Southwest Windpower Inc. History Southwest Windpower Inc. was founded in Arizona in 1987 by David Calley and Andy Kruse, who were able to recognize business opportunities, related to manufacturing wind-power electrical turbines, intended to be used on individual basis. In 1986, Calley invented a 300 watt wind generator, called Windseeker, which Southwest Windpower Inc. began producing in 1987, to address the demand for such generators in predominantly rural areas. The production of Windseeker continued up until 1990 and was associated with the great commercial success, on the part of newly founded company.
In fact, from 1987 to 1990, Southwest Windpower Inc. was able to triple the initial sales of Windseeker and to expand the range of its operations on international markets. By the beginning of nineties, Calley and Kruse had realized that Southwest Windpower Inc. needed to undergo organizational restructuring, as it was having a hard time trying to keep up with demands of the market. This prompted Companys founders to sign a contract with Wind Baron Corporation in 1991, which contained provisions for the integration of Wind Baron production lines with that of Southwest Windpower Inc., in order to significantly increase the number of produced Windseekers. However, this executive decision, on the part of Companys owners, proved disastrous, as Wind Baron Corporation was unable to stick with the terms of a contract. In 1993, the contract was being canceled, but the whole ordeal had a negative impact on the competitiveness of Southwest Windpower Inc., because, from 1991 to 1993, there were no Windseekers manufactured.
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In its turn, this prompted other companies to enter the market of wind-power generators, designed for the domestic use, which resulted in Southwest Windpower Inc. having to deal with fierce competition, on the part of newly emerged rivalries, by the time it re-entered the market in 1993. By 1994, the initial design of Windseeker was being improved. Calley and Kruze also decided to reorganize the process of manufacturing, in order to make it more cost-effective. This came along with introduction of a new series of wind-power turbines called Air. The article Company History, which is available on the web site of Southwest Windpower Inc., provides us with insight on the speed, with which Company was regaining its share of air market in 1994: June 1994: The Air series wind turbine was introduced to the public with shipments commencing in November of that year.
Approximately 18,000 Air Marine, Air Wind Module, and Air Industrial wind turbines were produced and shipped to over 100 countries, making it the best selling battery charging wind turbine in history (Southwest Windpower Inc.).
Companys sales in 1994 accounted for $200,000. The following year, the amount of sales jumped to $1.1 million. It was being estimated that, by year 1995, there were over 2800 Windseeker and Air turbines operating in 42 countries, around the world. In 1998, Southwest Windpower introduced a new line of its products, called Air 403, which featured numerous technological innovations being incorporated, as part of its design. Air 403 was the most technologically advanced wind-power generator at the time, which is the reason why the amount of placed orders on this type of turbine in 1998, exceeded Companys manufacturing capability by more then three times.
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Between 1998 and 1999, more then 12.000 Air 403 were being produced, while firmly establishing Southwest Windpower as the largest company, on the market of wind-power mini turbines. With the beginning of a new millennium, Southwest Windpower underwent an organizational restructuring, once again, as it was believed that the turbines with larger operational capacity were going to be in big demand, over the course of next few years. In 2000, Southwest Windpower acquired the operations of World Power Technologies of Duluth, while hoping that this would allow it to gain a better competitive edge. However, the practice showed that this was an unnecessary move, because sales fell sharply, as result of this managerial decision. It is only in 2001 that Southwest Windpower was able to fully recover from the depression of 2000. Nevertheless, even though the initial hopes of Companys owners to exploit the industrial share of air market were being proven as unsubstantiated, by 2002, the situation improved greatly, in this respect.
This was largely due to the fact that in 2000, Southwest Windpower became the first wind turbine manufacturer to receive UL and IEC certification for its Air wind turbines. In other words, Company was made eligible to sign contract with governmental organizations in U.S. In 2002, Southwest Windpower introduced a new line of micro-wind turbines Air-X, which featured a microprocessor, as its most important operational component. The output effectiveness of the new turbines was increased by 20% and they produced virtually no noise, while rotating. In its turn, this greatly increased Air-X commercial appeal. Companys web site states that, as for now, there are 90.000 Air-X in operation. The same year was marked with Company being nominated as Small Business Exporter of the Year.
Despite Southwest Windpower Inc. relatively small size, it was able to gain popularity in 62 foreign countries. In fact, by 2002, 50% of Companys sales accounted for export of turbines abroad. In 2005, the decision was made to double the size of Companys production facilities, in order to address the increasing demands of the market. At present time, Southwest Windpower employs 90 people, comparing to 60, at the beginning of 2006. Because the amount of sales increased by 50%, during the course of 2005 and 2006, Southwest Windpower became the object of close attention, on the part of potential investors.
