior technology, sound experience, and advanced project abilities that positions it in the emerging industry (Ahmed, Naeem, &Iqbal, 2017). The company designs manufacture and sells PV solar panels with a thin-film semiconductor technology to the public. First Solar has two segments that include systems and components. The components section deals with the design, manufacture, and sale of cadmium telluride solar modules. On the other hand, the systems section deal with the development, building, operation, and maintenance of the manufactured PV solar power panels. The company gives maintenance and operations services to panels owners acquired from the company.
Company Background
Harold McMaster first created Glasstech Solar in 1984. In 1990, McMaster chose to try a different technology that involved thin-film technology cadmium telluride formulating a new Venture-Solar Cells Inc. that rapidly became a giant in thin-film PV technology. Ownership changed in 1999 when True North Partners purchased the company and named it First Solar. As of 2005, the company’s production levels had reached 35MW (Allana, 2017). In 2006, First Solar decided to join various long-term contracts for supplying solar modules with six different European system integrators and project developers for a period ranging from 2006 to 2011 manufacturing and selling of 795MW solar modules. To keep up with the demand, the companytripled its production capacity in the USA by adding more lines in Ohio, Perrysburg, and four lines in Germany. In 2007, First Solar expanded its market in the USA by acquiring Turner Renewable Energy (TRE) Company. Besides, it signed a $1 billion agreement long-term module with a Babcock & Brown and EcostreamSwitzerland GmbH from 2008-2012. The company built its fourth manufacturing plant in Malaysia to meet the demand. The potential milestones for the next few years entail obtaining a market-leading series 6 product containing 12GW-contracted backlog to delivery between 2020 until 2023.
Product Overview
First Solar has an integrated business system. Integrated services include engineering, project development, construction, and procurement services and maintenance and operation services. These systems form the products that the company sells to the public (Federici&Kiernan, 2019). Project development services include securing rights and site-selection to obtain or utilize specific clearances and sites like acquiring requisite studies, land, and environmental use permits. The company might decide to collaborate with a country’s local development partners.
EPC services include engineering design and associated services. The company develops grid integration solutions, BoS procurement, and construction management and contracting services. First, Solar gives EPC services to independent power producers, utilities, and industrial and commercial organizations (Hicks& Dalton, 2019). The company gives limited warranty products on BoS parts and carries performance testing of the systems provided before completion to keep pace with expectations contained in the EPC agreements. Operations and management services include carrying out standard activities associated with maintaining and operating a solar power panel that seeks to optimize the performance of the system and conform to pertinent regulations and agreements. The services involve agreement compliance, monitoring systems, performance analysis, energy forecasting, and performance reporting, environmental and guarantee management services.
First Solar Market
Solar energy is one of the fastest-growing types of renewable energy. Recent times have experienced decreased prices for PV systems and decreased costs for generating electricity. A quick price decrease creates new possibilities for the development of PV systems in certain locations with no or limited finances (Romano, Corfee, Powers& Energy, 2016). Installed panels might function for twenty-five years, accompanied by extremely minimum maintenance when compared to non-renewable energy sources. Such factors have guided the growth of solar markets internationally as well as increased demand for electricity. First Solar continues to target such a market to develop their localized presence and expertise in such markets. Intense pricing competition continues to characterize the solar industry. First, Solar acknowledges that the solar industry would continue to witness times of structural imbalance between demand and supply. Based on such market realities, the company would continue to follow its long-term strategic plans that concentrate on its competitive advantage.
Organizational Objectives and Goals
First Solar aims at formulating an enduring value through allowing a world powered by affordable and clean, affordable solar power. The company aims at producing clean energy by converting byproducts to renewable, clean energy by reducing emissions and substituting solar power for fossil fuels through recycling, product design, material sourcing, and manufacturing. The company seeks to obtain sustainability by minimizing environmental effects through recycling and producer collection (Thompson&Ballen, 2017). FirstSolarIncseeks to take ecological responsibility through owning the responsibilities for the effects of the products sold by the company ranging from materials utilized, manufacture to recycling the products. The company seeks to lower global carbon levels. The organization has the objective of decreasing the solar modules cost utilizing the thin-film technology and scalable, automated production, move to non-subsidized markets to subsidized markets through leveraging the economies of scale. Besides, decrease overdependence on fossil fuels and eliminate emissions of greenhouse gases to promote improved environment hence affordable and clean renewable energy.
