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COMPETITIVE STRATEGY

Tata Solar- A Dawn under the Sun

Submitted by:
EPGDIB 2014-16_Group7

Akshay (4A) | Sachin (36A) | Kavita (19A) | Shiv (40A) | Ashirvad (9A) | Rakesh (30A)

Contents:
1. What is Completive Strategy?
2. Background
3. What is Solar Energy? 4. Solar Power in India
5. Tata Power Solar An Introduction
6. How Tata Solar Follows Competitive Strategy?
7. Competitors
8. Various Strategies Followed by Tata Solar
9. Pest Analysis
10. Porters Five Force Analysis
11. Tata Solar SWOT Analysis
12. Accounting Information
13. Strategic Recommendations
14. References

1. What is Competitive Strategy?


Competitive strategies are the method by which you achieve a competitive
advantage in the market. A firm's relative position within its industry determines
whether a firm's profitability is above or below the industry average. The
fundamental basis of above average profitability in the long run is sustainable
competitive advantage. Before devising a competitive strategy, one needs to
evaluate all strengths, weaknesses, opportunities, threats in the industry and then
go ahead which would give one a competitive advantage.
According to Michael Porter, competitive strategy is devised into 4 types:

Cost Leadership
In cost leadership, a firm sets out to become the low cost producer in its industry.
The sources of cost advantage are varied and depend on the structure of the
industry. They may include the pursuit of economies of scale, proprietary
technology, preferential access to raw materials and other factors. A low cost
producer must find and exploit all sources of cost advantage. If a firm can achieve
and sustain overall cost leadership, then it will be an above average performer in
its industry, provided it can command prices at or near the industry average.
Differentiation Leadership
In a differentiation strategy a firm seeks to be unique in its industry along some
dimensions that are widely valued by buyers. It selects one or more attributes that
many buyers in an industry perceive as important, and uniquely positions itself to
meet those needs. It is rewarded for its uniqueness with a premium price.
Cost Focus
In cost focus a firm seeks a cost advantage in its target segment. Cost focus
exploits differences in cost behavior in some segments. Such strategy helps firm
to satisfy sufficient consumers and gain popularity.

Differentiation Focus
In differentiation focus a firm seeks differentiation in its target segment.
Differentiation focus exploits the special needs of buyers in certain segments.
This type of differentiation is made to meet demands of border customers who
refrain from purchasing competitors products only due to missing of small
features. It is a clear niche marketing strategy.
2. Background
Indias strong economic growth, combined with countrys industrialization,
increasing population and increased access to power has led to rising demand for
power in the country. The need for renewable energy is obvious in todays world.
The problem is trying to get as many people as possible to recognize the need and
to spend their hard earned money on this technology.
3. What is solar energy?
Solar energy is, simply, energy provided by the sun. This energy is in the form of
solar radiation, which makes the production of solar electricity possible.
Electricity can be produced directly from photovoltaic, PV, cells. (Photovoltaic
literally means light and electric.) These cells are made from materials which
exhibit the photovoltaic effect i.e. when sunshine hits the PV cell, the photons
of light excite the electrons in the cell and cause them to flow, generating
electricity.
Solar energy produces electricity when it is in demand during the day
particularly hot days when air-conditioners drive up electricity demand.

4. Solar Power in India


Globally, the solar power industry has been growing rapidly in recent years. In
2010, an estimated total capacity of 17,000 MW was installed globally. Solar
radiation over India is 5000trillion KWH/year; in most parts of India, clear sunny
weather is experienced 250 to 300 days a year. The country receives more than
4kWh/m2 /day. Major states put together then 979.4MWp is the total amount of
energy derived in form of solar. Thus this puts India amongst the highest solar
radiation receiving countries of the world.
Solar power from SPV (Solar Photo Voltaic) system and solar concentrating
system is produced in environmental friendly manner, does not generate any
waste or pollution, and meets the energy requirement in domestic sector in
decentralized manner quite efficiently.
The exhibit below captures their estimates about solar market in India; which
shows that there is a steady growth in the solar market after 2017-22

