High costs and insufficient budgetary resources. Many of the countries that are undexplored by solar panel suppliers are also not open to the concept. The cost to developing new solar technologies is still higher than the cost of developing technologies using traditional resources. Banks and other financial firms are unwilling to invest in a technology that is unfamiliar (Jeannet 2000, 138).
Loans for solar technology development involve a 10 to 25 years of investment (IMF 2004). The only solution is to get the cooperation of the government of the country Nanosolar wishes to enter (Ongksvisit & Shaw 2008, 95).
Early this year, Nanosolar also became the most efficient solar panel after proving that it converts 17.1 percent of heat to energy, the most efficient in the business. This was certified by the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL).
Nanosolar’s vision is to produce the most efficient and most affordable solar panel in the world and install a solar panel in every household in the world. In the strictest sense, only Nanosolar can do this because of its affordability, efficiency and mobility of its products.
Market Entry Recommendation
Evaluation of the International Environment
The Renewable Energy Policy Network for the 21st Century stated that the growth of solar panel demand is highest in Europe. In fact, the demands have been increasing by 60 percent annually since 2004 to present. To date, solar panels provide for more than 16 percent of all new power installations. As awareness of the technology goes up, the demand will continue to climb in the next five years. Specifically, there are five countries that have achieved 1 gigawatt energy generated through solar panels: Germany, Spain, Japan, U.S. and Japan (See Figure 3). However, there are other countries that are now starting to open to solar technology, this includes Australia, China, Fance, Greece, India, Korea and Portugal (Pierer 2001, 71).
The first five countries are so far ahead in terms of policies and programs (WEF 2008) but Asia presents the greatest need in terms of alternative power source (WTO 2007). Most of the countries in Asia remain third world and electricity costs a lot. Taking a chunk of their monthly power expenses so they can allocate their money to more important things may be a more attractive. This is also the market that is underexplored in terms of solar panel distribution.
Analysis of the Foreign Market to Enter : Thailand
Thailand has the balance of the three components that Nanosolar needs for a profitable expansion: government support for the industry (Anh & Sibanda 2011, 68), market maturity about the technology (Charter 1999, 74), and economic capacity to purchase the technology (Oelrich 2011, 13).
The International Energy Agency (IEA) reported that 89 percent of the total solar panels installed in the world may be found on eight countries. The IEA said that for this to improve, the government of the different countries will have to support the growth of the technology (Ottman 2011, 97). National policies will have to be set up which includes tax breaks, tax cuts and even tax bonuses.
Thailand is number 25 in the world in terms of GDP and they are number 23 in terms of the electricity they consume to sustain its country and they are number 20 in terms of population (Schonfeld 2010, 32). It is a big market, a big country and it offers a lot of opportunities (See Figure 5). The government is amplifying that opportunity by setting up a goal to relieve its country from the energy it produces to sustain all the products its produces and the country it operates (Rugman & Verbeke 2000, 86).
Through its renewable energy plan, they plan to allow the entry of alternatives sources of energy to potentially power the whole country. More accurately, it wants to increase its capacity to produce energy from alternative sources, including solar panel, for 1,500 percent in 15 years. That is jumping from its current 35 megawatt back in 2007 to 550 megawatt in 2022.
Entry Mode Recommendation
The appropriate entry mode for a company usually changes as the company evolve and the market changes its temperaments. Naturally, when a company starts gaining some experience, it becomes more able and more willing take risks. Its disposition on a market entry mode also changes (Keegan & Green 2011, 157). That is where Nanosolar is right now. It is at a stage when it is evolving heavily. It has been two years since it started mass producing its products. It is a highly progressive two years as it gained traction it got enough funding and enough demands in Europe to open a German manufacturing plant. It also has been able retain its unique selling proposition, the only solar panel that is easily transported and light, as light as a newspaper. A USP is an essential factor in a business that’s going global (Black et al 1985, 15).
Nanosolar didn’t’ use a clear cut strategy plan when it entered Germany, the only other country it is distributing in. Its entry was more “organic” but the experienced it brought to Nanosolar is valuable. The most important element in the export entry mode is that the product is made outside of the country where the product is going to be sold. Nanosolar will continue to manufacture its products in the U.S. which automatically takes out the necessity of putting up a manufacturing plant in Thailand. This won’t be a deterrent to the distribution of the product since the solar panels are easy to transport.
The export mode has two kinds: direct export and indirect export. Nanosolar will use direct export.
Under direct export, the company will not set up a manufacturing plant in the country where it intends to sell its products. Instead, it will have to put up its own export group that is directly owned by the company but has direct connections with the country or countries where the company wants to be present (Wilk 1998, 323).
Nanosolar should set up a global export department that will supervise all its ventures outside the U.S. instead of using intermediaries. Export agreements should be planned and finalized by the global export department. This department should be composed of people that have linguistics skills to make communication with Thailand smoother. There should also be people or access to people that have a wide knowledge about Thailand’s culture, politics and ecology to make sure that all business processes and marketing strategies fit the market. This will require hiring a person that may have been educated in Thailand but spent considerable years in the U.S. and has strong academic and professional backgrounds in the technology (Sanchez 2003, 69).
Conclusion and Recommendation
Nanosolar’s vision is to become the leader in solar technology. It extends its sights in wholesale and retail which means Business-to-Business and Business-to-Consumer. It has proven that it has the right strategy by its continuous to development of its own technology. A brand like this will have to establish its global identity which means upholding the quality of its product and the culture of its business (Praskah 2002, 338). This identity is just as important as its need to expand.
To marry these interests, the export mode is the best entry strategy. The export mode gives the company total control over their product, its distribution, margins and even the marketing plan. For Nanosolar, it works perfectly because the product is portable. Unlike other solar panels that are made of fiber glass, Nanosolar may be transported easily. There will be no additional cost in setting up a manufacturing plant in or near Thailand. Product will continue to be produced in the U.S. This whole process gives the company a higher value of return for its investments.