IBC Solar's International Expansion into Canada

IBC Solar’s International

Expansion into Canada

Master's Degree Dissertation

Master of Science in International Business

UPF Barcelona School of Management – ESCI-UPF

Author Halee Grimsdale

Yiwen Geng

Academic Year 2020 – 2021

Mentor Manel Guerris


IBC Solar’s International Expansion into Canada

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Project performed within the framework of the MSc in International Business program taught by

Barcelona School of Management and ESCI-UPF, centre associated with Pompeu Fabra

University



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Resumen En este trabajo, la empresa de energía solar IBC Solar de Alemania se internacionalizará a Canadá.

El enfoque de este documento es la viabilidad de la expansión y una estrategia de expansión inicial

más factible. En términos de viabilidad, este plan analiza las condiciones externas del mercado

canadiense, al tiempo que da ejemplos de áreas que necesitan atención, como la competencia

cada vez más feroz en el mercado solar.

En términos de estrategia de expansión, después de planificar inicialmente la participación de

mercado esperada, comenzamos con una estrategia de marketing detallada e integral y

planificamos gradualmente los recursos humanos, y mejoramos la atracción de talento de la

compañía manteniendo el ambiente de trabajo amigable único de BluEarth. En el plan financiero,

teniendo en cuenta la enorme inversión de capital inicial de la empresa de energía solar,

propusimos el 50% del capital social de la empresa matriz alemana de IBC Solar, el 50% del modelo

de préstamo y una demanda de financiación de 75 millones de dólares canadienses.

Keywords: Energía solar, empresa social, Canadá, Aleman, expansión internacional

Abstract In this paper, the IBC Solar solar energy company from Germany will internationalize to Canada.

The focus of this paper is the feasibility of expansion and a more feasible initial expansion strategy.

In terms of feasibility, this plan analyzes the external conditions of the Canadian market, while giving

examples of areas that need attention, such as the increasingly fierce competition in the solar

market.

In terms of expansion strategy, after initially planning the expected market share, we started with a

detailed and comprehensive marketing strategy and gradually planned for human resources, and

improved the company's talent attraction by maintaining the unique friendly working environment

from BluEarth. In the financial plan, taking into account the huge initial capital investment of the

solar energy company, we proposed 50% of the equity of IBC Solar's German parent company, 50%

of the loan model, and a financing demand of 75 million Canadian dollars.

Keywords: Solar energy, Social Enterprise, Canada, Germany, international expansion

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License

https://creativecommons.org/licenses/by-nc-nd/4.0/

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Table of contents 1. Introduction (Company background)

1.1 Mission and Vision

1.2 Company Objectives

2. External Analysis

2.1 Microenvironment

2.1.1 The Consumer

2.1.2 Porter’s 5 Forces

2.2 Macroenvironment

2.2.1 PESTLE Analysis

3. Internal Analysis

3.1 SWOT Analysis

3.2 Stakeholder Map

4. Value Proposition

4.1 Sustainable Competitive Advantage

5. Strategy

5.1 Key Performance Indicators

6. Marketing Plan

6.1 Marketing Mix

6.2 Branding Strategy

6.3 Digital Marketing Strategy

7. Human Resources Plan

7.1 Recruitment and Selection

7.2 Training and Development

7.3 Motivation and Salary

7.4 Conflict Management

7.5 Performance Management

8. Logistics plan

8.1 Suppliers and Manufacturers



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8.2 Distributors

8.3 Logistics Strategy

9. Financials

9.1 Cost of Goods Sold

9.2 Initial investments

9.3 Sales Evolution

9.4 Cashflow Evolution

9.5 Hedging against currency risk

10. Long-term Strategy

11. Conclusion

12. References

13. Appendix



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1 Introduction

The future of energy relies heavily on the use of renewable resources. Without this integration into our current systems, our non-renewable resources will be drained, and the struggle to sustain the world as it is today will be almost impossible. Steps are being made in the right direction, as most developed countries have begun to convert wind, sun, water, biomass, and/or geothermal into energy. A four percent annual growth in the demand of renewables was seen between years 2013-2018 and companies like IBC Solar, are big contributors within the industry (REN21, 2020).

IBC Solar is a solar energy company that focuses on both commercial and residential solar power. The company was started in 1982 and has grown tremendously since then. It has established a strong market presence and has centered its goals around sustainability and flexibility. IBC Solar offers products in many areas: PV modules, storage systems, inverters, mounting systems, and more. Currently, the company has offices in 14 different countries and has partnerships with companies in numerous countries, from El Salvador to Finland (IBC Solar, 2020). With rapid expansion of renewables, IBC Solar will have to continue expanding in order to be a global player in this industry. IBC Solar currently has no market presence in Canada and based on a global ranking model, it is the best country for IBC Solar to enter at this time (Appendix A).

1.1 Objectives

Our main objective as a new company entering the Canadian market is to gain market share through the development of solar energy farms purchased by municipalities. With the installation of these farms/fields, the intention is to provide towns and municipalities with an alternative energy source to power their homes year-round. On top of revenues received from these projects, the world will become progressively more sustainable as resources shift from non-renewable to renewable. Entering the Canadian market alone as a wholly owned subsidiary poses some concern and therefore acquiring a company is IBC Solar’s best option for success. This acquisition decision will be explored further and evaluated where BluEarth Renewables (the company chosen to acquire) will be compared to other companies and market entry methods. Another objective when entering Canada is reforming BluEarth Renewables (BluEarth) through collaboration with IBC Solar and its resources. These resources include not only financial inputs, but also knowledge and skill. A focus will be placed on the creation of a cooperative work environment where IBC Solar learns from BluEarth and vice versa. This way, the combined company is able to take the best attributes of both and create a sustainable competitive advantage. Brand image will also be targeted as an immediate objective since a positive recognition and association to company names is of utmost importance when looking at the success of companies and their growth potential.

2 External Analysis 2.1 Macroenvironment Based on the variables in the scorecard (Appendix A) and the local knowledge and connections provided from our team, Canada was deemed the most feasible and logical country to enter. However, there are many aspects about Canada that have not been addressed that assess the viability of entering the country. Understanding the political, economic, social, technological, legal, and environmental aspects of the country will give IBC Solar a better understanding of its next steps and a glance at barriers to entry.



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After conducting a PESTLE analysis of Canada (Appendix B), Canada has shown strong attractiveness due to its politics, economy, and social stability. In terms of policy, Canadian government has implemented many programs that are conducive to the promotion of new energy, such as tax reduction and exemption for the solar energy industry (Natural Resources Canada, 2010), as well as photovoltaic electricity price subsidies and other policies. As a solar energy company, under Canada's strong support policy for clean energy, the economic pressure on the solar energy company's operations is minimal. Considering the high level of education per capita in Canada, its citizens' strong awareness of environmental protection, and its high and stable per capita income, individuals living in Canada have a higher acceptance of solar energy. Therefore, even if there is a higher initial cost than traditional energy methods such as gas, individuals are still likely to pursue the solar energy path.

2.2 Microenvironment To enter the Canadian market, an evaluation of entry strategies needs to be done. The energy sector in Canada is regulated by the provincial governments, so each province has its own requirements, regulations, and rebates. On top of this, there is a fair amount of competition in the solar energy industry, therefore the best way to make a large impact in Canada would be through a partnership or acquisition. After the assessment of many Canadian companies, 3 opportunities arose as most prominent and beneficial. These possibilities include entering as a subsidiary and using a local manager to help integrate the Canadian market into IBC Solar's business policies and strategy, or acquiring one of 2 companies: Grasshopper Energy or BluEarth Renewables.