5. Tata Solar Power An Introduction

Tata Power Solar is Indias largest integrated solar company that is driven by the
singular vision harness the power of sun to enable solar everywhere.
Headquartered in Bangalore, Tata Power Solar operates in three distinct segments
cutting-edge manufacturing, EPC services for solar power projects and creating
innovative solar products. Tata Power Solar with 25 years of deep domain
expertise, is one of the pioneering solar manufacturers in the world and India's
largest specialized EPC player. The company has more tha118% growth in 2104
as compared to 2013.
Tata Solar Power- Vision and Mission
Vision:
To be the most admired and responsible Integrated Power Company with
international footprint, delivering sustainable value to all stakeholders.
Mission:
To earn affection of customers by delivering superior experience and value,
thereby making them our ambassadors. Driving competitiveness by operating our
businesses at benchmark levels. Executing projects safely with predictable
benchmark quality, cost and time. Growing profitably across the power value
chain and allied areas, in focus geographies. Being the lead adopter of technology
with a spirit of pioneering and calculated risk taking. Practicing Leadership with
Care by pursuing best practices on Care for our Environment, Community,
Customers, Shareholders, People and creating a culture that will reinforce our
values. Enable employees and associates to achieve and unleash their full
potential to deliver outcomes in a sustainable way.

6. How Tata Solar Follows Competitive Strategy?


Tata Solar targets the mass market with its products, but combines this broad
scope with a differentiation strategy based on design, branding and user
experience that enables it to reach the Indian common man. Tata Solar has a
generic cost leadership and product differentiation strategy in the solar energy
industry. The current strategic goals of Tata Solar are market diversification and
operations expansion.
Consumer categories:
-Domestic
-Agricultural
Solar powered equipment is more environmentally friendly and economical in its
operation compared to equipments powered by an internal combustion engine
(ICE) or nuclear power. For irrigation and drinking water solar PV water pumping
systems are used in India. Solar water pumping system works on power generated
using solar photovoltaic system. The solar energy is converted in to electricity by
using a photo voltaic array.

The residential consumer category contributes to about 29 percent of the total


Indian Power requirement; this is expected to increase to 34 percent by 2021-22,
according to KPMG report. It is expected that high-end residential consumers
will be proactive in adopting solar rooftop given their higher power tariffs. A
large number of these consumers are likely to start adopting solar power from
2017-18. However, government involvement will be required in encouraging
non-high-end residential and agriculture consumers to use solar power.
Solar Market Segment:
-Grid Connected Solar Potential
-Off-Grid Connected Solar Application Potential
-Solar Water Heater (SWH)
Grid Connected Solar Potential includes; Residential Rooftops and Utility Scale
Solar power (CSP and PV). And Off-grid connected Solar Application Potential
includes; Solar Powered Agricultural Pump sets and Solar powered Telecom
towers.
In the off-grid space, solar power is already cost competitive with alternatives in
certain applications. For example, telecom towers are an attractive market for
solar PV installations. And Solar Water Heating (SWH) applications could be
used in residential, commercial as well as industrial sectors

Tata Solar Objectives


Focus on retail customers in metros, Refineries, Ports, Government Funded
Projects to start new plant and to increase market share, it is essential to increase
production capacity. Focus on both domestic and international markets. Nearly
75% of sales is achieved from exports to Europe and USA.
Product Innovations
Tata Solar product portfolio embraces more than 60 models today, ranging from
Rooftops to solar pumps. Sunjevini a power converter that charge your converter
with solar energy, Tata Solar Dynamo roof top solar power generators
Product Differentiation
Tata Solar reaches Indian mass and industries by launching new and innovative
products since inception. It has many first to its credit like
Solutions for Consumers
Solution for Consumers
Power cuts, rising bills and, in some cases, no electricity at all. From big cities
to remote villages, every home today is facing at least one of these challenges.
At Tata Power Solar, we have developed an array of solar lighting, heating and
power backup products that are reliable, affordable and green
Solutions for Business
Tata Power Solar, we are at the forefront of this mission provide sustainable
solar solutions. Tata have helped countless businesses benefit from these policies
while attaining their sustainability goals for the past 25 years, our pursuit to
enable solar continues like- Turnkey solar solutions, Customized systems for
unique challenges, A promise of No CAPEX and a low OPEX, Meet Solar RPO
& REC regulations, Profit from power, Industry leaders trust Tata Power Solar.
Programs with governments
Partnering with multiple government and non-profit agencies, Tata Power Solar
has played a pivotal role in making electricity accessible in off-grid villages, lowincome homes and isolated regions across India.
Solar Projects with Power Producers
Tata Power Solar can design a fully integrated and customized solar power plant
project for you. We have the prowess to manage solar energy projects of such
scale and the much-needed know-how to work within the confines of regulatory
policies or the geography constraints.

