Article
Sydney Morning Herald 2013, ‘Bosch dumps solar business as losses mount’, Sydney Morning Herald, 25 March, viewed 28 March 2013,

Summary
Bosch, a German Engineering Company, is removing its solar energy business in all worldwide locations early next year after it failed to add value to the organizations portfolio (Sydney Morning Herald 2013). Despite early efforts by management to expand their renewable energies business, most notably Bosch’s 1.1 billion euro acquisition of Ersol (Gow 2008), increases in price competition from China and Bosch’s overcapacity of solar products diminished hopes of long-term company stability (Sydney Morning Herald 2013). Despite this, interest in Bosch remains strong with share prices showing a high market capitalization (moneycontrol.com 2013).

Application
This article focuses primarily on the economic environment, with increasing evidence that the differences in global market economies have affected Bosch’s competitiveness in the global solar energy market.

There has been increased interest from society and government for environmentally friendly and renewable fuels over the past years, and demand to continuously provide new, cheaper and endless forms (Styring, 2012). Due to this aggregate demand, Bosch invested heavily in solar operations, spending close to two billion euros since 2008 in acquisitions and manufacturing sites globally (Nicola 2013). However, with a surplus of Chinese solar panels entering the market, it has created a collapse in the price of panels, with European companies, such as Bosch, unable to match this decrease of price by 34% (Limaye 2012). This has therefore resulted in a decrease in demand for Bosch’s high quality and more expensive products, and an increase in their supply, pushing the market equilibrium down (Allan 2013), with the market becoming elastic (Oliver and Jackson 1999). According to Diamond (1982), this shift in equilibrium ultimately introduces macro unemployment problems, with Bosch’s closure of plants contributing to increases in frictional unemployment. With Bosch exposed to a social market economy (Morrison 2011), the German government is likely to intervene, introducing job schemes to deal with rising levels of unemployment (Hanby and Jackson 1979). Although these government schemes aim to decrease the possibility of employee skill atrophy and withdrawal from the work force (Allan 2013), earlier government measures such as tariffs and subsidiaries should have been implemented to deal with China’s dumping and predatory and subsidized prices in an effort to destroy competition (Solar Group Seeks Dumping Probe 2012).

Analysis
After considering less detrimental methods of increasing profits of Bosch’s failing solar business (Sydney Morning Herald 2013), it is evident the decision to remove these units was, in effect, advantageous. Germany was home to the biggest solar panel manufacturers and plants in the world (DW 2008), however since the growth of solar manufacturers in China, almost 12 German solar businesses have filed for help from creditors (Sydney Morning Herald 2012). With the undervaluation of the Chinese Yuan, and the growing demand of Chinese products offsetting increases in price (Oberpriller, Sauer and Sell 2008), it was argued by Frondel, Ritter, Schmidt and Vance (2010), that the German Government failed to provide incentives to ensure a sustainable and profitable market environment for Bosch. This inevitably contributed to the failure of Bosch’s solar panel business division. With Bosch’s solar division of business accounting for only 14% of business operations (Bosch 2010) and reporting a net drop in profit of €1billion over one year (Sydney Morning Herald 2013), focus should be shifted to automotive technology and consumer goods and building technology divisions which provided the company with €40.68 billion profit (Bosch 2012).

However, with the closure of this business division, we can see that it removes their main Corporate Social Responsibility (CSR) strategy of promotion and harnessing of renewable energy sources for environmental awareness worldwide (Bosch 2007/2008). Bosch already shows weaker CSR credentials compared to its competitors, Suntech Power Holdings Company and Renewable Energy Corp, scoring 7 points below the overall average (CSRHub 2013). If the solar panel division is removed Bosch will move to a CSR grasp on the continuum (Konakci 2013). It also puts into question their statement of building drive concepts that are based on renewable energies, particularly their interest with photovoltaics (Bosch 2011), resulting in an inconsistency between message and reality (Fassin and Buelens 2011). As photovoltaic’s are a main market for renewable energies with continuing possibilities for development (Oliver and Jackson 1999), instead of complete business closure, focus should be on its plants in Southeast Asia as to achieve economies of scale and compete with the Chinese manufacturing companies.

Nevertheless, it has been argued that photovoltaics as a renewable energy source, does not provide additional emission reductions than what the Environmental Trading Scheme achieves alone (Frondel, Ritter, Schmidt and Vance 2010). Instead, with the removal of this business sector and the redistribution of employees, focus can be placed on the most profitable areas of the business. This will allow for continuation in innovation, benefiting the wellbeing of society and the environment, allowing economic success and a leading market position for Bosch.

