applied materials strategic analysis pdf
TRANSCRIPT
Applied MStrategic Analysis
aterials, Inc.
Albert King, Seth Breedlove, Shayne Armstrong
5/11/2010
TABLE OF CONTENT EXECUTIVE SUMMARY................................................................................................................................................................... - 1 -
COMPANY PROFILE ............................................................................................................................................................................- 1 - STRATEGIC INTENT AND MISSION ......................................................................................................................................................- 1 - PROBLEM IDENTIFICATION .................................................................................................................................................................- 1 -
ENVIRONMENTAL ANALYSIS: PERCEIVED TRENDS IN ADOPTING SOLAR POWER ...................................................... - 1 - SHAPING STRATEGY...........................................................................................................................................................................- 1 -
Scenario Analysis ......................................................................................................................................................................... - 2 - Scenario 1: “Sunny days are here again” ...................................................................................................................................................... - 2 - Scenario 2: “Running around in circles” ....................................................................................................................................................... - 3 - Scenario 3: “It’s as hot as hell in here” ......................................................................................................................................................... - 3 -
External Environment .................................................................................................................................................................. - 4 - Competitive Rivalry...................................................................................................................................................................................... - 4 - Threat of New Entrants ................................................................................................................................................................................. - 4 - Opportunities................................................................................................................................................................................................. - 4 - Threats .......................................................................................................................................................................................................... - 5 -
Internal Environment ................................................................................................................................................................... - 6 - Resources, Processes, Values........................................................................................................................................................................ - 6 - Strengths ....................................................................................................................................................................................................... - 6 - Weaknesses ................................................................................................................................................................................................... - 7 -
STRATEGIC ANALYSIS .................................................................................................................................................................... - 7 - IMAGINING MARKETS AND INDUSTRIES .............................................................................................................................................- 7 - CLEANTECH PRODUCTS AND SERVICES...............................................................................................................................................- 9 -
RECOMMENDATIONS ................................................................................................................................................................... - 12 - RECOMMENDATION 1: SHORT TERM OBJECTIVES ............................................................................................................................- 12 - RECOMMENDATION 2: LONG TERM OBJECTIVES..............................................................................................................................- 13 -
Political, Social and Competitive Implications:......................................................................................................................... - 15 - Political, Social and Competitive Implications:......................................................................................................................... - 16 -
APPENDIX A..................................................................................................................................................................................... - 18 - TABLE 1 STAKEHOLDER, TRENDS AND UNCERTAINTY RELATIONSHIPS ...........................................................................................- 18 -
APPENDIX B..................................................................................................................................................................................... - 19 - TABLE 2 SCENARIO MATRIX ...........................................................................................................................................................- 19 -
BIBLIOGRAPHY .............................................................................................................................................................................. - 20 - END NOTES ...................................................................................................................................................................................... - 22 -
‐ 1 ‐
Executive Summary
Company Profile Applied Materials, Inc. (AMAT) was founded in 1967 and is the global leader in nano‐manufacturing
technology solutions. Applied Materials has a wide portfolio with equipment, service and software
products used in the fabrication of semiconductor chips, flat panel displays, solar photovoltaic, flexible
electronics and energy efficient glass. This report will focus the solar photovoltaic technology which turns
sunlight into clean electricity.
Strategic Intent and Mission Applied Materials, Inc. has a vision of applying nano‐manufacturing to improve the way people live and a
mission of leading the nano‐manufacturing technology revolution. The stated mission for Applied
Material is “To lead the nano‐manufacturing technology revolution with innovations that transform
markets, create opportunities, and offer a cleaner, brighter future to people around the world.”1 The
organization is headquartered in Santa Clara, CA and has 13,000+ employees working to help make the
vision and goal a reality. Applied Material is a global organization operating in 92 locations in 21
countries with manufacturing operations in China, Germany, Israel, Italy, Singapore, Switzerland, Taiwan,
and the United States2. Based upon its mission and vision, and current operations, this study will show
that Applied Materials is in a great position to be an industry leader in the solar sector.
Problem Identification Applied Materials has four problems it must address:
How can Applied Materials make solar panels more efficient and cost effective? Which markets & products should it exit? (Red Oceans) Which markets & products should it enter? (Blue Ocean) How can Applied make solar panels more accessible to the general public?
Environmental Analysis: Perceived Trends in Adopting Solar Power
Shaping Strategy The prevailing question regarding the future of Applied Material relative to solar energy is what
components and forces will end up shaping the industry in the future and how will Applied Material tap
‐ 2 ‐
into these trends and forces to become a dominant player in the industry? In order to answer this
question it is necessary to analyze the stakeholders, trends and uncertainties and attempt to predict how
they will interact with each other. From this information, it will be possible to define the potential
markets space of the future (both near term & long term), determine if AMAT should use head‐to‐head
combat or create partnerships in the competitive space and define the elements that AMAT should adopt
to shape uncertainties to its advantage.
