Greenlight Planet: Made in China or Made in India?

CASE DESCRIPTION This case has been designed for use in junior and senior level undergraduate courses in Social Entrepreneurship or Business Planning, since students in either course may pursue business ideas that include social objectives or focus on the "triple bottom line." CASE SYNOPSIS In 2008, Greenlight Planet found itself making a critical manufacturing decision. The company had determined that the only affordable production opportunities for their solar-powered lanterns would be in Asia and began looking into cost and logistical details. Manufacturing in India, their target market, would lower transportation costs, avail them of tax breaks and provide the opportunity to create a grassroots movement. But the founders also discovered that Chinese manufacturers were financially competitive and allowed Greenlight Planet to consolidate their supply chain. What should the founders do and which country makes the most sense for the manufacturing decision? INTRODUCTION Patrick Walsh faces a critical decision about where to manufacture the solar-powered lanterns that he successfully marketed during the incubation stages of Greenlight Planet, the company he founded in 2004. Pondering the issue, Patrick considers the option of manufacturing in China, which could turn out to be the most competitive option in terms of price. But his partner, Mayank Sekhsaria, favors India as a sensible place to begin assembling the product since his family's business has had considerable success at contracting with factories there and has strong vendor relationships that could facilitate the process. Anish Thackar, the third partner, notes that since the product is sold in India, keeping the production process there will allow the entire management team be based in the same country and create domestic employment in India that could result in favorable treatment from the Central government. Patrick wants to focus on affordability, a crucial element for the ultra-poor consumers Greenlight Planet is targeting. But in this otherwise environmentally friendly industry of social entrepreneurs, he wonders whether the company will draw criticism for the carbon footprint associated with transporting goods from abroad, rather than using local production. The partners are now meeting to discuss their options and move forward with mass production. What should the team decide? BACKGROUND 2004--Early exposure to India During his sophomore year at the University of Illinois, Patrick Walsh was exposed to Engineer Without Borders (EWB), an organization that Patrick today describes as "ostensibly a development NGO but excelling in giving sheltered Western engineering students some intimate experience with the challenges in the developing world." He joined EWB and began working on an electrification project in rural India. The goal of the project was to install a vegetable oil powered generator that would bring electricity to the village for the very first time. While Patrick had read about international development issues at the base of the pyramid, this was his first opportunity to contribute in a meaningful way and he could not wait to move to India for the summer. During the installation, Patrick discovered that the village school, which was only half a kilometer away from the generator, could not be connected to the grid because the power lines would not reach that far. The villagers did not seem bothered by leaving the school off the grid as the children only attended class during the day, in plenty of sunlight. The team finished the installation and while the project was an overall success, the lack of electrification of the school really bothered Patrick. Spurred by his entrepreneurial spirit, Patrick began researching better alternatives that could offer superior performance at lower prices and more flexibility than the vegetable oil generators he was working with. He also wondered if he could improve upon the traditional kerosene lamps used in Indian villages and offer an alternative that could be cheaper and environmentally friendly. …