Although all three pose benefits and drawbacks, the third option of BluEarth Renewables (BluEarth) shows many long-term benefits that cannot be ignored (Appendix C). BluEarth’s values align directly with IBC Solar. There is a strong presence of flexibility through local involvement and relationships which is a strength of IBC Solar already. In a recent project, BluEarth renewables built a large solar panel facility in Ontario. This project was a long winded one and worked alongside the Mohawks of the bay of Quinte to benefit both parties (BluEarth, 2021). Indigenous peoples occupy a significant amount of land in Canada, greater than 3.5 million hectares; therefore, building and maintaining relationships with them is a necessity (GOC, 2021). BluEarth is clearly an asset in overcoming this barrier and IBC Solar will need to make it a priority to develop those relationships. Being able to facilitate such an elaborate solar panel facility with these people, shows the willingness to be flexible and accommodating. With IBC Solar’s years of experience and solar knowledge, the company would be able to expand the solar energy department quickly. However, BluEarth Renewables is not just a solar energy company. BluEarth has a tremendous amount of both tangible and intangible assets in the hydro and wind sectors of renewable energy. This is a great asset for IBC Solar entering Canada since entering as just a solar energy company may be difficult. The difficulties lie in the following but are not limited to: the fact that there are a number of competitors, hours of sunlight are limited, and land ownership of indigenous is great. With the limiting factor of sunlight hours, diversifying the company’s profile to include both wind and hydro on top of solar will allow more opportunity for growth: not only in Canada but also the world. Gaining this knowledge will permit the further expansion of current IBC Solar operations across the globe where hydro and wind opportunities are available.

2.2.1 Customers

IBC Solar Germany currently targets customers in B2B and B2C. This target market that IBC Solar currently focuses on around the globe will have to be adjusted in Canada. BluEarth has



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recently transitioned from offering B2C and B2B services to just B2B options. Generally, IBC Solar focuses on the manufacturing, selling and installation of solar panels to individual houses as well as businesses. In Canada however, IBC Solar will use the same engineering technology that it does for its current solar projects, but on a larger scale. The focus will now be on solar energy fields. These fields will then be used to power communities, big or small, as well as some larger private businesses. Considering that we identified a small to medium entry scale when we analyzed the external environment in Canada through the five-forces analysis (Appendix D), as well as BluEarth’s experience in B2B, and IBC Solar’s insufficient information about the North American retail market, we decided to carefully observe the B2C market for approximately 3 years before entering it. Once IBC Solar decides to enter this B2C market, the company will have to make additions to its targets and strategy in order to stay a top competitor.

Our target customers will be governments locally, provincially, and federally as well as large private businesses that could benefit from the use of a solar field. Since solar fields are very expensive and produce a lot of energy, small businesses do not suit our project plan. The aim with these target customers is to demonstrate the benefits that solar energy can provide for both the government directly as well as the residents within the communities using the energy. Environmental reasonings, cost savings, and future growth are all among the advantages of solar energy implementation and will be further discussed within the strategy segment.

The population of Canada is growing, however not at a substantial rate. This as of right now does not pose a concern for entering the market, however eventually this may be a limiting factor in the expansion of Canadian solar operations. Another reason for the company to be expanding into other forms of renewable energy. BluEarth as well, provides access to the United States market, where many more opportunities for growth lie. 81.6% of Canadians live in urban centers while the rest live in rural areas (Datareportal, 2021). This information is especially helpful for IBC entering Canada as it is targeting towns and the company needs to know how fast towns are growing and how many people are currently living there. Since IBC Solar will need to power these homes.

Canada, in general, has pushed for its citizens to become more sustainable in their way of life. Every year in Canada, efforts are being made to make it a greener place. In 2019, a customer insights survey was completed by PwC that showed Canadians increasing their sustainable actions. These insights showed that Canadians are more likely to pay more for something if they know it is environmentally friendly or derived from sustainable practices. This study was imperative in showing the rising concern of Canadians as customers in the marketplace and the sustainable path they are moving on (PwC, 2020). This information provides great opportunities for IBC Solar to thrive in this environment, as the mindset is already on the sustainability route. IBC Solar will not have to convince customers of the necessity of converting to renewable energy because the overwhelming majority of people are already aware. Half the battle for the company is already achieved, but IBC will have to demonstrate its competitive advantage over the other competing Canadian companies in order to be successful. This information is also very important for its future expansion, especially if we add a B2C target market.

After discussing with a Strathmore Council member, who asked to remain anonymous, we have gained more insight into what a town would be looking for in a solar project and any concerns that the local government may have. Strathmore, is a small town in Southern Alberta, Canada with a population of approximately 14,000. This would be a town to consider building a solar farm beside since there is a lot of land surrounding the town and it is greater than 5,000 people, therefore there would be more benefit to the field. The council member was particularly interested as the demand for sustainability has been increasing rapidly, however he did pose a few concerns. One concern was the growth of the town, if the solar field was too close, how was



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the town supposed to grow? Second, revenues. It's a very expensive project for no guaranteed revenues, since it would be their responsibility to get people to sign on to the solar service. IBC Solar will need to find ways to combat these concerns and present a proposition that the council would be willing to agree upon. Otherwise, the interest in the project is there.

2.2.2 Porter’s 5 Forces

Using Porter's five forces model (Appendix D), we analyzed the overall profitability and competitive situation of the solar energy industry. The vertical influence of the solar industry for IBC Solar is not strong (that is the bargaining power from suppliers and buyers). Regarding the bargaining power from suppliers, on the one hand, IBC Solar has already started a high degree of vertical integration in the upstream, and on the other hand, there are currently many solar photovoltaic panel manufacturers with a similar technological level and fierce competition among suppliers. Therefore, the bargaining power of suppliers is very poor. On the buyers side, considering that IBC Solar will focus on the B2B market, the bargaining power of public utilities and the government is medium. But at the same time, due to the high conversion cost and long maintenance period of solar photovoltaic products, the cost for buyers to choose alternatives is extremely high. In response to this, when governments and public utilities choose solar products, price is not the most important factor, but more factors such as product quality, company integrity, and reputation are considered. Because of this, IBC Solar needs to maintain its reputation and improve the company’s image. Hence, we considered the buyer's bargaining power to be low to medium level.

On the other hand, in terms of vertical threats, due to the huge amount of initial investment and high requirements for R&D skills, the barriers to entry are high. Therefore, the threat of new entrants is small (Adamkasi, 2020). In response to the booming new energy market, although there are few competitors, the competition is becoming more intense nowadays (SolarCity, n.d.). Because of this, IBC Solar Canada must find its own competitive advantage in order to improve competitiveness and occupy market share. At the same time, considering that there is no longer a first-mover advantage in the Canadian solar energy industry, and because the initial investment cost of the solar energy industry is high and the risk is high, we decided to adopt a small to medium scale entry into the Canadian solar market. Besides, regarding the threat of substitutes, from one side, other renewable energies, such as wind and hydro energy, are also attracting attention and put into use. At the same time, compared with traditional energy sources (fossil fuels, etc.), the price of solar energy is still not advantageous, and the initial construction cost is high as well. On the flip side, under the support of policies, solar energy can be subsidized, and the price of other clean energy such as wind energy is currently more expensive than photovoltaic solar energy. For this reason, we set the threat level of substitutes to medium.

After analyzing the potential profitability of the solar energy industry, we are more aware that at present, the solar energy industry still has a good prospect. Nevertheless, for IBC Solar Canada, if we want to become the industry leader, we need to recognize our own competitive advantages. And try their best to give full play to the advantages and strive to occupy market share.

3 Internal Environment After analyzing Porter's five-forces of the Canadian solar energy industry, in order to occupy a favorable position in the competition, we further analyzed the current advantages and disadvantages of IBC Solar through a SWOT analysis, as well as the potential opportunities and threats in the future in the industry (Appendix E). According to the analysis, it can be seen that the biggest advantage for IBC Solar is the rich product line and various service items. In the



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subsequent marketing strategy, we will also highlight this competitive advantage. Operation and management should also try to make up for this shortcoming of the current fragile capital chain. At the same time, since BluEarth also has wind and hydro energy-related products and services, the acquisition of BluEarth will also help expand our product line and improve. Among the opportunities and threats, the most important thing to be vigilant about is the emergence and competition of other energy alternatives. In response to this, we believe that the best solution is to enhance competitive advantage through uniqueness, thereby reducing the possibility of being replaced.

3.1 SWOT Analysis (Appendix E)

SWOT Analysis of IBC Solar Canada

Strengths

• Brand Portfolio • Wide Range of Services • Global market

Weaknesses

• No financial support • Only Operates in the Solar Energy Sector

Opportunities

• Consistent New Product Launch • Positive Global Renewable Energy

Outlook

Threats

• Development of Other Renewable Energy Sources

• Government Support Declined

3.2 Stakeholder Map

When analyzing the stakeholders of IBC Solar Canada, we believe that our parent company IBC Solar Germany, competitors and target customers are the key stakeholders that are more important and profoundly influence our company's entry and operation strategies (Appendix F).