As part of the analysis to determine the possible futures regarding the environmental, political &
social spaces, trends, uncertainties & stakeholders were examined in a round table/brain storming
session. Table 1 & 2 in the Appendices show the charts that were developed from the brainstorming
session. The most likely scenario, as determined by the Applied Material team and which will drive most
of this analysis, will be the optimistic scenario or “Sunny days are here again.” Following the scenario
analysis will be an examination of the external and internal environments that will serve to define the
future for the solar power industry.
Scenario Analysis
Scenario 1: “Sunny days are here again” Solar power technologies have taken a step function leap in both efficiency and cost; the new solar
power cells have achieved at least 80% efficiency and the cost per peak watt hour is below $3.00. In
addition, utility companies have completed their transition to smart grids that are able to effectively and
efficiently utilize solar generated power. The technology has also become plug and play, so for little
money and easy installation most home and buildings can purchase and install solar technologies. At
least 65% of homes and businesses by 2025 are powered solely by solar power.
Furthermore, there is excess capacity which, along with equitable and mutually beneficial
partnerships with China, Europe and India allows the US to export solar energy overseas through
underwater power transmission lines. New technology is being developed to package the power
wirelessly and transmit it overseas, but this technology is at least several decades away. Both the states
and federal government are heavily invested in green tech, especially solar because of the promise of
‐ 3 ‐
energy independence and a prosperous economy. Even traditional enemies of green tech innovation—
the oil companies, enthusiastically joined the band wagon.
Scenario 2: “Running around in circles” The depression of 2007 has lasted longer than expected and deflated much of the enthusiasm around
solar technology. In spite of the signs of recovery in 2009, the following recession lasted several more
years. Many companies have dismantled their solar power divisions and technological progress stalled.
The consumer has lost interest in the benefits of solar from both an environmentally responsible position
and the potential economic upside because unemployment had stayed high through the 2010s.
Consumers are most interested in cheap energy, and the least expense source of energy is still oil.
However, the loss of enthusiasm & momentum for solar energy did not completely extinguish all
innovation, but the pace had slowed down significantly. Governments are still investing in green tech and
innovation but the pace of progress has slowed the movement toward greater efficiency and energy
costs. By 2015 the cost per peak hour will be at $6.50.
Scenario 3: “It’s as hot as hell in here” The intense resistance of oil companies and their proxies, including all the global warming deniers have
gained a victory. The U.S. government has tilted severely to the right and all funding for alternative
energy has dried‐up. Innovation is non‐existing and the U.S. public is more dependent on foreign oil than
ever. Corporations have abandoned any pretense at being concerned for environmental issues and are
working hard to dismantle any environmental protections that were implemented in the last two‐
decades. Over‐seas, Europe and Asia are still pursuing alternative energy aggressively because the
climate change has wrecked havoc with their economies and rising water levels have devastated coastal
cities (the U.S. has suffered from severe storms and rising water levels, but the deniers in politics and the
media has been able to distract the public from the reality of global warming). However, without the
resources, and economic might of the U.S., progress has not been promising in finding viable alternative
energy sources.
‐ 4 ‐
External Environment
Competitive Rivalry Due to political pushes (e.g. defined renewable portfolio standards that require a percentage of energy
produced to be from renewable sources3) for alternative energy sources and production, the solar
industry is very competitive. In essence, Applied Materials is competing on two fronts. First, it is
competing to be the number one player in the solar industry. Second, it is competing to drive solar
technology so it becomes the renewable source choice that replaces conventional energy sources.
Solar energy demand has grown at a rate of 30% per annum for the past fifteen years.4 Many
organizations see this and are investing in solar technology, resulting in more than 3,400 companies in
the US alone.5 In addition, there is not much product differentiation, so it is hard for one particular
organization to come out as a leader. However, there are high fixed costs involved and specialized
equipment required, indicating that larger companies will prevail. Applied Materials spends over $1
billion dollars on R&D in 2009, a competitive advantage over smaller less funded companies. Overall,
competitive rivalry is high and will remain high as the industry continues to mature.
Threat of New Entrants Solar panels and components are globally sold products, and the push towards renewable energy
solutions makes the industry attractive to potential entrants. Threat of new entrants can also be seen
through the innovations coming out of the industry; such as engineered viruses which cause tobacco
plants to grow solar cells.6 This is an example that new entrants into solar technology can come from
anywhere. Taking all factors into consideration and the evolution of the energy production industry,
threat of new entrants is very high. It is a possible outcome that a start‐up solar power company with
some V.C. backing, some good ideas and a clear business plan could become the next Google.
Opportunities The government funding and push towards alternative energy production has created an opportunity for
Applied Materials. In addition to government mandates, environmental concerns are influencing the
general public. As these concerns increase, consumers are demanding more energy sustainability and
‐ 5 ‐
one way to achieve this is via clean energy. Consumers are also pushing large corporations to be more
accountable for their environmental impacts, so AMAT stands to benefit if it can partner with
corporations and governments to be the dominant player—of course it also needs to improve the
technology and lower the cost.
