Case 4 Analysis Copy
Business Case Analysis
MEMO
Date: 9 October 2014
To: KIOTO Group Senior Management
From:
Re: Your deteriorating position in the global solar thermal market race
European market is changing, your customers are backward integrating into your own business, the Chinese are dominating through price dumping and while your lobbying efforts are admirable, do you really think it is enough to put the Chinese dragon to rest? Emerging markets show high potential particularly due to your tremendous efforts in landing the KSA tender and establishing a track record in the region. Your white label products got you so far but is it still the right approach in these changing times? Especially when the middle men are pocketing up to 82% between themselves, leaving you with a modest 10% margin.
1. PROBLEM: What is the main (underlying) problem/opportunity in this case?
In the face of the intense pressure from competition, whether it be the Chinese price dumping strategy or the new threat from the backward integration of heating companies, and the inefficiency of the current distribution chain via plumbers and installers that is hiking up the cost, KIOTO Group has to decide whether it is enough to rely on their technological and quality advantages, this requires a deeper look into what kind of product(s) to focus on and who is their customer really (wholesale vs retail) and where is this customer located in order to establish a strong competitive position that will generate a strong market share and sustained sales and profit growth.
2. ISSUES: What are all of the issues relevant to this case?
Chinese are dominating the photovoltaic (PV) market with their low prices, made possible by the significant decrease in production cost of PV, price dumping strategies, low labour costs, no duty tariffs in European markets for Chinese imports, and government backed investments into Chinese companies. Establishing a 70% market share in Germany alone. To put it in perspective,
MEMO
Date: 9 October 2014
To: KIOTO Group Senior Management
From:
Re: Your deteriorating position in the global solar thermal market race
European market is changing, your customers are backward integrating into your own business, the Chinese are dominating through price dumping and while your lobbying efforts are admirable, do you really think it is enough to put the Chinese dragon to rest? Emerging markets show high potential particularly due to your tremendous efforts in landing the KSA tender and establishing a track record in the region. Your white label products got you so far but is it still the right approach in these changing times? Especially when the middle men are pocketing up to 82% between themselves, leaving you with a modest 10% margin.
1. PROBLEM: What is the main (underlying) problem/opportunity in this case?
In the face of the intense pressure from competition, whether it be the Chinese price dumping strategy or the new threat from the backward integration of heating companies, and the inefficiency of the current distribution chain via plumbers and installers that is hiking up the cost, KIOTO Group has to decide whether it is enough to rely on their technological and quality advantages, this requires a deeper look into what kind of product(s) to focus on and who is their customer really (wholesale vs retail) and where is this customer located in order to establish a strong competitive position that will generate a strong market share and sustained sales and profit growth.
2. ISSUES: What are all of the issues relevant to this case?
Chinese are dominating the photovoltaic (PV) market with their low prices, made possible by the significant decrease in production cost of PV, price dumping strategies, low labour costs, no duty tariffs in European markets for Chinese imports, and government backed investments into Chinese companies. Establishing a 70% market share in Germany alone. To put it in perspective,