Individual Reflection Paper

Entry and Progressive Sustenance

of Suzlon into the Canadian Market

- Rahul Saraswat
MSEP 16 CM 31
Group 9
Division B
 Table of Contents
Chapter No. Chapter Name Page No.

I Introduction and Objective Setting 2

II Company Profile - Suzlon 2

- The International View - Suzlon 2

III Understanding of Canada 3

IV PESTEL Analysis of Canada (2012-2015) 3

- Political Analysis 3

- Economic Analysis 3

- Social Analysis 4

- Technological Analysis 4

- Environmental Analysis 4

- Legal Analysis 4

V Electricity Market in Canada 4

VI Highlights of the Wind Energy Industry in Canada 5

VII Customer Mapping 5

VIII Competition Landscape 5

IX Business Model 6

X Conclusion 6

XI Appendix 8

XII Bibliography 11

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 I. Introduction and Objective Setting
This paper aims at answering the following question

1. Upon entry in Canada, What should be the strategy of Suzlon of sustaining and expanding
its market share?

Suzlon - a leading energy solutions provider for renewable and sustainable forms of energy, enters
into the Canadian market with a comprehensive understanding of the market scenario and what steps
it should undertake to ensure success towards attaining a stable and viable market share in the
Northern market.

We shall undertake a PESTLE analysis of the market scenario for Canada and a Five Force analysis of
the Electricity Market (Appendix 6) and the Renewable Energy Market to ascertain the key variables
involved in determining the potential success of Suzlons entry into the aforementioned foray of
industrial operations.

Canada in its truest sense is a natural economic and strategic ally of the United States of America with
whom it shares the world longest international border. With a sluggish growth in population, and open
immigration laws, the Canadian hierarchy faces stiff demands to meet with the expectations in quality
improvements of government aided services like healthcare, education and social services, of its
citizens. Canada has for long maintained its allegiance to the green energy movement and aims at
expanding its renewable sources to ensure minimal carbon emissions and environmental damage, by
diversifying its already multifold energy production scale. (CIA World Fact book, 2016)

With a majority of the urbanized population (81 %), the Canadian administration has been extremely
successful at ensuring a 100 % electrification coverage with almost all citizens having access to on-
demand electricity. With a production capacity of 616.2 billion kWh (2014 est.), Canada consumes its
majority share of almost 511 billion kWh (2014 Est). It exports upwards of 58.4 billion kWh (2014 est.)
to ROW which makes it the fifth largest exporter of energy in the world.

Canada contributes to 3% of the worlds renewable energy production with the majority stake coming
from hydro power (70.7%) and bio mass (24.0%). Wind and Solar power contribute to a total of 4% of
its renewable energy consumption. Suzlon aims to capitalize on the aforementioned market share
and on the positive policy approach of the government organisations towards clean energy
production.

II. Company Profile - Suzlon

Established in the mid 1990s and headquartered in Pune, India, Suzlon Energy now operates in
upwards of 19 countries across 6 continents. It has pioneered the Concept to Commissioning model
for end to end solutions across the spectrum of the service lifecycle.

The International View - Suzlon

Being one of the primary renewable energy solution providers in the world, it has installed upwards
of 15.5 GW of wind energy capacity globally. It has a diverse workforce of above 8,000 personnel from
various nationalities with in-house R&D facilities in Germany, Netherlands and Denmark. It has 15
manufacturing facilities worldwide in the countries of operations. The global outlook of Suzlon is

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critical to the organisation as it fortifies its identity in the ever changing technologically driven energy
market whilst also strengthening its value chain. With a global experience, local expertise, 15% of
its sales come from the North American Region (USA and Canada), 8% from its operations in Europe,
4% from its work in the Asia Pacific Region and the rest from the Indian Subcontinent (India, Maldives
and Sri Lanka). Thus with a major stake from global revenues, Suzlon truly is positioned to play an
active part in the global renewable energy sector (Appendix 2). With a revenue of upwards of $ 21
Billion, Suzlon was perfectly positioned to encroach into the mature markets of renewable energy
with Canada being the top of the priority chart. (Suzlon Annual Report 2015, 2014, 2012)

