1366 Technologies Case Solution

2. The Options

The business currently operates as a supplier of production technology and equipment to solar cell manufacturers. This was an operational detour taken by the management since it was unable to find the financing required to establish a solar cell manufacturing plant. As a supplier, the company requires less funding to get the business going; however, there are a few issues that are a major hurdle in the business’ success. The foremost issue is the lack of control of 1366 over its intellectual property. The key edge that the company has, over others in the market, is the technological efficiency of the processes that it employs. Coupled with the fact that almost every solar cell manufacturer has similar research and development teams make the intellectual property a central piece of the business’ profitability. The problem is the attitude of the customers towards the company’s sales pitch. For various reasons, ranging from indifference to the inability to incorporate the technology, the engineering teams are reluctant to adopt the 1366’s machines into their production processes.

Even the positive responses are not appreciating the delicacy of the intellectual property, and make demands that can allow them to copy the technology without buying it. With very few confirmed orders, the business is facing a very uncertain future.

Another issue is the sheer level of customization required. Even though the industry is moving towards standardization, there is still significant customization required, which makes the engineering much more difficult and costs much higher. Standardization also has its problems. If the industry standardizes, the technology employed by all will be the same, making protection of intellectual property even more difficult.

Now that the economy is recovering, and capital is once again available, the management can once again look into its initial vision of becoming a solar cell manufacturer. The solar cell manufacturing is not only more profitable than the equipment supplier business but also caters to many of the problems faced by the latter. When manufacturing its own solar cells, the company will no longer have to worry about loss of intellectual property, or catering to different customized production processes. The company’s market edge, its process engineering and designs, will be for the company to use for itself.

There are some problems in this option, as well. Other than the high capital requirements, the company will have significant trouble setting up an efficiently running manufacturing plant. If the company locates it in the United States, the production costs will be too high, but if the company takes it to Asia, it will unable to, effectively, monitor its activity from that distance.