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PV Technologies, Inc. Were They Asleep at the Switch Case Solution
There are several things that we know about the situation. The first thing that is quite clear is that the company PV Technologies is highly concerned about the response of RFP to Solenergy. It knows that the report of the evaluation conducted by Morgan will influence the purchase decision of Solenergy to a large extent. However, the complete details of the evaluation are not clear. As far as PVT is concerned, they only know that the evaluations confirm their products are more expensive than the competitors. A decision made on this sole knowledge might not be in the best interests of the company.
Following questions are answered in this case study solution
What do we really know (versus assume) about this situation?
In the context of PV Technologies business, how important is this issue?
What impacts does each of the four alternatives have on the profitability of the firm?
What other product management considerations regarding the planning of a new product or service or managing of an existing product or service does each of the alternatives involve? Include considerations both pro and con.
What are the concerns of PVT’s production team regarding new products, particularly the accelerated introduction of the new central inverter and the marketing initiative? Include R&D, Finance, Engineering, PR, Sales and Customer Service.
What should PVT do in Q1 2012 in terms of the current RFP and the introduction of the new inverter?
What lessons can you draw about the evolution and impending changes in technology, pricing, and buying criteria in this business?
Case Analysis for PV Technologies, Inc. Were They Asleep at the Switch
2. In the context of PV Technologies business, how important is this issue?
In the context of PV Technologies business, the situation is quite critical. There are several reasons that support this view. The first thing that explains the significance of this issue is the position of Solenergy within the market. The company was considered as one of the major developers of energy generation systems. Losing a contract to them would result in a certain amount of bad publicity for PVT. Another point to consider is that the evaluations conducted by Greg Morgan are considered highly influential throughout the industry. Since Solenergy is also in the habit of publishing his comments and his analytical opinion regarding companies like PVT in its press releases, there is a chance that others will become aware of the weakness of PVT as well. This will not only put a negative light on the image of PVT but it will also showcase to the competitors of PVT that the company is losing its market leadership position in the industry. In addition, future contracts, coming from the different energy generation companies, might be given to the competitors of PVT if they base their decision on the opinions of Greg Morgan. Thus, it is easy to identify that this situation is quite important and must be handled in a sensitive manner by PVT.
3. What impacts does each of the four alternatives have on the profitability of the firm?
The fourth alternative will not have any immediate impact on the profitability of the firm as it only involves initiating a dialogue process with Morgan. The dialogue process might confirm the assumption of PVT regarding the evaluation or they might be rejected but it will not affect the profitability itself.
Exhibit 4 explains the impact of each of the remaining three alternatives on the profitability of PVT. The gross profit figure for Alternative 1 is the same as the current structure of operations because the additional revenue from warranty premiums received in the years 11 to 20 will be offset by the warranty expense. So Alternative 1 will not impact the profitability of the business. However, the reduction in gross profit will be significant if the company opts for Alternative 2. The high amount of Guaranty expense needed in the second alternative will impact the business profitability by a significant margin. The third alternative will introduce a new product that has a different revenue and cost stream. It will also lower the profitability of the business but not by a very significant margin as the one that happened in Alternative 2.
4. What other product management considerations regarding the planning of a new product or service or managing of an existing product or service does each of the alternatives involve? Include considerations both pro and con.
Cost and time considerations are of primary concern. In cost terms, alternative 1 will result in the same profit stream as the current product offering whereas the second alternative will be most costly. However, if time is considered then the new product alternative becomes questionable as introducing a new product requires sufficient time for research and testing. Moreover, the practicality of the projects should also be considered.
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