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Strategy  and the Global  Competitive Environment BSS058-6 	 Report  on a Contemporary  External  Strategic  Environment

Student name:  Roxanne R. Ramsoondar Student  ID: 2112124 School: CTS C ollege  of  Business & Computer Science Country: Trinidad & Tobago

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Market sector:  Solar Photovoltaics  Market scope-  JAPAN Customer Segmentation: Business to Business (B2B) Business to Consumer (B2C) 3 rd  World’s Largest Residential Solar Market with usage-63.2 GW, behind China and USA as at 2019 (NS Energy, 2021)

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Power Market Size as at 2020: 80 Billion Fortune Business Insights (2020 Asia-Pacific Solar)

Key  competitors: GE  Energy, RES, First Solar, Canadian Solar and Gestamp  Solar. Japan share increased by 3% (General Electric, 2021)

Market Growth: By 2030, solar PV is forecasted to comprise of 33% generation from renewables & account for 7% electricity generation (METI, 2021 )

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1.Carbon neutrality 2050: Climate  change mitigation tax to move from fossil  fuel dependency (Prime  Minister of Japan and His Cabinet, 2020 )  Opportunity for solar sector  growth 2.Gov’t  incentives:  ZEBs & ZEHs  reached  70000 and  56000 of  total  houses and buildings constructed  (Ministry of Energy Trade and Industry, 2021 )   Opportunity for market growth and development

1.Reduction  in photovoltaics  costs by 75 % in  last decade owing  to increased accessibility and technology (IEA 2019).  Opportunity  for increased  demand 2.  Feed in Tariffs (FiT ): Annual  savings  320,000  yen, compared to a conventional  houses but Falling GDP by 4.8% (2020), reduce  gov’t  spending in FiT Schemes  ( Ministry  of Foreign Affairs of  Japan, 2021 )  Threat  to homeowners  : expensive  to set up on their  own

1. Fukushima  Nuclear  Disaster-  shut down of 49  plants led  to  increased  renewable  alternative like solar PV as consumer mindset shifted (NS Energy, 2021 ) 2.  National maturation of Japanese consumer culture  -trust multinationals more  Both are opportunities  for solar PV  growth

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1. Digitalization  will be vital in sustainability of solar  systems  METI (2018 ). Patent  applications  2010  to  2019=5,360  2.  Perovskite T echnology: a  capacity to reach 47% as they convert more sunlight into  electricity (BBC, 2021) Both are opportunities  for lower unit costs & affordability for consumers

Japan’s  National Determined Contribution under the Paris Agreement aim to reduce GHG emissions by 26%  ( GoJ , 2020 ) The Buildings Energy Efficiency  Act 2015 regulates new  constructions and renovations  (IEA, 2018)   Both are opportunities for sector growth

1.Hazardous materials & chemicals-pollute waterways & construction site-destruction of wildlife habitats-  Threat 2.  Activists  groups protests leads to decrease in investment for coal-fired  power  plants  (Japan Times,  2021)   Growth Opportunity

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The Impact/Uncertainty Framework (Wulf et  al.,  2010 )

IGH
TRENDS
Carbon
neutrality by
2050
Feed-in
tariffs (FiT)
KEY
POLITICAL
ECONOMIC
I SOCIAL
Change from nuclear to
renewable energy
Impact of solar
factories and materials
Carbon neutrality by
2050
Continuous
reduction in PV
cost/Disruptive
innovations-
Perovskite
technolo
CRITICAL
UNCERTAINTIES
Government
policy and
incentives-
Zero
Emission
Houses ZEH
SECONDARY ELEMENTS
LEGAL
Corporate Social Responsibility
ENVIRONMENTAL
Inflation
TECHNOLOGICAL
Cost of Living
UNCERTAINTY

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Government policy/incentives:  Zero  Emission Houses (ZEHs )  Continuous  reduction in PV cost/Disruptive  innovations

Disruptive  technologies  -Perovskite  solar  technology:  47 %  capacity- convert more  sunlight into  electricity I mprovements  in  productivity: lowered raw material costs Prices  for  PVs have  declined by  75% Will account  for 60% of the predicted renewable growth in Japan (IEA 2019).

Stakeholder  discussions S tringent  standards  & regulations for  insulation  materials Japan is ranked number 19 in the Corruption Perception  Index(Transparency  International, 2021).