Regarding competitors and target customers, we have analyzed the SWOT and Porter's Five-Forces model in the above, and based on these analyses, we have further understood the need to improve the competitive advantage and choose medium-sized market entry strategies. Nevertheless, regarding the key internal stakeholder, which is IBC Solar Germany, which is a successful solar energy company. If we break down IBC Solar Germany further, more stakeholders included are the headquarters themselves and especially IBC Solar's own manufacturer to which we will be importing our products from.



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4 Value Proposition

Gain Competitiveness

Due to the acquisition of BluEarth, the new IBC Solar owned company has a lot to offer. With the German superior engineering and the relationships that BluEarth has worked hard to build, this may be the next best competitor on the market.

Focus on Core Business of Solar Energy

IBC Solar will focus on the creation of solar fields, bringing a new option for energy into communities other than traditional services. The company will work to illustrate the benefits of implementing such fields around towns and cities to both the governments as well as the energy users. In comparison to coal or natural gas, solar panels, per unit of energy, produce up to 10 times less carbon emissions. Plus, solar energy is a renewable resource and moving in this direction is necessary since our nonrenewable resources such as coal and natural gas are depleting.

Social and Economic Benefits Coexist

On top of the environmental benefits, governments that purchase these projects will see great profits in the future as the cost savings will begin to pay off the initial investment and create a revenue stream. The users as well will see a lower cost in energy usage if they choose to pursue solar services through the government. These solar projects also offer a tremendous amount of jobs in the field to install the panels. This in turn could be a great investment for cities that have a low employment rate. They would have to invest money initially, that they would later get back, but also provide a number of unemployed workers with jobs. This may be something to consider especially during these hardship times right now after the pandemic.

4.1 Sustainable Competitive Advantage

The advantages of choosing solar over another form of energy are clear, but why choose BluEarth? BluEarth offers a few things that other companies don't, and it's important that the company emphasizes and capitalizes on them. Technologies across solar energy companies are relatively similar, however IBC Solar utilizes Germany’s superior engineering skills to ensure that our products are kept up to date with the most top quality systems, providing the best quality services. Something that BluEarth will implement and promote is that if a company purchases a soar project from them and a new technology comes out to improve the system before the end of the project is finished (this can take 6 to 24 months, depending on size), then BluEarth with transfer everything to the new systems for free. Another reason for choosing BluEarth is the customer experience. BluEarth is driven to create bonds with its clients and foster relationships with all parties involved with the projects. Having this close-knit relationship also allows for customizability. Our goal is to give the customers exactly what they want, even the impossible. If they need different shapes to fit a plot of land or perhaps different outputs of energy, BluEarth’s mission is to make it happen. Many other companies do not have this option and therefore you purchase the project as is, or you don't purchase it at all and that is not BluEarth’s philosophy. This is sustainable too, since no other company has access to IBC Solar Germany’s manufacturing plant technology. Yes, someone in theory could create customization options or develop good personal relationships, but not one company has the foundation or the bundle of all 3 together. Therefore, this competitive advantage is sustainable.



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5 Strategy 5.1 Key Performance Indicators The growth rate of renewable energy in Canada has slowed down in recent years, with a compound growth rate of about 4% from 2015 to 2019. In 2020, due to the impact of the pandemic, the subsequent global economy recession and the plunge of oil prices has caused the renewable energy market to shrink in the short term, yet considering that the global economy will gradually resume growth after the pandemic is over. According to MarketLine’s forecast (MarketLine, 2020), Canada’s renewable energy growth rate in the next three years will return to 2.3%, while solar energy growth rate will increase at a much faster speed and reach to 10%. In addition, solar energy currently only accounts for 1% of the Canadian renewable energy market. At present, the solar energy market is more like a small market segment for the Canadian energy market (Chakrabarti, 2019). Nevertheless, from a report of Canadian Solar Industries Association (CanSIA, 2019), in the next 20 years, if the Canadian government provides financial support for solar photovoltaic technology and implements all renewable energy plans, solar energy will occupy 20% of the new energy market in 2040.

After analyzing the status of solar energy in Canada, we began to forecast the initial market share and turnover of IBC Solar. We take into account the optimistic expectations for the Canadian solar energy market, as well as the BluEarth status (Mordor Intelligence, 2021), which is currently ranked in the top-five in the Canadian solar market and has outstanding performance in solar energy projects in the past year, make a more optimistic forecast for IBC Solar Canada. First of all, in terms of the number of projects, we plan to develop and establish two solar projects in the first year. After that, it is expected that the sales in the second year will increase by 25%, and then the growth rate slowed down, between 15% and 8% in the following years. Secondly, in terms of market share, IBC Solar needs to maintain the current BluEarth top-five market share. It is important to pay more attention to increasing large-scale government projects. In the second half of 2020 to the first half of 2021, BluEarth has cooperated with Shell and Canadian Solar Inc. to develop four solar projects, with a total capacity of about 130MWp. Meanwhile, competitor Greengate began to develop and build a project with a capacity of up to 456MWp in Alberta. Considering that on the one hand large-scale projects can reduce costs under the effect of economies of scale. On the other hand, the development and construction of a large-scale project is less difficult and faster than the construction of four small and medium-sized projects. Completing large-scale projects can not only quickly improve reputation, but also obtain higher economic benefits in a short period of time. Hence IBC Solar will target large-scale projects in the future.

6. Marketing Plan Since BluEarth’s headquarters are in Calgary, Alberta, we have decided to begin with projects in this province. This province is made up of 4.4 million. There are 107 towns in Alberta and 31 of them have greater than 5,000 people, which is what we are targeting. This means, In Alberta alone, we have the opportunity to have 31 solar fields (Hansen, 2019). That number is highly unlikely, but even if we can sign 4-6 projects in Alberta, that is a promising start. When we look at Canada as a whole, there are 725 towns, therefore the potential market in Canada is large, we just need to market correctly to attain projects (Statistics Canada, 2020). Using the 4P’s: Product, Promotion, Price, and Place, the best marketing strategies can be determined. Both the branding strategy and digital marketing strategy will play an important role in attaining a large customer base.



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6.1 Marketing Mix

Product

In Canada, since the business model being pursued is a B2B one, IBC Solar will no longer be focused on the manufacturing and selling of individual panels, but rather large solar energy projects. These projects will take the form of solar fields, also known as solar farms or solar parks. This is not what IBC Solar has traditionally specialized in, however, in order to be competitive in the Canadian market it makes sense to adapt. This was determined as the best course of action after weighing the pros and cons of acquiring BluEarth, and after doing so, continuing to follow their current business model. In the solar energy sector around the globe, a move towards solar fields to supply energy is favoured over solar panels on individuals' houses. Although these projects are very costly to implement and get started, the long-term benefits are significant. IBC Solar would focus its efforts in selling these projects to municipalities around Canada, likely beginning with towns that had significant land surrounding the community.

IBC Solar has two choices with these farms. IBC Solar could create them and act as an energy company, where individuals within the community would sign up for its services and energy would supply their homes through power lines from the energy converted from the sun. The other option is to sell the project to the community itself, where the government would act as the energy company. The municipalities would purchase the project and reap the cost benefits of solar energy over time. The latter is more favourable for IBC as the company would not have to deal with customers directly and worry about them signing up for services. This way, that is all up to the municipalities that purchase the project. This is also favourable for the governments since there long-term profits to be made as well as the positive impact on the environment. These municipalities that purchase the projects would be able to harness the energy from the sun and bill individual households according to usage. The government would also have control of the price to which they charge households for this energy. In order to make money, the government could offer rates that are lower than that of traditional energy companies but more than what they are getting the energy for. On average, solar farms see between $20,000 and $40,000 of profit per acre after the repayment of any debts from the initial investment (Croghan, 2019). This number varies due to the number of users and the price to which governments will choose to sell at.

Many things in regard to the projects will be decided upon meetings with the interested municipalities. This includes how big the project will be, how much land is needed, what is the best location for the project, what will be done with the excess energy as well as price and payment plans.

Promotion

First to be considered is using trade shows, also known as trade fairs or business expos, where information can be gathered on potential clients and to display IBC’s products and distribute the company’s value proposition to them.

