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CANADIAN SOLAR

Canadian Solar has been experiencing dramatic growth over the last five years. This
growth is mainly sustained by government’s aggressive incentive arrangements in both
Germany and Spain to install solar photovoltaic (PV) technology. There were changes in the
sales forecast due to fluctuating demands for their products. Other factors for the fluctuating
financial outlooks of the company are the global economic downturn and the changes to
incentive schemes in Spain. The temporary undersupply of solar modules is an evidence that
Canadian Solar’s forecast had failed to cope up with rapid changes in the actual demand. In
addition, it is difficult for the Canadian Solar to earn sustainable profits considering its
competitors such as industry players in Japan and the low-cost producers in China.

Canadian Solar could have given more attention to its external environment. The
planning and forecasting phase could also have included the economic and political
environment as major factors to be considered. Within just three to four months, the company
switched gears to large solar modules. This quick change in solar modules may have caused
cost and quality trade-offs.

The situation could have been handled well if the management was able to adapt to
the rapid changes in the industry trends with flexibility. The company could make feasibility
studies to further understand the risk analysis, cost analysis, and other relevant information.
While it is true that Canadian Solar is a risky venture due to its technologies and processes,
inevitable changes in government policies, and rapid changes in demand, the company can
use its experiences to plan and manage their operations better. It is essential to not dwell too
much in the past failures, either through unwillingness to learn from it or through timidity in
trying again. All the experiences that the company have encountered have offered it relevant
lessons to learn from.

Government incentives and renewable support schemes play a major role in the future
of the global Photovoltaic (PV) market. This became both an opportunity and a threat to
Canadian Solar and other companies in the same industry. A favorable government incentives
impacts the demand of the PV market and becomes an opportunity for suppliers of PV solar
modules to sell more of their products; whereas negative changes like what happened in
Spain and Japan had affected negatively the market resulting to lower sales.

Aside from the government incentives, economic crisis had also impacted Canadian
Solar. Although economic crisis is beyond control of Canadian Solar, they can still control
some areas to minimize the impact by carefully planning their movement. This is evident
with the lack of planning and failure to change quickly their forecasting in terms of inventory
which cause them to have a major inventory writedown (price of silicon is up from around
$25 per kilogram in 2004 to over $500 per kilogram in mid-2008 and falling to $60 per
kilogram in mid-2009). If the management had scheduled and planned their usage of silicon,
this can be avoided.

Additionally, since Canadian Solar is an emerging company, it still lacks its


competitive advantage. Marketing might have done well in building its brand through
industry trade shows, publications and by rebranding itself to emphasize its “Canadian” roots.
Yet, this is still not enough to compete on the strength of brand recognition of other players in
the market. Moreover, it also lacks uniqueness that would add to the selling point of their
products such as in technology and its research and development.

The case study makes to the enrichment of knowledge, theory, and practice in such a
way that it points to the importance of the project management, especially as to its three
phases: Planning, Scheduling, and Controlling.

Planning phase includes goal setting, defining the project, and team organization. In
the case of Canadian Solar, they lack the thorough planning as to thoroughly defining of their
corporate goal in their inception. They lack in planning during the time of the recession when
the prices of the silicon fluctuated resulting in substantial amount of writedown. They forgot
to internalize and set their corporate advantage, their unique selling point that distinguishes
them from their competitors. Establishing such an advantage, according to the Corporate
Finance Institute, is one of the most important goals of any company. In today's world,
competitive advantage is essential to business success. To boost their competitive advantage
through innovation, investing in Research and Development could be a route that Canadian
Solar should take.

In a short span of time, Canadian Solar has achieved so many things and they have
ventured into various areas. This may have contributed to their debacle, juggling different
projects that’s hard for them to keep up. A planned Project Scheduling may have helped them
in setting their timeline. Project scheduling involves sequencing and allotting time to all
project activities.stage, managers decide how long each activity will take and compute the
resources needed at each stage of production. Managers may also chart separate schedules for
personnel needs by type of skill (management, engineering, or pouring concrete, for example)
and material needs (Heizer, Render, & Munson, 2017). Managing a multimillion-dollar
business could be tough especially when it has quite a handful of projects around the world.

The control of projects, like the control of any management system, involves close
monitoring of resources, costs, quality, and budgets. Control also means using a feedback
loop to revise the project plan and having the ability to shift resources to where they are
needed most. In case of Canadian Solar, so much has happened that’s out of their control like
the economic downturn, the sudden fluctuation of the silicon prices. They could have
minimized its hit by managing the resources really well and implemented a better inventory
control procedure.

How to fail in Project Management (Without really trying)


The limitations to this case includes; Lack of Visibility of all projects, Unclear Project
Objectives, No visibility into Resource Workload , Gaps in communication.

Solution to these common issues are combination of people, processes and tools.
These isn’t a blink of eye. There should be a good process or system with completed staff
work to ensure that the project is moving. If theres is a need for linkage or consultant to
benchmarked for the improvement of the project and its people then the management should
hire or linked with them. As a business one must consider as well the benefits of research and
understanding its environment and market.

Executive Managers must set time and effort in planning, plot the goal and strategies.
The top management should have a support on the project implemented. Project managers
should give feedbacks if problem arises or ahead of time, not only problems but if the top
management expectations are unrealistic as well. Team members should be on board once the
tasked are given. Everyone must be responsible for their duties and functions and
feedbacking should be applied.

CANADIAN SOLAR
The case potential limitations includes the updating trends of the Canadian solar
business, that would help our study in determining there most profitable time and what
areas/time would the business be adjusted. Furthermore, the business does not focused on one
area of specialization that hinders our study to reflect on where the business goes. There are
lack of interventions on the problem that may arise that would be useful for further study.

Philippines is not exempted in economic crisis. Since Philippines had business


dealings with other countries as evidenced by its support for importation and exportation of
goods and services and borrowings from world bank, it can be also affected by devaluation of
foreign currency receivables and payables which may result to foreign exchange gains and
loses.

According to www.mordorintelligence.com, 2018, the Philippine government had


introduced feed-in tariff scheme in 2012 for solar. It aimed to increase the solar PV
installations to reach 3 GW of utility of solar in 2022. Backed up by government incentives,
the demand for PV solar increases as it is gaining popularity.

Suppliers will be faced again with the same opportunity and threat that the
government incentives offer. If the companies in solar industry will not be wary and will not
devise a plan on how to enter the market, the possibility of experiencing the same setbacks
experienced by Canadian Solar is high. Nonetheless, if we wise up and learn from the
experience of others as well as our experience especially in our failures, we could apply the
concepts learned and integrate it in our future research. Some of these are considering project
environment and the needs of stakeholders, conducting feasibility studies, doing extensive
research and development as necessary, admitting if a project fails and other concepts
applicable.

In conclusion, no business is perfect and is always successful. Instead there are only
business that are successful thru continuous improvement, learning from its failures and
learning from others experience.

Reference:

HEIZER, J., RENDER, B., & MUNSON, C. (2017). OPERATIONS MANAGEMENT


Sustainability and Supply Chain Management. Pearson Education, Inc.
CFI Education Inc. (n.d.). Competitive Advantage The ability of a company to outperform its
competitors. Retrieved February 2, 2019, from Corporate Finance Institute:
https://corporatefinanceinstitute.com/resources/knowledge/strategy/competitive-advantage/

www.mordorintelligence.com, 2018

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