Another opportunity is in the current solar industry, and the fact that there are so many players.
Applied Materials has the opportunity to either partner with other organizations to strengthen the solar
industry as a whole, or purchase smaller competitors with potential technology that could help AMAT
leap forward. Applied Material needs to take both these positions within clean energy to develop into a
key player in the industry.
Europe has been a leader in solar power production, and it is extremely competitive and may not
be the best market for Applied Materials to enter at this time. Asia, however, is a great market for
Applied Materials. In fact, the Asian market is larger than the European market and is expected to grow
at an annual rate of 20‐30%.7 Applied Materials has been investing in the Asian market in recent year.
This investment needs to continue as this is a strong market.
Threats Applied Materials is a globally operating organization, so the current economic crisis is a serious threat.
For example, the construction market in the U.S. has been in decline since 2006. Until construction
begins to rebound, investment in alternative energy will be threatened. According to AMAT’s website
Applied Materials derived 81% of its sales outside of the US in FY2009, 66% from Asia and 15% from
Europe.8 Moreover, the semiconductor industry had experienced a decline of 46.5% between 2008 and
2009. This decline has already adversely affected Applied Materials, and has caused it to focus more on
its solar operations (industry wide, the net margin on semiconductor chips has also been in decline,
which has affected AMATs profit margin).9
‐ 6 ‐
Internal Environment
Resources, Processes, Values Applied Materials is a large company with a lot of resources. It currently has 13000+ employees
worldwide and revenues of $5 billion. In addition, it has a strong R&D foundation with a budget of $1
billion. However, between 2007 and 2009 Applied Materials has suffered a loss of revenue of
approximately $2.7 billion.
Applied Materials also has low debt compared to its cash, cash equivalents, and investments.
AMAT continues to have strong financial results in spite of the challenges posed by the economic
downturn of the past several years. Furthermore, it has shown a growth in the last quarter of 2009 and
first quarter of 2010, indicating a turnaround of economic fortune.
According to its website, Applied Materials core competencies are thin film engineering,
commercializing sophisticated systems, and global reach.10 Its capabilities in semiconductors and flat
panels have led to innovations such as the cell phones and more recently LCD TV’s. In addition, since
2006 it has also become a leader in solar photovoltaic (PV) panels and it is now the largest supplier of PV
solar equipment. Applied Materials has capably used their expertise in thin film and large glass substrate
processing to develop next generation solar panel technology.
Strengths Potentially, AMATs greatest strengths are its R&D department. It has R&D operations globally with the
largest non‐government research facility in the world located in Xian, China. In this location it focuses on
“…engineering, equipment demonstration, validation and training for both crystalline silicon and thin film
solar equipment and processes.”11 This R&D center also houses its SunFab panel reliability testing
laboratory.
AMAT also has global reach. It is able to source and leverage equipment, materials, and skills
from around the world. Furthermore, the operational locations where AMAT does it research and
production gives this company access to customers in the largest and fastest growing solar markets in
‐ 7 ‐
the world‐‐ Asia and Europe. As the U.S. solar market begins to mature, Applied Materials will be well
positioned to become a market leader.
Weaknesses AMAT’s greatest weakness is its low margins. In 2009 its margins were 28.5% which was down from
42.4% in 2008. Low margins, and specifically declining margins, indicate a company is having a difficult
time controlling costs and could affect the financial performance of the company.12
Strategic Analysis
Imagining Markets and Industries Identify the range of factors that the industry you have chosen competes on and invests in.
There are four factors that define competition and investments. The First factor is the technology itself.
Whether the platform is photovoltaic solar cells or concentrating solar power (use lenses or mirrors to
focus a large area of sunlight onto a small area) rapid innovation throughout out the industry is diffusing
investment sources. Investment is not only being directed towards the most viable technologies, but also
towards the most promising and daring technologies such as biologically engineered plants. A second
factor that drives the industry is cost—both in manufacturing and in purchase cost for customers. The
industry is still relatively new and as processes improve, prices will naturally decrease. Indeed, depending
on the source of information, prices have already declined 10‐50% in the last decade. For example,
iSuppli has claimed that crystalline module prices fell by 37.8% in 2009.13 A third factor to consider are
standards: being a relatively young industry, standards on installation and performance need to be
adopted.14 The final factor affecting the solar industry is a qualified workforce. This is a young industry
that has yet to adopt standards, and these factors make it hard to find qualified employees; as the
industry matures workers will have to do a lot of adjusting (in type of work, pay, working conditions, skill
set, etc.), which could be stressful for them and their organizations.
‐ 8 ‐
Which of the factors that the industry takes for granted should be eliminated?
