MKT302: A worldwide, consumer-driven movement toward renewable energy solutions has created global market opportunities for entrepreneurial companies: Strategic Global Marketing Case Study, HU, Malaysia

SUZLON ENERGY

A worldwide, consumer-driven movement toward renewable energy solutions has created global market opportunities for entrepreneurial companies. In 1995, after facing rising electricity costs for his family’s textile factory in Pune, India, Tulsi Tanti decided to build two wind turbines to power the facility. Tanti soon realized that he had stumbled upon a promising opportunity. As he explained, “I had a very clear vision: If Indians start consuming power like the Americans, the world will run out of resources. Either you stop India from developing, or you find some alternate solution.” Within a few years’ time, Tanti had converted his factory from textiles to the manufacturing of wind turbine generators, gearboxes, towers, rotor blades, and wind turbines. Tanti’s company, now called Suzlon Energy Limited, was well-positioned to take advantage of the growing demand for alternative energy sources.

India’s Suzlon Energy has become a major player in the wind turbine industry. Historically, India’s power distribution system has been inefficient and inconsistent; users pay high prices for electricity but still must endure blackouts on a regular basis. Moreover, burning coal to generate electricity can have serious environmental consequences. For these reasons, industrial users in India seeking alternative sources of energy are Suzlon’s primary customers. Suzlon is also thinking globally: The company has opened a turbine blade factory in Minnesota, where it also operates a wind farm.

Moving into the U.S. market, Suzlon enjoyed the promising prospects of a booming industry; however, numerous problems with product quality and negative publicity, in addition to economic turbulence and regulatory restrictions, have raised concerns about the potential of Suzlon and other green-energy companies.

Product problems initially made headlines in 2008 after a turbine blade manufactured by Suzlon and financed by John Deere Wind Energy cracked and broke off a tower in Illinois. Although this was the sole reported incident of a blade actually falling, the incident raised concerns about the quality of Suzlon’s products. The company attempted to address the quality problem. It announced a program to strengthen or replace 1,251 blades—almost the entire number it had sold in the United States—after cracks were found on more than 60 blades on turbines run by Deere and Edison International’s Edison Mission Energy.

Despite Suzlon’s efforts to address the quality issue, problems continued. Edison claimed that blades were splitting and announced plans to delay its wind-generation development. Edison refused to make further purchases and announced it would consider switching to one of Suzlon’s competitors. In response, Suzlon spokesperson Vivek Kher claimed the cracks were not due to faulty blades. Instead, he blamed the Midwest’s unexpectedly violent changes in wind direction. However, these problems are not limited to the U.S. market. Suzlon’s products in India appear to have similar flaws. One of Suzlon’s largest Indian customers claimed that Suzlon’s products “are not fit to handle the wind.”

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