COMPETITIVE STRATEGY

Tata Solar- A Dawn under the Sun

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

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. If a firm can achieve and sustain overall cost leadership. proprietary technology. Such strategy helps firm to satisfy sufficient consumers and gain popularity. one needs to evaluate all strengths.1. According to Michael Porter. a firm sets out to become the low cost producer in its industry. opportunities. What is Competitive Strategy? Competitive strategies are the method by which you achieve a competitive advantage in the market. provided it can command prices at or near the industry average. . The sources of cost advantage are varied and depend on the structure of the industry. then it will be an above average performer in its industry. Cost focus exploits differences in cost behavior in some segments. weaknesses. Cost Focus In cost focus a firm seeks a cost advantage in its target segment. A firm's relative position within its industry determines whether a firm's profitability is above or below the industry average. Before devising a competitive strategy. preferential access to raw materials and other factors. threats in the industry and then go ahead which would give one a competitive advantage. The fundamental basis of above average profitability in the long run is sustainable competitive advantage. competitive strategy is devised into 4 types: Cost Leadership In cost leadership. A low cost producer must find and exploit all sources of cost advantage. and uniquely positions itself to meet those needs. They may include the pursuit of economies of scale. It is rewarded for its uniqueness with a premium price.

(Photovoltaic literally means “light” and “electric. combined with country’s industrialization. when sunshine hits the PV cell. Electricity can be produced directly from photovoltaic. 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.e. Background India’s strong economic growth.Differentiation Focus In differentiation focus a firm seeks differentiation in its target segment. cells. energy provided by the sun. 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. 2. What is solar energy? Solar energy is.”) These cells are made from materials which exhibit the “photovoltaic effect” i. generating electricity. PV. Solar energy produces electricity when it is in demand – during the day particularly hot days when air-conditioners drive up electricity demand. This energy is in the form of solar radiation. . The need for renewable energy is obvious in today’s world. Differentiation focus exploits the special needs of buyers in certain segments. the photons of light excite the electrons in the cell and cause them to flow. which makes the production of solar electricity possible. simply. 3. increasing population and increased access to power has led to rising demand for power in the country. It is a clear niche marketing strategy.

The exhibit below captures their estimates about solar market in India. an estimated total capacity of 17. 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. which shows that there is a steady growth in the solar market after 2017-22 . The country receives more than 4kWh/m2 /day. and meets the energy requirement in domestic sector in decentralized manner quite efficiently. Solar radiation over India is 5000trillion KWH/year. In 2010.4MWp is the total amount of energy derived in form of solar. the solar power industry has been growing rapidly in recent years. clear sunny weather is experienced 250 to 300 days a year.4. Solar Power in India Globally. Thus this puts India amongst the highest solar radiation receiving countries of the world.000 MW was installed globally. Major states put together then 979. in most parts of India.

in focus geographies. Community. Driving competitiveness by operating our businesses at benchmark levels. The company has more tha118% growth in 2104 as compared to 2013. Growing profitably across the power value chain and allied areas.5. thereby making them our ambassadors. Tata Power Solar operates in three distinct segments – cutting-edge manufacturing. delivering sustainable value to all stakeholders. cost and time. Shareholders. Being the lead adopter of technology with a spirit of pioneering and calculated risk taking. Enable employees and associates to achieve and unleash their full potential to deliver outcomes in a sustainable way. Practicing ‘Leadership with Care’ by pursuing best practices on Care for our Environment. Tata Solar Power – An Introduction Tata Power Solar is India’s largest integrated solar company that is driven by the singular vision – harness the power of sun to enable solar everywhere. Executing projects safely with predictable benchmark quality. . People and creating a culture that will reinforce our values. Customers. Mission: To earn affection of customers by delivering superior experience and value. 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. Headquartered in Bangalore. Tata Solar Power.Vision and Mission Vision: To be the most admired and responsible Integrated Power Company with international footprint.