Many organizations are chasing photovoltaic technology and this technology will most likely win out as
one of the leading technologies. Although panels are not as efficient, the expectation is that they will
become as efficient as PV technology. That being stated, the solar power industry needs to be cautious of
“putting all their eggs in one basket.” There needs to be on‐going effort to diversify investments and
efforts and continue research into other types of platforms. It would be dangerous for the industry to
remained focus on current technologies and paradigms and necessary for them to continue to challenge
the prevailing norms. An example may be the effort regarding genetically modified tobacco plants to
create biological solar cells to create a new technology that could have a future application. Although this
may seem like a wild idea, this type of “thinking outside the box” and building strategies that challenge
current paradigms could push the industry toward real success in competing and making in‐roads against
establish energy sources.
Which factors should be reduced well below the industry’s standard?
The biggest factor affecting the industry, currently, is cost, and this needs to be reduced in order for the
industry to take‐off. Organizations are improving production efficiencies and continually challenging
costs. Because of costs only large customers are able to take advantage of solar power (for the most
part), but when the price is low enough for individual households to afford the installation, the market
demand for solar power will dramatically increase.
Which factors should be raised well above the industry’s standard?
Installation and performance standards need to be widely adopted. Consumers currently do not
understand the difference between the technologies and performance levels available, and do not
understand the installation process required. Part of the reason is that solar installers have their own
practices, so from a consumer stand point it is hard to know the ‘right way’. Furthermore, it’s hard for a
consumer to know if it is more cost effective to install solar panels; until installation and performance
standards are improved it may still be too much of a risk to convert to solar power, especially given the
high cost.
‐ 9 ‐
Which factors should be created that the industry has never offered?
The concept behind solar energy is simple: Solar power is about creating electricity from a renewable
source. However, converting solar energy to electricity is not always feasible (at night for example), and
although technology breakthroughs are emerging for harnessing energy in low light situations, it is still
not readily available. Therefore, creating partnerships with other renewable energy companies, for
example, from the wind sector could prove beneficial for all involved. Creating a solution that could
harness energy from multiple sources could further the push for renewable energy, and lower the costs
while increasing efficiency.
Based on your analysis, characterize the new market space that you have identified. Do you think this is a viable space?
Creating partnerships with other renewable energy providers to combine two types of technologies to
increase efficiency and lower costs is a possible new market space. In theory this is an excellent market
space to investigate; but because the emerging and established renewable energy technologies are
currently competing for space in the renewable energy universe and improvements in efficiency have a
long way to go to be widely adopted, it is uncertain which technologies and platforms will be the future
standard (and which technologies will co‐exist). The renewable energy sector is currently disjointed and
this is a function of the large amount of investments in this industry that drive innovation and forward
progress. Every platform of renewable energy are competing to be a dominant player in the industry and,
therefore, it may be too soon to attempt to combine different sources at this stage; as the total
renewable energy field matures this could become a viable option— capitalize on the benefits of
different technologies.
Cleantech products and services Identify three potential playing fields for a specific cleantech product/service.
One potential playing field for Applied Materials is to venture into financing solar panel installation—for
both individuals and businesses. This is an expensive technology and access to finance could be a
deterrent for some potential customers. After some preliminary research, it does not appear that a lot of
‐ 10 ‐
organizations are bridging the gap and providing financing for solar power installation. There are more
than 3,000 organizations in the solar industry, but it is hard to find industry supported financing sources
at the same level. It could be a matter of marketing and building consumer awareness about financing
options.
A second potential playing field is the installation of solar panels and not just the technology that
makes the panel’s work. This may not be in the core competence of Applied Material, but this is an area
that could take the company to the next level. Furthermore, working directly with the end user would
allow Applied Material to better understand the needs of their customer base. This synergy could drive
more focused insight and this could lead to the next generation in solar panel technology. In addition,
Applied Materials would have a competitive advantage over other solar installers since Applied Material
has the capability to manufacturer its own panels.
A third potential playing field would be to study the market place and adapt the most promising
technologies available in the industry (if their crystallize Silicon and Flat Panel technologies are not
considered industry innovators after some internal soul searching). Applied Material could achieve leaps
in technology through the purchase of patents of next generation solar panel or the outright purchase of
companies that are industry innovator. For example, Applied Material could buy entrée into next gen
technology by investing in the research to use genetically altered tobacco plant to produce solar cells15.
Although these studies are being conducted by universities such as MIT, Applied Material could become
an investor in this type of research. Ultimately, this technology may not be the future that plays out in
the industry, but it is a great opportunity for Applied Materials to be the leader in this field. In addition,
this could help the organization reach a new audience, and potentially license its technological
breakthroughs. This could ultimately bring down the price of solar energy generation, and make it truly a
renewable source. While pursuing this playing field, Applied Materials should also concentrate on
improving the technology currently available.
‐ 11 ‐
What barriers are likely to appear (especially consumer related)?