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Threat of New Entrants (Low ) H igh  capital costs associated with  technology Due to  unique Japanese market overcome  barriers to entry by partnering with domestic players and in the solar  industry Access to distribution channels  encourages  new entrants to the electricity  market/stimulates  local systems for energy production and  consumption Climate Investment  Platform &  Deeper Decarbonisation Perspective

Bargaining Power of Suppliers (Low ) Prices  for solar panels  declined  by    75% in  10  years  ( IEA  2019): Increase  in suppliers is favourable for  customers Bureaucracies  stringent approval  processes for FiT schemes

Bargaining Power of  Buyers (Moderate) Tax  rebate to  consumers for ZEHs Global  price average for solar PV fell 77% between 2010 and  2018 so increased buyer power

Threat of Substitutes (HIGH ) The  Threat of substitutes would increase  due  to propensity  environmentally conscious   consumers  who want affordable  alternatives  to fossil fuels

Rivalry among existing competitors (HIGH ) Disruptive innovations in technology and gov’t subsides encourage a competitive market where multinationals seek strategic alliances and partnerships in this fast growing industry

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Radar  Diagram of Technology and  Gov’t Initiatives  in  solar PV  sector-  Japan

COMPARISION BETWEEN
2 KEY DRIVERS
IN THE MICRO ENVIRONMENT
NEW
(LOW)
Technology
overnment policies
& incentives
SUBSTITUTES
BUYER
(MODERATE)
(MODERATE)
RIVALRY
(HIGH)
SUPPLIER
(LOW)
POWER

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Japan solar pv: 4 future scenarios 2021-2031

Make cents out of
solar:
Gov't enhancements
but slow innovations
ENARI
The sunny side of life:
Digital strides in the
right direction
CULGC$!OU
CENARIO
ave the polar, G
Solar
Japan leads the
lar PV indust
ENARI
Solar power
freezes over:
Solar industry has
no future in Japan
L.JO pbgu
!uqr12CLÅ pge

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Possible strategic collaborations across geographic regions are anticipated  Firms: engage in stakeholder alliances with investment banks & raw material suppliers Japan projected to be one of the top three countries for PVs globally in the next decade.  Increased Government incentives: aging population -favoured   and benefit from rebates.     Technological advancements  /disruptive innovation: firms must extend their product portfolio

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Spend more on development and training of employees to keep up with technological advancements Increase staffing & recruitment to accommodate changing customer expectations Resource market expected to grow so firms need to prepare for these opportunities Apply for patents to protect intellectual property

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Increased Government incentives where the aging population are favoured   and benefit from rebates The top ten companies that grasp solar PV patents are Japanese, companies are expected to apply for patents to protect intellectual property Technological advancements  with disruptive innovation in PV materials-firms must extend their product portfolio  ( Johnson et. al, 2005). To accommodate changing customer expectations, firms will have to increase staffing recruitment, spend more on development and training of employees to keep up with technological advancements

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Limited growth in Japan’s solar PV sector due to  slow, incremental innovations. Supply does not match demand, consumers have less buying power (Gunasekaran et al., 2008)  Firms are expected to spend more on infrastructure, research and development, strategic alliances with raw materials supplier Government incentives and tax rebates    to  B2C customers: Millennials

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Steady growth in Japan’s solar PV sector: senior citizens Due to falling GDP, government cuts spending and reduces rebates so the aging population who is already retired  cannot afford to purchase solar PVs thus the Japanese  renewable energy is negatively impacted Firms are expected to invest in end-use electrification, power grids and flexibility (IRENA, 2020)  Firms should form strategic collaborations across geographic regions in a bid to make digital strides in the right direction- to increase consumer buying power and interest in solar PVs.

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The solar industry has no future in Japan Polysilicon material used in make wafers, cells and modules in solar PVs have increased by 300% so price of solar panels increase for consumer Nuclear power plants are fully operational so cheaper alternative to non-renewable solar energy Apart from customers, other key stakeholders most affected in this scenario are employees at the solar factories, suppliers of raw material and distributors-there will be a downward shift in power as the solar industry collapse

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SCENARIO 3 Implausible If  gov’t tries reopen the 50 nuclear power plants, there will be a huge black lash from environmental activists & legal repercussions from International Energy Agency and other global bodies ratification of Paris Agreement: reduce GHG emissions by 26% in  2030

SCENARIO 1&2 Unlikely Due to Paris Agreement ratification and carbon neutrality, administration is most likely to spend more on non-renewable sector, rather than cut it.  Therefore firms are expected to continue to create disruptive technologies to enjoy first to market benefits and remain competitive .