Tata Solar has a generic cost leadership and product differentiation strategy in the solar energy industry. government involvement will be required in encouraging non-high-end residential and agriculture consumers to use solar power. Solar Powered Agricultural Pump sets and Solar powered Telecom towers. For irrigation and drinking water solar PV water pumping systems are used in India. 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. 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. Solar water pumping system works on power generated using solar photovoltaic system. telecom towers are an attractive market for solar PV installations. For example. How Tata Solar Follows Competitive Strategy? Tata Solar targets the mass market with its products. And Solar Water Heating (SWH) applications could be used in residential. commercial as well as industrial sectors . The current strategic goals of Tata Solar are market diversification and operations expansion. Residential Rooftops and Utility Scale Solar power (CSP and PV). Consumer categories: -Domestic -Agricultural Solar powered equipment is more environmentally friendly and economical in its operation compared to equipment’s powered by an internal combustion engine (ICE) or nuclear power. In the off-grid space. solar power is already cost competitive with alternatives in certain applications. And Off-grid connected Solar Application Potential includes.6. It is expected that high-end residential consumers will be proactive in adopting solar rooftop given their higher power tariffs. The solar energy is converted in to electricity by using a photo voltaic array. A large number of these consumers are likely to start adopting solar power from 2017-18. However. Solar Market Segment: -Grid Connected Solar Potential -Off-Grid Connected Solar Application Potential -Solar Water Heater (SWH) Grid Connected Solar Potential includes.

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

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. Price and Promotion Tata Solar has shown strength in another significant aspect that is distribution network. 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 . our broad range of solar energy panels and modules are among the top tier PV panels available to multiple customer segments including industrial. For the B2C model. admin buildings etc. often globally operating. commercial. Achieving supply chain superiority or excellence is within the reach of any company. as well as the organizational imperative and willingness to invest in the right direction. Target Markets Who? House Owners Councils Corporations Where are they? How many? Millions of domestic roofs and developers / architects of new buildings. However. it requires a vision. 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.Globally Trusted Module Tata Power Solar. 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.schools. Many councils who own buildings with large roofs . both on-grid and off-grid solar projects and residential.

* XL Telecom & Energy Limited 8. In the proposal include all the equipment needed. Perform maintenance at no charge if anything breaks. In B2B model. spec sheets. Use marketing to . Competitors * Azure Power * Bharat Electronics Limited (BEL) * Bharat Heavy Electricals Ltd.cent. This total is usually pretty high. and come up with a total. engineers. Thus. 7. (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. necessary construction equipment. the target market of professionals was reached. This helped them penetrate the market deeper into the urban markets. Services and ideas: have expert and experienced salespeople. (BHEL) * Central Electronics Ltd. and installers. inverters. Price Give the customer a detailed accounting of all equipment and service fees. Perform analysis of the property and financial implications of the purchase. tally it up. 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. where corporate selling was involved. and warranty info to better inform the client of what they are buying. Various Strategies Followed by Tata Solar Products Goods: panels. transformers. * TRA International * Waaree Energies Private Limited * Webel SL Energy Systems Ltd.

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

. Technical Technological developments and investments catalyze the advancement of technology. and the impact of global warming on biodiversity. and the stability of delicate ecosystems. IREDA has come up with several schemes to not only encourage the use of solar-powered systems. companies engaged in R&D in solar power are also offered several subsidies and tax exemptions.76/ kWh for solar PV projects. (MNRE) provided financial assistance to the installation of around 33 grids of solar photovoltaic power plants. Tata Solar PEST Analysis PEST Analysis The government has huge presence in the Solar Energy market. In addition to emerging technology. 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. strengthen the ability of energy consumers to harness solar energy.24/kWh for solar-thermal and between INR 10. solar hybrid lighting. The government has initiated a Renewable Energy Certificate (REC) scheme. future technology being aggressively pursued by research and development include thermal and electrical storage systems. nanotechnology. the price discovery for levelized tariff was in the range of INR 10. It Political regulates the market through MNRE (Ministry of Renewable Energy) and financial assistance is provided by IREDA (Indian Renewable Energy Development Agency Limited). setup. Economical In the recent round of reverse auctioning process for the solar projects under the National Solar Mission. which is designed to drive investment in low-carbon energy projects. Growing environmental awareness which is defined as the increasing knowledge and understanding of the finite nature of many of the world’s resources. have led to increasing environmental concerns. 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.9. and improving concentrating solar power systems.59/ kWh to INR 12. improved manufacturing techniques. and improve manufacturing equipment and techniques that enable low cost production. but also facilitate businesses in the arena.49/kWh to INR 12. the negative impact and contribution to climate change from burning fossil fuels and deforestation.

