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Market Scan: Canadian Solar Inc.

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Department, Institutional Affiliation

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Introduction

Canadian Solar Inc. is a global supplier of solar-powered energy and a manufacturer of

photovoltaic (PV) modules based on sunlight. More than 36 GW of value-based modules have

been given through the organization's numerous auxiliaries worldwide.

More than 150 nations throughout the world have access to Canadian Solar Inc.'s services. Over

the year, Canadian Solar has sold more than $I billion worth of solar energy. GTM Research

recently ranked the company as one of the top solar power producers in the globe. The SWOT,

PESTEL, and Porter's analysis of the company is all included in this study.

SWOT Analysis

As sales increase, Canadian Solar uses SWOT analysis as a tool to keep pace with the

market and business environment. When conducting a SWOT analysis, this company can

identify the most critical internal components.

Strengths

The major concerns of Canadian Inc. include a consolidated market position, a vertically

integrated business model, concentrated research and development, and enhanced business

performance in the Energy category, debt, and the deterioration in module and system

solutions segment performance. Canadian Solar Inc. could gain from the growth of the

global solar market, the tax incentives for solar energy provided by the United States

government, and the company's strategic plans. Nevertheless, Korrea (2012) observes that

certain aspects of a company's performance impact its overall progress and revenue. A

rising number of alternative energy sources are becoming more popular, harming firm

operations due to poor market conditions. Internal and controllable characteristics, such as

strengths, can be exploited to take advantage of external chances.

● High-tech production facilities and high-quality goods

● The world's leading producer of solar energy, with millions of customers in more than

150 countries and territories (Canadian Solar Inc, 2019).

● The company has substantial financial resources, as evidenced by its 2018 operating

income of $364 million (Canadian Solar Inc, 2018).

● Research centers are constantly developing solar cell and module technologies.

● Strategic R&D partnerships and more than 1,000 patents make this company a recognized
innovator

● A multicultural company that encourages cooperation and diversity.

Further, given that the company is one of the leading providers of solar power and the

assemblers of PV devices that run on solar power, it is clear that the company has a significant

impact on the market. In addition, the company has a long history of providing high-quality

products to a wide range of innovative institutions. As a result, the company now has a larger

retail market. It also has a solid and effective brand portfolio that it has built up over the years of

marketing. Shah (2017) asserts that an effective brand portfolio can significantly impact an

organization's ability to introduce new products after discovering a market gap.

The company's clients have become more reliable and trustworthy because of its brand's

excellent performance in a new market. As in the case of Canadian Solar Inc., a company

must be in constant communication with reliable producers of production inputs to avoid any

supply chain disruptions. Because of the suppliers' dependability and stability, customers can

only buy products from the company. Aside from that, buyers can make purchases on a

functional and comprehensive website. Consequently, this has boosted the company's

revenue significantly.

Weaknesses

Canadian Solar Inc. has flaws that put it at a disadvantage compared to its competitors

and jeopardize its progress toward achieving its goals. Among the company's weaknesses are

internal factors such as:

● The nature of the solar industry encompasses a wide range of ever-evolving

technology.

● There is a lot of competition in the industry, including Renesola and Yingli Solar

(Canadian Solar's rivals, 2019).

● Customers must be prepared to make a significant financial investment to afford the

high prices.

● For Canadian Solar Inc. to achieve a global presence, it is necessary to coordinate and

collaborate with companies and people from different cultural backgrounds.

The company's weaknesses can be addressed, including that Canadian Solar Inc. is lagging in

brand advertising. However, despite its large market, the company should continue to promote

its product. Even though there is still room for improvement, new competitors may enter the

market and take over if the current players do not. Additionally, the company requires a higher

level of funding for inventions and growth. Notably, to increase its output, it should also

encourage a high operation rate in the new markets.

Additionally, the company is experiencing issues due to employee exhaustion. Because

of the high attrition rate, the company spends more than its competitors.
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(Nappinnai, 2013). The company has also opted to lease rather than purchase operational areas,

which adds unnecessary costs in the long term. The company's low assets to liabilities ratio

frequently resulted in liquidity problems. A lack of consistent cash flow necessitates excessive

borrowing on the part of the company. It's been two years since the last time the company did

any market research. As a result, the business is relying on research from two years prior. High

turnover in recent years has necessitated the company to spend more time and money training

new employees. In addition, there is a high work rate for workers because there are not enough

employees and a lot of work to be done.

Opportunities

Canadian Solar has a wide range of opportunities, including:

● Having a low inflation rate means that credit interest rates for its customers can be kept

low because of this.

● The reduction in transportation costs as a result of the low shipping rates tends to reduce

production expenses. The drop opens the door to potential profit margins.

● Canadian Solar can gain market share and develop new technologies by implementing

environmental policies.

● With the help of cutting-edge technology, Canadian Solar can keep its current

customers happy and attract new ones.

● Increased customer spending enables Canadian solar to produce more products and

attract new customers while simultaneously increasing market share.

