Canadian Solar Inc
Canadian Solar Inc
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Introduction
photovoltaic (PV) modules based on sunlight. More than 36 GW of value-based modules have
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
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
● The world's leading producer of solar energy, with millions of customers in more than
● The company has substantial financial resources, as evidenced by its 2018 operating
● 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
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
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
technology.
● There is a lot of competition in the industry, including Renesola and Yingli Solar
high prices.
● For Canadian Solar Inc. to achieve a global presence, it is necessary to coordinate and
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
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
Opportunities
● Having a low inflation rate means that credit interest rates for its customers can be kept
● 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
● Increased customer spending enables Canadian solar to produce more products and
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
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
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
company, various rules enacted by the Chinese government may impact its
organizational culture. On the other hand, the country's decisions can harm the
● 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
● 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
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
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
advantage of Canadian solar Inc's idea and improve on it, causing the company to lose a
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 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
investing in research and development (R&D). The company can achieve this goal by
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.
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
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
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
References
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
solar/competitors?competitors=canadian-solar%2Cjinko-solar%2Cfirst-solar
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Hoium, T. (2015, April 2). The Biggest Threats to Canadian Solar Inc. Motley. Retrieved from
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Appendix