As a part of Technology Management lesson that I had attanded eight months ago, I had prepared a term paper which shows steps of designating technology strategy of Vestas.
For total length of this term paper is around twenty pages, I am going to indicate each technology strategy step seperately in terms of positioning approach which can be found below:
To be able to select best competitive environment, first of all, we have to have a general information about wind turbine industry. Top players in wind turbine manufacturing market is listed below:
1) Vestas (Denmark)
2) GE Energy (United States)
3) Gamesa (Spain)
4) Enercon (Germany)
5) Suzlon (India)
6) Siemens (Denmark / Germany)
7) Acciona (Spain)
8) Goldwind (China)
9) Nordex (Germany)
10) Sinovel (China)
Biggest player in the market is Vestas Wind Systems A/S with more than %22 market share. Apart from that market is about to grow 20% percent each year through 2020.
Vestas’ headquarter and production facilities that produces various wind turbine components are located in Denmark. Annual sales of Vestas in MW have an inclination to increase prabolically each year, although the existance of crises. Because energy investment are long term planned investment and high rate of return, crisis did not have an adverse effect in investment decisions. Annual sales from 1986 to 2008 can be seen from the graphic below:
Vestas’ Sales in MW between 1986 – 2008
It can be easily said that demand for Vestas’ wind turbines are higher than supply (where this situation shows similarity with Technology Push Model but it is sure that our model is an nonlinear System Integration Model with some modifications in this case). If you decide to buy Vestas wind turbines which has a capacity ranges between 1.65 MW to 3 MW, they can hand over your turbines on 2011 which is earliest practicable delivery time. There are three types of wind turines capacities avaliable right now which are 1.65 MW, 2 MW and 3 MW with 80m and 105m hub heights (please check wind turbine components graphic for the terms). Apart from “Vestas’ Sales in MW between 1986 – 2008” graph above, it can be easily seen that Vestas is located in a emerging industry. According to Utterback – Abhernathy’s Dynamic Model (1978), Vestas is located on fluid phase, where it is trying to define exact needs of customers by trial and error method. Their machines in manufacturing plant, is not rigid but general purpose or modular machineries which can be adapted to further technological improvements. Vestas does not fit this model is in some certain point which is the requirement of being small scale company. Although Vestas is located on fluid phase phase now, it is a big scale company. If we just think about the future of this company on maturity period, then we can call current scale of company as small.
To be able to make you aware of the transportation costs, total tower wieght of a 105m wind turbine is around 285 tons, nacelle weight is 71 tons and hub weight is around 45 tons. So total weight of a 3 MW Vestas wind turbine which has 105m hub height, is around 435 tons. Around 11 extendable or regular lowbed trailers is used for the transportation of these turbines over land.
By taking this information into account we can say that total invesment cost for the investor increases as it gets far away from Vestas’ production facilities located in Denmark. Although Vestas headquarter and manufacturing facilities are located in Denmark, Vestas is selling wind turbines all over the world. For annual market growth rate for Europe 35% per year through 2015 and Kyoto targets are accepted EU member countries, best competitive environment for Vestas can be selected as Europe, especially countries located near Denmark such as Sweden, Norway, Germany, Netherlands, Belgium, Poland, United Kingdom. By taking the advantage of short transportation distances, Vestas can also provide competitive prices for the customers in target market. Vestas can also use advantage of being located in a European Union member country while selling its turbines in best competitive environment.
To be continued...
A.Yigit NEPHAN
25.02.2010
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