Nanosolar is the only solar panel in the world that is printed like a newspaper which makes it easy to transport and easy to install. It is also the most efficient with 17 percent efficiency in converting heat to energy. This poises the company to go global. However, it is also the newest players in the global market. It doesn’t have the reputation that other solar panel manufacturers have such as Sunpower and Samsung.
Nanosolar will increase the value of its products for all its stakeholder by going global. For the same manufacturing and Research and Development expenses, it will be able to widen its market. The best strategy is to penetrate a country that is underexplored by solar panel manufacturers.
By using export mode, Nanosolar will be able to maximize current investment. The mobility of its panels will make it easy to transport. Nanosolar may continue manufacturing its products in its current location and ship it to the country of choice.
Introduction: Company Background
The company originated in Chicago but has expanded its operation in the United Kingdom. In fact, their first major contract was in Germany instead of the U.S. Nanosolar continues to develop its technology to improve the amount of heat it converts to energy and make solar electricity cost as affordable as conventional electricity.
They are now officially the world’s most affordable solar panel and also the most profitable for the stakeholders of the company and efficient for the consumers of the product. Its superior technology and even more superior market positioning also gives it the potential to be a truly global product. It is the only solar panel in the market that is possible to be shipped through conventional consumer courier. It is the framework that makes Nanosolar’s entry to foreign market not only practical but logical. It will maximize the current investment by capturing a larger market.
Motives for Internationalization
The strongest reason for internationalization is the value it promises to its shareholder. The most obvious is the additional revenue it will generate using existing resources (Friedman 1970, 32). Nanosolar is the only one of its kind in the market that is easy to transport because of its flexibility. It renders the setting up of a manufacturing plant unnecessary. Companies who expand to foreign markets are forced to open a manufacturing plant in or near the market they want to penetrate. This equates to bigger investments which lengthens the returns to the stakeholder (Hollensen 2011, 231).
Nanosolar is also benefitting from the growth of independent campaigns geared towards orienting the world about the benefit of harnessing solar power financially and environmentally (Johansson 2002, 199). As such, governments are offering breaks to companies who enter their country with products that promises to contribute to the preservation and rehabilitation of the environment.
There are also external constraints in the market. The competition is getting stiff and many multinational companies are joining the industry (Mohamad 2002, 511). Samsung and Panasonic are now making their own solar panels. Given that these companies are able to manufacture in bulk, they are also able to pull the prices down (Carlson et al 1993, 37). This makes it more difficult for small players like Nanosolar to compete. Customers are naturally going to gravitate towards brands that have been around longer and have been established to come out with quality products (Muhlbacher 2006, 96). Meanwhile, the market is growing as fast (See figure 1 and Figure 2). Escalating competition for limited customers puts heavy pressure on margins, and bounds prospects for cost-effective variation (Birchall & Tovstiga 2005, 239). Such is the case of many technological products. The U.S. estimates a churn rate went from 20 percent in 1998 to 35 percent in 2001 (Doole & Lowe 2008, 251).
This expanding competition may only be countered through a continuous innovation and that has always been the trust of Nanosolar (See Figure 2). When it was launched in 2009, each panel was only able to convert ten percent of the heat it gathers to energy but in the early 2011, they are now at 17 percent making it an efficient system to use even during night time (Lockwood 2010, 179). The continuous evolution strengthens Nanosolar’s revenue potential which is highly beneficial to all of its shareholder. A good 90 percent of innovations are incremental which means value is added on top of the current value (Wiedeman et al 2010, 59).
Technology innovations do two things in the quest to make any venture profitable (Fuller 1999, 382). One, the upgrade of the products creates a new market need which drives purchase. This is, of course, a big risk because the need may not be immediate (Brown & Wahlers 1998, 43). This lowers the profit of the company. If the new innovation fails to get the support of the market right away, investments won’t be returned right away (Neely & Wynn 2010, 79). This, on the other hand, is an opportunity for new players to penetrate the market and this is the opportunity that Nanosolar is seizing.
Innovation on solar panels has been one dimensional (Charter 1992, 90). It has always been about increasing the efficiency of energy conversion. Nanosolar is introducing a new material altogether. It is an existing technology and offering it to a new market will increase its value to shareholders (Davis 1993, 28).
Barriers and Risks
Production Capacity. Nanosolar first introduced its product in 2007 and it promised to start commercial production by the end of the same year. However, they didn’t really mass produce their product until two years later and they were producing a fraction of the demand. This caused many investors and customers to question the real capacity of Nanosolar (Coddington 1993, 253).
Limitations in diffusion and distribution route. The International Energy Agency believes that the development of the solar power technology will not progress fast enough to provide at least 10 percent of the global energy demand. This makes the solar panel technology an unfamiliar concept to many consumers which will also serve as the biggest barrier to entry of Nanosolar. What is even more frustrating is the fragmented efforts of different solar panel providers. Many companies only educate the market to whom they are selling (Greenpeace 1994, 68; Abdul 2010, 93).