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Analysis of the Marketing Position of Solarworld AG

Term Paper 2013 29 Pages

Business economics - Offline Marketing and Online Marketing

Excerpt

Table of Contents

List of Abbreviations

List of Figures

List of Tables

1 Introduction
1.1 Brief introduction to Solar World
1.2 The stock price performance of Solar World
1.3 News and latest situation of Solar World

2 Problem definition

3 Objectives

4 Methodology

5 Macro Analysis
5.1 The PEST(EL) Analysis
5.1.1 Political Factors
5.1.2 Economic Factors
5.1.3 Environmental Factors
5.1.4 Technological Factors
5.1.5 Missing Factors

6 Micro Analysis
6.1 Porters Five Forces
6.1.1 The risk of entry by potential competitors
6.1.2 The intensity of rivalry among established companies within an industry
6.1.3 The bargaining power of buyers
6.1.4 The bargaining power of suppliers
6.1.5 The closeness of substitutes to an industry’s products

7 SWOT Analysis
7.1 Internal analysis
7.1.1 Strengths
7.1.2 Weaknesses
7.2 External analysis
7.2.1 Opportunities
7.2.2 Threats
7.3 Turning SWOT Analysis into a Strategic Plan

8 Results and Interpretation

Appendix

A Performance exchange rate dollar / euro

B Global annual PV market scenarios until 2017

C Module Manufacturing Cost by Value Chain

Bibliography

List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

List of Figures

Figure 1: Performance of Solar World

Figure 2: Stock price performance

Figure 3:Performance exchange rate dollar / euro

Figure 4: Global annual PV market scenarios until 2017

Figure 5: Module Manufacturing Cost by Value Chain

List of Tables

Table 1: Solar World AG SWOT Analysis

1 Introduction

1.1 Brief introduction to Solar World

Solar World AG is an international photovoltaic energy company that manages all stagesof production starting by the raw material silicon for solar wafers to the entire solarmodule - including its own research and development. Through an internationaldistribution network, Solar World supplies customers all over the world with solarmodules and complete systems. Solar World is through its subsidiary company Solarparc AG also involved in the construction of several large-scale solar power stations andoperates with approximately 2,600 employees two production sites - one in Germanyand one in the United States. The company is based in Germany.1 The by far biggestpart of the entire sales is generated in Germany (49.5%) followed by the United States(23%) and the rest of Europa 19 %).

The company has been founded in the year 1998 by Dr.-Ing. E. h. Frank Asbeck and is still managed by him. On the 8th November 1999 Solar World AG went to the stock exchange. In the following 10 years, the company developed by fortunes acquisition of other solar companies and the acquisition of key patents and the sensible expansion of distribution activities to the greatest world's leading producers of solar technology with highest turnover. According to figure 1 “Performance of Solar World” from the year 2004 sales increased tremendously and reached in 2010 a record high of 1.3 billion euros. Since 2010, sales and profit have been dropped dramatically.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Performance of Solar World 2

1.2 The stock price performance of Solar World

The development of the stock market price is an important indicator for a publiclytraded company which reflects the external capital market expectations regarding thefuture development of the company. From December 2004 to March 2013, the stockwas listed on the Tec Dax. The Company's share capital is divided into 111,720,000bearer shares with a par value of 1 euro. The free float was to the cut in capital in 2013at 71%, the main shareholder was Franz Asbeck, with around 28%.3 The blue graph infigure 3 "Stock price performance" shows the development of the share price since theinitial public offering (IPO). The green graph illustrates a 200 days average.