III. Understanding of Canada

Canada with a large area is one of the 8 most developed nations in the world and has a population of
35.36 M (2016 est). With a GDP of nearly $ 1.6 trillion, Canada is one of the most industrial societies,
emulating a capitalistic market driven economic approach as pioneered by the US. Given its abundant
natural resources, skilled labour force and modern capitalization, Canada benefits greatly from its
primary industries in the likes of chemical, minerals, technology and energy. Its key imports include
machinery and equipment, motor vehicles with US being its primary import partner. Canada exports
industrial machinery, petroleum and derivatives, electricity, crude oil to majority of the Eastern World.

IV. PESTEL Analysis of the Canadian Ecosystem

(2010 2015)

Political

1. Canadas growth has been closely linked with its ability to harness its strong relationship with
its greatest ally, the United States of America, which coincidentally is also is its primary source
of imports and recipient of exports. In the recent past, Canada has entered or is on the lines
of entering Free Trade Agreements with multiple emerging economies like India, China,
Argentina and Brazil. With a tremendous energy deficit in these emerging economies,
Canadas energy exports look to move towards an upward trend.
2. Regional provinces have a lot of power over policies, this resulted in region specific norms.
This mismatch and a lack of unilateral policy driving an industry, foreign players find it
cumbersome to function in the said ecosystem.

Economic

1. Conducting business for out of state players is simple. It ranked 7th on the Ease of Doing
Business Report of 2011, making it a lucrative next destination for foreign players, owing to
the conducive and favourable environment.
2. The new regime is driven towards reduction of interest rates towards manufacturing units,
reducing tax burdens, priming the GDP and spurring economic interaction with the world
economies.
3. An uneven distribution in a resource rich nation has resulted in an uneven economic
prosperity for the same, resulting in industrial concentration in a few resource rich areas as
compared to the others.

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Social

1. Canadas strong social security net provides a strong support system to its population. This
results in a euphoric consumption module making it an attractive haven for foreign entrants,
luxury goods, and manufacturing sectors.
2. Canada like many other world powerhouses faces a demographic crisis where 32.12% of its
population is above the age of 55, and 16% of population falls below the age of 14. This is a
serious threat to national productivity and employability.
3. The lack of resource distribution has led to vast differences in population dispersion,
conclusively resulting in barely 4 provinces accounting for almost 80% of the total population,
reducing majority areas as redundant.

Technological
1. A strong manufacturing sector specializing in high end technological innovation and research
has resulted in Canadas consistently growing GDP.
2. Highly skilled labour, and strong Intellectual Property laws bring about the required synergy
to bring about required investor confidence and investment opportunities.

Environmental

1. Canada is notoriously known for its wasteful use of energy, in fact according to the UN report
on Energy Utilisation it uses upwards of 33% more energy than its largest ally to produce a
single unit of GDP. The economic upsurge combined with the population growth is a pivotal
reason for this wasteful phenomenon. In an energy deficient hemisphere, this wasteful
tendency has resulted in maximizing energy demands, and energy organisations use this
opportunity to leverage this situation.
2. Canada is a leading offender of environmental norms amongst the OECD countries. With a
new political regime in place, the proactive steps taken towards reducing the carbon
footprints and emissions, has resulted in it becoming a hot bed for renewable energy
innovation.

Legal

1. Canada being on the forefront of economic development boasts of an evolved legal system,
which aids business operations in a free, fair and transparent manner. Foreign businesses
have historically preferred Canada over other OECD countries to operate from.
2. Canada also has one of the lowest tax structures in the G8 cohort, aimed towards further
reduction, to favour foreign investments and migrations, Canada seems to become a
favourable hotspot for new business implementation.
V. Electricity Market in Canada
The Electricity market in Canada was worth beyond $ 46 Billion in 2010, which was then forecasted
to grow beyond $ 66 Billion in 2015. It currently is evaluated at $ 68 Billion. The industrial
consumption is the highest in the said region accounting for almost 40.2% of the overall
consumption. Hydro-Quebec Distribution is the largest company, contributing to over 37% of the
market share by volume. (Energy Report Canada 2012)