In addition, new environmental policies are currently in place around the world to reduce

pollution. Asia and Europe, for example, appear to be shifting to using renewable energy sources

and the products they produce (Pehle, 2014). Soon, every country plans to phase out fossil fuels

and instead rely on renewable sources of energy. According to Samson (2010), alternative

production methods are an essential consideration in supply chain management. As a result,

Canadian Solar Inc. will see a significant increase in its market share of more than 50% due to

the increased use of alternative energy sources. Low inflation helps to keep credit available at

lower levels. The company's profits have increased significantly as a result of lower shipping

costs. As a result of advertising technological advances, new brands and strategic plans are being

established. E-commerce appears to be attracting more and more customers due to this shift

(Hajli, 2013). There will be a significant increase in profitability if Canadian Solar Inc. opens

new online markets. Increases in household income have prompted an increase in consumer

spending. As a result, Canadian Solar Inc. now has a larger target market.

Threats

Canadian Solar is one of the world's largest solar power producers.

China manufactures most of Canadian Inc.'s solar products. As noted in the Appendix section, most of its

financial assistance comes from China, making it an affiliate firm rather than a Canadian company. The

following dangers loom over the company:

● As a result of the complex Canadian-Chinese structure currently affecting the

company, various rules enacted by the Chinese government may impact its

organizational culture. On the other hand, the country's decisions can harm the

company's investments and stock prices. (Hoium, 2015).

● Even though Canadian Solar is one of the world's leading solar panel manufacturers, it

makes a pittance for R&D. Compared to First Solar's $144 million and SunPower's $73.3

million in 2014, Canadian Solar spent $12.1 million on research and development.

However, despite the company's belief that it is on its way to success, its competitors

invest in research and development to discover new, innovative ways of producing their

products (Hoium, 2015).

● Canadian Solar has a high dependency ratio on solar projects to generate income, which

has led to its success in the industry since its inception. In the fourth quarter of 2014,

the company sold more than 50 MW at the cost of $4.90 per watt, or $245 million

(Hoium, 2015)). That's a lot more money than they can get for a competitive

development plan these days, which is a lot. Canadian Solar was the only company

qualified to compete in these purchase agreements that required local content. High-

margin projects can be very beneficial, but they're usually only around for a few months

at most. Projects with high-profit margins fizzle out quickly, drying up a business.

● When banks lend money, they usually do so in long-term bonds, which provide financial

stability for a few years. The company relies on short-term loans from Chinese banks to

grow its businesses and promote its projects. As a result of the high level of risk

involved, this type of lending tends to flatten quickly. if a bank decides to stop funding

Canadian Solar within a fortnight, the company may see its assistance disappear. (Hoium,

2015).

Further, the company has had poor growth and low earnings due to a lack of excellent employees

across the globe. Due to this, Canadian Solar Inc.'s clients and other organizations are turning to

other suppliers who are more dependable. Since the entire organization will be affected by

growing costs of production inputs, this is a significant threat to consider. This aspect might lead

to an increase in the price of a company's products. Some customers may choose not to use the
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company's products or switch to a rival company whose products are more affordable. Since

physical sales have generated the vast majority of revenue for years, clients switching to online

purchases could threaten the company's long-term success.

Pestle Analysis of Canadian Solar Inc.

Environments directly impact Canadian Solar Inc.'s performance. The macro-

environment is affecting our company and all of the rapidly expanding businesses around the

world. Using PESTEL, a Canadian solar company will identify the external factors that could

affect its operations. Depending on the company's global demographic location, these aspects are

particularly relevant to Canadian Solar (Strategic planning, n.d., para 17-18).

Political

The political factor demonstrates how a business can grow and generate significant revenue.

Companies that operate in countries with stable political climates benefit from the favorable

conditions provided by those countries. Having a stable political environment attracts more

investment, as explained by Tesfaye and colleagues (2019). Laws that prevent the firm from

conducting business, such as contract law, impact how it operates as well. Investing in an

industry where intellectual property legislation does not exist can be risky for investors and

sponsors. As long as other companies aren't allowed to import their products, some trade barriers

are advantageous for the company that erects the obstacles. Companies will be negatively

affected by this rule if they cannot export their products to other countries.

Economic

Canadian Solar Inc.'s aspirations to expand in the U.S. market could be impacted by some

economic incentives now in place in the United States that encourage solar energy customers.

SRECs (Solar Renewable Energy Credits) are among the most important incentives available

in various jurisdictions for solar energy consumers. SRECs are traded on the open market and

can be worth $300, but their prices fluctuate often. Federal and state financial incentives for

solar energy consumers include cash rebates and solar tax exclusions, among other examples.
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Technology.

The company should ensure a competitive advantage over its rivals and be at par with

them in light of the rapid pace of technological investment. Canadian Solar Inc. currently

dominates the market, but this could change in the future if these smaller companies discover

something incredible. As a result of this advancement in technology, competitors could take

advantage of Canadian solar Inc's idea and improve on it, causing the company to lose a

significant portion of its market share and eventually go out of business.