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: Stock price performance 4

The price per share has increased continuously from 2004 until the end of 2007 with aslight slump in the middle of 2006. The price was to the beginning of 2004 about 1euro. At the end of 2007, the share price reached its peak from about 47.5 euro pershare. In this time the Company had a market capitalization from approximate 5.3billion euro. In early 2008 the course broke massively to around 25 euro and fell after ashort stagnation until the end of 2008 to about 12 euros. One reason for the dramaticallydrop was the company announced plans to take over the four German plants as well asthe development center of the ailing automobile manufacturers Opel. Solar Worldwanted to develop Opel to the first green European automotive group. Therefore Solar World offered the U.S. auto giant General Motors (GM) around one billion euros.GM declined the offer. In comparison to the Tec Dax in which Solar World AG waslisted, the company has performed far better than the market index, despite the massiveslumps. From 2004 until the end of 2007, the price was relative to Tec Dax at about4500% Performance. Currently the share price is stagnating at around 0.80 euros with atendency to drop to 0.11 euros.

1.3 News and latest situation of Solar World

As a result of current difficult market situation, which is characterized by excesscapacity, dumping and illegal subsidies in the solar industry, Solar World hasaccumulated 2012 debt of 1.2 billion euros. At the same time the company made a lossof around 477 million euros alone in 2012. To escape the debt trap and the insolvencyplus to make the corporation for the future competitive again an extraordinary generalmeeting was convened, in the vote was taken on the financial restructuring of thecompany in August 2013.

It was decided in a first step, to reduce the share capital of 111,720,000 euros down to744,800 euros, which corresponds to a ratio of 150:1. In a second step, long-term debtshall be restructured into equity (Dept-equity swap) in order to reduce debt and interestcosts. Thus, the previously reduced share capital of the Company will increase from744,800 euros by 14,151,200 euros to 14,896,000 euros again. Thanks to the approvalof the shareholders and the creditors Solar World is now ready for a new beginning.5

On 11/26/13 Solar World AG bought parts of the weakened solar division of Robert Bosch Gmb H. By buying Solar World AG acquires in Arnstadt, Thuringia, a cellproduction with a production capacity of 700 MW and a module production plant with acapacity of 200 MW of Bosch Solar Energy AG. The for this purpose newly establishedcompany Solar World Industries-Thüringen Gmb H, a 100% subsidiary of Solar World AG, will take over as part of a so-called 'asset deal' a large part of the productionfacilities and other assets of Bosch Solar Energy AG. In Arnstadt about 800 employeeswill continue their employment in the fields of cell and module production. Aftercompletion of the transaction, the Solar World group will have a capacity of over onegigawatt on the value chain wafer, cell and module production. With its high-performance mono crystalline cells, the new production subsidiary in Arnstadtcomplements the technological portfolio of the Solar World Group. The research anddevelopment activities for constant improvement of high-efficiency solar cell to bepooled to give the Group more competitive advantages and to enable further costreductions.6

2 Problem definition

The situation of Solar World is as already described in chapter 1.3 “News and latestsituation of Solar World” because of several factors currently very difficult, which isreflected in decreasing turnovers, profit and share price. Needs to be prepared for thefuture growing challenges a strategy has to be developed to bring the company back totrack. Therefore the current situation must be represented by a comprehensivemarketing analysis.

3 Objectives

The objective of this assignment is a complete and comprehensive analysis of Solar World AG and its surroundings.

4 Methodology

In order to get a complete picture of the current situation the company has to face, it is necessary to analyse in a first step, the Macro- as well as a Micro environment of the company. For this a macro- as well as a Microanalysis is performed. In a second step the by the analysis recovered data and information are collected and interpreted in a SWOT (Strength, Weaknesses, Opportunities, Threat) analysis. Finally, the SWOT is carried out to create the basis for a future strategy.

For that work no primary data was collected, the entire work is based on secondary data. The necessary information for the analyses that were previously only scattered published or accessible will be combined and analysed by the author. The sources of secondary data are, for example, the annual report of the company.

5 Macro Analysis

5.1 The PEST(EL) Analysis

The environmental analysis is a framework used to scan the organization’s externalmacro environment. One tool for that process is the PESTEL Analysis that helps toanalyse the Political, Economic, Socio-Cultural, Technological, Environmental and Legal changes in the business environment. The important principle is identifying thekey factors from the wider, uncontrollable external environment that might affect theorganization and get an overview about the whole situation the company might be in.

