First Solar Case Study: Analyzing Competitive Advantage and Sustainability in the Solar Industry

Running head: FIRST SOLAR CASE STUDY
First Solar Case Study
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Table of Contents
Introduction..............................................................................................................................................2
Solar industry and its attractive industry.................................................................................................2
Porter’s Five Force Model...................................................................................................................3
ROA and ROIC model.........................................................................................................................4
First Solar’s competitive advantage.........................................................................................................4
VRIO Analysis.....................................................................................................................................5
Sustainability of the organization........................................................................................................6
Biggest threats to First Solar’s strategy...................................................................................................7
Recommendations....................................................................................................................................8
Conclusion...............................................................................................................................................9
References..............................................................................................................................................10

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Introduction
As opined by Schulze and Schmidt (121), the term ‘competitive advantage’ had become the
catch-phrase of the contemporary business world and the net result of this is that the different
organizations are striving to gain competitive advantage within the business market in which they are
operational. However, Hosenuzzaman et al. (296) are of the viewpoint that the organizations often fail
to take into effective consideration the notion of sustainability and thereby over-utilize the resources
or the technologies that had initially helped them to gain success. The net result of this is that the
organizations so as to maintain their competitive advantage over their competitors needs to undertake
the process of continuous development so as to keep on changing their business practices in
accordance with the requirements of the business environment in which they are operational. This
paper will undertake an analysis of the concepts of competitive advantage and sustainability in the
particular context of the organization First Solar.
Solar industry and its attractive industry
The origin of the solar industry can be traced back to the 19th century when the French
scientist Edmond Becquerel undertook the discovery of the photovoltaic effect which in turn was used
for the development of the solar panels. This was since the contemporary organizations related to the
solar industry take the help of these solar panels for the generation of electricity and is also the major
product which is being offered by these organizations to the customers (Sahu 631). As a matter of
fact, it is seen that the contemporary solar PV panels which are being offered to the customers are
primarily of two types, namely, the thin-film and the crystalline silicon. More importantly, the
industry contributes in a significant manner towards the world economy and at the same time had
reduced the dependence of the different individuals as well as organizations on the various no-
renewable sources of energy. However, in the recent times it is seen that the emergence of different
kinds of technologies and also the reduction in the price of silicon had changed the landscape of the
solar industry in a significant manner (Kannan and Vakeesan 1104).
The organization First Solar started as a glass manufacturing organization in 1984 however
the organization soon realized the business opportunity offered by the solar panel industry and thereby
switched over to the solar industry. More importantly, the organization under discussion here
specializes in the manufacture of thin-film cadmium telluride (CdTe) which helped it dominate the
solar industry in the early part of the 21st century. Furthermore, the organization resorted to the
manufacture of thin-film cadmium telluride (CdTe) because of the high price required for the
procurement of silicon and also the technology which was required for the manufacture of silicon
based solar panels. Moreover, it was seen that the organization was able to hold a monopoly in the
solar industry in the initial phase of the 21st century before the price of silicon was reduced and

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innovative technologies were used for the manufacture of thin film solar panels. Taking the help of
this innovative technology and the reduction in the price of silicon China had emerged as one of the
leaders in the solar industry.
Porter’s Five Force Model
First Solar is observed to belong to the solar energy industry and the industry attractiveness of
the company is explained through analyzing porter’s five forces model that is indicated below:
 Rivalry- As the company operates within the solar industry it competes with several
semiconductor companies within the solar energy sector. The industry is deemed to be highly
competitive along with being rapidly changing. The global solar energy market is attaining
growth at an annual growth rate of 30% (Nebojsa and Sharma 5552). One major factor that is
increasing rivalry within the industry is absence of product differentiation. As solar energy
products have distinct cost structures along with efficiency ratings and as this industry is
determined by price it is driven to offer high cost rather than on superficial product aspects.
Competition is also increasing from organizations those currently offer or developing certain
renewable technologies like geothermal and power generation sources which burn
conventional fossil fuels.
 New entrants- There are several barriers to the entry within the solar power industry and
among the major barriers of entry is an increased amount of research and development needed
to be able to manufacture a competitive technology at a competitive price. Government along
with cultural interest within renewable and green technology makes the social industry
increasingly attractive for the new companies (Sahu 631). Moreover, the governments of
Germany and France start decreasing attractive subsidiaries along with incentives, the
expense to enter the market sector will increase that can turn out to be less attractive sector for
new organizations.
 Threat of substitutes- First Solar faces intense competition from the manufacturers of
crystalline silicon solar modules, thin-film solar modules along with solar thermal along with
PV systems. The solar industry is also observed to have several substitutes that encompass
silicone based photovoltaic cells along with other types of renewable energy. First Solar
Company might be affected by rising popularity of other renewable generation technologies.
The market for the fuel cells is increasingly evolving and the new technologies are developed
through employing fuel cells for to produce decreased carbon emissions along with
generating high electricity levels (West, Ford and Ibrahim 154). In addition, continuous
research and development in such technologies might result in novel and effective
technologies which might impact business of First Solar.
 Supplier bargaining power- Supplier bargaining power is observed to be high for the First
Solar Company for the reason that Chinese subsidization of suppliers is complex to identify.