CANADIAN SOLAR Case Analysis

CANADIAN SOLAR
Case Analysis


1. Should Canadian Solar try to be global?
In my opinion every company should try to be global if there is a good opportunity. It is also same for Canadian Solar and they have chance to go after to be global. If the company can create difference on their products and diverse from other global companies. The most common semiconductor material for PV cells is silicon. Thus one of the major driver behind the price of solar PV is price of silicon. Companies like Canadian Solar are trying to decrease the costs by finding cheap; silicon, other raw materials and labor.  There are really huge competitors in the world in solar energy sector. In order to survive in this market Canadian Solar should be global and build offices and facilities around the world. They should establish their facilities especially on Asian countries such as China, Thailand, Taiwan, Indonesia. Because the cost of raw material and labor is cheaper. The marketing and selling offices should be built and focus on Europe and America. Because, generally countries in those areas are the customers. Also, especially European governments' renewable energy policies would be so beneficial for Canadian Solar company. Because the governments which supports renewable energy will allow the Canadian Solar company to establish in their country. There are some example countries such as; Renewable Energy Law (EEG) in Germany, Feed-in Tariff (FIT) in Spain, USA's renewable energy support program which was promise of President Obama. In order to catch those opportunities Canadian Solar should be more globalized and open offices and warehouses in those supportive countries. The company should also focus on development of their products. In this case they should be practicing especially in Japan by making strategic alliance partnerships with Japanese solar developer companies. For example, Canadian Solar should try to make strategic alliance with Sharp, Kyocera and Sanyo. Because those Japanese companies are having long histories developing Pv solar. They are competing on the strength of their brand recognition, research and development. By making strategic alliance with those well-known Japanese companies, Canadian Solar company will get really great brand image. Working with those companies means your products are high quality. This will generate an image on customers that Canadian Solar's products are quality because they have great partners. The company currently aims to be global. The action of changing the company name ('Canadian Solar International' to 'Canadian Solar’) is showing that the managers of the company want to be global. 
To sum up of course they should be global. However, this generation should be well planned and strategically designed before start.  In my opinion there are three strategic stages for being global company these are; 
1. Establishing facilities in Asian countries in order to decrease the costs and be competitive with world's leading companies.
2. Establishing marketing, selling and investor relations offices in Europe and America. Because the majority of the PV solar's customers are from Europe and America. Having offices these areas will have great impact on company's revenue.
3. Strategic alliances with Japanese big companies will help the Canadian Solar to make great brand image and develop their products.

2. Evaluate Canadian Solar's country selection choices by using the CAGE framework.
In this part I will make Cage framework analysis on Canadian Solar's country selection choices. Those countries are; Spain, Japan, Germany, China and USA. There will be four stages in this analyze these are; Cultural Distance, Administrative Distance, Geographic Distance, Economic Distance.

1. Cultural Distance:
Culture is sometimes referred to as the software of the mind, in that it has a sometimes invisible but indelible influence on people`s values and behaviors. Spain, Germany and USA's are culturally similar countries. USA has same language with Canada. But the other countries; Spain, Japan, Germany, China speak different language. Japanese and Chinese people have totally different culture than Canadian culture. Japan and China are more traditional. By looking at cultural distance perspective USA looks more similar to Canada. Because it has same language, religion, tradition, history, values. Therefore, in this part USA is the best option for Canadian Solar Company. 
2. Administrative Distance:
Administrative distance reflects the historical and present political and legal associations between trading partners. Trade practices between countries can be significantly affected by laws and regulations enacted at the national or international level. Because they affect fundamental business practices, they often affect the competitive position of firms as well. Especially European governments' renewable energy policies would be so beneficial for Canadian Solar company. Renewable Energy Law (EEG) in Germany, Feed-in Tariff (FIT) in Spain, USA's renewable energy support program which was promise of President Obama. Therefore, the countries Germany, USA, Spain are beneficial for Canadian Solar. China also gives support to PV solar investors. But Japanese government does not give support to PV solar investors. If we look at currency China is the best choice for Canadian Solar. But German government is really supportive at renewable energies. They generated laws in order to increase the usage of renewable energy. Germany will be best option while establishing offices and fabrics. Because they are serious about renewable energy and will support Canadian Solar more than other companies.
3. Geographic Distance:
We can think geographic distance as absolute, in terms of the miles or kilometers that separate a firm from another market or supplier. USA is the closest country to Canadian Solar headquarter. But it is not close to Canadian Solar's productions. Canadian Solar's facilities are based on China. The closest countries to Canadian Solar' facilities are China and Japan. China looks more beneficial for Canadian Solar because, China has massive population.  
4. Economic Distance: 
Finally, economic distance captures fundamental differences relating to income, the distribution of wealth, and the relative purchasing power of segments of a geographic market. In my opinion this is the most important part because, companies' first aim is to make profit. For this reason, they strongly focus on economic situation. Canadian Solar company is aiming to decrease the cost. In order to survive in the PV solar industry, they should have competitive prices. How can they decrease the costs? By establishing their facilities in China. Chine is the best country for Canadian Solar in order to achieve cheap; human resources (labor wages), infrastructure, raw materials. The cheapest way of establishing facilities and production can be in China.  The mean labor wage per month in China is around $656 on the other countries are much more than this. For example, in Germany it is around $2604 and the other European countries, Japan and USA has the same high wages. Currency is also important. Chinese Yuan is the cheapest money between those five countries. Currency is important on costs side. Because they will produce the goods with Chinese Yuan. They will pay labor, raw materials with Yuan and sell those PV solar goods with dollar. It will be so profitable trade for Canadian Solar company

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