Reference List

Allan, M. 2013, The Business Environment (BUSS1002), at The University of Sydney, 26 March

Bosch 2007/2008, Corporate Social Responsibility Report 2007/2008, Bosch, viewed 29 March 2013,

Bosch 2011, Bosch Sustainability Report 2011, Bosch, viewed 29 March 2013, < http://www.bosch.com/media/com/sustainability/sustainability_new/downloads/SustainabilityReport2011_Update_EN.pdf>

Bosch 2012, Annual Report 2012, Bosch, viewed 29 March 2013, < http://www.bosch.com/media/com/bosch_group/bosch_in_figures/publications/archive/Bosch_Annual_Report_2010_en.pdf>

CSRHub, 2013, Bosch, CSRHub, New York, viewed 29 March 2013,

Diamond, P. 1982, ‘Aggregate Demand Management in Search Equilibrium’, Journal of Political Economics, vol. 90, no. 5, pp. 881-894, viewed 28 March 2013,

DW. 2008, ‘World’s biggest Solar Plant Goes Online in Germany’, DW, 22 February, viewed 29 March 2013, < http://www.dw.de/worlds-biggest-solar-plant-goes-online-in-germany/a-3430319-1>

Fassin, Y. and Buelens, M. 2011, ‘The hypocrisy-sincerity continuum in corporate communication and decision making: A model of corporate social responsibility and business ethics practices’, Management Decision, vol. 49, no. 4, pp. 586-600, viewed 29 March 2013, Emerald Group Publishing Limited, doi: 10.1108/00251741111126503

Frondel, M., Ritter, N., Schmidt, C.M. and Vance, C. 2010, ‘Economic impacts from the promotion of renewable energy technologies: The German experience’, Energy Policy, vol. 38, no. 8, pp. 4048-4056, viewed 29 March 2013, ScienceDirect, 0301-4215

Gow, D. 2008, ‘Solar energy shares soar as Bosch buys Ersol for €1.1bn’, Guardian, 3 June, viewed 28 March 2013,

Hanby, V.P. and Jackson, M.P. 1979, ‘An Evaluation of Job Creation in Germany’, International Journal of Social Economics, vol. 6, no. 2, pp. 77-117, viewed 28 March 2013, Emerald Group Publishing Limited, doi: 10.1108/eb013830

Konakci, O. 2013, The Business Environment (BUSS1002), at The University of Sydney, 12 March

Limaye, S. 2012, ‘Solar Panel Maker Doubles Output as Prices Drop: Corporate India’, Bloomberg, 28 August, viewed 28 March 2013,

Morrison, J. 2011, The global business environment: meeting the challenges, 3rd ed., Palgrave Macmillan, Basingstoke

Nicola, S. 2012, ‘Bosch Reviews Solar future After $1.4 Billion of Charges, Losses’, Bloomberg, 24 January, viewed 28 March 2013,

Oberpriller, C.M., Sauer, B. and Sell, F.L. 2008, ‘The Undervaluation of the Yuan Dispute: Is a Repetition of Germany’s Experience in 1969 Necessary, inevitable or Desirable? A Comment and Reply to John A. Tatom’, Global Economy Journal, vol. 8, no. 2, pp. 1-13, viewed 29 March 2013, De Gruyter, doi: 10.2202/1524-5861.1334

Oliver, M. and Jackson, T. 1999, ‘The market for solar photovoltaics’, Energy Policy, vol. 27, no. 7, pp. 371-385, viewed 28 March 2013, ScienceDirect, 0301-4215

‘Solar Group Seeks Dumping Probe’ 2012, Medical Engineering, vol. 134, no. 9, pp. 16, viewed 28 March 2013, ProQuest Central, 1039290732

Styring, S. 2012, ‘Solar Fuels: Vision and Concepts’, AMBINO, vol. 41, no. 2, pp. 156-162, viewed 28 March 2013, ProQuest Central, doi: 10.1007/s13280-012-0273-6

Sydney Morning Herald 2012, ‘China price war drains jobs in Germany’s Solar Valley’, Sydney Morning Herald, 8 September, viewed 29 March 2013, < http://www.smh.com.au/environment/china-price-war-drains-jobs-in-germanys-solar-valley-20120908-25kp4.html>

Sydney Morning Herald 2013, ‘Bosh dumps solar business as losses mount’, Sydney Morning Herald, 25 March, viewed 28 March 2013,

Moneycontrol.com 2013, Bosch, Moneycontrol.com, Mumbai, viewed 29 March 2013,