Second, in order to promote the projects, IBC could apply for both online and offline promotion. For the online strategy, IBC could have it done by cooperating with social media platforms such as YouTube and LinkedIn. It could be a perfect opportunity to Illustrate the company and project value to potential customers through social media profiles. This allows for direct interaction with the clients and other possible cooperators.

Moreover, business magazines could be another source to improve brand awareness since the reputation of the product is critical to the business. By participating actively in business conferences and showing technical know-how on the magazines, IBC could gain favorable



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appraise by the commercial and social world. For offline implementation, word-of-mouth will be a great strategy to get projects promoted due to the fact that people will be affected by others' opinions (or to address it as an anchoring effect). Therefore, it may be feasible to hire and train salesforce/salesmen to investigate the demand in communities of promise. From the perspective of the product life cycle, it is pretty clear that the solar energy industry is now at the stage of growing as IBC introduces major projects to the incumbent market. Throughout all of these options, it is important for the company to emphasize its superior technological capabilities and its promise to always have the best products. This goes hand in hand with our campaign to implement any new technology that has been brought to market in the time the project was being installed at no cost to the clients. Awareness needs to be raised in order to have a competitive advantage among other rivals.

For the first-year plan, it is urgent to improve the company’s brand image and social acknowledgment. In order to achieve this, IBC needs to participate in several business seminars and open fairs, where IBC can directly reach the target market. Additionally, spending part of IBC Solar’s fund to invest in creating social web pages and other advertisement campaigns is necessary to reach as many communities as possible.

Price

In order to give the target customers the greatest degree of independent choice, four plans have

been formulated for farm ownership and settlement methods.（Appendix G)

The biggest merit of purchasing land is that it can be used more freely, and the subsequent expenses are lower, therefore there is no need to worry about the increase in rent caused by inflation. At the same time, without the resistance from landowners, small-scale solar power projects do not face higher unit area costs anymore. Yet, the most critical shortcoming is the high initial one-time capital investment. The advantages and disadvantages of leased land are just the opposite. The most significant advantage for leasing land to establish a solar energy farm is the low capital investment at the beginning of a solar energy project, which is crucial considering for some companies or small local governments, Nevertheless, it should be noted that solar projects are usually long-term or even permanent projects. Therefore, considering long-term benefits, for customers, leasing land is not necessarily a better choice.

In addition to the different strategies for purchasing and leasing land, two different payment plans will also be set up for customers to choose their preferred payment method: One will be a one-off payment,IBC's one-time payment plan here includes the payment of a deposit before the project starts, the payment of some materials and construction costs in the early stage of the project, and the payment of the unpaid balance after the completion of the project. In order to avoid subsequent corporate debts or operational difficulties, the plan will target most private companies. At the same time, for short-term or uncertain solar power construction projects, it is recommended to adopt a one-time settlement method to avoid unnecessary risks.

Another method is subsequent monthly payment. Because the huge initial investment cost of solar power plants has become a concern for many potential companies and governments. An effective way is to make an initial payment based on labor and material costs, and then charge based on electricity consumption.

Placement



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IBC Solar does a lot of its own manufacturing and sells its products to other companies to be distributed as well. For the sake of starting operations in Canada through acquisition of BluEarth, IBC Solar will start by initially focusing on just sales, and installation. These processes are much more transferable, and the manufacturing infrastructure can follow later if deemed necessary and financially feasible. Another option for the manufacturing of these solar panels is to utilize IBC Solar’s existing manufacturing plants overseas. At this time, since finding a local supplier in Canada is very expensive, and IBC Solar already has a manufacturing plant in Germany, BluEarth will capitalize on this opportunity and be able to utilize its superior engineering that contributes to the company’s sustainable competitive advantage. If BluEarth were to use another manufacturer, the company may lose this competitive element and that is not something the company should pursue if it wants long term sustainability and growth.

BluEarth’s headquarters is located in Calgary, Alberta, Canada. However, its current projects are being operated throughout Canada, primarily in Alberta and Ontario. These provinces are favourable as Ontario is the province with the largest number of people with over 38% of the population residing there (world population review, 2021). Alberta on the other hand is a prairie province composed of flat lands which is ideal for Solar fields. The prairie provinces, Alberta, Manitoba, and Saskatchewan have the greatest amount of solar capacity and therefore will be IBC Solar’s initial targets (Appendix H, Figure 1). The strategy will be to target municipalities within Alberta to begin, as that is where our team has the greatest connections and knowledge. Since this is a new strategy being pursued, we have reached out to a number of local governments in Alberta with hopes to secure an interview and determine the interest and expectations of the clients. With this information, IBC Solar will be able to choose which projects to start and where in proximity to the town the fields will be constructed. The challenge with the placement of the solar farm projects is its distance from the town as inevitable future growth needs to be considered. However, the further away the field is from the town, the more costly the solar energy becomes as there needs to be a way to transport the energy to homes. Therefore, it is ideal to have these projects as close as possible to the homes that will be receiving the energy. Once interest is shown by a municipality, it is IBC Solar’s job to vet the land possibilities based on the size of the project and determine if there is land for sale or lease that is feasible. In Canada, there is also crown land which is owned by the national government. In support of a renewable Canada initiative, the Canadian government may also be willing to provide this land to a nearby municipality for little to no cost. Looking at the placement of BluEarth Renewables by IBC Solar in Canada as a company, the company would fall in the small-medium size business category, since BluEarth is still in its infancy. The backing of IBC Solar’s financials would help the company grow significantly over time. The company is not competing directly with solar energy companies that are focused on residential solar panels, but other solar companies with the same solar field agenda. Since BluEarth has already implemented numerous successful solar fields around Canada, its portfolio demonstrates its capabilities and therefore ensures clients that the projects will be according to plan.

6.2 Branding Strategy



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BluEarth has created a great reputation for itself and takes pride in the relationships it has with the indigenous peoples of Canada. This is especially important since there are a number of First Nations communities throughout Canada, and they occupy a great amount of land. Largely because of the name BluEarth has made for itself, we have decided to keep its name and only add by IBC Solar underneath. The full name being “BluEarth Renewables by IBC Solar''. Our branding strategy is going to otherwise be consistent with IBC Solar's global image. This being a brand that focuses on environment, customization, and savings. Since there is a disconnect between solar energy and the benefits it provides to consumers, we do not want to brand the company in a way that is only appealing to businesses (municipal governments). Rather, we want to create a brand image that also focuses on the benefits to the actual consumers of the energy. By informing individuals of the benefits of solar energy and the annual savings it could provide them, it will push communities to pursue a project as the demand for solar energy will increase among the population. The more users interested in solar energy equals more profits for the governments and therefore leading to more projects being purchased through IBC Solar. IBC Solar will move forward with brand images to both the business and the consumers. For businesses and consumers, the overarching theme will be the benefit to the environment, however that is a well-known perk of solar energy. Therefore, the focus here is largely on customization and savings solar fields can offer to municipalities.

6.3 Digital Marketing Strategy

The world today has become a digital one. Everyone partakes in the leisurely ways of the internet, but for businesses, this provides an opportunity to reach a vast market in a short amount of time. In order to do so, a strategy needs to be implemented in order to be effective in this digital world.

SEO Marketing

For starters, IBC Solar can start by engaging in our search engine optimization, which could largely improve the image of our business to the public. In order to better operate, reputation management needs to become the focus. The key behind reputation management is search saturation, meaning that IBC Solar needs to identify the key words associated with the company that are being searched for by potential clients and configure the content being displayed. From there, the company will be able to publish it across multiple channels, including the company's own webpage, news website, and social network. The objective is to acquire as much information as possible to show search engine users that BluEarth Renewables by IBC Solar is a reliable and technology-savvy business that people want to work with. On the contrary, the company can also avoid negative images by strategically targeting the keywords.

