PV Technologies Case Group 4 B2B
PV Technologies:
Were they asleep at the switch?
Submitted by:
Group 4
Ankur Meena
Yaman Rai
Ajinkya Parab
Abhinav Sehgal
(068)
(120)
(122)
(230)
The Problem
Solenergy was committed to cut costs
PVT’s prices are significantly higher than competitors Solenergy’s evaluation of recent proposal had not been published yet; but if it were true, Morgan (chief engineer) would be difficult to convince
Reasons for unfavorable evaluation of PV technologies by
Greg Morgan
Prices offered by PVT are significantly higher than competitors( in the range of $10,000-$2
Alternative course of actions available to PVT to gain favorable evaluation
Proposition: Offer to extend the original Warranty at internal cost from 10 to 20 years
Financial Implication:
Contractually prepay the warranty at the rate of 18% of the purchase price per inverter
Perform Warranty services, submit monthly invoices and “true up” at year end
Summary
Total Project revenue
$ 18,000,000.00
Warranty Premium
3,240,000.00
Maintenance contract income
Total revenue
$ 21,240,000.00
Total cost of sales
10,800,000.00
Warranty expense
3,240,000.00
Gross expense - Guarantee
Maintenance contract expense
Sales commission
72,000.00
Project cost of sales
$ 14,112,000.00
Project gross profit
$ 7,128,000.00
For
(Marketing & Sales executives)
• Economic value of alternative would outweigh high product cost
• Performance history so far was good
Against
(Finance, Production and Engineering Execs.)
• PVT’s already existing 10 year warranty as against industry average of only 5 years
• High Risk Strategy
Proposition: Offer a 99% Uptime Guarantee for inverter’s in-service life at no cost for the customer
Summary
Total Project revenue
$ 18,000,000.00
Warranty Premium
Maintenance contract income
Total revenue
1,600,000.00
$ 19,600,000.00
Total cost of sales
Warranty expense
10,800,000.00
Gross expense - Guarantee
6,980,172.00
Maintenance contract expense
1,450,000.00
Were they asleep at the switch?
Submitted by:
Group 4
Ankur Meena
Yaman Rai
Ajinkya Parab
Abhinav Sehgal
(068)
(120)
(122)
(230)
The Problem
Solenergy was committed to cut costs
PVT’s prices are significantly higher than competitors Solenergy’s evaluation of recent proposal had not been published yet; but if it were true, Morgan (chief engineer) would be difficult to convince
Reasons for unfavorable evaluation of PV technologies by
Greg Morgan
Prices offered by PVT are significantly higher than competitors( in the range of $10,000-$2
Alternative course of actions available to PVT to gain favorable evaluation
Proposition: Offer to extend the original Warranty at internal cost from 10 to 20 years
Financial Implication:
Contractually prepay the warranty at the rate of 18% of the purchase price per inverter
Perform Warranty services, submit monthly invoices and “true up” at year end
Summary
Total Project revenue
$ 18,000,000.00
Warranty Premium
3,240,000.00
Maintenance contract income
Total revenue
$ 21,240,000.00
Total cost of sales
10,800,000.00
Warranty expense
3,240,000.00
Gross expense - Guarantee
Maintenance contract expense
Sales commission
72,000.00
Project cost of sales
$ 14,112,000.00
Project gross profit
$ 7,128,000.00
For
(Marketing & Sales executives)
• Economic value of alternative would outweigh high product cost
• Performance history so far was good
Against
(Finance, Production and Engineering Execs.)
• PVT’s already existing 10 year warranty as against industry average of only 5 years
• High Risk Strategy
Proposition: Offer a 99% Uptime Guarantee for inverter’s in-service life at no cost for the customer
Summary
Total Project revenue
$ 18,000,000.00
Warranty Premium
Maintenance contract income
Total revenue
1,600,000.00
$ 19,600,000.00
Total cost of sales
Warranty expense
10,800,000.00
Gross expense - Guarantee
6,980,172.00
Maintenance contract expense
1,450,000.00