PV Technologies Inc Were They Asleep At The Switch? Case Solution

1. Describe the decision to be made, in terms of the key elements and / or alternatives. This should be written as a statement, not a question.

The decision that needs to be made, in this case, is regarding the four options that the company is facing with respect to the Solenergy evaluation report and the response it needs to make for the RFP. This decision has four elements of the decision facing the company. These include offering to extend the original warranty at internal cost from 10 to 20 years. The second option offers a 99% uptime guarantee at no cost. The third one is related to introducing a new product that has higher capacity at 1.25MW and 98.5% efficiency. The last decision involves initiating a dialogue with Morgan to confirm the reported findings of the evaluation. This decision is critical to the company because without it the company cannot decide on a specific course of action. The choice of decision is on the management but they must take them in accordance with the pros and cons of each; otherwise, they can go wrong very easily. In comparison, by taking a careful approach the company can reduce chances of making an incorrect decision. Besides considering these four options, the company should also attempt to examine the root causes behind the report generated by Morgan. With this information, the company can introduce new improvements that deal with these issues in an effective manner.

2. Describe the relevant facts and issues. e.g. major areas of consideration with key facts relevant to the decision to be made. 

The key facts related to this discussion include studying the profile of both the companies involved with an emphasis on the evaluation report. PVT Technologies was a firm that presented solutions to companies for renewable energy programs. The company had a long and credible history with a presence in more than 25 countries. The company had five main products that were considered industry leaders. Product groups included Industrial Automation, Process Management, Network Power, Drive Technology and Climate Technologies. The company obtained revenue growth and higher market share due to its R&D and reputation for product reliability and efficiency. The company made most of the sales by using salespeople who negotiated with other companies regarding purchases.

One of the largest customers of PVT’s solar energy business was Solenergy. The company had recently been awarded a contract to setup new power plant by the government and for this purpose they had contacted PVT to buy one of their products after going through RFPs of different companies. Being the industry leader, Solenergy was also in the habit of evaluating the different competitors. For this purpose, an evaluation report was prepared each on a periodic basis. This report was made by Greg Morgan, who was a highly respected engineer at Solenergy. His opinions were considered highly influential in the entire industry. According to this report, the cost of PVT’s products was coming at a much higher level in comparison to the competitors.

Another problem with this process was that Solenergy usually accepted the projects based on the evaluations conducted by Morgan. Therefore, the management at PVT was worried as they did not have the full details of the evaluation report but they were aware that the results showed PVT in a negative light. This was a serious issue because if the company was not able to get the new project, their reputation in the market might get affected. In addition, once the report of Greg Morgan becomes available to the public by an official press release other players in the industry will learn about the weakness of PVT, and try to further take away future projects from the company. After this happened, the management at PVT was feeling agitated and surprised at the possibility of their product getting poor evaluations even though in general their products are considered of the highest quality. This then led to the consideration of four different options that could work in this scenario. Each of these options was presented so that the possible negative effects of this evaluation report could be removed by successfully utilizing one of these options. 

3. Evaluate the four alternatives: what are the pros and cons of the four alternatives offered.

Option 1: Offering to extend the original warranty at internal cost from 10 to 20 years

In the first alternative, PVT simply has to extend the product warranty to 20 years. This option was good because the company simply needed to perform warranty services for an extended amount of time without any other extra effort. The competitors offered only 5 year warranty schemes so this option would also set the company apart. The sales and marketing team believed that this option would also negate the effects of Morgan’s evaluation report as the high acquisition cost would be offset by the advantages in the later years. The good thing about this option was that the current profitability of the firm would not be affected if it followed with this alternative. The additional cost of warranty expenditure for years 11 to 20 would be offset by the additional income received from the premiums. The amount of effort needed to execute this option is also little. Another thing that will work in favor of the company is that by offering a 20 year warranty period the company can differentiate its product from others. There are also certain disadvantages in selecting this alternative. The first disadvantage is that even with an extended period of warranty the product is still the same and acquisition costs that are considered most important in purchase cycle would still be high. In addition, some equipment might become obsolete in 20 years so companies might not see any benefit in having an extended period of warranty when they have to replace the older equipment by that time. The long term advantages of this option appear to be less attractive. Thus, this option should only be considered after looking at the several points discussed here as there is no need to take a wrong decision.