Consumers are aware of solar panels and believe they can save them money in the long term. However,
financing is another issue. Some organizations such as Clean Power Finance are trying to bridge the gap,
but financing in this area is still relatively new.16Another barrier is the number of renewable energy
producers, for example, wind turbines compete for the same customer. The efficiency of the panels
themselves is another barrier, consumers need to invest a significant amount of money upfront and the
panels are only about 40% efficient.
If you were a firm that had key expertise in the cleantech product/service identified, what would your suggested sequence of entry be?
The first thing a firm should do is build market awareness. Many consumers do not understand the
benefits of solar technology over other renewable energy sources. Furthermore, they do not realize that
there are finance options available, so easing the access to financing could help grow the consumer base.
In addition, AMAT should make the solar equipment more affordable by limiting the margins and
generate more revenue through interest earned on loans made to consumers.
Crafting Strategies to Stay Ahead
Applied Materials originally entered the solar industry through its acquisition of Applied Films in 2006.17
Continuing to build its competencies in‐house will make Applied Materials stronger, but acquiring smaller
competitors when it makes sense to strengthen its market position should continue. It is also necessary
to develop a marketing space that serves to excite consumers (end user, businesses and organizations)
about the benefit and advantages of solar panels. If it does not enter the solar installation field, it would
be beneficial for Applied Materials to start collaborating with solar installation companies to strengthen
the solar panel industry. This industry is competing with other renewable sources and collaboration
amongst players in solar could benefit them all.
Gaining Value from Knowledge Assets
Applied Materials is gaining knowledge in the solar industry through acquisitions of organizations such as
Advent Solar, but it is also gaining knowledge through its own operations.18 The company has more than
‐ 12 ‐
7500 patents; this indicates that the business is driven by innovation. In addition to the patents, Applied
Materials has strong brand recognition for the quality and innovativeness of its product, which could be
an advantage as the solar industry progresses forward.
Recommendations
Recommendation 1: Short Term Objectives Based on the current environment, company strengths and weaknesses, and potentials playing
fields for the solar sector, AMAT has a lot of opportunities for future success. From a short term stand
point there are a number of activities that AMAT should enter in the next three to five; the revenues
generated from the short term strategic efforts could finance long term objectives. As mentioned there
are more than 3,000 organizations fighting for space within the solar sector which is likely (and already
has) created a lot of confusion for customers in terms of standards. Furthermore, it would seem that
with so many players in the industry that there would be a better developed financing mechanism to
aide consumers with converting to solar. Unfortunately, the availability of financing options is scatter‐
shot at best and if there are viable financing mechanisms, the solar industry is not doing a good job at
informing the consumer of these options. This is important because it creates an opportunity for Applied
Materials to step outside its current playing field of nano‐manufacturing, R&D, and Solar Panel
Manufacturing to growing market share through a robust effort to develop a financing service to drive
consumers to purchasing solar panel and other solar technology from AMAT. In Addition, AMAT needs
to leverage their current effort at manufacturing solar panels to improve the technology and focus on
efficiency and cost per panel (at the moment, AMAT’s cost per panel is $1.70/watt versus $1.50/watt for
SunSolar and $1.80/watt for leading Chinese manufacturers). By driving down costs through by
improving their manufacturing processes (and given that AMAT produces their own manufacturing
technology they have a competitive advantage) AMAT can further make inroads in acquiring a bigger
piece of the solar panel pie.
‐ 13 ‐
Applied Materials has also been successful at acquiring technology and technological “know‐
how” through the acquisition of competitors. This is the avenue AMAT took in 2006 to enter the solar
industry. Through acquisition of patents and companies, by providing financing for solar panels and by
improving their current solar panel technology in terms of efficiency and cost AMAT, in the short term,
would drive their growth in the solar panel business.
Recommendation 2: Long Term Objectives Blue Ocean Strategies
The solar technology in which AMAT is involved such as solar panel and thin‐film is being
seamlessly integrated in the construction of buildings and the manufacturing of cars that may be
surprising to the average consumer. An individual may be walking into a building with a clear glass roof
and may never know that rooftop is generating electricity, the neighbors Latin styled shingles may
actually be solar panels or a stadium in Japan may be using solar panels to generating electricity that is
capable of powering an entire neighborhood.
However, the industry is currently saturated with solar companies and all are developing
competing technologies that will most likely result in a challenging environment to implement standards
in installation, production, efficiency and compatibility—an industry shake‐out will be necessary. Because
of the fast pace in the industry and the rapidly technological transformations, Applied Materials needs to
adopt a ‘Blue Ocean’ strategy and must look beyond existing possibilities and envision the future of the
industry five years, ten years, and twenty years into the future and explore the potential synergies that
may evolve between cleantech such as solar and the construction & auto industries as an example. In
order to this, AMAT needs to develop mutually beneficial partnerships with companies and other
stakeholders who have expertise in areas outside their core competencies and leverage these
partnership and their R&D expertise to develop prototypes and concepts on how solar power technology
can be effectively and seamlessly integrated into buildings and vehicles. The Chevy Volt is a good of a
platform that could serve as a starting point for this type of integrative research.