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In 2006, Company announced completion of an $8 million Series-B equity investment led by RockPort Capital Partners, a venture capital firm in Boston. This significantly improved Companys financial standing and allowed its managers to consider the possibilities of long-time investments, on their part. In the same year, Southwest Windpower began manufacturing a new type of micro-wind turbines, called Skystream 3.7, which are being specifically designed for the residential use. These turbines became an instant hit, on the air market, and resulted in situation when Companys managers now consider the policy of continuous expansion as such that should serve as basis, upon which Southwest Windpower business strategy is based. S.W.O.T Strengths The commercial strength of Southwest Windpower Inc. derives out of fact that Company operates on largely unexplored market, which nevertheless, is associated with very good prospects of expansion. In U.S., the monthly electrical bill, per single household, often goes up to $200. The fact that government continues to introduce new rules and regulations, in order to increase the levels of safety, associated with operating nuclear power plants, causes the price for electricity to rise, on continuous basis.
As result, more and more people in this country often have a hard time paying their electrical bills, especially when they excessively rely on its usage. Therefore, it was only the matter of time, before manufacturing of residential wind-power turbines, would become associated with the prospects of making a commercial profit. As for today, there are only five other large manufactures of wind-power generators in the world, which rely on exploiting the same share of the market, as Southwest Windpower does – Bergey Windpower, Vestas, GE Wind, Enercon and Gamesa. However, neither of the rivals leads the way in designing of micro-wind turbines. They simply strive to exploit the existence of demand gaps on the air market. In her case study Southwest Windpower, Lisa F.
Borstadt comes with a suggestion of what can be considered as Companys greatest strategic advantage: Over the last 10 years, the renewable energy industry has grown at a rate of up to 30% per year. Southwest Windpower is about five years ahead of the closest competitors. This competitive advantage should enable the company to achieve a high profit margin on sales (Borshtadt).
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Even though this case study was being conducted in 1996, the conclusions to which author came, during the course of her research, still remain valid. The operating strength of Southwest Windpower, as commercial enterprise, also corresponds to the fact that Company is keeping a close eye on what defines the dynamics on the market of residential wind-power generators. Southwest Windpower managers invest great amount of time in researching the essence of economical trends that might have effect on the Company, as whole.
Unlike it its main rivals, Southwest Windpower relies on results of sociological surveys, conducted on annul basis, when it comes to designing its business strategy. For example, the introduction of Skystream 3.7 was prompted by customers tendency to buy wind-power turbines that are user-friendly. The article Southwest Windpower, which is available on the web site of Answers.Com, refers to Skystream 3.7 as such that requires very little effort, on the part of owner, when it comes to operating it: Southwest Windpowers latest turbine, the Skystream 3.7, stand 35 feet high and can generate up to half an average home’s energy in optimal winds, requiring less than one acre of land for operation. The company calls Skystream the first plug and play backyard wind generator. This is because the generator’s inverter is build-in, requiring no external box or wiring (Answers.Com).
Thus, we can say that the main competitive strength of Soutwest Windpower derives out of very essence of air harvesting, as innovative method of producing electrical energy. Weaknesses The prediction of developments on the market of wind-power generators is the subject to significantly greater number of independent variables, comparing to other commercial markets.
This is the reason why many executive decisions, on the part of Windpower owners, proved to have a negative effect. For example, when Calley and Kruse decided to unite their companys production effort with that of World Power Technologies in 2000, they were relying on economic forecasts, which left no doubt as to the fact that in 2001-2002, the market demand was going to shift from micro-wind turbines to generators with significantly greater production capacity. However, it never happened, which was the reason why Company sustained a great financial loses, within this period. Thus, it will not be an exaggeration to say that the main weakness of Soutwest Windpower, as commercial entity, is the fact that there is no reliable method of predicting the trends, on the market of residential wind generators. This is because micro-economic factors define these trends to significantly larger degree then macro-economic ones. Although, Soutwest Windpower is being regarded as the largest of all manufactures of wind-power turbines, it is relatively small, comparing to transnational corporations, which one day might become interested in acquiring Company, as one of their divisions.
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Being fully focused on addressing the current demands of the market, prevents Companys managers from considering investments in long-time projects. In its turn, this deprives Soutwest Winpower of commercial competitiveness, in strategic context of this word. Calley and Kruse regard Soutwest Windpower as their personal domain, even though Company went public long time ago. Despite the fact that their managerial decisions often proved to be wrong, throughout the history of Southwest Windpower existence, they still insist on having the final word, when it comes to designing Companys business strategy. Opportunities The commercial opportunities of Soutwest Windpower are strongly related to the fact that the market of wind-power turbines remains largely unexplored. The article Finally Time for Wind?, which is available on the web site of TelosNet.Com, leaves no doubt that wind harvesting, as the way of producing energy, is going to become more and more popular, as time goes by: The major technology developments enabling wind power commercialization have already been made.
There will be infinite refinements and improvements, of course. One can guess (based on experience with other technologies) that the eventual push to full commercialization and deployment of the technology will happen in a manner that no one can imagine today (TelosNet.Com).
This provides us with the insight on the very nature of business opportunities, which can be utilized by Soutwest Windpower, for the purpose of making profit. The depletion of natural resources, which were being traditionally used as fuel by power plants, will inevitably have a negative impact on the individual consumers of electrical power. Therefore, it will only be natural, on their part, to seek alternative sources of energy. Wind harvesting has its own drawbacks, but its commercial appeal cannot be underestimated.
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