REC solar: Strategising on a solar coaster

• Main Authors: GENG, Xuesong, BHATTACHARYA, Lipika
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2019
• Subjects: Strategy Management; Strategic Positioning; Crisis Management; Differentiation Strategy; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/249; https://smu.sharepoint.com/sites/admin/CMP/cases/SMU-19-BATCH [PDF-Pic]/SMU-19-0006 [REC]/SMU-19-0006 [REC].pdf
• Institution: Singapore Management University

In 2017, the solar panel industry was in choppy seas due to a sudden drop in panel prices, and many large companies started to report bankruptcy. Steve O’Neil, the CEO of Renewable Energy Corporation (REC), was worried about the future of the solar industry and began reassessing REC’s market strategy in the face of the downturn. REC was established as a hand-washed solar wafer manufacturing unit in Norway in 1996. Over the years the company grew to become a leading integrated solar panel manufacturing company and the largest European supplier of solar panels. It was able to build a market niche for itself and a reputation of being a quality-focused and technology-oriented manufacturer. By 2017, the company had installed more than 30 million solar panels worldwide. REC had shifted its focus to Asia in 2010 and moved its operational headquarters to Singapore. REC was a mid-scale manufacturer and focussed on residential and commercial customers. The key focus markets for the company were the U.S., Asia Pacific, and Europe with almost half of its revenues coming from the U.S. The solar industry globally was going through a downturn after several solar companies reported bankruptcy and began selling their products at significantly reduced prices. What ensued was a price war among companies, further fuelling the impact of the downturn. Companies who did not have scale had to shut down, and those that were plagued with overcapacity faced losses and became insolvent. REC had been more stable due to its niche market focus but was also beginning to experience the pressure. The company had so far focused on investing in the latest technology to ensure that its products were competitive. Could O'Neil and the management team at REC protect the company from the crisis? What could be their business strategy in the crisis? Through the discussion of this case, students will understand the significance of strategy formulation and execution for a firm during a period of industry-wide crisis. They will also understand how a firm implements a focused differentiation strategy. The case also allows students to understand how organisations strive to operate in the face of environmental change and fierce competition and maintain a competitive advantage through strategic choices on new technologies and sustainable manufacturing practices. The case can be used in undergraduate, postgraduate and executive education classes.