Channels

Next thing followed will be the choice of channels. Before our business starts to have an impact, it is important for a business website to be in good shape. Apart from providing good content by using SEO, the company can also investigate the channels being used so as to better connect with the clients and society. Since our business is based on B2B, the majority of clients are primarily business entities and public governments. For these specific clients, we propose to choose LinkedIn as one of the channels that connects our clients since this platform has been an excellent one for utilities to promote B2B transactions and cultivate relationships. Also, LinkedIn also provides a convenient way to communicate with other industry leaders. Once our connections within are established, the content-sharing nature of LinkedIn can ever expand our influence in the industry. At the same time, we can not neglect the end users since they are the most critical targets whom the value proposition is delivered to. Impressing them with the new



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BluEarth brand is another important task during our business expansion. Therefore, we are suggesting using Facebook to regularly post our business content and ambitions, together with story sharing in order for people to have an impression of the company and its offerings.

Content management

A highly significant step in public utilities and local government marketing is to keep in touch with the target customer group at all times, and successful targeted content marketing to achieve this step is the most effective, cost and otherwise. The correct content marketing method can provide useful information to help customers, thereby building recognition and loyalty to IBC Solar.

For content marketing, several solutions have been designed:

1. Find a suitable industry professional with marketing capabilities, conduct an in-depth analysis of the status quo of the industry through a feature article, and use the project story for reference in the article as IBC's technological innovation and excellence in solar energy sources.

2. Considering the target groups of the government, highlight their contributions through easy-to-understand articles and properly analyze how to improve the lives of residents through solar energy.

3. At the end of each year, through summary analysis, some industry analysis reports such as white papers or e-books are provided to gradually transform into the market authority of IBC Solar.

7. Human Resource Plan

Considering that IBC Solar Canada will acquire BluEarth and its human resources (HR) team, the current BluEarth human resources team needs to be evaluated. After doing so, IBC Solar will be able to formulate an HR policy combining the superior policies of BluEarth and IBC Solar. BluEarth has been honoured as top employer in Alberta for three years beginning in 2019. This is mainly due to BluEarth's harmonious company atmosphere, cooperative environment, generous vacation policy, and financial support for study outside work. These elements that make BluEarth stand out are ones that should be continued even after the acquisition. BluEarth currently employs 112 full-time employees, four of whom are in the human resources department, responsible for recruitment and training, performance management, bonus and salary setting, conflict management, etc.

According to the existing organizational structure of BluEarth, we have made a few changes to maintain the original flat structure (Appendix I). Considering that we are a small and medium-sized company, the flat structure is more conducive to shortening the distance between director and subordinates, the vertical flow of information is fast, and the management cost is low. This also coincides with our company's HR goal of maintaining a good working environment.

7.1 Recruiting

Considering the different job requirements for office employees and field employees, instead of a unified recruitment system, adoption of different recruitment and selection processes are necessary in finding the right candidates.



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Job posting For individuals looking to work as a field employee, work experience is of utmost importance. Previous work experience at BluEarth or with similar solar field projects is preferred since there is already an understanding of the job and if necessary, there are references to contact in regard to their work ethic and ability. When posting positions, there is no need to carry out campus recruitment for field employees, but rather to conduct social recruitment through LinkedIn and the career application section of the official website. When recruiting office employees, considering the high level of requirements for employees’ learning ability and professional knowledge of their positions, we will conduct university bulletins on target schools as well as utilizing social platforms and the official careers website.

Written Test After the resume screening process, where the HR department will screen according to the job description, the manager in charge of recruitment will issue a written examination tailored to the job being applied for. In terms of written test assessment, we believe that the personality of any employee is very important for teamwork, communication, and execution during work. Therefore, whether it is an office employee or a field employee, we will evaluate their personality, meanwhile, job knowledge is also essential. For office employees, we will also add cognitive ability tests and emotional intelligence assessments. These tests are in place to predict job performance by learning about individuals abilities to think abstractly, navigate social situation and self manage.

Interview Regarding the interview, in order to examine the authenticity of the candidate’s resume and learn about the candidate’s ability to solve problems based on the candidate’s past experience, we will adopt behavior questions. On top of that, in order to encourage candidates to think seriously about being hired, situational questions will also be deployed during the interview so the interviewers can have a better idea of how they handle certain situations. After considering many factors such as the results of the interview and written examination, the compatibility with the corporate culture will be assessed and the HR department will select the most suitable candidates to enter the company and start the job. 7.2 Training and Development In training and development, we not only continued part of BluEarth's excellent training program, but also referred to the training mechanism of IBC Solar's German parent company. The company will provide a comprehensive and long-term training system which includes before, during and after work sessions.

The training program mainly consists of four parts. During the probation period, an intensive week or so of training on company culture and job-related knowledge and skills will be made mandatory. After joining the company, a three-year training and promotion plan is in place with the intention to develop and maintain company employees. In this plan, each employee will be rotated in various departments of the company to have a better understanding of the responsibilities and contents of each department. This also helps employees better understand the coordination and management of the company's various departments. In addition, from the start of employment, the company will provide each employee with an education fund of up to 15,000 Canadian dollars, so that employees can continue to learn career-related knowledge. This allowance provides employees with motivation, a sense of purpose and validation, and support from the company. Finally, as a large international company, IBC Solar believes that BluEarth Renewables by IBC Solar can cooperate with the parent company for international trade fairs and team building events.



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7.3 Motivation and Salary

Motivation

Regarding motivation policy, we decide to use the theory of 3 dimensions of motivation emphasis is placed on extrinsic rationale, relational rationale, and intrinsic rationale, Extrinsic motivation will be the easiest one to carry out since bonus and performance management would encourage employees with monetary compensation. Regarding the intrinsic motivation, the company offers every employee the opportunity to develop vital skills. Since IBC acquired BluEarth, the company will continue some of its excellent HR policies, including in-house training, and tuition subsidy for work-related courses. Not only that, but BluEarth provides two days of paid charity leave every year, and employees can use this opportunity to satisfy their desire for social benefits. Not only does this benefit the employees, but this policy also contributes to the company’s public image and social initiatives. The employees can satisfy their social responsibility at work, which potentially constitutes a motivation to work but also to be a part of a company that is taking steps to be corporately responsible. In addition, for relationship motivation, we encourage teamwork. Considering the overall honor and mission of the team, most employees will work harder.

Salary

After talking with the CEO of BluEarth, it became apparent that since the company is a relatively new and small one, it has a low to middle level of salary. However, the company is invested in the wellbeing of its employees and therefore provides a great working environment, sufficient vacation allowances, education funds, etc. Due to this, most employees are satisfied with their work in BluEarth. Considering we chose a small scale company to enter Canada, we decided to follow the BluEarth salary policy and continue to maintain a positive and likeable work environment.

7.4 Conflict Management In any company there are sure to be some issues that arise. Therefore, policies need to be in place to combat and minimize them. In this case, the newly acquired BluEarth will mainly use 2 tools to reduce and resolve employee quarrels: 360 degree feedback and individual resolution conversation. A minor dispute can be resolved by the participation of the employees involved, while a serious conflict might require the action of the whole team in charge and tools such as 360 – degree feedback will be able to aid in this. This is why it's significant to stretch out the importance of group thinking and avoid selfish behaviors. In addition, IBC will organize conflict resolution meetings that include only the involved parties to the conflict. In order to prevent the meeting from receiving the attention of all employees, meetings will be held during non-peak hours (early morning or late at night). 7.5 Performance Management In terms of performance appraisal, the company will be divided into three stages: preliminary performance indicators (KPI), evaluation and final adjustment. First of all, with regard to the formulation of KPIs, we divide the result indicators, which are mainly for office employees. At the same time, there are financial indicators, which are more aimed at the leadership, by urging the company's leaders to carefully formulate fiscal-related policies, and at the same time, the financial indicator shows the strategic direction of the company's development in the next stage. After setting the KPI, two evaluation methods will be based on the employee's entry time. For new employees within three years of entry, an evaluation of their performance will take place quarterly, and for senior staff, they will face semi-annual performance reviews. For field employees, evaluations will be made on the quality and progress of their completed projects.



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Meanwhile, for office employees, we will evaluate from the two perspectives of results and personal contributions, which not only considers employees’ teamwork ability, but also urges employees to complete high-quality work.

8 Logistics Plan

The main components needed for a solar field are the solar panels, inverters, and storage systems. The solar panels are in charge of absorbing the sunlight throughout the duration of the day, which is direct current electricity, and the inverters convert it into alternating current electricity. This electricity is what the electric grid then uses to power homes. The storage systems are in charge of holding energy for when it is needed, since the energy from the sun will be all captured in the day, but much of the output will need to be provided to homes during the evening. In order to create an efficient system, BluEarth by IBC Solar will need to select supplies, manufacturers, and distributors accordingly.

8.1 Suppliers and Manufacturers

Originally it was thought to utilize BluEarth’s current suppliers and manufacturers, however since IBC Solar runs its own manufacturing plant that sources out its own supplies and raw materials, using the resource is more feasible. Instead of ordering parts from a third-party and having to deal with many contracts and lack of quality assurance. By using IBC Solar’s manufacturing plant in Germany, we can ensure superior quality through the use of our top engineering skills and ensure our flexibility through the allowance of requests that can be made.

8.2 Distributors

Since these Canadian operations are not B2C, in which case there would need to be a company signed on with ours to distribute the panels to each house, there only needs to be distribution when the shipments of components arrive for each project. IBC could choose to either hire a third-party company on yearly contracts that state that IBC will exclusively use their transportation services on a per project basis or IBC could decide to find the best company based on price, timing, and quality when it was necessary for each project. This could mean that for each project there could be a different company being used to transport and distribute the goods from the shipment drop site, to the installation site. The pros of using the first option and having one company for every project are reliability since we already will know how the transport company performs and operates, the company may offer a deal if IBC agrees to only use them, and no research time is required in trying to find a new one. However, the cons are, there may be a better deal another company could offer at a given time and the service being provided may not be as superior as desired but there has already been a contract signed that the company cannot break. Therefore, the best option here is to choose different companies on a per project basis to maximize our profits and attain the best deals on transport services for the first years of operation. In the first year, the goal is to achieve 2 projects. Once the company grows and is completing 5+ projects a year, it will be more feasible to solidify a contract with one transport company. Companies such as Canada Transport Ltd. and All Seasons Freight are among the top transport



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companies in Canada that should be considered when making the decisions for each project.

8.3 Logistics Strategy

IBC Solar will operate a pull strategy in Canada. This means that production of solar panels will be driven by the number of projects attained and orders placed. Therefore, the company itself will have very little stock on hand. Some however, in case of a part breaking, defaulting, or arriving with some other dysfunction that deems it unusable. The reason for deploying a pull strategy is due to the high demand variability and the desire for those purchasing the projects to have as much customization and flexibility as possible. Ideally, each client should be able to have a say in the design of the project and then it is IBC’s job to do its best in creating solar panels that fits the goal. This may mean different size panels, different shaped panels, etc. This strategy also allows the company to keep up with current technology trends and adapt its techniques to remain a top competitor within the industry. If there was a warehouse in Canada that we utilized, it would take a much longer time before the new technology that was created, to see the marketplace.

9. Financials

In the first year of operations, IBC Solar plans on building and selling 2 solar energy field projects with the approximate size of 25 MW, providing the company with an estimated 25 million CAD per project. The energy that these projects will produce is enough to supply approximately 5,000 homes, which is our target town size. Looking at many countries and companies to supply our solar panels, we have decided to move ahead with importing them from IBC Solar’s own manufacturing plant in Germany, since the production cost will be as low as can get since it's all part of the same company, plus, all the money that is deemed a profit to the manufacturing plant will be circulated back into IBC International. On top of the revenues from the sale of the projects, we will offer services to maintain the projects each year. This generally costs about 1% of the total cost of the project. Our revenues are separated accordingly (Appendix J)

When entering Canada, the company will need to assess the conditions of the country. We have calculated the average salaries of individuals in Canada within this industry and considered all those that are permanent employees as well as the temporary ones necessary for the construction of projects. Since we are operating in Canada, benefits and worker’s compensation have also been added to the expenses that our company will need to pay. The cost of goods sold will need to be examined along with an assessment of the risks associated with foreign currency exchange.

9.1 Cost of Goods Sold

All of the information used to provide an accurate understanding of the actual cost of goods sold is shown in Appendix K, Figure 1. For the costs, the number of MW



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produced per project (25) was multiplied by the price to purchase the panels in year 1 per W (0.54) and that was divided by 0.000001 (to get both numbers in the same unit). This gave us the cost of goods for one project and therefore we multiplied this number by 2 in the first year since that is the forecasted number of projects to be completed (Appendix K, Figure 2).

In Alberta, the target province, there are 107 towns. 31 of those towns have a population greater than 5,000. The approximate size of a solar field needed to supply a town that size with electricity for a year is 25 MW. The price of these projects is approximately 1,000,000 CAD per MW and therefore BluEarth will be charging, on average $25,000,000 per project. These projects are very large scale and take up to 2 years to complete. Therefore, in the first year of the company’s presence within Canada, attaining 2 projects seems reasonable since IBC will acquire the reputation and market knowledge of BluEarth Renewables.

9.2 Initial Investments

As shown in the Cash Flow statement (Appendix J), an investment of 7,500,000 CAD will be required initially. This is derived from research and development costs that will be essential in determining the best towns to target in Alberta and the feasibility of doing so. The other portion of this initial investment is for PPE, property, plant and equipment. In the first year of operations, IBC Solar will need to purchase some new equipment to help facilitate the maintenance and installation of the solar projects. This includes work vehicles for specific employees, storage areas for the few solar panels that will be kept in Alberta in case of emergencies, and installation machinery.

9.3 Sales Evolution

From first to second year, our sales are ambitious but reachable. The goal is to grow 50% in project acquisition between the 2 years. Therefore, attaining a total of 3 projects in the second year. The growth in subsequent years is estimated as follows, year 2 to 3: 25%, 3 to 4: 15%, and 4 to 5: 8%. The growth of this company is forecasted to continue as the way of the future pushes for a more renewable world. The cost of producing solar panels is going down and therefore the gap in price to purchase energy from a solar provider over a traditional energy provider is shrinking. Therefore, it is encouraged to move towards a more feasible, sustainable world, at a relative price. We estimate that this growth will be easy to keep up with as the foundation of BluEarth is there to support the needs of the newly acquired company with its market knowledge and relationships with the people. IBC Solar is a very capable and successful company and therefore will not be entering into a market that it is not familiar with. In the coming years, the company should see great success.

9.4 Cash Flow Evolution

As seen in Appendix J, the cash flow is set to grow substantially. Loans of the greatest extent will be taken out in year 1 to combat the extensive costs of starting up in a new



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country. After this first year, however, the repayment of that loan will begin to take place and the increase in cash flow will be realized. In this cash flow we take into consideration the growth of the company and the associated costs with salaries, number of employees, rent increases, and more.

9.5 Hedging Against Currency Risk

Our company in Canada is a subsidiary of the German solar energy company IBC Solar. Currently, our plan is to begin importing all of our solar panels from Germany. The main reason is that products imported from the parent company can ensure cost reduction under the effect of economies of scale while ensuring quality control. However, choosing to solely import from Germany brings tremendous risk to the company as we do not have anything to fall back on if the euro increases. Hence, we would use financial instruments such as forward contracts to limit or avoid the risk. For IBC Solar, we are most inclined to use the Swap method among different

financial instruments which not only can hedge the risk of interest rate fluctuations，but also

may reduce the interest of loans (Appendix M).

10. Long-term Strategy We believe that IBC Solar's expansion in Canada will have a high potential. Whether the current global attention and support for clean energy, the local policy support in Canada, or the technology and market advantages brought by the powerful combination of IBC Solar and BluEarth, all those will help IBC Solar Canada to occupy a place in the Canadian solar energy market. But in the future, we still hope that IBC Solar can be more promoted to the retail consumer market. Taking into account that BluEarth has no experience in the B2C market, we decided to start cautiously from the B2B market in the early stage of entering the market (1-3 years). Nevertheless, considering that IBC Solar’s German parent company and some overseas subsidiaries generally target the B2B market and B2C market for simultaneous sales, we will also learn from their experience in the near future and try to enter the direct market after gaining a better understanding of the Canadian solar energy retail market.



