Subscribe free at the bottom of the page for an exclusive OCS Financial Calculations and Ratios PDF.


The SWOT is a great lens through which to view the Case Study. Most of you will be familiar with the acronym, which stands for: Strengths, Weaknesses, Opportunities and Threats. The SWOT therefore helps you to clarify and order most of the main elements affecting a firm. As a result, the SWOT really forces you to hone in on the key issues in the pre-seen materials. 

To spell it out further here is the formal definition for each part of the SWOT:

• Strengths: characteristics of the business or project that give it an advantage over others

• Weaknesses: characteristics that place the business or project at a disadvantage relative to others

• Opportunities: elements that the business or project could exploit to its advantage

• Threats: elements in the environment that could cause trouble for the business or projects




Remember that the strengths and weaknesses shine a light on the internal situation at the company while the opportunities and threats are more outward-looking.

The reason the SWOT is a great tool to employ when analysing the Case Study is because examiners are highly likely to hone in on the weaknesses and threats especially when devising their exam questions and they frequently do so. The examiner wants to see how you help deal with the frailties of the company and how you can aid your bosses in mitigating potential threats. The examiner also wants to see that the advice you give in the exam is in line with the strengths of the company and if you demonstrate an understanding of the opportunities available to the firm, you'll likely score well on business acumen and leadership skills.

So, let's take a look at the SWOT for Marici Power.



1. Marici is renowned for the high quality of its products due to having one of the most advanced solar cell production facilities in the world. Their products are efficient and sophisticated and the company has a history of innovation. This is key in the renewable energy industry in order to stay ahead of the competition and indeed, just to keep up with the competition. Therefore, it's undoubtedly a positive that Marici has a strong R&D focus and background.

2. As well as having excellent products it's clear that the company is very focused on pleasing the customer - Marici claims that "customer needs drive the entire business" and strong customer service helps differentiate their offer in this increasingly competitive industry.

3. The industry has been growing spectacularly in recent years and Marici itself has registered very solid revenue growth of 15% in 2015. Marici is clearly aggressively pushing for higher sales as is evident from the daily sales reports made available to managers so that quick corrections can be made if targets are not met. Sales growth is also a fundamental part of the company's future strategy. Because they are the largest manufacturer in their home market, Marici can probably take advantage of economies of scale, negotiate better conditions with suppliers and can fight off new entrants more easily.

4. In Freeland Marici distributes directly to commercial customers and uses installers to deal with domestic buyers. Internationally, we are told that Marici uses distributors to reach its customers. These varied routes to market help to diversify risk and give the company more reach than if they were reliant on just one distribution channel. 

5. Marici has very recently been bought by the Wala Solar group which we are told is a major global player. Wala offers Marici its financial muscle and expertise, not to mention potential cost savings should they choose to fuse processes thus achieving economies of scale.


1. It's interesting that in the "Future Strategy" section of the pre-seen material, Marici states that its aim is to merely maintain its position as market leader in Freeland so really, it seems they have squeezed all the juice from their home market and if "maintaining its position" is the extent of their ambition then the company could be in trouble. Freeland represents a massive 85% of turnover so the company is not geographically-diversified in the way it probably should be. In the pre-seen it is explicitly stated that "demand will still be highly concentrated in a handful of countries, presenting significant risk to those companies who do not have a strong market presence in these countries". It is blatantly obvious that the examiners see this as a key issue for Marici and I would expect to see it come up in plenty of the exam variants in November.

2. Due to the fact that the production facility is one of the most advanced in the world and it's based in the capital city of a developed western European country, it's safe to assume that costs for production and labour will be very high.

3. Along with the general quality and efficiency of the solar panels, the other key element driving demand is their cost to the customer. Solar has been an affordable option for customers in recent years particularly because of generous subsidies and tax cuts from the government e.g. VAT on solar panels in Freeland is just 5%. With sentiment starting to turn and a general trend in falling subsidies, it is undoubtedly a weakness for Marici and the industry as a whole to have to rely on these government breaks to ensure their products are considered affordable.

4. Marici may well have a cost issue that makes them uncompetitive compared to the Asian rivals that flooded the market with cheaper products between 2009 and 2011. These cost issues stem from Marici's location in the capital city of a wealthy western European country, but also from its reliance on third party suppliers for its key material input (polysilicon). Undoubtedly, suppliers of polysilicon solar wafers must have huge bargaining power (think of Porter's 5 Forces). Most of these suppliers are based in the US and China and in fact, most of them are also in the business of producing solar panels themselves so are unlikely to be overly-kind to a potential competitor who is reliant on their materials! Moreover, polysilicon is prone to huge fluctuations in price which creates great uncertainty for Marici.

5. Like many firms in the solar industry, Marici is highly leveraged. Undoubtedly, the particularly lean years of 2011 to 2014 meant Marici had to take on more debt to keep its head above water. This high level of debt means Marici is paying very high interest which is eating into its operating profit and leaving it with a razor-thin net profit margin of just 0.2% in 2015.

6. The cash and liquidity positions for Marici are worrying but again, not altogether surprising given the lean years it has endured. At least the cash position has improved slightly since 2014 but liquidity has not - the quick ratio for 2014 was 1.4 while in 2015 it has fallen to just 1.1 meaning that Marici barely has enough liquid assets to cover its immediate obligations. The cash conversion cycle (inventories + receivables - payables) is long at 180 days in 2015, meaning the company's capital is tied up for a long time while waiting for a return. The large stock of inventories is particularly dangerous in an industry that is constantly evolving. They could potentially become obsolete unless Marici is able to shift them quickly.