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 VI. Highlights of the Wind Energy Industry in Canada
1. A high potential market owing to three long coastlines, Wind energy is just utilised by 1% if
the total population.
2. With multiple foreign entrants into the market like Vestas, GE etc., the investments into the
sector are growing exponentially ($ 3 B 2011 to $ 16 B 2015)
3. Enormous employment opportunities created owing to this resource, and thus receiving
ample thrust from governmental agencies.
4. CanWEAs WindVision 2025 aims at harnessing 55,000 MW of energy by 2025. Export
partner include USA and Mexico primarily.
5. Scenario Analysis conducted by CanWEA suggests an aggregate wind power production of
around 120,000 MW. With the optimistic limit being 200,000 MW and the pessimistic 33,000
MW.

VII. Customer Mapping

As a heavy industry wind turbine manufacturer, Suzlons primary customer base looks towards Farm
Developers, Power Producers and Energy Companies. The utility industry would be a primary target
audience for Suzlon being valued at over $140 B in 2011. Keeping the aforementioned in mind, based
on a market share division on hoovers.com. The primary potential customers for Suzlons energy
turbines would be

Trans Alta Power is a subsidiary of Trans Alta Corp. is involve in providing power generation via
traditional and renewable sources. It is also the single largest energy producer in Canada.

Cartier Wind Energy Inc. Formed out of a strategic partnership between TransCanada Corp and
Innergex Renewable Energy Group, it entered the fray of energy production in 2004.

Enbridge Inc. Accredited with owning the largest crude oil pipelines in the region, Enbridge is a
generation and transmission company based out of Alberta. It has now made inroads into the solar
and wind markets as well as a part of its diversifying plan.

Innergex is a leading Canadian renewable energy player. Established in 1990, Innergex is a major
hydro electrical powerhouse who is making inroads into the wind industry. It carries out operations in
Quebec, Ontario and the USA. It is a privately run enterprise thus has more independence towards
radical decision making.

Brookfield Renewable Power Inc. This privately run mid-size firm owns, operates and develops
renewable energy out of the North American Region and Brazil. Based out of Toronto, this organisation
contributed heavily to the export of renewable energy out of the Canadian borders.

VIII. Competition Landscape

Suzlons competition in the Canadian market includes established leaders with a considerable market
share of the installed capacity and also foreign entrants looking towards Canada for the next big jump.

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The top fourth of the manufacturers control upwards of 95% of the turbine production. These key
companies are

Vestas Proliferated the Canadian market in the late 1990s and has captured majority of the utility
companies as its customers. It is Trans Altas primary vendor since 1998. (Canada Energy Highlights
2012)

GE Energy The energy subsidiary of the formidable world force that is GE comes with a backing of
presence in 145 countries and technological expertise in its sophisticated offerings like Control
Systems, Data Controlled Turbine Systems and Health Monitoring. It has a strong presence in Canada
for over six decades with a workforce of above 6,000.

Siemens is not the biggest player in the Canadian market but its solution offerings on the end to end
wind energy spectrum make it a threat to be taken seriously. Its global dominance in offshore wind
facility management is second to none.

IX. Business Model

(Refer Appendix 3)
1. Suzlon an Indian turbine manufacturer looking towards capitalizing on the favourable
market conditions and resource augmentation based out of Canada.
2. Clearly Suzlon has employed an Uppsala Business Model, where an organisation ventures
into the socio political neighbours of its long term target country, to gain experience,
traction and understanding of the market, before entering the target. Its historical progress
in the International market (as highlighted in appendix 3) has intensified over time to
culminate in leveraging its experience in Canada.
3. Suzlon initiated its international traction by strategic technological alliances with German
firms and thus establishing a foot in the door in the German market.
4. Suzlon thereon entered the Chinese and the Australian markets with slightly more maturity
and equity in the same.
5. Progressing towards the Americas, it established foothold in South Americas greatest
contributor in the renewable energy spectrum Brazil.
6. Gaining almost half a decade of experience, it entered the third largest contributor to clean
energy USA.
7. Sustaining itself as a recognised partner with governmental agencies and local authorities,
in 2012, it finally took the leap to enter the Canadian market which was swell and ready to
take-off (considering the green initiative brought in by the shift in political regime).

