Financial Analysis of Solar Panels and Safeguards - Rising Tensions in the Global Trading System Case Solution
If you are a member of the finance team in a global trading system, then you may be battling rising tensions. It is a matter of concern, as these tensions could threaten the safety of your business and its customers. Hence, you need to take some steps to protect your investments and business.
Problem Statement
The solar industry has a long and eventful history. Its heyday was in the mid 2000s, but has since been plagued by declining prices and trade disputes. Trade conflicts have led to a glut of solar panels, which is not an ideal scenario for the country's energy industry. As such, the sector is on a tighter leash than at any time in recent memory.
In addition to defending itself from foreign imports, the US has enacted a number of tariffs aimed at both the burgeoning solar industry and the Chinese market. This has led to a decrease in exports from Canada to the U.S., as well as an increase in the price of imported solar panels, the latter of which is likely to negatively impact downstream employment in the solar panel distribution chain.
In short, trade disputes are a fact of life in the modern age. However, it is still possible to avoid the pitfalls of trade wars. One viable solution is to encourage more collaboration. Specifically, governments should promote the deployment of the latest technology, while taking a pragmatic approach to trade policies. To do this, it is imperative to consider the broader context of trade and trade policy. Rather than just looking out for the interests of one nation, it is imperative to ensure that energy cooperation and trade can flourish in the longer term.
Case Study Solution
During the past decade, the solar panel industry has been a target of a series of trade disputes. These conflicts have involved both countries and third parties, and have contributed to the ongoing tensions in the global trading system. The current trade war between the United States and China may have impeded the growth of the solar panel sector.
Several solar energy disputes are currently underway at the WTO, mainly between the United States and China. These conflicts involve remedy measures such as anti-dumping duties and safeguard measures. Some argue that these barriers are ineffective and can impede the transition to clean energy. Others, however, point out that these regulations are essential to help promote and support domestic renewable energy sectors.
In the US-China dispute, the two sides claimed that the safeguard measure was inconsistent with their obligations under the WTO. However, the investigation did not move past the first phase of consultations.
In a separate investigation, the US Commerce Department imposed antidumping duties on Chinese solar panels. Both countries believe that these measures undermine the predictability of the multilateral trading system. Moreover, both sides have accused the other country of unfair treatment.
According to the study, the use of safeguards in the global trading system has been plagued by problems for decades. Nevertheless, the pending status of these solar energy disputes is unlikely to change.
As the global solar industry continues to suffer from the trade war, the issue of tariffs and safeguards has also been raised. Studies show that both of these factors play a significant role in the economic impact of the sector.
Porters Five Forces
Michael Porter's Five Forces strategy is an industry analysis tool that helps you understand your market and your competition. This strategy enables you to make strategic decisions that help you win more customers, grow your business and improve profitability. The main focus of this approach is to identify the underlying levers of competitive advantage in your industry. Using this method, you'll gain the knowledge and insight you need to be an expert in your field and to stand out from the pack.
Porter's Five Forces framework is a useful tool for understanding your competition, identifying and responding to the latest trends and implementing a sound strategy. For example, you could use it to devise a plan to counter a competitor's pricing strategies and implement a new marketing initiative to increase customer acquisition and retention. A similar strategy could be used to build barriers to protect your competitive edge.
Among the five forces, the one that stands out is the threat of entry. This is due to the emergence of new players in the Semiconductor - Specialized space that bring innovation and lower costs. In turn, these companies will be able to exert greater pressure on First Solar, Inc. (NYSE:FSLR).
As the aforementioned study demonstrated, the best way to mitigate this risk is to implement a multipronged approach. A key element is to develop a sound strategy to counter a competitor's price and revenue strategies.
Financial Analysis
When looking at the financial analysis of solar panels and safeguards, it is clear that solar panel industry is a highly competitive industry. This competitive environment can be seen as a result of a number of factors. The global demand for renewable energy has been rapidly rising. But the industry has also been shaped by a number of geopolitical factors.
As a result, trade tensions in the solar panel industry have been on the rise. These tensions are mainly related to remedy measures, such as anti-dumping duties and safeguards. There are various types of conflicts between global players in the solar sector, including subjective and investor-country disputes.
While it is a fact that the solar industry is dominated by China, other countries have developed comparative advantages. In particular, Singapore and the Republic of Korea have developed international competitiveness.
China is the largest solar panel exporter in the world. But its growth in exports has been slowing down in the last few years. However, its share in world exports remained high in 2018.
Despite the current trade conflict, China has maintained its leading position in the world market. Nevertheless, China has been accused of unfair solar panel trade practices. Several countries have argued that Chinese companies have received illegal subsidies and dumped solar panels into the EU market at cheap prices.
According to the study, the use of protectionist measures in the global trading system is a problem. The use of such measures can lead to a higher cost for the hardware. Additionally, it is believed that such measures can hinder states in their pursuit of environmental objectives.
Recommendations
In recent years, the solar industry has been plagued by a series of trade wars that have left the industry awash in red ink. To combat this, President Trump announced a number of tariffs on a range of products and services, including solar panels. Aside from the cost of production, the import restrictions will negatively impact downstream employment prospects in the solar panel distribution chain. Fortunately, however, a slew of trade partners have responded in kind. These include China, Japan, and Korea. They also have the clout to persuade Washington to enact a raft of their own trade agreements.
One of the most important developments in the solar industry has been the advent of cheap, Chinese-made solar cells. During the last few years, the Chinese have taken to producing these modules in foreign nations where the 2012 antidumping duty does not apply. The resulting glut has pushed up the price of solar power in the US, which may be counterproductive to the interests of consumers and utility providers alike.
This is not to say that the US is a cheapskate. Indeed, there are several companies, notably Solaria, that manufacture both domestic and foreign-made solar panels. Nevertheless, the cost of solar energy is a growing concern, and tariffs are likely to make the future a little less sunny. That said, there's no reason to be complacent, and solar producers should not be afraid to advocate their case.
This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.
Related Case Solutions & Analyses:
Airbus A3XX: Developing the Worlds Largest Commercial Jet (A)
Meeting the Diversity Challenge at PepsiCo: The Steve Reinemund Era
Social media: The New Hybrid Element of the Promotion Mix
Cirque du Soleil–The High-Wire Act of Building Sustainable Partnerships
HubSpot: Inbound Marketing and Web 2.0
Symbian Google & Apple in the Mobile Space (A)
Sanctuary Soft: International Expansion Strategies
U.S. Subprime Mortgage Crisis: Policy Reactions (B)
The Walt Disney Company and Pixar Inc.: To Acquire or Not to Acquire
HP: The Computer is Personal Again
