Purpose
Now that you read the case study and played the game (I suppose), it is time to addess the questions related to pricing and strategy. Don’t forget to use the concepts that you learned in this class in addressing these questions!
Instructions
1. Reread the case study (http://forio.com/simulation/mit-sloan-solar/downloads/SunPower-Henderson.pdf) and make sure you understand the dynamics of the situation our company finds itself in.
2. Play the simulation game (http://forio.com/simulation/mit-sloan-solar/index.htm) and make sure you have a good grasp of the cause and effect environment our company operates in.
3. Submit your 15-page-long final project paper addressing the pricing and other managerial strategies available to the firm. Below you can find a list of questions that you can address in your final paper.
Some of the questions that you can address in the final paper:
Describe the SunPower companys main business and the specifics of the industry it operates in. What is the competitive structure of the industry the company operates in?
What are the shapes of the demand and supply curves SunPower is facing? Is the demand elastic? How do you compare marginal cost and average cost of producing the modules?
Is SunPower company profitable? Would inspecting the income statement provide a reasonable answer?
Discuss the cost and product curves of the company.
In Exhibit 8 the drivers of cost savings are listed. Explain three of these drivers and their impact on the cost of the firm is facing.
Is the SunPower company a price setter or is it a price taker? What is the pricing strategy you would recommend for the firm?
Discuss the impact of the macroeconomic environment on the business model and profitability of SunPower.
Discuss the last paragraph of the case study text: The key was choosing and formulating the right strategy. Should, for example, SunPowers strategy focus on the pricing of modules? Or should it focus more on investing in process improvements? Or should the strategy be some combination of the two? If so, what was the right formula based on the multitude of variables that solar cell producers like SunPower faced?