There is no substitute product for solar. high end residential consumers is the pro-active group. higher quality -Low switching costs for the buyers -Substitute products are available . 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 buyers: -Forcing down the prices. Degree of influence exerted over the industry by the suppliers: -Product is unique and scarce. The product is critical for the company. like rural.10. only a small part of residential segment i.e. The Suppliers of the solar energy supplies also too many industries. Since the awareness in the market is very low. since the consumers are price sensitive -Consumers are demanding in terms of value-added. But for the non-high end residential consumers’ government’s role will be important. -High switching costs for the firm in the industry is high. hospitals. etc. agriculture. hotels. -Suppliers are more concentrated in the European market because of better technology. Tata Solar Porters 5 forces Analysis Suppliers Power: Solar technology has oligopoly characteristics dominated by a small number of players. Buyers Power: The industry’s major power lies within the buyers’ side.

companies dealing in solar equipment. -Some prominent companies in the solar market. mitigate 2. -The major barrier to entry is the distribution channel. Investment opportunities across the value chain from manufacturing to EPC to project development over the next decade. Degree of influence exerted over the industry by the threat of substitute product. The imperative for action today is strong and therefore is the case for persistence and consistency on part of the Government. this represents a significant investment opportunity.e. BHEL. 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.e. -Product is not differentiated. Degree of influence exerted over the industry by the threat of new entrance. are: -Market is crowded with indirect competition from indirect competition but with some direct competition. The exit barrier is expected to go down after the grid parity is reached.5 bn of imports). are: -Low scale of economies before the grid parity. Threat of substitute product: Another prominent power in the industry is the threat of substitute. Now the segment has high entry barrier but not very low exit barrier so the segment is attractive.6 percent of our carbon emissions in that year and save over 71 MTPA of imported coal in that year (equal to USD 5. conventional sources of energy are already present in the market and it is dominated by them. like Reliance. . For the industry. -The technology is not protected. etc. whose brand image is much higher.e.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. -Government policy makes the entry barrier lower but after the grid parity it is expected to go down. The substitute i. Mahindra. companies dealing in conventional residential pump it is very high. Degree of influence exerted over the industry by the industry rivalry. is low but from the indirect competition i. -Switching cost for the consumers for the conventional market is low. Since the solar prices are coming down and the support from the government will be the major driver in this regard. Solar power has tremendous potential to meet almost 7 percent of our power needs by 2022. Industry Rivalry: The intensity of rivalry from the direct competition i. Moser Baer.

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. Supply from Tata subsidiaries for component could improve margins To expand its product mix. Present systems utility limited to lighting and heating. Use of its R & D Centre’s for development of newer cheaper products. Tata Solar SWOT Analysis SWOT Analysis Strength First established manufacturer in the country.11. Portable product market yet to be tapped. biogas is another cheaper option compared to solar water heating systems. Products limited for indoor use mostly Poor efficiency of the solar panels as compared to competitor products. Quality of the products manufactured is durable Weakness Limited portability of products available. High cost of the product. Threats Chinese solar lighting products providing cheaper alternatives For water heating. Opportunity Existing supplier network be strengthened. Newer and bigger entrants like Philips entering the solar lighting system market .

Financial Performance and Sales: .12.

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

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