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Product cover image for Vestas Wind Systems: China and the Global Wind Turbine Market

Vestas Wind Systems: China and the Global Wind Turbine Market

Christine Cote, Saul Estrin, Daniel Shapiro, Katherine Nunner

Product #:W25129
Supplier:Ivey
Discipline:General Management, International Business
Setting:China, 2021
Details:Case (PDF) • 17 pages • 2021-10-20

Subjects:

Environmental sustainabilityBusiness and societyBusiness managementInternational businessManagement

Industries:

Fabrication and manufacturing

Geography:

AsiaChina
Your Price:$9.71

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Vestas Wind Systems A/S (Vestas), a Danish company, had deep roots in the wind technology sector and had positioned itself as a solutions provider. While it was a global leader, it lacked significant market share in China, even though it had been carrying out manufacturing there for decades. China presented unique challenges, as it was dominated by local players and had its own rules for doing business. However, China also presented significant opportunities for a company like Vestas given its enormous market and the potential for cost savings in Vestas’s supply chain. Given these conditions, Vestas’s senior management had to decide how to develop the company’s international strategy for the next ten years, particularly with respect to China.

Learning Objectives

This case can be used to teach master of business administration or master of management courses on global strategy or international business. It can be used to demonstrate the challenges and opportunities of operating in the high-priority sector of renewable energy. It illustrates the strategic issues arising for a company like Vestas in the face of difficulties in penetrating the Chinese market, where preference is given to local competitors; the attractive yet eroding cost benefits of a China-based supply chain; the cost shocks brought about by the US-China trade war; and the disruption caused by COVID-19. After working through the case and assignment questions, students will be able to do the following:
  • Understand the context of the global sustainability drive and its impact on renewable energy.
  • Understand the international strategic motivations of the world’s top wind energy company, Vestas.
  • Evaluate the strategic choices surrounding global value chains, including both location and governance (internalization) choices.
  • Understand the challenges of operating in China in a sector where government policy favours local firms, often state-owned, and where “good-enough” strategies often prevail.
  • Determine how local competition and rising labour costs can affect the attractiveness of supply chains located in China.
  • Create an analytical framework for determining the next steps for Vestas.
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Case Study: Vestas Wind Systems: China and the Global Wind Turbine Market (English version) | Ivey Publishing