BUS 890: Culminating Experience in Strategic Management, FALL 2010 The culminating project is an in-depth case analysis of Suntech Power Holdings Co., Ltd. The analysis includes multiple concepts from the course to help explain the strategies, actions and performance of the company.

1. Michael Camarena, Eric LeDuc, Teo Tertel

3. Company Profile

4. Strategic Intent Suntech’s top priorities Superior technology and superior value High quality, low cost solar solutions Cost and scale leadership Achieve grid parity Suntech’s goal is to drive the cost per watt of their solar panels below $1 by 2012

5. Brief History Founded in 2001 by solar Dr. Zhengrong Shi Solar manufacturing in China was nonexistent Public traded company in 2005 Volatile oil prices fueled concerns for renewable energy 12 million panels in 80 countries Production capacity increased to 1400MW in 2010

6. Challenges Demand for their products exceeds their ability to supply due to capacity constraints Solar PV technologies are not commercially viable without government incentives Rapid technological advancements Reducing downstream costs

7. External Environment Market Volatility Industry wide shortage of polysilicon in 2008 Industry Demand Demand fluctuates with market prices Technological Uncertainty No dominant technology Government Support Crucial towards growth of solar energy output

8. Porters 5-Forces Model Threat of Buyers Strong Threat of Entry Moderate Threat of Substitutes Strong Rivalry Strong Threat of Suppliers Strong

9. Internal Environment Strong Market Growth Outlook Leading Market Position Leading R&D Capabilities Quality Commitment Strong Supplier Relationships Broad Product Portfolio International Management Team

10. Elements of Strategy

11. Where is Suntech Active? Design, Development, Marketing & Manufacturing of silicon based PV products Worldwide residential, commercial, industrial, and public utility applications and systems integration services Key solar energy markets US, Germay, China, Australia, Spain, Middle East, South Korea, Japan, Italy

12. How Will Suntech Get There? Focused efforts on internal developments Increasing efficiency of manufacturing R&D to increase cell efficiency Cost reductions Capacity expansion Strategic acquisitions & Joint Ventures

13. How Will Suntech Win? Product Differentiation High conversion efficiency Manufacturing quality Warranty certified power output Credit for customers

14. What’s Suntech’s Staging? Solar Cells-> Solar solutions: modules, systems, systems integrations Staggering Speed Production capacities have doubled every year since 2004

15. What’s Suntech’s Economic Logic? Heart of Suntech’s product strategy Low cost & high conversion efficiency Superior consumer value Focus on enduring capabilities Leveraging low cost production Creating scale economies Rapid innovation

16. Corporate Strategy Corporate umbrella for over 36 different subsidiaries in operation A result of strategic acquisitions and investments Strengthen Suntech’s position in vertical chain Upstream: Key access to high quality supplies Downstream: Systems integrations and project development

17. Key Mergers & Acquisitions Aggressive targeting of suppliers and manufacturers of solar technology KSL-Kutler, increase expertise in manufacturing Luoyong China Silicon, secure silicon supplies for solar cells

18. International Strategy Analysis Operate manufacturing, distribution, and sales offices worldwide HQs: Asia, America, and Europe Promote adoption of solar power Become energy leader in solar technologies Requires converting global presence into a global competitive advantage

19. International Strategy Analysis Adapting to local market differences Building relationships with customer base Distribution and subsidies Exploiting economies of global scale Largest producer of silicon solar products Spread fixed costs over a larger volume Exploiting economies of global scope Deliver same quality and level of service regardless of location

20. International Strategy Analysis Tapping optimal locations Leverage locations with access to low cost resources and clean energy mandates Maximizing knowledge transfer 36 subsidiary organizations and 13 sales offices Manufacturing and R&D locations in China

21. Cooperative Strategy Analysis Partnerships & Alliances Strengthen core business, solar developments, enhance R&D, and secure supplies University of New South Wales: solar cell efficiency Calisolar Inc. to secure solar silicon manuf. facility Secure development of smart panel technology

22. Recommendations Expand Capacity, Reduce Supplier Dependencies Demand continues to increase, as costs are reduced and efficiencies increase Rapidly expand into new facilities that generate needed capacity and satisfy local requirements for government subsidies Acquire/Partner with silicon suppliers to reduce supply shortages and obtain cost advantages

24. QUESTIONS?