In order for firms to thrive through the economic weak spots, which are integrated into the global economy, they need to understand the way they can develop organizational capabilities (Grant, 1996: 385). Market orientation and strategic flexibility play a big role in building organizational capabilities. Demand and technological uncertainty, which are enhanced by competitive intensity, moderate a firm’s performance. Inventions and innovation of new technologies has been linked to the market. More of the products will be needed by the consumers, leading to increase in market size (Grewal & Tansuhaj, 2001: 75).
Three sources of opportunity used in the 1366 technology ecosystem included; refining the business model, technology and team, and market approach (Grewal & Tansuhaj, 2001: 74). The solar market continued to grow a strong interest from the venture community. In addition, 1366 developed its manufacturing facility based on the projections of the set targets. Mierlo was able to solicit many venture firms, which responded positively. There was need to develop a new market, that was independent of raising large amounts of money (Grant, 1996: 379).
The second source of opportunity in the 1366 Technologies is the technology and team. By mid 2009, 1366 had many technologies, which were in different stages of development (Grant, 1996: 381). The firm had developed and licensed its grooved ribbon bus-bar technology, and they were refining new machines for use as 3MW systems of production. Sachs expected his team to have both texturing and dispensing machines, which were to be ready by the end of 2011 for customer delivery (Grant, 1996: 384).
Sachs has shown the benefits brought by 1366 manufacturing innovations in the PV sector, enabled through manufacturing (Grant, 1996: 387). The approach and contribution was to develop new manufacturing processes and equipment. Inventions of materials typically took longer than inventions of the manufacturing process. 1366 has already known the great deal of silicon, which includes its longevity and reliability. Therefore, the fastest way 1366 is developing PV market is by producing manufacturing innovations for silicon cells (Ulrich & Lake, 1991: 85).
The third source of opportunity in the 1366 technologies was market approach opportunities. Sachs could meet targets ahead of schedule, under cost, and above the set targets. Mierlo explored partnership opportunities by visiting American, Asian, and the Europe manufacturers (Ulrich & Lake 1991: 82).
Evidently, 1366 experienced competition from the in-house group by telling the management to consider cost reduction, whilst maintaining proprietary. This makes the 1366 firm to lose the order (Grant, 1996: 383). However, the firm believes that they can still get orders placed with a few Asian manufacturers, because they do not have entrenched in house groups. The Asian also want to insure access to the U.S. market. 1366 have machines which could give the right Asian an incredible edge in driving down dollars per watt, and they might help them into entering U.S. market strategies (Ulrich & Lake, 1991: 92).
The 1366 considers two options that can be taken to build organisational capability. There were several roots to become an equipment manufacturer. Go-it-alone was the first approach (Ulrich & Lake, 1991: 89). They would finance and develop its machines, and sell them as a package or individually to large cell manufacturers. 1366 could also sell through providers of turnkey cell manufacturing lines; firms install some 10% of equipment sold annually (Grant, 1996: 381). The firm requires 5 million of technical developments, including proving machine and reliability (Grant, 1996: 382). Wafers are received from customers and processed during periods of technology evolution. The firm’s engineers visit the customers to discuss how the machines can be integrated with the customers’ pre-existing production systems.
To become an equipment supplier, one had to seek a strategic partner to share the development cost with, and also gain operating experience (Grant, 1996: 379). Some cell makers are process-inventive but not innovative. Their expertise is in getting costs out of the manufacturing process. Sharing development costs would open other opportunities for leveraging the firm’s engineering capacity. Another possibility was working with a turnkey equipment supplier, which provides entire cell production (Grant, 1996: 377).
However, strategic partnership had some risks. It could result in the company being sold to the in-house groups and ensuing partnership arrangement (Ulrich & Lake, 1991: 77). Losing of the partnership could result in loss of control over its IP, hence becoming a powerless supplier of design to plan. It could also result in 1366 losing touch with the market, just as the forces of process standardization were coming together. If 1366 could become a solar cell manufacturer, its partner would become its competitor. These two possibilities could result in degradation of partnership over time, as well as equipment sale relationship (Grewal & Tansuhaj, 2001: 78).
Becoming a solar cell manufacturer would require $75 million to develop a demo facility with 50 MW production capacities. Capital requirements would increase steadily, as production capacity increased (Grewal & Tansuhaj, 2001: 68). By choosing cell manufacturing option, the company was faced with several problems. Selection of plant location was a problem. Several Asian companies had low wages, low power costs, and a plentiful supply of skilled engineers. Many companies had lost their intellectual property advantage to unscrupulous local partners and individual companies. The government permitted limited remedies. It is evident that locating in US would enable the company to protect its IP and closely monitor the plant construction, as well as its training. However it was not the best due to high environmental compliance and labour costs, making it difficult to compete with Asian countries (Grant, 1996: 380). Another challenge of this option was that the addition of one megawatt required an addition of two or three staff.
References
Grant, R. M 1996, “Prospering in dynamically-competitive environments: Organizational capability as knowledge integration”, Organization science, vol. 7 no. 4, pp. 375-387.
Grewal, R & Tansuhaj, P 2001, “Building organizational capabilities for managing economic crisis: The role of market orientation and strategic flexibility”, The Journal of Marketing, vol. 3 no. 2, pp. 67-80.
Ulrich, D & Lake, D 1991, “Organizational capability: Creating competitive advantage”, The Executive, vol. 4 no. 1, pp. 77-92.