Organizational Structure
First, Solar utilizes a structure that helps in aligning objectives and goals to obtain affordable and clean energy. The strategy remains based on the division of the product internationally. The strategies attempt to attract targeted consumers that include private customers and retail estates developers (Thompson &Ballen2017). The company has four lines in Germany and sixin Malaysia. The company packs the solar panels and ships them to customers globally. First Solar seeks to enter the emerging markets in developing nations because it has already penetrated the markets in developed states. Decreased prices for solar products open new possibilities in developing nations. The company has placed its manufacturing plants on geographic locations where labor remains extremely cheap, and the availability of qualified and skilled labor exists to formulate products.
Company’s Decision-making Tactics, Creativity and Entrepreneurship
First, Solar Company utilizes both five steps and seven-step decision-making processes. The seven-step process involves defining the problem affecting the company’s productivity. Secondly, the leadership identifies aspects bringing about the problem. Thirdly, leadership formulates various possible solutions (Lepri, Oliver, Letouzé, Pentland&Vinck, 2018). Fourth, it involves analyzing formulated alternative solutions to establish their workability. The fifth step involves choosing the most suitable solutions. The company then implements the chosen alternative to solve the problem. Lastly, the leadership determines an evaluation and control system.
(Lepri et al. 2018)
Seven-step Decision-making process
The five-step model applies in managerial practiceand involves identification of the decision to make, analyze the available options, assembles data, making the decision, and finally implementing the decision (Delic, Neidhardt, Nguyen, Ricci, Rook, Werthner&Zanker, 2016). The leaders first write everything regarding the decision they need to make and scrutinize it against the issues. The process enables the decision-makers to answer questions like what if, which, and how. During the examination process, the decision-makers draw different options, versions, and consider possible options. The decision-maker brainstorms possible solutions and assembles information on the issue. The decision-makers make the available data to make and implement the decision reached.
(Delic et al. 2016)
Five-step decision-making process
The company has ensured the development of willingness and capacity to organize, develop, and manage its business model accompanied by any of its risks to ensure profit realization (Delic et al. 2016). Some of the company’s entrepreneurship ideologies include opening new manufacturing plants in Malaysia and Germany.
The organization’s human resource management
Recruitment planning remains essential for First Solar, as the company has grown becoming the leading solar energy provider globally. To maintain its brand, First Solar differentiates itself from competitors. The Human Resource Management (HRM) department plans and executes a well-arranged recruitment process (Romano, Corfee, Powers & Energy, 2016). The HRM hires exceptional talents at every location. The department promotes innovative thinking, strong support for corporate social responsibility, and sustainability. The company, through HRM, plans for internal and organizational training workshops to help the workforce improve skills through training. First Solar Incl plans and acquires the right type and numbers of personnel to perform needed tasks that help the company obtainset goals and objectives. The HRM examines the status of the workforce in the company, future projections, and examines the gap between these two. The analysis helps the company to build its business strategy—the department plans for workforce requirements at a three-year projection rate.
SWOT analysis
Strengths
First Solar is the leader in solar energy provider globally. The company provides PV solar panels, and one of the largest module manufacturers of panels based on market capitalization (Solar, 2020). Besides, it keeps on increasing the production lines to satisfy the demand increase. The company has long-term contracts with different suppliers enabling it to earn predictable revenues. First Solar has technical expertise that ensures low-cost for each watt generated. The company contains a robust balance sheet that gives significant flexibility aligned to changing demands and development of technologies.
Weakness
Over-reliance on the cadmium telluride mineral component as the key raw material in the manufacture of solar panels is the biggest weakness for First Solar Inc. The mineral component remains rare; hence, it influences the actual number of panels First Solar Company might manufacture (Solar, 2020).
Opportunities
PV market remains untapped, and as a key industry player, the company could increase demand by lobbying efforts and decrease manufacturing costs through synergy creation. Such an occurrence could profit the organization and enable it to broaden its geographical operations to maximize government systems support (Solar, 2020). The company’s capability to expand its capacity could give broad growth opportunities and could facilitate it to reach the expectations of the consumer.
Threats
More companies might enter the market, resulting in decreased profit margins hence loss of market market shares. Besides, the company heavily depends on support from government systems(Solar, 2020).
