Assess the global market opportunity for sustainable energy

Assignment Help Project Management
Reference no: EM131283972

Suzlon Energy: The Assignment Product problems initially made headlines in 2008 after a turbine blade manufactured by Suzlon and financed by John Deere Wind Energy cracked and broke off a tower in Illinois. Although this was the sole reported incident of a blade actually falling, the incident raised concerns about the quality of Suzlon's products. The company attempted to address the quality problem. It announced a program to strengthen or replace 1,251 blades-almost the entire number it had sold in the United States-after cracks were found on more than 60 blades on turbines run by Deere and Edison International's Edison Mission Energy. Despite Suzlon's efforts to address the quality issue, problems continued. Edison claimed that blades were splitting and announced plans to delay its wind-generation development. Edison refused to make further purchases and announced it would consider switching to one of Suzlon's competitors. In response, Suzlon spokesperson Vivek Kher claimed the cracks were not due to faulty blades.

Instead, he blamed the Midwest's unexpectedly violent changes in wind direction. However, these problems are not limited to the U.S. market. Suzlon's products in India appear to have similar flaws. One of Suzlon's largest Indian customers claimed that Suzlon's products "are not fit to handle the wind." While battling product reliability and durability problems, other product development issues arose. The turbines manufactured by Suzlon failed to create as much energy as originally promised due to differences in the U.S. electrical grid and the power grid in India.

To address the problem, Suzlon quickly converted turbines to work in the United States. In addition, some turbines installed in Minnesota broke down during the winter due to the region's extremely cold winter temperatures. Electric heaters were installed to keep the control panels from freezing; however, the placement of the heaters created electrical problems for the turbines. The fact that doubts have been raised about the reliability and durability of Suzlon's products suggests that the company's research and technology-update programs have not kept pace with customer needs.

One member of Suzlon's management team acknowledged as much; Ashish Dhawan, an independent director on Suzlon's board stated: "It's not that their technology is bad [ . . . ] but they've been a laggard." In an interview in April 2008, Tulsi Tanti, Suzlon's chairman and managing director, was asked about the concerns with the economy and the product. He responded with confidence, saying, "There are no companies growing the way we are growing. Within 4 years we will feed product technology to the whole world." He was confident that Suzlon would double its annual production capacity by 2010, insisting that the cracked-blade problem did not stem from any fundamental design flaw. However, some question whether Tanti's optimism was well founded.

Take, for example, Suzlon's problems with a Chinese windenergy project. Suzlon successfully bid on a proposal from Germany's REpower Systems, a company in which it holds a 74 percent stake. The contract called for Suzlon to supply an initial shipment of 75 blades for installation in China's Shandong Province. There was a possibility of a second order for an additional 75 blades. However, REpower rejected Suzlon's prototype and sourced the blades from other suppliers. It ended up costing REpower an extra €6 million ($8.4 million) to ship the substitute blades from Europe. Sumant Sinha, Suzlon's chief operating officer, insisted the canceled order was due to delivery delays, not quality issues. "New blades for any new customer take time," he said.

"Our products are good and reliable." Meanwhile, Suzlon faces a cash crunch. Prior to the economic downturn, the company took on a great deal of debt. Management borrowed heavily to expand factories in the United States, China and India. In addition, Suzlon spent $1.7 billion to purchase its majority stake in REpower in 2007. It has already spent more than $100 million to perform repairs on cracked blades. Although sales jumped 70 percent, to $2.7 billion, in 2008, its backlog of orders for export is down. Lower growth rates in the wake of the economic crisis have forced Suzlon to search for additional sources of financing.

In 2010, it began laying off workers at its plant in Minnesota. Other problems loom. Policymakers in many parts of the world realize the importance of reducing dependence on imported oil and cutting greenhouse gas emissions. According to the International Energy Agency, wind currently accounts for only about 1 percent of the world's electricity. However, the collapse in prices for oil and natural gas and the global economic downturn mean that it is difficult for Suzlon's customers to obtain financing for wind-energy generation projects. So, what does the future hold for Suzlon? Will a company that once prided itself on rapid innovation and design changes be able to stay ahead of competitors? Or, will it fall victim to unfavorable publicity and changing times?

Discussion Questions

1. Assess the global market opportunity for sustainable energy sources such as wind turbines.

2. Do you think Suzlon can address the quality control issue before the company's brand image is damaged?

3. What impact do you think the global economic downturn and credit crunch will have on a company like Suzlon?

Reference no: EM131283972

What is the optimal stocking level

Henrique Correa’s bakery prepares all its cakes between 4am and 6am so they will be fresh when customers arrive. Day old cakes are virtually always sold, but at a 50% discount

Discuss various types of communications you will need to use

Discuss various types of communications you will need to use on the project, what stakeholder(s) each type would address and the frequency of each communication type. You m

What the ama statement of ethics contains

Does the AMA Statement of Ethics have anything to say about this issue? - Write a brief paragraph on what the AMA Statement of Ethics contains that relates to this situation.

Social interaction and setting you are observing

Who apparently has the most power in the social interaction and setting you are observing? Explain how they exert their power and privilege. Does their status help them main

What is behind the so called patent paradox

What is behind the so-called ‘patent paradox'? How can it be explained?-  Why isn't it optimal in terms of public policy to have patents that last forever? Discuss.

Identify five requirements of an effective mrp system

What is the rationale for (a) a phantom bill of material, (b) a planning bill of material, and (c) a pseudo bill of material? Identify five specific requirements of an effec

Discuss a successful project and an unsuccessful project

Identify and discuss a successful project and an unsuccessful project with which you are familiar. Include what you would say distinguishes the two, both in terms of the proc

Produce a top ten risk list for a wedding project

Produce a 'top ten' risk list for a wedding project; and consider the four strategies of Risk avoidance; Risk acceptance; Risk transference; Risk mitigation and develop cont

Reviews

Write a Review

 
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd