SUNPOWER, INC.

This essay’s primary goal is to conduct a case study on a business called SUNPOWER, INC. Located near Oakland, California, Sun Power (McVeigh, 2013). The production of solar panels is the company’s primary goal. This essay also tries to outline the company’s business plan, which will include details about whether or not the INC should move.

An American business called Sunpower has made a specialty of creating solar panel designs. It has been over three decades since the Company first started. High Plains Ranch II, LLC, Woongjin energy, and Sunpower Corp Systems are more subsidiaries that are connected to this company. Engaging in Business is a very tricky task that requires a lot of time, effort and resources. Based on the Case Study; SUNPOWER, INC was doing well financially until its growth rate started to decline substantially. In reference to the Company’s financial files, the growth rate had been dropping by 3% in the last 2 years (Campeau & Anderson & Hasselbrink & Kavulak & Shen & Lacerda & Mikofski, 2013). This had contributed to a lot of losses that the Company could no longer withstand.

Further projections also showed that the Company would experience more losses in the next two years. Its projections indicated there would be a further 5.4% drop in the Company’s interests (Campeau & Anderson & Hasselbrink & Kavulak & Shen & Lacerda & Mikofski, 2013). Different factors are responsible for the drop in the growth rate of the Company. They include the high rate of taxes imposed by the Government, insurance, utility and leasing creditors.

California has one of the highest rates in tax in the U.S. Most of the Companies that are located in this state pay a lot of taxes as compared to other Companies located in different parts of the Country. After consistent talks with the Governor of California, the state was ready to reduce the Company’s tax load by up to 10% (Pickles & Zhu, 2013). On the other hand, insurance, utility and leasing creditors refused to lower their rates; in fact they had posed to the possibility of an increase by up to 6%.

After a careful analysis together with the board of directors, it was determined that 72% of the Companies problems arise from their expenditures. As the CEO of SUNPOWER, INC there was a desperate move to relocate from California. The Company’s finances and direction was already in a green light. As the saying goes “Desperate times call for desperate measures.” The chances of the Company thriving in other states was promising as compared to California.

As a result of a successful meeting together with the Board of directors; it was agreed that the Company ought to relocate into a different state that was less strict in terms of their tax rates. Most of the stakeholders admitted that the current and future state of the Company does thrive on Californian soil. Before relocation, there was a need to assess the on the Company’s probability to succeed in their new area of relocation.

After a detailed and careful Survey; results showed that the Company was going to succeed at a high rate if they would relocate to New Mexico. Some of the main factors which proved that a relocation would lead to increased sales and profits are favorable rates and less competition (McVeigh, 2013). California is a very diverse state that is very rich in the industrial sector. There are very many Companies which have a specialty in the production of solar panels.

This has greatly reduced the rates and profit margins of the Company. On the other hand New Mexico is a less industrialized Stat (Campeau & Anderson & Hasselbrink & Kavulak & Shen & Lacerda & Mikofski, 2013)e. Despite the fact that there are many industries in this state; the level of competition is much more less as compared to California. Very few Companies have specialized in the making and production of solar panels. Based on this scenario, Sunpower is likely to gain an upper hand which will maximize on its growth rate. Competition is the main reason why most Companies across the World normally fail.

In terms of favorable rates; based on the survey results. New Mexico has one of the best tax rates in the U.S. This rates are favorable for the investment of different business Companies. As a result of constant negotiations with the Governor of New Mexico, the state was ready to give Sunpower a 20% in form of tax reduction. This was an offer of one of a kind. Most of the states in the U.S offer a reduction that ranges between 10 – 15% (McVeigh, 2013). Based on a projection made by the Companies analysts, a 20% reduction on taxes would boost the Company’s growth, interest and sales significantly.

California is a very difficult Country to invest in. There are very minimal cuts on the rates of taxes. This is the main reason why Sunpower did not progress in terms of growth and returns. The other major reason why Sun power’s relocation would be favorable to the Company’s growth is the fact that New Mexico has one of the best Working conditions. Some of this conditions include favorable Employee cut and terms (Campeau & Anderson & Hasselbrink & Kavulak & Shen & Lacerda & Mikofski, 2013). New Mexico’s has an employee cut of about 5% to 3%. This is much higher as compared to that of California. The percentage is based to those who are highly and lowly paid. Highly paid employees get a 5% cut while the latter receives a 3% cut.

Another change that is likely to occur after the Company relocates to New Mexico is the fact that the cost of doing business will be more less or friendly. The cost of operating a business in California is very high. The rates are mind blowing. Everything is expensive ranging from raw materials, employees’ salaries and maintenance, Electricity etc. The cost of doing business in New Mexico is approximately 30% less as compared to Oakland (McVeigh, 2013). A 30% in the reduction of the Business’ operating costs would mean an increase rate of growth in the Company’s sales, interest and earnings. New Mexico has a lower operating cost since raw materials are much cheaper and the employees also have a lower cut.

The insurance, utility and leasing creditors in New Mexico are very understanding. Their rates are fixed and favorable for any business opportunist (Pickles & Zhu, 2013). This rates favor the development of any adjusting Company. Most of the creditors in New Mexico do not take advantage of business opportunists; instead they ensure that they give them favorable conditions that will promote their growth and development. Most of the creditors in California are very strict and outstanding in reference to their rates.

Some of them have rates that do not favor the growth rate of any new developing Company. Based on the Case Study; despite the fact that creditors have a high interest rate/charges, they still want to take advantage of the opportunity and add an extra rate on their interests. As discussed earlier; creditors in California wanted to increase their rates by up to 6% (McVeigh, 2013). This means that the chances of Sunpower making profit in the state would be unrealistic or hard to achieve. As the CEO of the Company, relocating to New Mexico is the best choice. The Company has a chance to thrive and develop a fresh. In case the Company opts to stay in California; it is with no doubt that it will be closed within a matter of time.

CONCLUSION

Every Company is Potent to develop under the right conditions and circumstances. Most of the Modern Companies normally collapse due to common factors such as competition and high tax rates. The most limiting factor is Tax. Companies have to pay a lot of money in form of tax. This rates end up distorting the direction of the Company. In summary, based on Sun power, there is a great need for the Company to relocate.

A relocation to New Mexico would ensure a positive rate in the growth of the Company. The Company would also be able to save more due to Mexico’s low rates on taxes. It is estimated that Sunpower would receive a 20% cut on taxes as well as an employee cut of about 5 to 3%. The cost of doing business in the state is also favorable to the Company. In case Sunpower relocates to New Mexico; significant changes are likely to occur. Changes that are likely to restore Sunpower’s former glory and dominance in the Business.

References

McVeigh, J. C. (2013). Sun power: an introduction to the applications of solar energy. Elsevier.

Campeau, Z., Anderson, M., Hasselbrink, E., Kavulak, D., Shen, Y. C., Lacerda, R., ... & Mikofski, M. (2013). Sunpower module degradation rate. SunPower Corpor, 1-61.

Pickles, J., & Zhu, S. (2013). The California transparency in supply chains act.

(2017). Retrieved 30 July 2017, from http://file:///C:/Users/Hp450/Downloads/SunPower_Case_stufy.pdf