Incorporation of SunPower

Organizations and Governmental Regulations

Organizations are impacted in a variety of ways by changes to governmental regulations governing their operations. In some cases, new laws and regulations from the government drive commercial activity and boost profit margins for many companies. New laws and regulations, however, may have a negative impact on how businesses operate. The growth rate of Oakland-based SunPower Inc. has decreased by 3%. The business decides to relocate its operations to New Mexico, where operating expenses are 30% lower than in Oakland. The impact of the change, particularly on stakeholders like employees, is a matter of worry. The impact of moving to New Mexico is irrefutably significant especially to the employees, customer availability, stock prices, availability of raw materials and many other factors. This paper focuses on providing a detailed and pithy analysis of the case study, and a conclusion on whether or not the decision to move to New Mexico should be implemented. The process of case study analysis involves six distinct processes including clarification of the decision context, definition of objectives and criteria for evaluation, development of an alternative, estimation of consequences, evaluation of trade-offs as well as implementation and monitoring process (Shapira, 2002). The first step has been done. The subsequent steps are discussed in the subsequent sections as shown below:

Step 02: Defining Objectives and Evaluation Criteria

This involves selection of what genuinely matters and the targets that should be achieved. The end result should aim at meeting the overall goal which is reducing the cost of doing business. Evaluation will involve analysis of the business in terms of profitability and comparison done. This way, SunPower Inc. will be able to analyze and evaluate if doing business in New Mexico is indeed cheaper than doing business in Oakland.

Step 03: Developing Alternatives

In order to come up with the best decision regarding the problem, SunPower Inc. must have a list of options to consider when analyzing the problem. In this case, some of the options include moving to New Mexico, staying at Oakland and finding the best ways of doing business to increase profitability, and negotiating with the government to consider offering incentives. In developing alternatives, stakeholders should be involved to ensure that they are all aware of the possible options that can be used in addressing the issue. The best option that can be used in attaining the goals of the organization is chosen. To do this, the stakeholders analyze the options and point out the ones that cannot work in effectively to realize the goal of the company, which is ensuring steady growth in terms of revenues. The other possible option as described in the case is discussing with the California State government to consider reducing the leasing tax if the firm decides to implement and use green energy sources (Guzzo & Salas, 1995). New Mexico is solar-friendly compared to Oakland. The options are analyzed based on their consequences and trade-offs. An alternative that gives the best results as per the objectives is selected first. From this case, moving to New Mexico is more preferable compared to other options. Trade-offs are also considered in making the decision.

Step 04: Estimating Consequences

The stated options have various consequences when implemented with the aim of providing a solution to the problem. If the company decides to remain in Oakland, there are high chances that it will continue facing a decline in growth and probably in the next two years, it will be facing approximately 5.4% decline in growth. Despite the fact that the California governor has agreed to reduce the tax if the company adopts green energy, the impact will still be significant and the firm will still face a decline in its growth. In addition, all other possible and recommended ways of doing business will also result in no significant effect on the growth rate. Therefore, the best option is moving to New Mexico where solar energy will be used and manufacturing costs will be reduced.

Step 05: Evaluating Trade-offs

Trade-offs involve what is lost or gained when one of the options is implemented. It involves analysis of the gains and losses when the option is considered. Based on the case study, a move to New Mexico will make the company lose some of its customers, especially local customers based in Oakland. On the other hand, New Mexico will be a suitable place for doing business since the company will reduce the cost of business by using solar energy, which is much cheaper than petroleum products.

Step 06: Implementation and Monitoring

Implementation of the decision will require the company to analyze the costs of moving to the new location. This will also involve employees’ transport costs and other factors such as housing (De Reyck and Degraeve, 2010). Employees will have to switch their locations to New Mexico to make the transition much easier. Employing a new team of workers will make it difficult for the company to run smoothly as before and may lead to loss making.

Consequences to Stakeholders

The stakeholders include but are not limited to: employees, investors, suppliers, and consumers. When the decision to move to New Mexico is implemented, the employees will have to decide if they are willing and able to move with the company. They will not be paid for the move up front, but they will be compensated in the years to come with tax breaks, and the fact that they still have a career.

Investors will have to decide if they want to stick with Sunpower for the long haul or if they want to cash in their chips and make what money they can, because they move leaves many questions unanswered for the future of the company. Investors constitute an important part of the company as it ensures that the company operates on the best way possible. Investors’ decisions will have a significant effect on the status of the company in New Mexico. A decision not to continue investing in the company will be a big blow to Sunpower.

The other stakeholders will be the in-state suppliers. Once SunPower moves to New Mexico, all the in-state suppliers will be lost due to the high costs of shipping goods, which will not be worth the extra cost as the company will also be trying to save as much money as possible.

The last group of stakeholders is the consumers. Notably, the consumer market will change due to the change in geographical location of the firm. Analytically, the number of consumers is likely to remain the same. A slight increase in demand is likely to be experienced since the company will be operating in a new location.

Implementation of the Plan

Implementation process of the proposed decision begins with a meeting at the town-hall chaired by the company CEO. The board of directors, the company’s management and leadership teams, union representatives, employees and their families should also attend the meeting. This is because they are all affected by the decision and their concerns and ideas regarding the move should be heard by the company’s top leadership. In the meeting, the CEO will elaborate on the problem of increased taxes by the local government and how it has made the growth of the company impossible (Boyle et al, 2008). Furthermore, the CEO will discuss the various opportunities and advantages of moving to New Mexico and other possible alternatives. The employees will be given the opportunity to talk about their views or opinions on the decision to have the company relocated to New Mexico. Hopefully, the employees will make the decision to move to New Mexico alongside the organization.

Conclusion

One of the most challenging tasks in organizations is decision making. Poor decision making can be very costly and can make a company collapse. Good decision-making requires proper analysis of the organizational activities, its stakeholders, as well as the possibility of having the suggested decision implemented well. From the SunPower case study, the best option among the many alternatives was relocating to New Mexico with the main goal of cutting down the production cost. High production costs always lead to constant loss making in many companies. A move to New Mexico will increase the company’s profit margins and consequently boost its growth rate. The stakeholders are given the chance to relocate to New Mexico as well to make the transition easier in the new environment.

References

Boyle, R., UNEP Sustainable Energy Finance Initiative., & New Energy Finance. (2008). Global trends in sustainable energy investment 2008: Analysis of trends and issues in the financing of renewable energy and energy efficiency. Paris: UNEP SEFI.

De Reyck and Degraeve. (2010). More important than results. Retrieved from https://www.london.edu/faculty-and-research/lbsr/more-important-than-results ? display=expanded#.WFZxmHfwdE5

Guzzo, R. A., & Salas, E. (1995). Team effectiveness and decision making in organizations. San Francisco, Ca: Jossey-Bass.

Shapira, Z. B. (2002). Organizational decision making. Cambridge [u.a.: Cambridge Univ. Press.