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Appendix A



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Appendix B

PESTLE Analysis

Political

Canada’s political stability ranks a 1.03 on a scale of -2.5 - 2.5. This number indicates that, for the most part, Canada is a country that is politically reliable, and it is unlikely for major changes to happen politically in a short timeframe (The Global Economy, 2019). This is good news for IBC entering Canada, since it will not have to be worried about rapid policy changes that affect the company directly. There are energy regulations in Canada that are laid out in the Canada Energy Regulator Act. This Act controls the use, infrastructure, and development of renewable energy projects. The Act also works directly with Indigenous people to address the impact that any energy projects may have on them and works to organize an appropriate compromise. This will be something for companies entering the energy market to consider, since much of the land is protected in Canada and will either need special permission to be used or they will be asked to find another area to suit the needs of the company (Government of Canada, 2020). As of right now in Canada, there are no extra taxation regulations for solar energy companies, however, each province is at leisure to provide tax credits for the use of solar. Tax credits and rebates are used to incentivize individuals and companies to switch to solar for their electricity generation (solacity.com, 2019). It may be wise for IBC to choose provinces that promote the use of solar in the first place.

Economic

Canada’s currency is relatively stable and is ranked the fifth most commonly held currency in the world (OFX, 2020). A stable dollar is good for companies entering Canada, it provides less fluctuation in prices and overall, more certainty. Canada’s GDP growth in 2019 was 1.7% and its GDP at 1.74 trillion USD (World Bank, 2019). A positive growth rate means that the Canadian economy is expanding, however not at the most rapid rate. This is still promising news for IBC entering the country, more growth equals more potential. The unemployment rate for Canada before the novel coronavirus took over the world was 5.6%. It is currently at 8.9% and it is uncertain as to what will happen with those numbers in the near future (tradingeconomics.com, 2020). However, IBC Solar could see this as an opportunity to hire skilled employees.

Social

The population of Canada is nearing 38 million people with a growth rate of 0.89%. Canada is growing relatively slowly, but still positively (Government of Canada, 2020). Having a large number of people provides new companies with many different target market opportunities to capitalize on. The education level of Canadians is also quite high, 62% of adults in Canada between the ages of 25 and 34 have achieved post-secondary degrees (Amyot, 2020). When compared to the United States, where only 36% had bachelor’s degrees (OECD, 2018). Companies entering Canada can expect a skilled workforce.

Technological

As of 2018, Canada was ranked 7th in the world in renewable energy production at 3% (Natural Resources Canada, 2020). Canada has already established that it has the capabilities to support the solar energy industry, as many renewable energy companies have been operating within this market for some time. This is good news for energy companies coming to Canada. These companies are able to see what its competitors are doing, how they are doing it and apply their competitive advantages to the industry. New companies are able to learn from the already existing ones and use it to their advantage. Although, this does mean more competition in the field.



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Legal

The Investment Canada Act addresses individuals and companies that acquire a Canadian company or plan to start their own operation and are not native to Canada. These non-Canadians must submit a notification or application for review. This act is necessary to protect Canada and the people within it. It must be deemed that there is some benefit for Canada through economic growth, investment opportunities, and job creation. These requirements are not in favour of companies entering Canada but are unlikely to deter many away. The requirements are not unattainable and if the company already operates internationally, it is unlikely it will be refused entrance (Government of Canada, 2020). The Government of Canada has legislation on wage and working requirements. These will need to be followed by any company entering the country. It is to be noted that the average wage is different in each province, however, it is relatively high compared to many other countries. Based on IBC Solar’s financials, it will be made clearer as to how many employees the company could hire while still being financially responsible. Of course, there are other laws to be mindful of when starting operations in Canada and these include: Employment Law, Health and Safety.

Law, Data Protection, Intellectual Property Law, and Discrimination Law. None of these laws are outrageous, but it is important to familiarize the company with them since there are likely to be differences across countries.

Environmental

Countries everywhere are scrutinized for the damage done to the environment. Canada is focused on creating a greener, healthier way of living largely through the reduction of pollution (Government of Canada, 2020). Solar energy companies are intended to reduce the amount of damage to the environment and use the resources that we have to provide us with electricity needs. However, companies still must take into consideration the greenhouse gas emissions of its operations. Oftentimes solar operations need large areas of land to absorb the greatest amount of sun, but choosing this land is critical. It must be in an optimal location for sunlight but also, not somewhere that disrupts habitats of many animals.



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Appendix C

Benefits and Drawbacks of Entry Strategies into Canada



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Appendix D

Five-forces Analysis

Threat of new entrants

New entrants still have to face cost disadvantages of technology and marketing. At the same time, considering the distribution channels, new entrants need to determine their own means of distribution since most existing energy manufacturing companies have their own channels or distribution from their partners. Therefore, for new entrants, this will become a significant barrier to entry.

Threat of substitutes

As a sub-industry of the power industry, solar power generation, thermal power, hydropower, nuclear power and wind power, etc. may have an alternative role for solar energy. Considering all types of energy, hydroelectricity is the largest segment of the renewable energy market in Canada (Energy and Mines Ministers’ Conference, 2013).

Bargaining power of customers

The buyers of the solar energy utility company are domestic users and commercial entities. Although the low-cost switching increases the bargaining power of buyers, most of the buyers are a much smaller size compared to the large energy companies. Overall, the buyer's bargaining power is to be evaluated as weak.

Bargaining power of suppliers

The upstream suppliers of the solar power industry are the battery and module industries. The price cost of battery components has a huge impact on the profitability of the solar power industry. Nevertheless, for IBC solar they started to integrate resources upstream and developed battery technology internally, which has received less influence from battery suppliers.

Competitive rivalry

Since electricity from renewable energy is a commercial product, the only difference is its source and any other services provided by the utility company, so the participants are forced to compete almost exclusively on price. This creates a particularly competitive environment, which is further promoted by the high fixed costs associated with the construction of renewable energy plants.



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Appendix E

SWOT Analysis

Strength

Brand Portfolio

As a solar energy company that offers a wide range of products with a number of brands, IBC can attract new customers with a broad portfolio of brands, while minimizing the risk of the company's over-reliance on a single brand. Not only that, as a parts supplier of world-renowned manufacturers, IBC provides solar modules for companies such as BenQ and JinkoSolar, but also inverters and storage devices for companies such as SMA Solar Technology, LG Chem, and Fronius. While being a supplier to a well-known manufacturer also makes it easier for IBC to enter various markets

Wide Range of Services

IBC Solar covers project management, consulting and planning for photovoltaic equipment installation, facility operation and maintenance, project financing, on-site support, after-sales and monitoring services, and a series of services ranging from planning to completion of photovoltaic equipment handover.

Global market

IBC has many different products and brands in various countries so that the company can provide services to customers in different markets, and it can also reduce the risk of over-reliance on a certain market. IBC Solar's business covers the Americas, Europe and Asia, and it also cooperates with more than a thousand high-quality companies.

Weakness

No financial support

Just as most private companies have in common; IBC Solar has been suffering from fundraising problems and lack of liquidity. Moreover, as an energy company, sufficient financial support is a guarantee to every circle in the operating process. Hence it can be posed as a shortcoming when considering private ownership.

Only Operates in the Solar Energy Sector

Many competitors of IBC Solar have projects in other renewable resources as well, such as wind and hydro. Having more than one renewable resource in IBC Solar’s wheelhouse would offer more opportunities for growth and development. Without this, IBC Solar may fall behind its competition as others are expanding across all energy sectors, not just solar.

Opportunities

Consistent New Product Launch

By releasing new and improved products on a regular basis, IBC Solar is able to retain and attract new customers. The launch of these products is expected to meet the changing needs of corporate customers and attract new customer bases. In July 2019, the company announced the IBC Aero Flat mounting system. Designed for commercial sheet and bituminous carbon roofs to minimize the risk of roof penetration and increase maximum stability. In May 2019, the



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company launched a new energy platform, efa: home. It is an intelligent energy platform developed to improve the flow of energy in the home. In March 2019, IBC Solar launched the era: powerbase. This is a new high voltage storage system. Developed to be equipped with 3-6 battery modules to expand the storage system capacity from 7.5 to 15 kWh. Through these launches, the company will improve its customer base and its profitability.

Positive Global Renewable Energy Outlook

As shown in the figure (Appendix H, Figure 2), since 2007, renewable energy power generation in various regions of the world has continued to grow until 2020 due to the impact of the epidemic and shutdown activities, as well as financing challenges faced by global companies. Nevertheless, according to the IEA, the production will be rebounded in 2022 (IEA,2020).

