Financial Analysis and Market Entry Strategy for Canadian Solar, Inc. in Target US Markets
Overview
This paper presents a comprehensive financial analysis of Canadian Solar, Inc.'s entry into new target markets, including breakeven analysis and implementation strategy. The analysis forecasts 1,000 units sold at $1,400 per unit, calculates a breakeven point of 10,000 units, and outlines a geographic expansion plan focused on high-growth solar markets. The plan incorporates pricing strategy, distribution controls, and contingency measures to support market entry.
What this case study covers
- Introduction and business overview of Canadian Solar's complete solar system units
- Breakeven Analysis with forecasted sales, variable costs, and fixed costs calculations
- Implementation plan focusing on geographic expansion in five states with regional management structure
- Pricing strategy incorporating skimming approach, payment plans, and bundle packages
- Controls and selective distribution strategy to maintain relationships with existing distributors
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Financial Analysis
June 5, 2020
University of Maryland, Global Campus
Jung Goodwin
Alexis Hooper
Rachael McCauley
Tiara Williams
Canadian Solar, Inc.
Financial Analysis
Introduction
The section will present a breakeven analysis for a new target market. The information presented includes the focused number of units sold, the average price for each unit, forecasted total sales, the forecasted average unit variable cost, as well as the forecasted fixed costs. The plan is essential in ensuring that the business is prepared to venture into the market as well as take the essential steps as a safeguard to potential risks. The unit is a complete system that has with a solar panel, power battery for storage, converter, and connection system. The plan further outlines the implementation process, controls, as well as a contingency plan.
Breakeven Analysis
Forecasted Total No. of Units Sold | 1000 |
Forecasted Average Unit Price | $1,400 |
Forecasted Total Sales | $1,400,000 |
Forecasted Average Unit Variable Cost | $1,000 |
Forecasted Fixed Costs | $4,000,000 |
Break Even Point Units | $4,000,000/(1,400-$1,000) = 10,000 units |
Break Even Point in US Dollars | $14,000 |
Implementation, Controls, and Contingency Plan
Implementation
The plan to sell 1000 units will be implemented geographically focusing on the areas with the highest solar usage and growth: Arkansas, Arizona, Alaska, Alabama, and California (Deloitte United States, 2020). As these states are not linked geographically, each state will have an individual marketing team. Teams will be managed by two regional managers, Eastern and Western. Additional states will be divided into four regions, north, south, east, and west. Marketing will be less heavy in these areas but not nonexistent. In addition, they will expand the customer base through direct marketing, professional selling, and advertising.