BALLARD POWER SYSTEMS IN 2024: WHAT IS NEXT?
CASE STUDY SOLUTION
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SYNOPSIS
Founded in Metro Vancouver, Canada in 1979, Ballard Power Systems (Ballard) was known for its hydrogen
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fuel cell technology. Ballard’s principal business was the design, development, manufacture, sale, and service
of proton exchange membrane (PEM) fuel cell products, which generated electricity by combining hydrogen
and oxygen, and emitted only water as a by-product. Despite strong revenue growth, Ballard had not reported
any positive operating income since going public in 1993, primarily because its rapid increase in research and
n
development (R&D) expenditures and administrative costs overshadowed its revenue growth.
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At the end of 2023, Ballard had cause to re-examine its investment in China. Previously a major market for
Ballard, China had accounted for only 11 per cent of its revenue in 2022. This was a dramatic change from
prior years; in 2020 China had represented approximately 52 per cent of Ballard’s revenue. In September
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So
The Case Solution Starts From page 4
,ASSIGNMENT QUESTIONS
1. What was the position of Ballard in the hydrogen value chain, and how and when did Ballard
technology help address climate change challenges?
2. Use SWOT analysis to understand Ballard’s internal strengths and weaknesses as well as the external
environment in 2021. Explain why Ballard had yet to achieve profitability.
3. China had been Ballard’s major market. Use CAGE analysis to justify this strategic decision. Ballard
chose to maintain the production of its basic technology—membrane electrode assembly (MEA)—in
Vancouver. What factors might justify this strategic choice?
4. The world changed after 2021. Revise your initial SWOT analysis to discuss the new external
environment at that time, and its potential impact on Ballard. Did Ballad have the necessary capabilities
to address the new opportunities and threats in the global environment? What new capabilities might
have been needed?
5. At the end of 2023, Ballard’s CEO Randy MacEwen needed to decide whether to proceed with the
company’s 2022 investment plan in China, involving a $130 million investment in Shanghai. If you
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were engaged as a consultant for Ballard today, would you advise the company to proceed with that
plan, given the strategic options available to it?
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m
Sa
ANALYSIS
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1. What was the position of Ballard in the hydrogen value chain, and how and when did Ballard
tio
technology help address climate change challenges?
The green hydrogen value chain (see case Exhibit 2) consisted of production, transformation, transportation,
lu
and end use. Ballard did not produce hydrogen or transport hydrogen, but its fuel cells, which converted
hydrogen to electricity, contributed to end uses, notably in several long-range transportation applications.
So
To attain their net zero emission goals, there were limited options for the heavy industry and long-haul
transport sectors to cut emissions, and hydrogen emerged as a key alternative that could address the issue.
For example, compared to battery electronic vehicles, hydrogen fuel cell electronic vehicles offered longer
The Case Solution Starts From page 4
, e
pl
5. At the end of 2023, Ballard’s CEO Randy MacEwen needed to decide whether to proceed with
the company’s 2022 investment plan in China, involving a $130 million investment in Shanghai.
m
If you were engaged as a consultant for Ballard today, would you advise the company to
proceed with that plan, given the strategic options available to it?
Sa
n
Option One: Exit from China and Focus Solely on Expansions in Europe and North America
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Pros
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• Reduced risk exposure in China, including geopolitical risks, risk in China’s economic development
prospect, and the risk of losing intellectual property in China.
•
So
Europe and North America were advanced, stable markets with favourable industry policies, making
them attractive for expansion.
•
The Case Solution Starts From page 4
CASE STUDY SOLUTION
e
pl
m
SYNOPSIS
Founded in Metro Vancouver, Canada in 1979, Ballard Power Systems (Ballard) was known for its hydrogen
Sa
fuel cell technology. Ballard’s principal business was the design, development, manufacture, sale, and service
of proton exchange membrane (PEM) fuel cell products, which generated electricity by combining hydrogen
and oxygen, and emitted only water as a by-product. Despite strong revenue growth, Ballard had not reported
any positive operating income since going public in 1993, primarily because its rapid increase in research and
n
development (R&D) expenditures and administrative costs overshadowed its revenue growth.
tio
At the end of 2023, Ballard had cause to re-examine its investment in China. Previously a major market for
Ballard, China had accounted for only 11 per cent of its revenue in 2022. This was a dramatic change from
prior years; in 2020 China had represented approximately 52 per cent of Ballard’s revenue. In September
lu
So
The Case Solution Starts From page 4
,ASSIGNMENT QUESTIONS
1. What was the position of Ballard in the hydrogen value chain, and how and when did Ballard
technology help address climate change challenges?
2. Use SWOT analysis to understand Ballard’s internal strengths and weaknesses as well as the external
environment in 2021. Explain why Ballard had yet to achieve profitability.
3. China had been Ballard’s major market. Use CAGE analysis to justify this strategic decision. Ballard
chose to maintain the production of its basic technology—membrane electrode assembly (MEA)—in
Vancouver. What factors might justify this strategic choice?
4. The world changed after 2021. Revise your initial SWOT analysis to discuss the new external
environment at that time, and its potential impact on Ballard. Did Ballad have the necessary capabilities
to address the new opportunities and threats in the global environment? What new capabilities might
have been needed?
5. At the end of 2023, Ballard’s CEO Randy MacEwen needed to decide whether to proceed with the
company’s 2022 investment plan in China, involving a $130 million investment in Shanghai. If you
e
were engaged as a consultant for Ballard today, would you advise the company to proceed with that
plan, given the strategic options available to it?
pl
m
Sa
ANALYSIS
n
1. What was the position of Ballard in the hydrogen value chain, and how and when did Ballard
tio
technology help address climate change challenges?
The green hydrogen value chain (see case Exhibit 2) consisted of production, transformation, transportation,
lu
and end use. Ballard did not produce hydrogen or transport hydrogen, but its fuel cells, which converted
hydrogen to electricity, contributed to end uses, notably in several long-range transportation applications.
So
To attain their net zero emission goals, there were limited options for the heavy industry and long-haul
transport sectors to cut emissions, and hydrogen emerged as a key alternative that could address the issue.
For example, compared to battery electronic vehicles, hydrogen fuel cell electronic vehicles offered longer
The Case Solution Starts From page 4
, e
pl
5. At the end of 2023, Ballard’s CEO Randy MacEwen needed to decide whether to proceed with
the company’s 2022 investment plan in China, involving a $130 million investment in Shanghai.
m
If you were engaged as a consultant for Ballard today, would you advise the company to
proceed with that plan, given the strategic options available to it?
Sa
n
Option One: Exit from China and Focus Solely on Expansions in Europe and North America
tio
Pros
lu
• Reduced risk exposure in China, including geopolitical risks, risk in China’s economic development
prospect, and the risk of losing intellectual property in China.
•
So
Europe and North America were advanced, stable markets with favourable industry policies, making
them attractive for expansion.
•
The Case Solution Starts From page 4