5.1.1 Political Factors

The Domestic political scene - Federal elections

Germany has in general a stable government. In September 2013, the 18th Federalelections were held in Germany. Currently, the two future coalition parties (CDU and SPD) are still in negotiations. These should be completed by the end of November. Amajor point of dispute between the parties is the reorientation of energy policy in orderto break the electricity price increase. The fundamental reform should be adopted before Easter 2014 to provide a reliable framework for energy policy. Even the green party isnot anymore part of the coalition; the new coalition will keep on track the energyturnaround. Objectives of the energy policy are climate and environmentalsustainability, security of supply, affordability. As the costs of energy policy haveincreased very quickly and strongly in recent years, the new government also wants toreform the Renewable Energy Sources Act (EEG). Excluded from the reform isphotovoltaic, as the current system has proven itself. Overall the impact form the 18thelection for the solar industry is not too big. There will not be any spectacularly chancesand more important no backdates cuts in existing systems.7

Subsidies - Renewable Energy Sources Act

The breakthrough of photovoltaic technology in Germany is based on the photovoltaicpromotion by the Renewable Energy Sources Act (EEG). In 2000, each solar kilowatthour of electricity was rewarded with about 50 euro cents. This triggered a real solarboom and as a consequence Germany gained to the world wide largest photovoltaicmarket. For many countries, Germany served as a model. To slow down significantlythe additional construction and the solar boom, Germany and the rest of Europe havecut funding since a few years. In Germany the EEG promotion has been monthlyvariable lowered - but at least by 1 % - since May 2012. This value may increase ordecrease on a monthly basis, depending on how much photovoltaic capacity in Germanywas built over during a specified period before. The ongoing reforms and discussions onthe EEG and specifically solar subsidies in the past few years have been completed. Inthe foreseeable future there won’t be any chances to the current system.8

EU-China solar panel trade dispute

For several years the low-cost PV modules from China taking over the EU and speciallythe German solar market. At the initiative of the German industry leaders Solar Worldand other EU companies, the EU commission reviewed this situation. As a result of thesolar dispute China and the European Union have agreed in July 2013 on minimumprices and quantity limits for imports of Chinese solar products to the EU. Chinesecompanies that act against these conditions must be expected from August 2013 penaltyduties in a range from 37.2 to 67.9 percent. In view of low cost competition from Chinawere 25,000 jobs in the European solar industry in acute danger, the EU Commissionhad justified the punitive tariffs. It is questionable if this compromise brings the desiredrelief of the damage to the European and German solar industry since the fixed prices of

56 cents per watt are still at dumping price level.9

Global trend to renewable energy

The worldwide massive expansion of renewable energy continues further: In 2012,renewable energy already established approximately 19 percent of global final energy.

[...]


1 Cf. http://www.solarworld.de/en/press/short-portrait/ 25.11.13

2 Data generated of the annual reports from 1999 to 2012 - own created chart

3 Cf. Solar World (2013), Annual Group Report 2012, page 49

4 Cf. http://www.finanzen.net/chart/Solar World 27.11.13

5 Cf. Solar World (2013), Ad-hoc-announcement 07.08.2013

6 Cf. Solar World (2013), Ad hoc-Announcement 26.11.2013

7 Cf. http://www.focus.de/politik/deutschland/bundestagswahl-2013/der-koalitionsvertrag-im-wortlaut-1-4-energiewende_id_3436400.html 03.12.2013

8 Cf. http://www.solaranlagen-portal.com/photovoltaik/wirtschaftlichkeit/einspeiseverguetung 03.12.2013

9 Cf http://www.handelsblatt.com/politik/international/solarstreit-europaeische-union-und-china-einigen-sich/8556852.html 12.11.2013

Details

Pages
29
Year
2013
ISBN (eBook)
9783668749542
ISBN (Book)
9783668749559
File size
823 KB
Language
English
Catalog Number
v432954
Institution / College
University of applied sciences, Nürnberg
Grade
Tags
macro analysis PESTEL micro analysis SWOT solar porters five forces

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Title: Analysis of the Marketing Position of Solarworld AG