1. Marici could look to improve the efficiency of current PV technology and the effectiveness of inverters in generating more electricity giving buyers the opportunity to sell even more excess power to the public grid. This would allow them to really focus on selling the benefits of their best-in-class offering, distracting consumers from price issues related to the decline in government subsidies. All of this would require plenty of R&D but luckily, Marici is strong in this area. Moreover, with the financial power and expertise of Wala, Marici can expect to have access to even more technical know-how and it will have the ability to develop prototypes and scale up more quickly than before.

2. There are a number of ways in which Marici can diversify its product offering:

• by expanding into the production of higher quality batteries which are currently unreliable

• offer more maintenance services. The cleanliness of solar panels is very important and regular inspections are necessary

• They could also diversify by targeting the utility-scale installation segment. We are told this segment has become the largest in the solar market since 2014. There seems to be a push towards these installations given how cost-effective they are and the same subsidy cuts evidenced recently in Freeland do not look like being extended to utility-scale installations

3. There is clearly high growth in the solar PV market with 22.5% of all installations being implemented in 2015 alone but that growth is not occurring in Marici's traditional markets. There is a need to expand into other markets - so, which ones? The markets that are growing are China, Japan, USA and to a lesser extent, UK and the rest of the world. China could be a tough nut to crack as the very largest solar company in the world is based there (Trina Solar) as well as a number of other big companies. The US has cut subsidies in recent years and seen some high profile players go bankrupt like SunEdison earlier this year so it's not necessarily the most hospitable territory. Japan has less intense competition but it's a very different culture to adapt to. What's clear though is that Europe is not a growth market and there is a need to generate sales growth elsewhere. Of course Europe still has the most installations with 49% of total GWs at the end of 2015, so perhaps there is a good opportunity to offer ongoing maintenance services there. The problem at the moment is that Marici is dependent on both Europe and new installations/orders. They either need to change their offer (maintenance etc) and/or target new markets for new orders.

4. Marici needs to mitigate the risk of price fluctuations of polysilicon wafers. Prices for this key resource are at historical lows (down from $400 per kg in 2007/08 to $20-25 per kg at the end of 2011) and now would be a very good time to lock in low prices by negotiating new fees with suppliers. That is in the case that neither Marici nor Wala can produce the polysilicon in-house (but perhaps that's too expensive or they don't have the technology or required expertise).

5. With the takeover by Wala, Marici has an opportunity to gain economies of scale by merging production. Alternatively, if this is not in Wala's plans Marici could offshore some production and warehousing facilities to cheaper developing markets. This also diversifies the risk of damage to inventories or production halting at its current premises in Freeland.

6. The government in Freeland has recently slashed subsidies to households by a massive 60% and it has also cut subsidies for commercial projects. Given the fact that these are the two segments Marici currently serves it is potentially fatal to the company. Apart from expanding into new markets and/or product areas, Marici could start to aggressively lobby government in Freeland. Potentially, they have an ally in the form of the shadow energy secretary Lisanne Furwell who has spoken out against the cuts to subsidies.


1. There are numerous substitutes such as wind power and tidal energy that threaten solar power companies such as Marici. The companies in these sectors may steal ahead of solar in terms of cost effectiveness and/or functionality

2. Given the recent trend noted in Western economies of government cuts to subsidies and tax breaks for the solar industry, it would not be surprising to see more countries follow the lead of the UK, US and the fictional Freeland in leaving solar companies battle it out on the basis of free-market forces

3. I see the danger of a public backlash from two stakeholder groups in particular: the general public and employees. To date subsidies for solar have been funded by additional charges on the general public's energy bills. Politicians supporting the recent cuts to subsidies in Freeland have used that fact to drum up support for the reductions. If that general trend is repeated elsewhere the tide of public opinion may move decisively against solar as a viable alternative to traditional fossil fuels. The second group that may make life uncomfortable for Marici is its own employees. In the "Future Strategy" section on page 7 of the pre-seen, Marici talks ominously of "cost reductions in all organisational units" i.e. redundancies. This report is taken from the 2015 annual report. Given the fact that Wala has concluded its takeover of Marici in February 2016 they may plan to lay-off even more workers. Clearly that will have an effect on morale and may also prove costly given Marici's location in a rich western capital city.

4. Interestingly, the 2012/13 import tariffs and duties imposed on Chinese manufacturers of solar cells and panels by the US and European Commission may be less watertight than they seem. Many non-Chinese Asian firms continue to sell their products at well below the average prices charged by European firms. It may also be the case that the removal of government subsidies in recent times is extended to a more general withdrawal of government forces from the solar market leaving private firms to battle it out on price. If that were the case, European firms such as Marici would have a hard time fighting off their cheaper Asian rivals. On the other hand, the Chinese government seems to have no such intention as we are told that 2015 sales growth was largely driven by government policy there.

So, there you go! As I said, the SWOT is a great way to come at the pre-seen and helps you focus on most of the key issues affecting the company. With intimate knowledge of the SWOT you have a great advantage and nothing that comes up on exam day should veer too far the issues highlighted above.


Don't forget to check out our other articles on the Nov16 OCS here and here for more invaluable analysis of the Marici pre-seen material.


Visit our YouTube Channel for free, exclusive video content to optimise your exam preparation.