Although Covid has brought crises to various industries, the basis for the expansion of renewable energy has not changed. In most countries today, solar photovoltaic power generation and wind power generation have become the cheapest way. According to estimates, by 2025, renewable energy will account for 95% of the net increase in global power generation. Among them, by 2025, solar photovoltaic power generation will account for 60% of all new renewable energy capacity.

Threats

Development of Other Renewable Energy Sources

As mentioned above, with the development of other renewable energy, IBC Solar’s business could be affected. Among all types of renewable energy, solar thermal technology is the biggest competitor and constitutor to photovoltaic technology. The greatest advantage of solar thermal technology lies in its ability to store energy, which cannot be achieved with photovoltaic technology. The market for fuel cells is developing rapidly and new technologies developed with these products can reduce carbon emissions and generate high levels of electricity. These technologies, which generally have lower start-up costs, are being favored, which can reduce demand for the company's products and services.

Government Support Declined

To this day, solar energy remains an expensive energy source that requires a large investment. Most solar product manufacturers rely on government support and subsidies. To encourage the use of solar energy, the governments of many countries have provided subsidies to users, distributors, traders, and manufacturers in the form of cost reductions, tax breaks, and other incentives. Nevertheless, in the near future, with the increased use of solar energy, these subsidies may be reduced or eliminated. The reduction or elimination of government incentives is likely to pose a threat to the performance of solar energy companies, such as IBC Solar.



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Appendix F



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Appendix G

Price Method of Marketing

First, an analysis of the respective situations of leased land and purchased land needs to be completed.

Leased land

The most significant advantage for leasing land to establish a solar energy farm is the low capital investment at the beginning of a solar energy project, which is crucial considering for some companies or small local governments, this is a big barrier to entering the market. Plus, renting land to build factories can reduce a lot of early investment. Nevertheless, it should be noted that solar projects are usually long-term or even permanent projects. Therefore, considering long-term benefits, for customers, leasing land is not necessarily a better choice. Under normal circumstances, the land lease agreement for solar power plants is long-term, between 15 and 50 years, and considering inflation, an annual rent increase of 1.5%-2.5% is required. A suitable means to avoid rent increases for clients who choose to lease land when they have sufficient funds, a large upfront payment may be their better choice.

Besides this, when choosing leased land, consider the possible impact of some factors in different projects on fluctuation of rent. For example, the scale of the project. Generally speaking, the scale of the solar power plant is relatively large, and the rental cost per unit area is relatively



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low. But if some customers want to customize a small area of solar power plants, the unit rent is likely to increase substantially, which is caused by the cost of infrastructure investment and the resistance of landowners.

In addition, the difference in land rental prices in different regions is very large (Appendix C, Figure 1). It can be seen that the average land price per mu in Canada in 2019 was $3,245, while Ontario reached $11,446, nearly four times the price (Statistics Canada, 2020). Not only that, even in the same area, the price of land for different uses varies greatly. Under normal circumstances, the price of non-irrigated land may be lower than the price of irrigated land, which is also a big advantage for PV plants. Consider that most concentrated solar power plants (CSP) have to be built on flat land where the slope is less than 1% (Strategic Solar Group, n.d.) The utility-scale photovoltaic (PV) that BluEarth and IBC Solar are working on can use land with a steep slope and no water passage. With these in mind, when renting land, careful consideration, and suitable selection of land for power plants are crucial.

Purchased land

The biggest merit of purchasing land is that it can be used more freely, and the subsequent expenses are lower, therefore there is no need to worry about the increase in rent caused by inflation. At the same time, without the resistance from landowners, small-scale solar power projects do not face higher unit area costs anymore. Yet, the most critical shortcoming is the high initial one-time capital investment.

In addition, the acquisition of land, site selection and subsequent permits are a complex and a time-consuming process for solar power projects, occasionally taking up to 5 years. First of all, for site selection, similar to the site selection conditions for leased land, there is a wide gap in the price of different types of land in different regions. At the same time, the potential of solar energy in the region and other natural conditions must be considered and the development of solar power plants requires a certain degree. The land is leveled, and vegetation is cleared, which is necessary to minimize the damage to the environment.

Secondly, ensuring that the appropriate location is selected is only the first step in the site selection process. Land use, transmission rights and water rights must be considered, and solar power plants need to pass strict inspections by regulatory agencies. In addition, when building a power plant on private land, it must be approved by agencies at all levels before construction. Because of this, related project fees are charged, on top of charging a certain amount of fees during site selection, lease or purchase negotiation according to the size and workload of different projects.

In addition to the different strategies for purchasing and leasing land, two different payment plans will also be set up for customers to choose their preferred payment method: One will be a one-off payment, and another is expenses of the project as early payment, and settlement based on the amount of electricity used as later payment.

One-off payment

In order to avoid subsequent corporate debt or operational difficulties, this program will only launch for most private companies. At the same time, for short-term or uncertain solar power generation construction projects, it is recommended to use the one-time settlement method in order to avoid unnecessary risks. IBC’s one-off payment program here includes the payment of a deposit before the start of the project, the payment of part of the materials and construction costs in the early period of the project, and the payment of the outstanding balance after the



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project is completed. According to the survey, one megawatt of solar energy requires an average of 6-8 acres of land, and the cost of manufacturing one megawatt of solar energy is about 3 million US dollars. Considering that most of the target customers are public utilities, their demand is generally above 3 megawatts, hence it can be speculated that the development cost of a small to medium-sized solar farm project is about 10 million US dollars, which does not include the cost of land sales or lease. Additionally, taking labor, R&D, internal operation and other costs of the company into account, the one-off payment for a 3 megawatts ordinary non-customized solar power plant is about 20 million dollars.

Subsequent monthly payment

As the huge initial investment cost of solar power plants has become a concern for many potential companies and the government, the initial payment of costs, labor costs, and the subsequent charging based on power usage are an effective way to expand solar farms. The fact that more local governments, state-owned enterprises are willing to invest in solar energy projects in Canada, together with the increase in resident’s willingness to pay has encouraged the further growth of our program.

The initial rate of the payment could be varied, depending on different projects, companies, or local governments. Take a solar power plant that will be operating for 20 years and produces 3 megawatts per year as an example. After the project is completed, it will have to pay about US$10 million to US$12 million. The current average solar power price in Canada is around US$3.07 per watt. In order to be more competitive in the market, IBC Solar sets the price around US$3 per watt. In the following 20 years, considering the inflation and environmental policies of local governments, the electricity price will be slightly adjusted with the rate being floated around 2% each year. IBC solar draws 0.001% per watt per month, and its annual income is about 9 million US dollars.

For every situation, there will be a tailored strategy and model, however they are likely to fall in one of 4 categories. Either purchasing the land and completing subsequent monthly payments or purchasing and completing a one-time payment. The other 2 options are the same except for instead of purchasing the land, renting would be the option. Appendix C further demonstrates the pros and cons of each strategy the communities could pursue. IBC Solar will work closely with its clients to determine the best option for them.

Post-maintenance cost

After the solar power plant is completed, it needs to be maintained once every quarter. IBC Solar also provides follow-up services such as maintenance, repairing, and updating service. At the same time, different rates of handling fees are charged according to the difficulty of each service



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Appendix H

Figure 1: Sunlight hours per province. Retrieved from Retrieved from https://www.energyhub.org/solar-energy-maps-canada/

Figure 2: Renewable electricity capacity additions, 2007-2021, updated IEA forecast



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Appendix I

Appendix J

Cash Flow Statements



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Appendix K

Figure 1: Important Information Used for Financials

Figure 2: COGS



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Appendix L

Balance Sheet



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Appendix M

Swap method In order to repay loans (in Euro), SWAP is a significant method for IBC Solar to pay lower

interest rates during the exchanging and repayment process. IBC Solar has a competitive

advantage of the interest rate of Canadian Dollars, meanwhile BMW has a competitive advantage

of the interest rate of Euro, and needs to exchange Euro into Canadian Dollars.

Since both companies don’t have an absolute advantage, BMW could make contracts at 1.8% on

Euro and IBC Solar would contract at 2% interest rate for CAD, and then, both companies could

swap and have a lower interest rate.

CAD Euro

IBC Solar 2% 2.5%

BMW 3.1% 1.8%



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IBC Solar's International Expansion into Canada

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