The organizational culture
Culture involves particular pre-defined policies that give guidance to the workforce.The company has a culture of having a short and brief vision statement that communicates the main aim of the business and projected plans for the future. First Solar’sIncl culture presents itself in three level-artifacts, values, beliefs, and underlying assumptions (Ahmed, Naeem&Iqbal, 2017). The artifacts involve visible and tangible factors of the company, like office layout and official dressing code. The values include standards, principles, shared goals, diversity, collaboration, quality, passion, leadership, and integrity. Assumptions in the culture of the company remain embedded philosophies and ideologies and give the foundation of the company’s culture.
The organization’s core competencies and competitive advantage
First Solar Inc.’s competitive advantages originate from the utilization of the CdTe element. The culture acquires huge value for First Solar as the costs assist decrease costs of manufacturing and give affordable energy alternatives for customers. The mineral component remains a rare compound hence the particular technology employed by the company remains inimitable (Ahmed, Naeem&Iqbal, 2017). The vertical integration serves as a key source of the competitive advantage as it decreases manufacturing costs. The company’s large amount of cash and assets compared to present liabilities give a competitive advantage. The amount helps in financing future investments. The other competencies include the availability of a strong balance sheet that allows investment within the disruptive technology designed map. The company has a proven work record of 17GWof modules sold internationally. Effective decision-making within the company’s leadership creates a source of the company’s competitive advantage.
Company’s Communication and Information Technology Management
The company utilizes mobile technology to manage company information. The company utilizes technology to activate the product warranty. Each customer activates his or her product warranty by texting the serial number of the product by toll-free SMs. Such a form of activation presents a group of questions that customers answer hence help the company establish and comprehend the status of the products stand in the market (Ahmed, Naeem&Iqbal, 2017). The technology assists the company in identifying its clients and projecting the future of theproducts in the market. The company uses its communication strategy to give post-sales support to customers.Clients utilize the same technological channels to make inquiry hence increasing efficiency for the company and client concurrently. The company utilizes web-based social media platforms to formulate and send surveys through SMs. The company makes access to any information available in real-time through its technological system. Such surveys help the company to evaluate and monitor the workforce.
How the company manages vital operations and processes
The company’s leadership helps in managing various significant processes through effective decisions making. The leaders establish a vital situation and set it a problem that requires a solution. The company leadership discusses the possible solutions for the present issues examining all to establish the best (Federici& Kiernan, 2019). The management brainstorms the possible key solutions noting down data for any missing option. After assembling of data, the company leadership discusses the available solutions and decides the best option that would help in solving essential operations and processes. The company invests in field research to establish scientific evidence that supports solving vital issues. The research provides evidence-based solutions helping the company obtain its key objectives and goals. Effective implementation of its business strategy also helps them handle such issues effectively.
The organization’s value chain
The thin-film modeling modules manufacture nearly 30 kinds of raw materials to build a complete solar module. The vital components and raw material for the manufacturing process involve transparent conductive oxide, cadmium telluride laminate material, photo resist junction boxes, solar connectors, and cables (Thompson &Ballen, 2017). The company contains only one product manufactured through a single process and a single bill of raw materials that result in consistently manufactured quality products that differ from other competitors that manufacture multiple products. The company utilizes a sprawling value chain that brings about rises reliability risks, variability, and quality. In 2017, First Solar spent almost $1.95 billion in its international value chain. Such expenditure includes the manufacturing bill of materials, capital spends on company issues, and that spent indirectly. The company also utilized over $917 million on local suppliers in the USA market to promote the company solar modules operations and project development of the solar panels (Thompson &Ballen, 2017). The company also creates approximately thirty-thousand direct and indirect jobs across the supply value chain globally.
Graphical analysis of the company’s predicted performance regarding the available financials.
As of 2016, First Solar manufactured 3.1GW of solar modules that represented a 24% increase from the previous year. Higher efficiencies of solar modules and increased throughout drives the increase of production. In the same year, the company carried out its manufacturing facilities at nearly 97% capacity utilization that represented approximately a 5% increase from the previous year. The company projected to manufacture 2.2 GW of solar panels every New Year as the company continues to move within its series of solar panels from the available finances. The graph below shows the company’s performance and projections (Solar, 2017).
(Solar, 2017)
In 2016, the company sales accumulated up to $3 billion, demonstrating an increase from $3.6 million in the previous year(Solar, 2017). Despite increased competition in the market place, the company continues to maintain a robust financial position among competitors. The table below shows financial estimates of First Solar projections for the coming years.
(Solar, 2017).
The table demonstrates the valuation of First Solar Inc. for the coming year through the available financial resources.
(Solar, 2017).
