SUZLON ENERGY LTD.

MAKING FORAY ABROADCASE

STUDY ANALYSIS

PREPARED BY:
VIKAS SRIVASTAVA
ROLL NO. G14059
GMP

Question 1.

How do you analyse the attractiveness of industry?

We will use Porter five force model for analysis of the situation

A) INDUSTRY ANALYSIS

INDUSTRY ATTRACTIVNESS: The increasing awareness and quest for clean, renewable sources of energy
indicates a robust growth of wind energy in the coming years. Wind power generation has increased more
than fivefold between 2000 and 2007. Though wind currently produces just over 1% of global electricity, it has
the potential to produce 54000 million tons of oil equivalents.

MAJOR COMPETITORS IN THE INDUSTRY: Suzlon is the market leader in India with the market share of 52%
but there are a lot of global competitors like Vestas, Enercon, GE wind, Gamesa etc. The major competitors of
Suzlon are as follows:
a) VESTAS: Vestas is the global market leader of supplying modern energy solutions and enjoys more than 28%
of the market share among turbine manufacturers. The organization is truly global with operations in 63
countries and employees over 15000.
b) GAMESA: It is a manufacturing company based in Spain which is mainly concerned with the fabrication of
wind turbines and the construction of wind farms. It develops and manages wind farms. It is the market leader
in Spain and 2nd largest company worldwide with a market share of 15.5% in wind turbine manufacturing.

c) ENERCON GmbH: It is a German based company and also the market leader in Germany. It is the 3 rd largest
wind turbine manufacturer and enjoys the advantage of being the domestic leader in the leading wind market
i.e Germany. It pioneered and specializes in manufacturing gearless wind turbines and distinctive drop-shaped
generator housings.
d) GE WIND: It is one of the worlds leading wind turbine suppliers. GEs knowledge and expertise spans more
than two decades. Its current product portfolio includes wind turbines and support services ranging from
development assistance to operation and maintenance.

THREAT OF SUBSTITUTES: The threat of substitutes is high in the industry because all the major
organizations in the industry would use high end technology and have only perceived points of differentiation.
This would make Suzlons plan to grow in global market even more difficult and it would have to face the
challenge of differentiating its offering so that customers choose it over the established players.

THREAT OF NEW ENTRANTS: Wind Energy being a capital intensive industry would deter the entrance of a
new entrant. Since the industry attractiveness is quite good, we cannot rule out the possibility of new players
in the market but even if new players do enter, it would take time to build the right supplier partnerships and
to win customers from established players. So for the short term the threat of new entrants in the industry is
low.

BARGAINING POWER OF SUPPLIERS: The bargaining power of the suppliers of parts and components is
quite high. This is evident from the fact that when Suzlon faced problems of unreliable and erratic supply of
parts, it decided to go for backward integration rather than replacing the supplier.

BARGAINING POWER OF CUSTOMERS: The bargaining power of customers would depend on the scale of
operations the customer provides to the organization. But overall customers would not be able to dictate
terms as each of the company specializes in a particular technology and if the customer needs it, he would not
have a lot of other choices.

Question 2: Please evaluate the decision of Tanti to go for acquisitions? Have these acquisitions helped Tanti
in making his firm a vertically integrated entity? Has it given it any competitive advantage.
ANALYSIS OF THE EFFECTVENESS OF ITS ACQUISITIONS
Suzlon has been quite proactive in making the acquisitions in the European market. The decision to acquire
the European firms can be explained in the light of the following reasons:
a) It was imperative for entering and establishing itself in the European market. It would have been very difficult
to compete against the established players without any reliable supplier partnership in the market. The
acquisitions ensured regular supply of components and parts in Europe.
b) With the acquisition of Hansen Transmissions, Suzlon achieved easy access and integration of gearbox
technology into the total turbine solution. With the acquisition of RE power to high capacity wind turbines
without which it would have been difficult for Suzlon to compete with Vestas and Enercon.
c) It is possible that Hansen transmission may also be supplying to Vestas and other European companies. In that
case Suzlon has created greater protection and benefits for itself by controlling some stake in the competitors
processes. An increase in the pie of competitors would also indirectly benefit Suzlon.

Question 3. What can be the possible future expansion strategies of Suzlon Energy?
FUTURE MODE OF EXPANSION: The acquisitions were strategically required for the organizations smooth
functioning in the new market. But with the high cost baggage on its back, the right track for future growth of
Suzlon is organic growth. As per figure 2.3 we can understand that Suzlons majority orders are not from India
but from outside India. Therefore, future growth lies in maintaining the growth in India and increasing the
penetration in the global market. The following could be the means of expansion:
Locking-in of customers: Suzlon has the ability to provide end-to-end services and it should capitalize on
it. Right from the inception of the project to after sale maintenance and service should be handled by
the company so that the customer is completely locked in with the company. Then if the company is
really good in what it does, the future orders of the customers are already assured for the future.
Exploiting the satisfaction and expectation gap in the market: In addition to competing directly with the
competitors, the organization systematically can research about customers of existing competitors and
try to survey as to who is dissatisfied with the existing service. Suzlon can try to offer better service to
these customers of other companies. Such customer needling ensures right differentiation and unique
positioning of the organization in the mind of the customer.
Capitalizing on its low-cost advantage: Suzlon with its right acquisitions and backward integration would
be in a position to efficiently minimize costs and use this point to attract customers. Other players in
the market are not completely integrated firms, so they would find it difficult to counter Suzlon on
costs.
Considering joint ventures rather than further acquisitions: Because Suzlon has already spent a lot of
funds in acquisitions, a better course of expansion would be building partnerships with other
companies rather than shelling out more funds. It should first look at getting returns from the
investment and then indulging in greater acquisitions. This would also make the venture capitalists
more at ease with the financials of the company.