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Improper disposal of hazardous materials used in the PV cell manufacturing process pollute waterways and  poison  citizens .   This event can be comparable to past nuclear disasters in Japan- Chernobyl and Fukushima where radioactive material killed several persons and toxic fumes contaminated the local vegetation and water supply (Union of Concerned Scientists, 2021).

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Cuervo-Cazurra, A., Andersson, U., Brannen, M.Y., Nielsen, B.B. and  Rebuer , A.R. (2016), ‘From the Editors: can I trust your findings? Ruling out alternative explanations in international business research’.  Journal of International Business Studies , Vol. 47 No. 8, pp. 881-897. Emissions Trading . Paris: OECD Publishing. https://doi.org/10.1787/9789264305304-en. EU-Japan Centre for industrial Cooperation (2014) ‘The Japanese Solar PV Market and Industry -Business Opportunities for European Companies.’ Available at:https://www.eu-japan.eu/sites/default/files/publications/docs/pvinjapan.pdf. Accessed: Oct 5, 2021 Fortune Business Insights (2020)  Renewables- Solar Power Market . Available at: https://www.fortunebusinessinsights.com/industry-reports/solar-power-market-100764. Accessed: 7 October, 2021. Gan, V., (2014)  Is Japan’s Offshore Solar Power Plant the Future of Renewable Energy?  Available at: https://www.smithsonianmag.com/innovation/Is-Japans-Offshore-Solar-Power-Plant-the-Future-of-Renewable-Energy-180949453/ Accessed: 7 October, 2021 . General Electric (2021)  GE Energy Financial Services raises largest solar fund in Japan with Development Bank of Japan as Anchor Investor.  Available at: https://www.ge.com/news/press-releases/ge-energy-financial-services-raises-largest-solar-fund-japan-development-bank-japan. Accessed: Oct 5, 2021 Green Fiscal Policy Network, 2021  What Can We Learn from Sweden’s Carbon Tax? (Niskanen).  Available at https://greenfiscalpolicy.org/what-can-we-learn-from-swedens-carbon-tax-niskanen/. Accessed: Sept 30, 2021. Gunasekaran, A., Lai, K. and Cheng, T.C.E. (2008), ‘Responsive supply chain: a competitive strategy in a networked economy’.  Omega: The International Journal of Management Science , Vol. 36 No. 4, pp. 549-564

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Hariharan, S. and Prasad, E., (2021)  Solar Energy Market Outlook – 2026 . Available at: https://www.alliedmarketresearch.com/solar-energy-market. Accessed: 7 October, 2021. IEA (International Energy Agency (2018)  Japan 2021 Energy Policy Review.  Available at: www.iea.org   IEA (International Energy Agency) (2018)  IEA Energy Technology RD&D 2018  (database)   International Renewable Energy Agent-IRENA (2020)  Energy Transformation 2050. Global Renewables Outlook . Edition: 2020 ISBN 978-92-9260-238-3. Available at: www.irena.org/publications. James , T., Feldman, D. and Margolis, R. (2013). ‘Japan’s Solar Photovoltaic (PV) Market: An Analysis of Residential System Prices.’  National Renewable Energy Laboratory . DOE – Solar Program Washington, D.C. Available at: https://www.nrel.gov/docs/fy14osti/60419.pdf. Accessed: Oct 5, 2021 Japan  Times (2021)  Outnumbered but unafraid: Japanese climate activists confront society to save it.  Available at: https://www.japantimes.co.jp/news/2020/05/12/national/japanese-climate-activists/ Accessed:  5 October,  2021 JETRO  (2021). Environment and Energy Government Initiatives. Available at: https://www.jetro.go.jp/en/invest/attractive_sectors/env_and_energy/government_initiatives.html. Accessed 7 Oct, 2021. Johnson , G., Scholes, K. and Whittington, R., (2005).  Exploring Corporate Strategy Text and Cases . 7 th  edn. London: Pearson Education Limited.  JPEA VISION SECTION, 2014: ‘JPEA PV Outlook 2030 – FIT’.  Photovoltaic Journal , 37( n.a ) Tokyo.

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Strategy and the Global Competitive Environment BSS058-6 Report on a Contemporary External Strategic Environment

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