Internal Environment Scan
The success of any business highly depends on its understanding of the internal environment. Analysis of the microenvironment allows a company to identify factors and forces that affect its growth and profitability. An internal environment scan entails the assessment of strengths and weaknesses to identify opportunities and threats. According to Gürel and Tat (2017), understanding strengths and weaknesses helps an organization capitalize on opportunities while resolving the weaknesses to ensure an enhanced competitive edge. The SWOT (strengths, weakness, opportunities, and strengths) analysis serves as the best-suited tool for Canadian Solar Inc. microenvironment scan.
Canadian Solar Inc SWOT Analysis
Canadian Solar Inc. has strong, reliable management that ensures the corporation overcome cultural barriers in its international expansion endeavors. As a result, the company has a considerably high level of success in meeting its customers’ needs by delivering high-quality products at relatively low prices. Additionally, the organization has maintained a reputation of providing new innovative products to the consumer market that enhances its power production and supply (“Canadian Solar Inc. (CSIQ) 10K Annual Reports & 10Q SEC Filings”, 2019). Consequently, this has helped Canadian Solar Inc. maintain robust brand reliability in the regions that it provides its services.
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Additionally, Canadian Solar Inc. has a well-established distribution and reach, whereby it has many outlets in almost every state in Canada. The outlets are supported by a robust distribution network that ensures that its products are readily available and accessible to many customers in a convenient manner. The corporation also has a strong relationship with its dealers who provide it with supplies and also promote the Canadian Solar Inc.’s products and services (“Canadian Solar Inc. (CSIQ) 10K Annual Reports & 10Q SEC Filings”, 2019). The distribution reach, coupled with the dealer community, provides a competitive advantage for Canadian Solar Inc.
Canadian Solar Inc.’s cost structure and financial position also serve as a strength for the company. The organization has a massive asset base, which provides it with considerably better solvency. Moreover, the company’s strong financial position resulting from consecutive profits in the past five years and longstanding accumulated profit reserves complements the asset base as they can help finance future capital expenditure. Canadian Solar Inc. has also been significantly successful in generating positive returns on its capital expenditure on various projects (“Canadian Solar Inc. (CSIQ) 10K Annual Reports & 10Q SEC Filings”, 2019). The strong financial position serves as a strong asset for the company’s marketing efforts.
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The corporation has automated various stages of its production, which allows for more efficient use of resources and also minimizes costs. Automation also facilitates consistency in the quality of products and enable the company to scale up and down as the consumer market demands. The automation is complemented with a skilled workforce, whereby the company has extensively invested in recruiting the best talents in its industry and also provides training and a favorable environment to ensure the labor force remains highly motivated (“Canadian Solar Inc. (CSIQ) – Financial and Strategic SWOT Analysis Review”, 2018). Considering that human resource is the most resourceful asset of any organization, a highly skilled workforce and automated processes guarantee consistent efficiency.
Lastly, Canadian Solar Inc. has a strong presence on social media platforms, whereby it has millions of followers on the three most famous platforms (Instagram, Facebook, and Twitter). The organization also has a functioning and fairly interactive website that attracts large traffic that translates to increased sales (“Canadian Solar Inc. (CSIQ) – Financial and Strategic SWOT Analysis Review”, 2018). An online presence allows the company to market its wide range of products.
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Although Canadian Solar Inc. spends a considerable amount of its funds on research and development (R&D), it is spending less than other market leaders. The expenditure constraint on R&D places it as a disadvantage in comparison with major competitors. In the three years, Canadian Solar Inc. has not conducted any research aimed to further the company’s understanding of the consumer market (“Canadian Solar Inc. (CSIQ) – Financial and Strategic SWOT Analysis Review”, 2018). Research and development are crucial to ensuring an organization effectively meets consumer market demands and expectations.
Regarding integration, Canadian Solar Inc.’s current structure and culture have caused the corporation to fail in various merger efforts aimed to facilitate vertical integration. The company also has a constrained budget for the quality control department as compared to major competitors (“Canadian Solar Inc. (CSIQ) 10K Annual Reports & 10Q SEC Filings”, 2019). This facilitates the possibility of a decline in quality for the firm’s products across its various outlets.
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Whereas Canadian Solar Inc. has established itself as a major player in its respective industry, only a few of its products have a large market share. Most of the company’s products have a relatively low market share (“Canadian Solar Inc. (CSIQ) 10K Annual Reports & 10Q SEC Filings”, 2019). The reliance on a few products to maintain a competitive edge renders the corporation vulnerable to external threats.