‐ 14 ‐
‐ 15 ‐
Auto Industry The Chevy Volts MPV5 lithium battery technology has a current range of thirty‐two miles on
average. On a full charge, the Chevy Volt Sedan can reach a range of forty miles without consuming any
gasoline. Forty miles is not a great enough range to meet the commuting needs of 75% of daily
commuters in the U.S. When the Volt switches to its small four‐cylinder gas powered engine which also
helps generate electricity to recharge the battery, the range of the Volt extends to over three‐hundred
miles on a single tank of gas. 19 In addition, there are other all electric vehicles that are capable of
reaching ranges of one‐hundred miles with no gas; such as the Nissan Leaf which is gas optional and
Telsa Motors which claim a range of two‐hundred‐thirty‐six‐miles with no gas. Another new development
is RORMaxx automotive, a vehicle that uses solar power to start the car, and then uses technology based
on airline jet engines to recapture twenty to twenty five percent of the expended energy via wind energy
for immediate use. These vehicle technologies have experienced rapid improvements in the past five
years because of the increasing demand from the public for a viable alternative to the traditional gas‐
combustor engine.20
Applied Materials should seek partnerships with companies in the auto industry to combine
technologies such as clear glass solar panels, infrared solar panels (produces electricity even in bad
weather or at night) and spray on solar panels. Although these technologies are in their infancy, AMAT
should form joint ventures with auto‐companies; with split level control (Each company with the
expertise controls the unit with the correlating technology with joint control on the corporate strategy
level). With the combining of these technologies, we could see vehicles capable of going well beyond
current ranges without the aid of gasoline. It is also within the realm of possibility to develop vehicles
using integrated technologies that would one day be one‐hundred percent energy independent.
Applied Materials should seek to partner or purchase with other smaller companies that have an
edge in these emerging technologies together with pursing partnerships with auto‐companies.
Political, Social and Competitive Implications: Having the support of the auto industry (a major stakeholder) will also have a positive effect politically, as
those in the auto industry who may have lobbied in favor of the oil industry will now throw their efforts
‐ 16 ‐
and clout behind the solar industry. AMAT will be practicing Judy strategy by applying the puppy dog
technique and not attracting attention of competitors. After AMAT has a firmer footing, it can redefine
the competitive space by packaging its solar technology with automotive technology. Additionally, with
legislation and funding in favor of both solar energy and clean electric vehicles combined, there would be
a synergy of resources that would spur technological advancement. As consumers become aware of the
advancement and accessibility in technologies this would cause a virtuous cycle in economic and political
trends.
Construction Industry Applied Materials should work with the construction industry to have clear solar panels installed in newly
constructed homes and commercial properties. Additionally, they should contract with developers to
construct buildings with natural looking roof top solar panels. Even though clear solar panels are not yet
as effective as regular solar panels, they have aesthetic value and are currently being used in many
structures.
Applied Materials should work with developers as long as it can break even. With the advantage
of being a first mover and building a relationship with developers, Applied Materials could position itself
as the standard bearer for the industry and the concomitant technology. If AMAT can set the rules for the
industry, it can potentially block new entrants. Working with developers has an advantage of working
directly with consumers because it eases the financing dilemma and allows Applied Materials to reach a
larger market than going to consumer to consumer.
While Applied Materials should continue to construct turnkey solar panel farms for utility
companies, the trends indicate that one day; people will indeed be living and working in buildings that
seamlessly serve as power plants.
Political, Social and Competitive Implications: As social awareness and accessibility increases, so will political pressure and support. Some areas of
concern are the possible health effects of having an individual surrounded by so much solar energy and
equipment. Some people may be electromagnetic hypersensitivity and may experience symptoms such
‐ 17 ‐
as headaches or agitation. More research is needed to study these possibilities. Additionally, by
entering into exclusive agreements with developers, AMAT can apply the Judo strategy of ‘gripping its
opponents’ and create barriers to entry for competitors such as DuPont and block potential smaller
companies from entering the industry.
Appendix A
Table 1 Stakeholder, Trends and Uncertainty Relationships
‐ 18 ‐
S1
S2
S3
S4
S5
S6
S7
S8
S9
S10
S11
T1
T2
T3
T4
T5
T6
U1
U2
U3
U4
U5g y g q y g g g g
both compatible and competing technologies.
STA
KEH
OLD
ERS
TREN
DS
gy gy peffort at investing in coal tech and nuclear power? Will oil and utility companies embrace and support innovation in alternative energy or move to destabilize innovation g g gy g gfuture president be pro‐clean energy?
stringer climate control laws?