Globally Trusted Module


Tata Power Solar, a pioneer of the solar industry offers a broad range of
photovoltaic solar modules that feature high efficiency and best-in-class
manufacturing edge. With an in-house production capacity of 200 MW for
modules and 180 MW for cells, our broad range of solar energy panels and
modules are among the top tier PV panels available to multiple customer
segments including industrial, commercial, both on-grid and off-grid solar
projects and residential.
Target Markets
Who?

House Owners

Councils

Corporations

Where are they? How many?


Millions of domestic roofs and
developers / architects of new
buildings.
Many councils who own buildings
with large roofs - schools, admin
buildings etc.

Many companies with large roofs

Reduce electricity costs


Contribute to carbon emission reduction
Take advantage of other incentives
Increase value of property
Reduce electricity costs
Comply with carbon emission targets
Reduce electricity costs
Display corporate social responsibility
Gain emission credits
Sell electricity
Sell carbon emission allowances

Land Owners /
Project Developers

Electricity
Companies

Motivation

Big companies, often globally


operating.

Consumer

Spread energy mix


Comply with regulation
Would otherwise have to buy carbon emission
credits (in the EU)
Use solar powered lights or charges instead of oil
lamps (especially in developing countries or
remote areas)
Use solar powered products for novelty val

Tata Solar Distribution Networks


Apart from the Product, Price and Promotion Tata Solar has shown strength in
another significant aspect that is distribution network. Achieving supply chain
superiority or excellence is within the reach of any company. However, it requires
a vision, as well as the organizational imperative and willingness to invest in the
right direction. For the B2C model, higher margins up to 15 per cent were offered
to the dealers, which was higher than the industry average of 6 per cent to 10 per

cent. This helped them penetrate the market deeper into the urban markets. In
B2B model, where corporate selling was involved, tie ups with major corporate
houses saved the margins of the distributors and Tata Solar could provide the
corporate houses a lesser price than the market. Thus, the target market of
professionals was reached.
7. Competitors
* Azure Power
* Bharat Electronics Limited (BEL)
* Bharat Heavy Electricals Ltd. (BHEL)
* Central Electronics Ltd. (CEL)
* HHV Solar Technologies Private Limited
* Micro Sun Tech Private Limited
* Moser Baer India Limited
* Photon Solar Energy Systems
* Punj Lloyd Delta Renewables
* Reliance Industries Solar Group
* Renewable Energy Systems Limited
* Solar Semiconductor
* Sun Energy Systems
* TATA BP Solar India Limited
* Titan Energy Systems Limited
* Titan Energy Systems Ltd.
* TRA International
* Waaree Energies Private Limited
* Webel SL Energy Systems Ltd.
* XL Telecom & Energy Limited
8. Various Strategies Followed by Tata Solar
Products
Goods: panels, transformers, inverters, necessary construction equipment. In the
proposal include all the equipment needed, spec sheets, and warranty info to
better inform the client of what they are buying. Services and ideas: have expert
and experienced salespeople, engineers, and installers. Perform analysis of the
property and financial implications of the purchase. Perform maintenance at no
charge if anything breaks.

