PEST Analysis The company we are focusing on is Canadian Solar. They are a multinational firm that operates in several countries such as “Canada, Germany, Italy, Japan, Korea, Spain, Australia and the United States”. (Canadian Solar) They are a leader in the solar energy industry. A detailed PEST (Political, Economic, Social and Technological) analysis will be provided on how these elements affect the company. There are various political regulations and by-laws passed by the Canadian government to help regulate proper practices of using and installing solar energy. These regulations affect Canadian Solar and their practices. For instance, in the 1970s and 1980s there were a large number of solar panels installed that were not installed properly because they were added by unqualified people. (Pouyot, SOL Spring Issue, 2007) Today there are strict regulations on getting the permission to install solar energy panels which protect land owners from liabilities. Permits must be attained from the government. This regulation protects Canadian Solar from any lawsuits from poor quality installation of solar panels or any damage to their customers’ property. This also helps them meet a certain standard of excellence to help their image and their customers. (Pouyot, SOL Spring Issue, 2007) From 2007 to 2012 the world suffered a global recession. Canada was affected by it but not as severely as other countries worldwide. Economists say we are not in a recession but many Canadians believe otherwise. Although real GDP is adjusted for inflation, it is not for the growing population. This means “a country’s economy can be growing simply because the population is rising, and Canada’s population increases one percent a year”, which is misleading and does not tell the actual condition of the country. (Recession In Canada? Economists Say No, But Good Reason To Believe Otherwise , 2012). This has affected Canadian Solar as well. Although they made a net profit in 2011, they made a net loss in its first quarter of 2012. (Canadian Solar, 2012) Canadian Solar operates in other countries as well which were affected by the recession. For example, in late 2007 China was affected by the recession, where their economy “plummeted by [forty] percent” (Maich, 2008). However, in 2012 Canadian Solar and Ningxia State Power, a Chinese based solar energy company, had completed a major project. This would help China “reduce CO2 emissions by 18, 900 tons annually – the equivalent of saving 5,200 tons of standard coal.” (Solar, 2012) So although China was affected, companies are still progressing towards a healthier alternative of energy resource. Many Canadians believe solar energy is an excellent resource of energy. An advantage of using solar energy is there is no green house emissions and is friendly to the environment. However, only fifteen percent of sunlight is converted into energy which is not efficient for the amount it costs to install them. (Anget) Although society agrees that solar energy is a healthy alternative to current resource of energy, it is very costly and inefficient. This affects Canadian Solar because depending on how society feels. If the environment deteriorates much quicker than it is already, people will invest more in solar panels as a way to help the environment. If they do not care or feel the investment is not worth it, they will not buy. This affects the overall growth and stability of Canadian Solar. There has been much technological advancement in solar panels. The first solar panel was created by Charles Fritts in 1883 but could only convert less than one percent of sunlight into energy. (Solar Cells, 2003). By 1954 a solar panel that could convert six percent of sunlight was created. (Perlin, 2003). In the modern day Canadian Solar has made panels which can convert up to eighteen percent of sunlight into energy. (Canadian Solar) The technological advancements have steadily improved in the solar energy industry and Canadian Solar is continuing to research and develop new ways to convert energy more efficiently.
Encompassing Stakeholder map Government – Legislation is a key stakeholder interest for the company. Certain legislation can hurt or promote an industry which affects the companies within it. For example, in Ontario the provincial government passed the “Green Energy and Green Economy Act” which promotes the use of clean energy and promotes jobs. However, there is a lack of the right to light within Canada which affects those who want to use solar panels. This will be explained later. Employees – Employees want job security when working within an organization. Employees are an important stakeholder because they can affect the production and image of an organization, and at the same time are affected by the progress or deterioration of a company. If the organization is doing poorly that can affect the employees job security. Owners – Owners have an interest in the success of the company. These owners could be shareholders who have invested their money into the company in hopes of a positive return. Without their investments, these public companies have a lack of capital funding. Without proper decision making by management, these shareholders could lose everything they invested. Consumers – Customers are the foundation of businesses. Without them, a business cannot exist. Customers care about various things like customer service quality and the quality of the company’s product. If the product does not meet the standard of customers, they will not buy the product. Community – The community cares about environment and how solar energy will affect them. They want to make sure the product they are buying does not harm the environment and can be used to effectively harness sunlight as a form of energy.
Specific Stakeholder Position Analysis The CEO of Canadian Solar is Dr. Shawn (Xiaohua) Qu. As CEO he holds several responsibilities and duties. He is considered the image of the company to both shareholders and the general public. If there are any disasters or public relation issues the media, stakeholders and general public will look to him for answers. Although there are high ranking officials within the company to handle any public relation issues, it is up to him regarding where the company is heading towards. The decisions he makes can affect the company and other stakeholders who have stakes in the company. If Canadian Solar announces a major project which is long term and fails, the pressure is on the CEO. If the financial status of the company is poor, it concerns shareholders and they want to know why the company is failing. These responsibilities fall upon the CEO and it is up to him to determine whether certain projects are viable in the long term and how his decisions affect everyone around him. The federal and provincial governments are also stakeholders in the solar energy industry. The legislation they pass can hurt or harm the solar energy industry like Canadian Solar. There are various legal issues that come with harnessing sunlight as a form of energy. For example, in Canada there is no right to light. Although you may have a solar panel installed around your home, you legally do not have the right to light. For example, a man in Ottawa installed a solar panel but “is now under threat from a near-by five-storey condo development”. (Wakulat) This means that he cannot do anything to stop the construction of the condominium regarding his solar panel because there is no law for it in Canada. The lack of a right to light in Canada can affect many people who want to use solar energy as a source of energy but cannot because of obstacles like this. However the provincial government is making an effort to help encourage the use of alternative energy resources. On May 14, 2009 the Ontario government passed the “Green Energy and Green Economy Act” which encourages the use of “clean and renewable energy resources such as solar energy” and to create more jobs. (Ontario Green Energy Act). The provincial government of Ontario has been trying to encourage the use of solar energy by passing legislation that helps promote the use of renewable, clean energy and promoting jobs at the same time. Customers are essential to the overall growth and long term development of companies. They are important stakeholders because companies depend on them in order to operate. In the solar industry, customers need to know that the product they buy is ethical, efficient and has quality. Customers are the foundation of companies and they make an overall impact on the organization. If boycotting occurs that would be a public relations disaster for them and can affect multiple things such as market share value and profits of an organization. They demand high quality, ethical and efficient goods. Customers believe solar energy is an excellent source of energy however because of the costs related to it and the lack of energy conversion. The industry needs to continuously try to improve their product in order to attract a larger market.