Through the utilization of the available finances, the above graph provides a projected financial income statement of the company both previously, now and in the future. Lastly, the graph below shows the financial advantage for the company.
(Solar, 2017).
The primary and secondary leaders within the company
The Board of directors and management of the First Solar Inc. Company form both the primary and secondary leaders of the company. The leaders use corporate governance protocol to help the Board carry out their duties and responsibilities effectively. The Chief Executive Officer (CEO) is the leader of the organization and the Board with a responsibility to manage company operations. The chairperson has the responsibility to prepare financial statements and both long-term and short-term strategic planning (Hicks & Dalton, 2019). The leadership of the company utilizes a servant leadership style. In this case, the management as the secondary leaders of the company through human resource management utilizes servant leadership skills to ensure maximum employee performance. The leadership skills involve serving others first, leading by example, and directing. Both primary and secondary leaders in the company utilize this type of leadership because it allows increased employee involvement on the company issues hence increased employee performance. The leadership skills give the workforce a sense of belonging since it takes into account all opinions and suggestions from the employee during the decision-making process. Finally, the leaders utilize this kind of leadership to promote the growth of other employees before the company. In this case, the company puts the issues of its employees first before those of the organization hence formulating a sense of belonging among employees hence increased efficiency and performance.
Recommendations
The first recommendation for First Solar Company is to request the government to invest more in solar energy. In this case, First Solar has the chance to porch different international governments and the USA government to invest in the company. Such investments would help the company to benefit from renewable energy enthusiasm from around the globe. State governments and leadership have taken a serious of ensuring increased energy efficiency through the provision of different incentives to its nationals. The research recommends that the company require investing in development and research to transition from utilizing Cadmium Telluride. The company should start preparing itself to transform from manufacturing second-generation solar panels to the current generation cells. The company should also eliminate the use of Cadmium since it is one of the toxic substances in the environment. The study recommends that First Solar should improve its investment in new talent. The company contains a stable cash balance due to previous economic growth demonstrated over the years. New talent should learn to exploit the new talent with its communication and technologies to ensure increased company production. Therefore, the available cash should help the company to the porch and acquire new talent form the competitors and new talent from the country to maximize production.
The analysis also recommends that the company should promote diversity product supply. The company only focuses on only one product line in the market place. The solar energy industry contains numerous technologies that the company ought to utilize its financial capabilities to exploit them and invent new products hence expand its market shares like competitors. The company should also ensure geographical expansion. In this case, the company must seek to expand its operations on areas where they presently do not have manufacturing plants. Currently, First Solar has zero presence in the emerging markets for solar energy in developing nations. The decrease in prices results in new possibilities in such markets; hence the company should work on starting new operations in such areas. The study also recommends that the company should make good use of its opportunities in the market by taking advantage as the leading solar energy provider, produce different products, and use its brand name to sell. Such occurrences promote increased profits and income.
References
Ahmed, F., Naeem, M., &Iqbal, M. (2017). ICT and renewable energy: a way forward to the next generation telecom base stations. Telecommunication Systems, 64(1), 43-56.
Allana, S. S. (2017). Valuation of First Solar Inc.: fundamental analysis of a solar company (Master’s thesis).
Burke, M., &Emerick, K. (2016). Adaptation to climate change: Evidence from US agriculture. American Economic Journal: Economic Policy, 8(3), 106-40.
Delic, A., Neidhardt, J., Nguyen, T. N., Ricci, F., Rook, L., Werthner, H., &Zanker, M. (2016, September).Observing group decision making processes.In Proceedings of the 10th ACM conference on recommender systems (pp. 147-150).
Federici, J., & Kiernan, J. (2019). FIRST SOLAR, 2006–2012.
Hicks, K., & Dalton, M. (2019). By Other Means Part II: Adapting to Compete in the Gray Zone. Center for Strategic & International Studies.
Lepri, B., Oliver, N., Letouzé, E., Pentland, A., &Vinck, P. (2018). Fair, transparent, and accountable algorithmic decision-making processes. Philosophy & Technology, 31(4), 611-627.
Romano, A., Corfee, K., Powers, J., & Energy, E. (2016).Community Solar Program-Development Landscape. Community Sol. Value Proj.
Solar, F. (2017).First Solar sustainability report. 5-84
Solar, F. (2020).First Solar, Inc. (FSLR) – Financial and Strategic SWOT Analysis Review: GlobalData., 1-41
Thompson, N., &Ballen, J. (2017).First Solar. MIT Sloan School of Management, September, 13, 1.