CASE C1: PV Technologies, Inc: Were they asleep at the Switch
1. What could be the reasons for the unfavorable evaluation of PV technologies by Greg
Morgan?
The unfavourable evaluation of PV Technologies by Greg Morgan could be could be due to the
following reasons:
Price Competitiveness
The confidential evaluation revealed that the bid prices of competitors, especially BJ Solar, were
significantly lower than PV Technologies. This price differential was a key factor in Solenergy's
renewed focus on expense control, leading to consideration of selecting the lowest-cost product
despite potential performance differences.
Expense Control and Cost Considerations
Solenergy was committed to expense control, and the upfront cost differential between PV
Technologies and competitors was significant. The evaluation suggested that enhanced
maintenance and quality control programs could compensate for potential performance
differences of lower-cost inverters, leading to lower net ownership costs.
Perception of Product Superiority
Some members of the Executive Committee at Solenergy challenged the validity of the evaluation
findings, citing the tested superiority of PV Technologies' central inverter line in terms of
efficiency, reliability, and productivity. They believed that the evaluation did not consider
sufficient data to accurately define inverter specifications or performance characteristics.
Market Dynamics and Cost Sensitivity
Inverter efficiency, reliability, manufacturing cost, and anticipated expense for operations and
maintenance were critical factors influencing developer choices. The industry was also
experiencing the entry of Chinese firms offering lower-cost products, potentially signalling a shift
towards commoditization of PV inverters. This market dynamic could have influenced
Solenergy's evaluation criteria.
Communication and Relationship Management
There were concerns about the communication between PV Technologies and Solenergy,
particularly regarding the awareness of the evaluation results. Some executives questioned
whether there was an ethical breach that warranted review, highlighting the importance of
transparent communication and relationship management with key customers.
2. Evaluate alternative course of actions available to PVT to gain favorable evaluation by
Solenergy for the Barstow Project?
Several alternative courses of action were presented to the Executive Committee of PV
Technologies to gain a favourable evaluation by Solenergy for the Barstow Project.
Offer to extend the original warranty at internal cost from 10 to 20 years
This alternative involved extending the product warranty to 20 years, with Solenergy
contractually prepaying the warranty premium annually at the rate of 18% of the purchase price of
each inverter. PVT would perform warranty services as necessary throughout the year and submit
an invoice monthly of actual internal cost for parts, labour, and service calls to Solenergy for its
recordkeeping purposes. At year-end, PVT would "true up" the prepayment and issue either a
refund in the event of an overpayment or an invoice in the event of an underpayment. This
alternative was favoured by marketing and sales executives who believed that the economic value
of this alternative would offset any product cost-related shortcomings Morgan may have
identified.
Offer a 99% uptime guarantee at no cost
This alternative involved offering a 99% uptime guarantee at no cost to Solenergy. This
alternative was favoured by some executives who believed that it would demonstrate PVT's
commitment to quality and reliability, potentially offsetting any concerns about performance
differences between PVT and competitors.
Accelerate the introduction of a new product, scheduled to release shortly, with higher capacity at
1.25MW and 98.5% efficiency
This alternative involved accelerating the introduction of a new product with higher capacity and
efficiency, potentially demonstrating PVT's commitment to innovation and technological
advancement. This alternative was favoured by some executives who believed that it would
demonstrate PVT's ability to meet evolving customer needs and preferences.
Tactfully initiate a dialogue with Morgan to confirm the reported findings of the evaluation
This alternative involved approaching Morgan directly to confirm the reported findings of the
evaluation and attempting to persuade him and Solenergy executives to share or even re-evaluate
the criteria from which they drew their conclusions. This alternative was favoured by Rubenstein
and Salvatori, who believed that it would be a proactive approach to addressing the issue and
potentially clarifying any misunderstandings or misinterpretations.
3. What short term and long-term policies and processes should PVT develop and implement
to effectively improve its marketing programs?
To effectively improve its marketing programs, PV Technologies (PVT) should consider
implementing both short-term and long-term policies and processes. Here are some
recommendations:
Short-Term Policies and Processes:
o PVT should prioritize transparent and proactive communication with key customers like
Solenergy to ensure they are aware of any evaluations or feedback that may impact their
perception of PVT's products.
o Conducting regular market research and competitive analysis to stay informed about industry
trends, competitor strategies, and customer preferences. This will help PVT identify
opportunities for differentiation and innovation.
o Implementing a CRM system to track customer interactions, preferences, and feedback. This
will enable PVT to tailor its marketing efforts to meet the specific needs and expectations of
different customer segments.
o Developing a comprehensive IMC strategy that leverages various channels such as trade
journals, sales collateral, trade shows, and the company website to raise awareness, provide
product information, and build brand reputation.
Long-Term Policies and Processes:
o Setting up a process for regularly evaluating and aligning product development efforts with
the evolving needs and preferences of key customers. This will ensure that PVT's products
remain competitive and relevant in the market.
o Conducting regular assessments of customer needs and preferences to inform product
development, marketing strategies, and service offerings. This will help PVT anticipate
market changes and proactively address customer requirements.
o Ensuring the adoption of standardized metrics in the industry to measure reliability and
efficiency of PV inverters. This will provide a common framework for evaluating products
and comparing performance across different manufacturers.
o Investing in ongoing training and development programs for the sales force to enhance their
product knowledge, selling skills, and customer relationship management capabilities. This
will ensure that the sales team is well-equipped to effectively engage with customers and
drive sales.
By implementing these short-term and long-term policies and processes, PVT can strengthen its
marketing programs, better understand customer needs, and maintain its competitive position in
the PV inverter market.