Developing Countries' Growth Will developing countries continue to grow at their current rate and need to satiate their hunger for fuel as currently forecast?
Investment: As stated above, investment is growing and additional competition is pushing technology advancement. gy g y g p y p g prenewable.p g p g p g gy g pthese markets will be the fastest growing areas in alternative energy investment in research and development.
Climate Change: With the planet temperature continuing to rise, the need for solar technology increases.
Efficient Technology: The Cost to power output for solar power is reducing at an accelerated rate and is almost reaching cost parity with conventional energy sources. By2018 it is expected that the cost will be as low as $3 per peak watt or less. By 2015, it is expected that capital cost for fuel, coal and natural gas and nuclear will rise as thecost for alternative sources decline and a “cross‐over” point will be reached.
Solar power will evolve to become a plug and play technology with cheap and easily installation that will make it popular with the average consumer.
p y p p p gywind, solar, thermal and bio‐fuels.
Environmental Groups: Environmental groups will continue to have positive grassroots effect on the solar industry. y g y g g p ypushing technological boundaries; making solar technology more feasible.
p p y p peffect through legislation, funding and tax credits. y p pstate wide initiatives. Yet, local and state governments lack the power to regulate national industries such as the oil industry. gy p y p g p g p g gy pnegative effect on the oil industry. gy p gy p p y p p penergy and resources will be divided between wind, solar, thermal and bio‐fuels. y p p y g y y ppanels and the possibility of cars being energy independent the auto industry will have a positive effect on the solar industry.
positive influence on the solar industry.
solar industry.
Shareholders/Investors: Investment in solar power in the U.S. is expected to reach $450 billion to $650 billion between now and 2025. (Needs Source)
Appendix B
Table 2 Scenario Matrix
S1 S2 S3 S4 S5 S6 S7 S8 S9 S10 S11 T1 T2 T3 T4 T5 U1 U2 U3 U4 U5
S1 Federal Government + + + + + + + + + + + + + + + + + + + +
S2 Local & State Government ? ? + ? + ? ? ? ? ? ? ? ? ? ? + + + ? ?
S3 Energy Companies Oil ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
S4 Energy Companies Alterative + + + + + + + + + + + + + + + + + + + + +
S5 Auto Industry + + + + + + + + + + + + + + + + + + + + +
S6 Utility Companies + + + + + + + + + + + + + + + + + + + + +
S7 Consumers + + + + + + + + + + + + + + + + + + + + +
S8 Shareholders/Investors + + + + + + + + + + + + + + + + + + + + +
S9 Farmers ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
S10 Enviromental Groups + + + + + + + + + + + + + + + + + + + + +
S11 Scientists + + + + + + + + + + + + + + + + + + + + +
T1 Climate Change + + + + + + + + + + + + + + + + + + + + +
T2 Efficient Technology + + + + + + + + + + + + + + + + + + + + +
T3 Investment + + + + + + + + + + + + + + + + + + + + +
T4 Clean Energy President + + + + + + + + + + + + + + + + + + + + +
T5 Developing Countries Growth: + + + + + + + + + + + + + + + + + + + + +
U1 Oil Prices ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
U2 Federal & State Legislation ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
U3 Federal & State Funding ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
U4 Developing Countries' Growth ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
U5 Technological Advancement ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
Stakeh
olde
rsTren
dsUncertainities
‐ 19 ‐
‐ 20 ‐
BIBLIOGRAPHY
Aditi Justa. 10 March 2010. “World's largest solar powered creations” Retrieved from http://www.worldsbiggests.com/2010/03/world‐largest‐solar‐powered‐creations.html/
“Applied Material Acquires all of Advent Solar’s Assets”. 09 November 2009. Retrieved from http://www.newenergyworldnetwork.com/renewable‐energy‐news/by_technology/solar‐by_technology‐new‐news/applied‐materials‐acquires‐all‐of‐advent‐solar%E2%80%99s‐assets.html
“Applied Materials, Inc. ‐ Mergers & Acquisitions (M&A), Partnerships & Alliances and Investment Report”. March 2009. Retrieved from www.datamonitor.com