Price
Give the customer a detailed accounting of all equipment and service fees, tally
it up, and come up with a total. This total is usually pretty high. Use marketing to

get the client to think of the purchase as an investment, rather than a huge
expense.
Place
Salespeople need to be available to travel to the individual sites to perform the
analysis, and go wherever they need to close the sale.
Promotion
Tata BP Solar has embarked on an extensive retail distribution network, named
Project Disha, to reach out to customers across the country and overseas
Advertising: newspaper, TV, radio, billboards, anything to get your message
across
Personal Selling: very important. Solar Panels are complex and customized. Meet
face to face with the potential buyer to understand their goals and resources. Give
them immediate feedback.
Public Relations: media is constantly reporting about new developments in the
renewable energy industry. Informs the public of the benefits of solar without
having to spend money on advertising.
Sales Promotions:
Direct marketing: uses direct communication to generate a response in the form
of an order or a request for further information.
Tata Solar Collaborations
- Transphorm Partners With Tata Power Solar to Introduce Indias Most Efficient
Solar Inverter.
- DuPont is collaborating with Tata Power Solar to provide a safer, more efficient,
reliable and cost-effective alternative to kerosene lamps for home lighting in areas
such as Uttar Pradesh, where the electricity supply is unreliable.
- Tata Solar working on Indo-China partnership for solar energy
- Tata Power Solar, Manipal varsity unveil solar car prototype

9. Tata Solar PEST Analysis


PEST Analysis
The government has huge presence in the Solar Energy market. It
Political
regulates the market through MNRE (Ministry of Renewable Energy)
and financial assistance is provided by IREDA (Indian Renewable
Energy Development Agency Limited). IREDA has come up with
several schemes to not only encourage the use of solar-powered
systems, but also facilitate businesses in the arena. setup. (MNRE)
provided financial assistance to the installation of around 33 grids of
solar photovoltaic power plants, companies engaged in R&D in solar
power are also offered several subsidies and tax exemptions.
Economical In the recent round of reverse auctioning process for the solar projects
under the National Solar Mission, the price discovery for levelized tariff
was in the range of INR 10.49/kWh to INR 12.24/kWh for solar-thermal
and between INR 10.59/ kWh to INR 12.76/ kWh for solar PV projects.
The budgets has also encouraged private solar companies by reducing
customs duty on solar panels by 5% and exempting excise duty on solar
photovoltaic panels. The government has initiated a Renewable Energy
Certificate (REC) scheme, which is designed to drive investment in
low-carbon energy projects.
Social

There are two overall forces in the social environment that are
influencing the growth of the renewable energy industry: increasing
environmental concerns and increasing energy demand. Growing
environmental awareness which is defined as the increasing knowledge
and understanding of the finite nature of many of the worlds resources,
the negative impact and contribution to climate change from burning
fossil fuels and deforestation, and the impact of global warming on
biodiversity, and the stability of delicate ecosystems, have led to
increasing environmental concerns.

Technical

Technological developments and investments catalyze the advancement


of technology, strengthen the ability of energy consumers to harness
solar energy, and improve manufacturing equipment and techniques
that enable low cost production. In addition to emerging technology,
future technology being aggressively pursued by research and
development include thermal and electrical storage systems, solar
hybrid lighting, improved manufacturing techniques, nanotechnology,
and improving concentrating solar power systems.

10. Tata Solar Porters 5 forces Analysis

Suppliers Power:
Solar technology has oligopoly characteristics dominated by a small number of
players, but then with government intervention and rising awareness the price of
solar energy is coming down. The time taken to reach grid party would also
depend on the bargaining power of the developers. Degree of influence exerted
over the industry by the suppliers:
-Product is unique and scarce,
-Suppliers are more concentrated in the European market because of better
technology.
-High switching costs for the firm in the industry is high.
The Suppliers of the solar energy supplies also too many industries; like rural,
agriculture, hospitals, hotels, etc.
There is no substitute product for solar.
The product is critical for the company.
Buyers Power:
The industrys major power lies within the buyers side. Since the awareness in
the market is very low, only a small part of residential segment i.e. high end
residential consumers is the pro-active group. But for the non-high end residential
consumers governments role will be important. Degree of influence exerted
over the industry by the buyers:
-Forcing down the prices, since the consumers are price sensitive
-Consumers are demanding in terms of value-added, higher quality
-Low switching costs for the buyers
-Substitute products are available

Threat of New Entrance:


The threat of new entrance is not that prominent now but it will be high as soon
as grid parity is reached. Since the solar prices are coming down and the support
from the government will be the major driver in this regard. Now the segment has
high entry barrier but not very low exit barrier so the segment is attractive. The
exit barrier is expected to go down after the grid parity is reached. Degree of
influence exerted over the industry by the threat of new entrance, are:
-Low scale of economies before the grid parity.
-The technology is not protected.
-Product is not differentiated.
-Government policy makes the entry barrier lower but after the grid parity it is
expected to go down.
-The major barrier to entry is the distribution channel.
Threat of substitute product:
Another prominent power in the industry is the threat of substitute. The substitute
i.e. conventional sources of energy are already present in the market and it is
dominated by them. Degree of influence exerted over the industry by the threat
of substitute product, are:
-There are many substitute products available
-Customers switching cost is low as they can easily switch over to them as there
price is less.
Industry Rivalry:
The intensity of rivalry from the direct competition i.e. companies dealing in solar
equipment, is low but from the indirect competition i.e. companies dealing in
conventional residential pump it is very high. Degree of influence exerted over
the industry by the industry rivalry, are:
-Market is crowded with indirect competition from indirect competition but with
some direct competition.
-Switching cost for the consumers for the conventional market is low.
-Some prominent companies in the solar market, whose brand image is much
higher, like Reliance, Mahindra, BHEL, Moser Baer, etc.
Solar power has tremendous potential to meet almost 7 percent of our power
needs by 2022, mitigate 2.6 percent of our carbon emissions in that year and save
over 71 MTPA of imported coal in that year (equal to USD 5.5 bn of imports).
The imperative for action today is strong and therefore is the case for persistence
and consistency on part of the Government. For the industry, this represents a
significant investment opportunity. Investment opportunities across the value
chain from manufacturing to EPC to project development over the next decade.

11. Tata Solar SWOT Analysis


SWOT Analysis
Strength

First established manufacturer in the country.


Beneficiary of major Solar lighting system schemes
Warranty of upto 5 years is a major benefit
Manufacturing plant based in the country
Huge supply network and service facilities.
Quality of the products manufactured is durable

Weakness

Limited portability of products available.


Products limited for indoor use mostly
Poor efficiency of the solar panels as compared to competitor
products.
Portable product market yet to be tapped.
Present systems utility limited to lighting and heating.
High cost of the product.

Opportunity

Existing supplier network be strengthened.


Supply from Tata subsidiaries for component could improve
margins
To expand its product mix.
Use of its R & D Centres for development of newer cheaper
products.

Threats

Chinese solar lighting products providing cheaper alternatives


For water heating, biogas is another cheaper option compared
to solar water heating systems.
Newer and bigger entrants like Philips entering the solar
lighting system market

12. Financial Performance and Sales:

13. Strategic Recommendations


The key driver of the growth of this sector is the concept of Grid Parity. This
refers to the point when the cost of the solar power equals the cost of conventional
power. In the exhibit below, it shows a band representing solar rooftop costs. The
band variation signifies the margins, i.e. the difference between cost and price
(includes margins across the value chain). It is expected that the solar tariff to lie
anywhere within this band depending on the bargaining power of the developers.
And India will reach its grid parity by 2019-20.
In order to meet the rapidly growing electricity requirements in coming years,
Tata Solar have to focus on following:1. Improve the cell efficiency and production cost.
2. Increase the plant capacity to cater market demand.
3. Company to reach out to as many people and organizations as possible to
through different marketing media.
4. Promote Single Axis Tracking System technology, used to track the sun
movement improve 20% solar power
5. Promote low cost solution to convert existing inverters to solar.
6. Invest in R&D for cost effective technologies and increase the segment
like developing the Solar Water Purifiers.
7. Cost reduction is achievement of economies of scale
8. Technological advancements
9. Emergence of low cost manufacturing locations.

14. References
1. www. moneycontrol.com
2. www. tatasolar.com
3. www. bridgetoindia.com
4. http://www.renewableenergyworld.com
5. Google finance
6. Mercom Communications India
7. MNRE (Ministry of Renewable Energy)
8. IREDA (Indian Renewable Energy Development Agency Limited).