First Solar, Inc. in 2010

By Robert A. Burgelman, Robert Eric Siegel, Morgan Hallmon
2010 | Case No. SM190 | Length 42 pgs.
In 2010, First Solar was the global leader in photovoltaic (PV) modules and looked to dominate the market going forward. The company’s strong market position was largely predicated on its proprietary Cadmium Telluride (CdTe) cell technology, which had allowed First Solar to achieve the lowest cost in the industry. Despite its success to date, the company faced significant challenges in 2010. Declining subsidies in major markets in the EU, increased competition from well-heeled Chinese manufacturers, and the risk of disruption from higher efficiency technologies all threatened to undermine the progress that First Solar had made.

The case provides a backdrop for analysis of how significant changes in the external market environment alter the relative importance of a company’s distinctive competencies and require the development of new competencies. Specifically, the declining growth in subsidy markets requires First Solar to seek new sustainable markets in which PV solar is viable in the absence of subsidies. Success in these markets requires development of new skills not necessary for pure-play module manufacturing. In addition, the case explores key elements of technology leadership and mitigation of disruptive forces as the industry leader.

Furthermore, the case examines the rationale for vertical integration within the solar industry and confronts the question of business definition. Management at First Solar must consider whether the company is simply in the module business in 2010 or whether its development and EPC capabilities have made it a more general energy company. The case also details the company’s financial strategy, highlighting the intimate linkages with the overall corporate strategy. Finally, the company’s corporate culture and management control systems are examined for their effectiveness at aligning the organization amidst significant external change.
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