"Chevrolet Volt ‐ GM's Concept Electric Vehicle ‐ Could Nearly Eliminate Trips To The Gas Station". 08 January 2008. Retrieved from www.gm.com
Bland, Eric. 25 January 2010. “Tobacco Plants Tapped to Grow Solar Cells”. Retrieved from http://news.discovery.com/tech/tobacco‐plants‐solar‐cells.html
Clayton, Jeffryes, Timothy Guto, Jun Jiao, and Gregory Rorrer. 7 May 2010. "Metabolic Insertion of Nanostructured TiO2 into the Patterned Biosilica of the Diatom Pinnularia sp. by a Two‐Stage Bioreactor Cultivation Process." Retrieved from http://pubs.acs.org/doi/abs/10.1021/nn800470x?cookieSet=1&journalCode=ancac3
“Enabling Renewable Energy Today”. (n.d) Retrieved from http://www.cleanpowerfinance.com/
“Environmental Scan, Solar Industry, SF Bay & Greater Bay Area Region”. April 2008. Retrieved from http://www.coeccc.net/Environmental_Scans/Solar_Scan_SF‐SV_08.pdf/
Fast Solar Energy Facts. July 2009. Retrieved from http://www.solarbuzz.com/FastFactsIndustry.htm
Feed‐In Tariffs. May 4, 2010. Retrieved from http://en.wikipedia.org/wiki/Feed‐in_TariffKricenki, Ali. 27 Apr 2010. "SOLARA: CA’s First Solar‐powered Apartment Community." Retrieved from
http://www.inhabitat.com/2007/12/05/solara‐californias‐first‐solar‐powered‐apartment‐community/
Form 10‐K, Applied Material Inc. December 2009. Retrieved from http://www.corporate‐ir.net/seccapsule/seccapsule.asp?m=f&c=112059&fid=6634471&dc=
“Industrial Nanotech Enters Asian Solar Market”.04 November 2009. http://www.solarfeeds.com/energy‐boom/9637‐industrial‐nanotech‐enters‐asian‐solar‐market.html/
Lance, Jennifer. (n.d.) “Engineered Virus Cause Tobacco Plant to Grow Solar Cells”. Retrieved from http://greenlivingideas.com/topics/alternative‐energy/engineered‐virus‐tobacco‐plants‐grow‐solar‐ cells
Madway, Gabriel. 12 May 2009. “Applied Material Posts Loss as Revenue Tumbles”. Retrieved from http://www.reuters.com/article/idUSTRE54B6QA20090512
‐ 21 ‐
"Nissan Leaf Electric Car." 27 April 2010. Retrieved from http://www.nissanusa.com/leaf‐electric‐car/index#/leaf‐electric‐car/specs‐features/index/
Renewable Portfolio Standard Facts Sheets. April 2009. Retrieved from http://www.epa.gov/chp/state‐policy/renewable_fs.html
“Solar Industry Face Steep Price Drop”. 15 March 2010. Retrieved from http://imaginesolar.com/?p=1380
Solar Energy Industries Association. (n.d.) Retrieved from http://www.seia.org/cs/state_fact_sheets
“Telsa Roadster, Uncompromised Design, Performance and Technology”. 27 Apr 2010. Retrieved from http://www.teslamotors.com/
‐ 22 ‐
END NOTES
1 http://www.appliedmaterials.com/about/index.html 2 http://www.appliedmaterials.com/ 3 http://www.epa.gov/chp/state‐policy/renewable_fs.html 4 http://www.solarbuzz.com/FastFactsIndustry.htm 5 http://www.seia.org/cs/state_fact_sheets 6 http://greenlivingideas.com/topics/alternative‐energy/engineered‐virus‐tobacco‐plants‐grow‐solar‐cells 7 http://www.solarfeeds.com/energy‐boom/9637‐industrial‐nanotech‐enters‐asian‐solar‐market.html 8 http://www.appliedmaterials.com/about/assets/corp_overview.pdf 9 http://www.reuters.com/article/idUSTRE54B6QA20090512 10 http://www.appliedmaterials.com/about/assets/corp_overview.pdf 11 http://www.appliedmaterials.com/products/solar_capabilities_3.html?menuID=9_5_1 12 www.datamonitor.com 13 http://imaginesolar.com/?p=1380 14 http://www.coeccc.net/Environmental_Scans/Solar_Scan_SF‐SV_08.pdf 15 http://news.discovery.com/tech/tobacco‐plants‐solar‐cells.html 16 http://www.cleanpowerfinance.com/ 17 http://www.businesswire.com/portal/site/appliedmaterials/index.jsp?epi‐content=GENERIC&newsId=20060707005423&ndmHsc=v2*A1167656400000*B1178676791000*C4102491599000*DgroupByDate*J2*N1002992&newsLang=en&beanID=547561197&viewID=news_view 18 http://www.newenergyworldnetwork.com/renewable‐energy‐news/by_technology/solar‐by_technology‐new‐news/applied‐materials‐acquires‐all‐of‐advent‐solar%E2%80%99s‐assets.html 19 General Motors (2007‐01‐07). "Chevrolet Volt ‐ GM's Concept Electric Vehicle ‐ Could Nearly Eliminate Trips To The Gas Station". Press release. Retrieved 2007‐01‐08. 20 Nissan, USA. "Nisan Leaf Electric Car." Nissan (2010): n. pag. Web. 27 Apr 2010. <http://www.nissanusa.com/leaf‐electric‐car/index#/leaf‐electric‐car/specs‐features/index>. Telsa Motors “Telsa Roaderste, Uncompromised Design, Performance and Technology”. Telsa 2010 27 Apr 2010 <http://www.teslamotors.com/>