Legal

Health and safety regulations are necessary due to discovering the horrible working conditions

that employees previously endured. There must be a financial cost to implement these

requirements by Canadian Solar Inc. However, the management of Canadian Solar Inc. thinks

that people should be able to perform their duties in a safe environment, regardless of the cost.

As a result of the anti-discrimination statute, Canadian Solar Inc. employees have been treated

the same as everyone else. Because the company cares so much about the well-being of its

employees, they are more likely to do their best work, which in turn increases productivity.

Environmental

Poor weather conditions in a specific location can impede the production of goods and

manufacturing inputs. Certain Canadian Solar Inc. products may not be as effective as others,

depending on the circumstances. As a result, the company will see lower sales in these regions.

PORTER's Analysis of Canadian Solar Inc.

Porter's five forces analysis indicates how the corporation can sustain a fair rivalry with

rivals like Jinko, First, and SunPower. The research constitutes the following aspects:

New Entrants

Revolutionary marketing strategies are frequently promoted by new organizations that assist in

the creation of cutting-edge tactics for seizing control of the market. Despite this, the company
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must rethink its development and research strategies to maintain its position as a leader in the

market. According to Uphill (2016), a corporation can obtain a competitive advantage by

investing in research and development (R&D). The company can achieve this goal by

introducing customers to new items and encouraging research and innovation.

Bargaining Power of the Supplier

The supply chain is a common feature of all companies. Purchasing Canadian Solar Inc.

products can be expensive because of the supply chain. Individuals will buy more products if

the selling price is low because of a low supply chain rate. Despite this, a few providers will

raise their product values when conducting business with the corporation, especially when they

realize that it is significant. As a result, the cost of products would rise, resulting in a lower

selling rate.

Bargaining Power of the Buyer

Canadian Solar Inc.'s most excellent products are always sought after by customers, and they

also expect to pay a reasonable base price. A company's productivity is a reflection of this

aspect. On that note, there is the possibility that customers may not request a discount if the

company introduces new products and services. Customers seek a discount on products that are

likely to remain on the market for an extended period.

Threats of Substitutes

If a new product on the market entirely meets the needs and wants of customers, the previous

products will no longer be available for purchase. Competition for a company's brand is a

constant endeavor for organizations like the ones mentioned above. As a result, Canadian Solar

Inc. needs to devote more resources to research and development to keep up with its competitors

and stay relevant in the market.

Rivalry Among Existing Competitors.

If the rivalry between companies intensifies, the price of products tends to decrease. The

reduction of cost, of course, will have a considerable impact on the company's ability to
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generate profits. A company's long-term viability depends on taking bold steps to stay relevant

in the market, such as merging with another company or forming a corporation to control

commodity prices (Vlachos, 2015). In this regard, the corporation may want to consider

isolating itself from its rivals to boost its revenue or partnering with them to create a mutually

beneficial alliance.

Conclusion

Through research and development, Canadian Solar Inc. can create new brands in the

solar industry. From a critical point of view, it is also important that the company's products

stand out to prevent competition from the competitors as mentioned above and remain at the

forefront of the market. Further, the company has an extensive and devoted customer base of

millions of people, which it has to utilize to expand its business.

References

Canadian Solar. (2018). Canadian Solar. Retrieved from Canadian Solar:

https://www.canadiansolar.com/

Canadian Solar. (2019). The Canadian Solar Difference. Retrieved from Canadian Solar:

https://www.canadiansolar.com/na/companyIntro/

Canadian Solar Inc. (2018). Form 20-F 2018. Retrieved from SEC EDGAR website

http://www.sec.gov/edgar.shtml

Canadian Solar's competitors. (2019). Craft company. Retrieved from https://craft.co/canadian-

solar/competitors?competitors=canadian-solar%2Cjinko-solar%2Cfirst-solar

%2Csunpower-corporation

Hajli, M. (2013). A research framework for social commerce adoption. Information

Management & Computer Security, 21(3), 144-154.

Hoium, T. (2015, April 2). The Biggest Threats to Canadian Solar Inc. Motley. Retrieved from

https://www.fool.com/investing/general/2015/04/02/the-biggest-threats-to-canadian-

solar-inc.aspx

Korres, G. M. (2012). Handbook of innovation economics. Nova Science Publishers, Inc.

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Ming, X. (2015). Optimal Path Selection of Vehicle Route Scheduling under Bad Weather

Factors. Computer Simulation, 32(3), 210-212.

Nappinnai, M. V. (2013). Employee attrition and retention in a global competitive scenario.

International Journal of Research in Business Management, 1(6), 11-14.

Pehle, H. &. (2014). Germany: The engine in European environmental policy. In Governance

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Samson, R. M. (2010). Supply-chain management: Theories, activities/functions, and problems.

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evidence. Accounting Research Journal, 33(1), 57–74. Retrieved from https://eds-b-

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Appendix