Vestas Case Analysis

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Wind. It means the world to us.
Wind. It means the world to us.
Vestas’ World of Wind Case Analysis

Vestas’ World of Wind Case Analysis

John Dietrich, EMBA Cohort -59, University of Denver, Daniels College of Business John Dietrich, EMBA Cohort -59, University of Denver, Daniels College of Business

I. Contents
I. Core Problem/ Issue ………………………………………………………………………………2 II. SWOT Analysis ……………………………………………………………………………………….2 A. Strengths ………………………………………………………………………………..2 B. Weaknesses ……………………………………………………………………………3 C. Opportunities …………………………………………………………………………3 D. Threats …………………………………………………………………………………..4 III. Alternatives …………………………………………………………………………………………4 IV. Recommended Strategy …………………………………………………………………......4 A. Phase 1: Now …………………………………………………………………………4 B. Phase 2: 1-3 years ………………………………………………………………….4 C. Phase 3: 3+ years ……………………………………………………………………5 V. Appendix A: McKinsey 7-S Framework ………………………………………………..6 VI. Appendix B: Financial Ratios ……………………………………………………………….9 VII. Appendix C: Macro Forces ………………………………………………………………..13 VIII. Appendix D: Porter’s Five Forces …………………………………………………….15 Bibliography ……………………………………………………………………………………………17

I. Core Problem/Issue

“In the Last 15 years Vestas had reported yearly double digit organic growth, mainly driven by the rapid development of the wind energy market. But this extended sellers’ market had Vestas to become a rather introverted company, less attentive to customer needs, and with limited marketing activities.” (Steenburgh & Corsi, 2011, p 1). The economic downturn of 2008 caused a significant loss in sales and left Vestas in a volatile position in the wind energy market.

The core problem for Vestas is that they have become complacent in marketing themselves to an ever evolving and growing wind energy market. In order for them to grow in both established and emerging markets, they must be able to convince the world that they are the leader in wind energy production.

II. SWOT Analysis
A. Strengths
Vestas has had several years of success in the wind turbine manufacturing market and established themselves as pioneers in the wind turbine industry. They are defined as the world leader in turbine manufacturing and are known in the industry for producing some of the best functioning, high quality turbines. They are leaders in wind turbine technology and continue to introduce new turbines to the market setting them at the forefront amongst their competitors. Other strengths include: * Decentralized manufacturing allowing for savings in transportation and less dependence on one market for success and faster adaptation to that market’s needs. * Strong management keeping company in line with their core values. * Experience in the wind turbine market.

* Strong Brand in the global market.
* Continued investment in R & D.
* Wide range of products to offer customers. (2MW-7MW)
(Vestas, 2013)

B. Weaknesses
Though Vestas has proved to have several strengths in the wind turbine manufacturing market, they are not without some weaknesses. Being that they solely operate in the wind turbine market, they are very susceptible to large variations in sales depending on the current market state and this can have a significant impact on their bottom line and overall value to their shareholders. The wind industry is also highly dependent on incentives to boost the production of alternative energy and they can also see large reductions in sales if these incentives are not renewed. “The economic downturn that followed the US economic crisis and the increased competition in the wind turbine industry had brought a sudden drop in orders from 6,019 MW in 2008 to 3,072 MW in 2009.” (Steenburgh & Corsi, 2011, p 1). Other areas needing improvement are: * Marketing and clearly defining who they are marketing to. * Internal communication between divisions to ensure overall company...
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