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Do you think Q-Cells could have avoided its current financial troubles? What could they have done differently? 2. Do you see import or export opportunities for entrepreneurs or small businesses in the solar industry? What advice would you give them?

Do you think Q-Cells could have avoided its current financial troubles? What could they have done differently? 2. Do you see import or export opportunities for entrepreneurs or small businesses in the solar industry? What advice would you give them?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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 1.Do you think Q-Cells could have avoided its current financial troubles? What could they have done differently?

2. Do you see import or export opportunities for entrepreneurs or small businesses in the solar industry? What advice would you give them? 

Chinese market, it also locked Q-Cells into buying wafers from LDK. These wafers were priced higher than those Q-Cells could source on the spot market. As a result, Q-Cells was paying about 20 cents more for its wafers than competitors were paying. Thus, in the short term, the joint venture hurt Q-Cells. However, the company was able to renegotiate the price it would pay for LDK wafers. To stay cost competitive, Q-Cells has decided to outsource its solar-panel production to contract manufacturer Flextronics International. Q-Cells' competitors, SunPower Corp. and BP's solar unit, also have outsourced production to contract manufacturers. The outsourcing has not only saved manufacturing costs but also brought the products physically closer to the Asian market where the [3] greatest demand is currently. This has reduced the costs of shipping, breakage, and inventory carrying.
Transcribed Image Text:Chinese market, it also locked Q-Cells into buying wafers from LDK. These wafers were priced higher than those Q-Cells could source on the spot market. As a result, Q-Cells was paying about 20 cents more for its wafers than competitors were paying. Thus, in the short term, the joint venture hurt Q-Cells. However, the company was able to renegotiate the price it would pay for LDK wafers. To stay cost competitive, Q-Cells has decided to outsource its solar-panel production to contract manufacturer Flextronics International. Q-Cells' competitors, SunPower Corp. and BP's solar unit, also have outsourced production to contract manufacturers. The outsourcing has not only saved manufacturing costs but also brought the products physically closer to the Asian market where the [3] greatest demand is currently. This has reduced the costs of shipping, breakage, and inventory carrying.
Opening Case: Q-Cells Q-Cells exemplifies the successes and challenges of global importing and exporting. Founded in Germany in 1999, the company became the largest manufacturer of solar cells worldwide. (1) By 2010, however, it was experiencing losses due, in part, to mistiming some of the entry strategies that are covered in Section 9.1 "What is Importing and Exporting?". First, it's important to know that Germany is a high-cost manufacturing country compared to China or Southeast Asia. On the other hand, Germany is known for its engineering prowess. Q-Cells gambled that customers would be willing to pay a premium for German-made solar panels. (You'll learn more about this "country of origin" factor in Chapter 14 "Competing Effectively through Global Marketing, Distribution, and Supply-Chain Management".) The trouble was that solar cells aren't that sophisticated or complex to manufacture, and Asian competitors were able to provide reliable products at 30 percent less cost than Q-Cells. The Cost Advantage Q-Cells recognized the Asian cost advantage-not only are labor and utility costs lower in Asia, but so are the selling, general, and administrative (SG&A) costs. What's more, governments like China provide significant tax breaks to attract solar companies to their countries. So, Q-Cells opened a manufacturing plant in Malaysia. Once the Malaysian plant is fully ramped up, the costs to manufacture solar cells there will be 30 percent less than at the Q-Cells plant in Germany. Then, Q-Cells entered into a joint venture with China-based LDK, in which Q-Cells used LDK silicon wafers to make its solar cells. The two companies also used each other's respective expertise to market [2] their products in China and Europe. 12 Although the joint venture gave Q-Cells local knowledge of the
Transcribed Image Text:Opening Case: Q-Cells Q-Cells exemplifies the successes and challenges of global importing and exporting. Founded in Germany in 1999, the company became the largest manufacturer of solar cells worldwide. (1) By 2010, however, it was experiencing losses due, in part, to mistiming some of the entry strategies that are covered in Section 9.1 "What is Importing and Exporting?". First, it's important to know that Germany is a high-cost manufacturing country compared to China or Southeast Asia. On the other hand, Germany is known for its engineering prowess. Q-Cells gambled that customers would be willing to pay a premium for German-made solar panels. (You'll learn more about this "country of origin" factor in Chapter 14 "Competing Effectively through Global Marketing, Distribution, and Supply-Chain Management".) The trouble was that solar cells aren't that sophisticated or complex to manufacture, and Asian competitors were able to provide reliable products at 30 percent less cost than Q-Cells. The Cost Advantage Q-Cells recognized the Asian cost advantage-not only are labor and utility costs lower in Asia, but so are the selling, general, and administrative (SG&A) costs. What's more, governments like China provide significant tax breaks to attract solar companies to their countries. So, Q-Cells opened a manufacturing plant in Malaysia. Once the Malaysian plant is fully ramped up, the costs to manufacture solar cells there will be 30 percent less than at the Q-Cells plant in Germany. Then, Q-Cells entered into a joint venture with China-based LDK, in which Q-Cells used LDK silicon wafers to make its solar cells. The two companies also used each other's respective expertise to market [2] their products in China and Europe. 12 Although the joint venture gave Q-Cells local knowledge of the
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