Business Essay Sample: Review of the Solyndra Bankruptcy and Current Events

Published: 2022-03-11 18:39:32
Business Essay Sample: Review of the Solyndra Bankruptcy and Current Events
Type of paper:  Article review
Categories: Company Business Energy
Pages: 2
Wordcount: 451 words
4 min read
143 views

Solyndra was not a profitable company. This was because the company was unable to realize financial gains despite receiving 535 million dollar loan from the Federal Financing Bank. The company's failure is attributed to the change in the demand for solar which saw the company generate insufficient revenue. The business company's strategy was mainly differentiation. It focused on producing solar panels that provided more energy at lower costs. This would enable the company to capture a significant market of the energy consumers. The company made losses due to selling the products at lower prices than the costs of production (Kao, 2012). The company incurred total costs of $773 million in setting up Fab 1and Fab 2. These were meant to generate more electricity. During 2009/2010 period the company was selling its modules at 3.34 per watt which was the revenue at that time. The target was however between 2 and 2.35 per watt. This made it difficult for the company to gain profits. I would recommend for sufficient research to be done before starting such a business. This would have helped Solyndra in identifying the market dynamics. The Chinese solar competitors are investing a lot of money in the solar industry (Chovanec, 2012). Therefore the American solar companies are finding it difficult to compete with the Chinese companies.

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The company's bankruptcy was as a result of the change in the market for solar energy. The entry of other companies to the market increased the competition and resulted in price pressures (Mulkern, 2011). This made the company fail to reach the targeted revenues and was therefore unable to meet its obligations. Solyndra's managers could have applied better research and management skills. This would have ensured that the company had adequate knowledge regarding the investment. Market research would have identified the change in the market before it affected the company.

The taxpayers' money should not be used for private businesses since such cases have failed to work in the past resulting in the loss of taxpayers' money. The government loan helped the company to solve some of its financial problems, but it did not help the company out of financial distress. The company's niche market was mainly the commercial building rooftops (Kao, 2012). This was a marketing strategy. There are unique characteristics that the company provided for the niches. This involved covering more rooftops, low-cost installation among others.

References

Chovanec, P. (2012). WSJ: China's Solyndra Economy. The Wall Street Journal, 13.

Kao, H. (2012). Beyond Solyndra: Examining the Department of Energy's Loan Guarantee Program. Wm. & Mary Envtl. L. & Pol'y Rev., 37, 425. Retrieved from, http://scholarship.law.wm.edu/cgi/viewcontent.cgi?article=1569&context=wmelpr

Mulkern, A. (2011). Solyndra Bankruptcy Reveals Dark Clouds in Solar Power Industry. Greenwire, September, 6.

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