Canadian Solar Inc. has been experiencing high rates of employee turnover. As a result, the company is spending large amounts of funds on recruiting and developing new employees. The constant leaving of qualified employees also translates to workforce shortages rendering the company incapable of sufficiently meeting its customers’ needs (“Canadian Solar Inc. (CSIQ) – Financial and Strategic SWOT Analysis Review”, 2018). Notably, when employees face excess workloads, their morale decreases and, as such, are unable to meet clients’ demands and expectations effectively.
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Lastly, the decision-making process at Canadian Solar Inc. is highly centralized. Decisions by teams, including the marketing department, must be approved by top-level managerial officials (“Canadian Solar Inc. (CSIQ) – Financial and Strategic SWOT Analysis Review”, 2018). Consequently, this reduces efficiency in organizational operations by rendering them relatively slower. Centralized decision-making also leads to reduced creativity and innovation since employees lack the autonomy to try new things.
Over the years, the internet has attracted an enormous number of users from all over the world. This provides an opportunity for Canadian Solar Inc. to increase its online presence by utilizing the internet to interact with existing and potential customers. The internet also presents an opportunity for the corporation to venture into e-commerce. Furthermore, Canadian Solar Inc. should seek ways to increase the productivity of its social media platforms to ensure that it reaches a wider client base to promote its products and interact with the consumer market to gather data that can help it improve its products services.
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Technological advancements also provide an opportunity for Canadian Solar Inc. to increase its customer reach. For instance, recent developments in the consumer market data analysis algorithms can help the corporation better understand the consumer market and, therefore, customize its marketing efforts to ensure enhanced efficiency. Considering that the company has the financial capacity to fund such investments as demonstrated in the strengths section of this SWOT analysis, then the company stands to benefit from technological developments.
In recent years, the Canadian government has been emphasizing the use of green power sources to curb environmental pollution in its ‘green government drive initiative’ (“Canadian Solar Inc. (CSIQ) – Financial and Strategic SWOT Analysis Review”, 2018). This provides an opportunity for Canadian Solar Inc. to supply its product to federal and state government agencies. In fact, the government strives to provide tax rate reductions and subsidies on companies supplying environmentally friendly products (“Canadian Solar Inc. (CSIQ) – Financial and Strategic SWOT Analysis Review”, 2018). Canadian Solar Inc. stands to benefit from these opportunities.
Lastly, globalization also provides an opportunity for Canadian Solar Inc. to increase its reach by expanding operations into other countries. The corporation has expanded its operations to twenty-one countries across the globe (“Canadian Solar Inc. (CSIQ) – Financial and Strategic SWOT Analysis Review”, 2018). There is still room for improvement as it can expand its reach to serve most countries, especially during these times when governments are keen on promoting the use of green energy. Due to the increased globalization characterizing, the 21st-century trade barriers have significantly declined and made it relatively easier for Canada Solar Inc. to establish global reach.
Whereas technological advancements provide an opportunity for Canadian Solar Inc., it also serves as a threat to the corporation, given that major competitors are largely investing in new technology. These technological improvements exert increased pressure on the company to constantly improve its products and marketing efforts to meet customers’ dynamic needs market (“Canadian Solar Inc. (CSIQ) – Financial and Strategic SWOT Analysis Review”, 2018). If Canadian Solar Inc. does not improve keep up to date with technological advancements, it risks losing its competitive advantage, stemming from technology use.
Also, the stiff competition in Canada’s energy sector poses a significant threat to Canadian Solar Inc. since the continued increase of alternatives in the consumer market could induce a shift in customers’ buying behavior. As consumer tastes keep changing, organizations have to invest in understanding the patterns and meeting the new demands (“Canadian Solar Inc. (CSIQ) – Financial and Strategic SWOT Analysis Review”, 2018). Therefore, the increased competition dictates that Canadian Solar Inc. improve its research and development efforts or stand to lose. Laws and regulations could also pose a threat to the corporation due to new licenses and permit requirements importing and exporting products. Regulations on international trade keep changing, which necessitates that Canadian Solar Inc. must ensure compliance (“Canadian Solar Inc. (CSIQ) – Financial and Strategic SWOT Analysis Review”, 2018). Notably, compliance can prove costly to the company.
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