X. Conclusion
Q - Upon entry in Canada, What should be the strategy of Suzlon for sustaining and expanding its
market share?

With Suzlon poised for a sustainable growth in the Canadian market and a successful entry strategy
aiding the same, the following factors would aid Suzlon in fortifying its position as a competitor with
an increasing market share in the Canadian market

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1. At the very onset, Suzlon would benefit tremendously if it shifts some part of its
manufacturing operations to Canada. As an entry level strategy, the Uppsala business model
aided to align with the business needs of the organisation, but in order to grow in a mature
market like Canada, Suzlon ought to able to become a part of the ecosystem of Canada rather
than just a foreign entity. Shifting into The Prahlad & Doz (Appendx 7) model would be highly
beneficial to Suzlon. Transitioning from a Global Strategy into a Transnational Strategy would
be a requirement in this market, as the cost pressures from the competition is high and
effective and also local responsiveness is of utmost importance to aid grass root level brand
recognition and foster building investor sentiment and faith in a transitionary market.
2. With a wide range of differentiated resource allocations and high competition, Suzlon ought
to focus on resource rich areas of Canada like Ontario and Quebec to expedite and further
their opportunities of gaining a greater market share. The legislations and policies of these
regions are suggestive to further renewable energy production specially wind power.
(Appendix 4 & 5)
3. Suzlon would benefit majorly from shifting its primary customer focus from larger utility
organisations like Trans Alta and Cartier to mid-size organisations like Innergex and
Brookfield. Large organisations like Trans Alta have long term strategic partnerships with
global stalwarts like Vestas. In order to sustain a successful entry point strategy, Suzlon ought
to maintain a healthy inflow of revenue which it can insure from seizing opportunities from
mid-size organisations initially.

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 XI. APPENDIX

2. Breakout of the Energy status of 1. Sales Breakup of Suzlon

Canada (Energy Factbook 2015) (Annual Report 2014)

3. Suzlons Historical Progress in the International Market (Suzlon Website)

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 4. Wind Energy Mapping in Canada (GE Canada Report)

5. Political Map of Canada highlighting location of Ontario, Quebec, Nova Scotia (Wikipedia) -

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6. Five Forces Analysis of the Electricity Market Segment in Canada

Buyer Power

Unregulated markets make switching easier

Consumers are overly dependent on electricity
High Buyer power owing to the strong economic upturn

Supplier Power

Market is driven by overlapping vertical distribution of the major players, thus controlling the
end to end lifecycle.
Moderate Supplier Power

New Entrants

Diminishing cost and upsurge returns imply that new entrants can offer services at cheaper
levels.
High initial capital investment, as is characteristic of this industry.
Lack of major competition reduces the threat

Substitutes

Solar and Wind are not the primary renewable sources, thus major substitutes are available
to counter the same.
Governmental customers have a tendency to adopt self-generation as a means of energy
propagation.

Rivalry

Similar portfolio offerings result in overlapping of offerings

Dominated by pre-set leaders. Thus high rivalry.

7. The Prahalad and Doz Model

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 XII. BIBLIOGRAPHY

- Firm Investigates Wind Power Provost News (2010) - Web

- The Alaska Pipeline Project (Feb 2012) Web
- Analysis Small Canadian Province flexes Green Energy Muscle (Reuters)
- Brookfield Renewable Energy
- Innergex Wind
- Trans Alta Corp
- Global Wind Energy Council
- UN Energy Data Book
- CIA World Fact Book
- Hoovers (Web)
- Google Finance
- Yahoo Finance
- Bloomberg (Web)
- Harvard Business Review
- Suzlon
- Suzlon Annual Report
- Suzlon Investor Presentations
- The Energy Future Energy Supply and Demand 2035
- Canadian Wind Energy Association
- Electricity Canada
- Wind Energy Canada GE
- Natural Resources Canada (Web)
- Wind Energy Event Canada (Web)
- Choice of Global Strategy (WordPress Web)
- Wikipedia

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