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First Solar Turns Sunshine into Profits

With skyrocketing oil prices that reached new highs, and the world recognizing that alternative energy has become a responsible and economical alternative to fossil fuels, 2007 was a watershed year for First Solar, which designs, manufactures, and markets solar energy products. From its inception in 1999, the Phoenix- based company was founded by the Walton family of Wal-Mart fame, which still owns a majority of the firm's stock. First Solar has taken advantage of environment opportunities to harness the sun to provide alternative energy, in the form of cadmium telluride solar cells and panels, allowing it to lock in more than $6 billion worth of contracts over the next five years. The company's profits jumped from $4.3 million in 2006 to $46 million in 2007, and its stock likewise accelerated almost 1,000 percent in value.

This success comes from being in tune with changes in both the physical and social environment. The opportunity for making a profit with alternative energy has arrived around the world.

First Solar is committed to improving the global natural environment, as well as the health and safety of employees, customers, and communities. By marketing cost-efficient solar energy solutions, the company helps reduce our dependence on fossil fuels and other conventional energy solutions drawn from raw materials. The company produces a perpetually renewable energy resource that reduces harmful air emissions and removes solid waste from the environment. It also engages in continuous improvement in the environmental quality of its products, processes, and services.

Among First Solar's products are modules designed for use in large-scale, grid-connected solar power plants that are sold to leading solar project developers for use in commercial projects. First Solar engineers therefore work closely with the firm's project development partners to design the optimal balance of systems and solutions that can produce solar energy efficiently. The foundation of First Solar's main product is a crystalline thin-film structure that employs a cadmium telluride semiconductor material to convert sunlight into electrical energy. Because this product is not dependent on the silicon wafers used by most of the solar industry, First Solar is well positioned ahead of its competition because silicon is in short supply and quite expensive, creating a bottleneck for the rest of industry. This advantage enables the company to move aggressively forward with its production capabilities and to serve markets that are undersupplied.

First Solar is growing rapidly because it is now targeting the U.S. utility market, where solar products that are installed on commercial and residential rooftops are in high demand. To that end, First Solar recently purchased Turner Renewable Energy LLC, which markets solar systems to utility companies, thereby opening up the consumer utility market for First Solar. This move brings solar energy into the mainstream of helping to generate electricity that can reach everyone, not just those individuals and businesses that have their own solar generators.

Until recently, First Solar's primary market production was in Germany. Europe remains slightly ahead of the United States in concern for renewable energy alternatives and recognition of the need to reduce pollution associated with fossil fuels. Today, the company operates production facilities in the United States, Germany, and Malaysia. By maintaining a global perspective, the company can take advantage of both marketing and production opportunities to achieve maximum efficiency and market penetration. First Solar is strategically positioned to use technology associated with its cadmium telluride cells and market leader in the emerging alternative energy industry. In the future, the company will have to maintain environmental assessments related to competition, fossil fuel prices, new solar technology innovations, and the willingness of businesses and consumers to adopt renewable energy practices that will contribute to the world's concern for a clean and healthful environment. If the trend continues, First Solar will be a name that everyone will recognize.

Refer to the case.

1. Which marketing environment forces are likely to have the greatest impact on First Solar?
2. What types of organizations are most likely to exert the strongest competitive forces on First Solar?
3. How did technology affect First Solar's responses to the changes in the marketing environment? How can it continue to maintain its technological edge in its industry?

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Solution Preview

My suggestions/comments follow each question, along with examples and locations in the case study where responses can be found (when applicable):

Question 1. Which marketing environment forces are likely to have the greatest impact on First Solar?

For question 1, I defined marketing external forces and gave brief descriptions of some examples. Based on what you read in the case study and the descriptions, choose which forces you think will affect First Solar the most and elaborate on the description of each of the forces you choose. I suggest you choose two or three and elaborate on why you chose the ones you did in your response to this question.

Definition: A marketing environment force is anything external to the company that could affect its relationship with the target market. Examples include but are not limited to:

1) Supplier power:

Does First Solar have a supplier that produces raw materials they need for their product? If so, how might that relationship affect price and availability of their product? What could the supplier do that would affect First Solar's position in the market?

2) Demographics:

If at all, how would population shifts, size of populations and/or geographical location influence sales of First Solar's product?

3) Bargaining power of buyers:

Who are the buyers (customers) of First Solar's product and how might they influence production? In one market scenario, there are many buyers and one supplier. In another scenario, there are many suppliers and one buyer. Which scenario fits First Solar and how might that position influence sales and ...

Solution Summary

This 1,011-word solution includes step by step instructions for answering the questions included in this case study assignment. Detailed suggestions and comments follow each question, along with examples and locations in the case study where responses can be found (when applicable)