Question

Case study, SunPower: Focused on the Future of Solar Power

Describe the SunPower company’s main business and the specifics of the industry it operates in. What is the competitive structure of the industry the company operates in?

Class is Economics (MBA)

Answer 1

The solar market is the future of the energy world as more and more people are becoming environmentally conscious and hence, are switching to the clean energy sources. As the governments come more under pressure to enable laws that protect the environment, more and more companies are adopting more envirnmentally conscious methods to reduce their carbon footprint. In this regard, consider the following points about the solar energy business -

• This market was valued at $52.5 billion in 2018 and is expected to reach $223.3 billion by 2026, a CAGR of 20.5%
• Emerging economies China and Japan have significantly increased their solar industry production in the recent years
• The market is currently very demand based and there are geographic variations in price since the demand is not the same in different regions
• The major challenge in the production of solar powered devices is the technology involved which include massive investment in R&D.
• The market is emerging and hence the competition is increasing as the demand is increasing. However, it is not close to being perfectly competitive, and it is more towards an oligopoly where the few top firms can influence the prices to a great deal.