The case study on PowerGen, corporate planning and strategy gives a clear picture of the power sector in the world. The article takes through the various developments and improvements that have been experienced in the company and how they have impacted on the society. This is a clear indication of how the management of the company can have an impact on similar activities in the country. There is a certain kind of power that has been exercised by the company management that has shaped the industry in the country (Spulber, 2007). The developments that were experienced in the organisation mainly came after it was privatised. The aim of this paper is to take us through the various developments that have occurred in the electric power industry in relation to PowerGen. A comparison has been made on the impacts of the company and other similar companies in other countries. There are certain management competencies that have been displayed by the organisation which have made it to have a competitive advantage over other similar corporations. The success of a business entity depends on their ability to predict future changes and needs and hence taking the necessary measure to ensure safety.
Meaning of ‘strategy’ and ‘corporate planning’
Strategy and corporate planning have a distinct meaning in the cases present in the study. PowerGen has gone through a series of developments due to the strategies that they have employed. Strategy is a term that has been used to define the preparations of the organisations before they entered into a certain business plan. PowerGen which formed the basic supplier of electricity and fuel in United States had to employ measures that will ensure that their customers are satisfied with their products. There were other smaller companies that fed from their plants and aided in the supply of such products to other areas (De Wit & Meyer, 2004). Before the company entered into business with another subsidiary company, they had to strategise to see whether the deal would be beneficial to them or not. After laying down the strategy, the company would now be involved in corporate planning where they will plan on how such activities will be carried out. ‘Strategy’ mainly involved the company staff while corporate planning involved other external business units.
PowerGen strategize on how to effectively carry out their business with other corporations. The idea of pools came in which was considered the best in ensuring that the company still had a competitive advantage over the others. It was after discussing the idea amongst them and came up with a solution that the company came out in the open. Through corporate planning, the company involved the help of other subsidiary companies with the aim of implementing the idea (Boutellier, 2008). The plan was aimed at leading others in ensuring that the resources of the company are not wasted. The company intended at ensuring a lower production cost of its electricity and passing on the same to other corporations. The main purpose that made the company to enter into business planning with other corporations was to facilitate regional supply of electricity. The company was engaged in other demanding activities of production and needed help in supplying it to different destinations.
Impact of changes in ‘organisational structure’ on PowerGen’s ‘Corporate Planning Process’ during the period 1990-1998
In1992, PowerGen changes its management system of centralisation and diversified its activities. This saw the company opening other branches in other divisions to enable to effectively serve its clients. It was also a procedure that would reduce on the work load at the central office (Hofstede, 2004). The corporation was divided into three other units that were involved in different management activities. The corporation was hence able to divide its labour force into specific categories according to their skills. This was one of the developments that lead to substantial growth of the corporation. This is because the corporation had to increase the number of managers who were station at different branches of the company. They were able to exercise their management skills which enhanced their experience. This was a rare chance that was given to the employees of the company to manage other units. They were able to exercise authority at their line of management which enabled them to take up bigger roles in the company.
The diversification of the company activities enabled it to reach a wider group of customers. This made the company to also reduce on the costs of having to use other middlemen. This was also a form of marketing strategy that enabled the company to increase on its income (Bradley, 2005). There was adequate manpower on the ground to manage company activities; this ensured that underutilized opportunities were adequately utilized. Diversification was a form that encouraged division of labour and specialization. Different branch units were specialized in specific activities; this in turn enhanced the quality of the work that was being produced by the employees. There was a pool in technical expertise which made the employees to come up with advanced ideas and technology that led to the growth and expansion of the company. The units of the organisation were given an independence that made them come up with their own strategies. Even though they were answerable to the central office, they were given the authority to venture into projects that they felt would be workable for them.
The reason for such independence was mainly because they were located in different areas that had varying needs (Tulder, 2006). Each unit was located and an appropriate manpower assigned in accordance with the needs of the area. They were to come up with plans that would enable them to effectively serve the local residence. They were also allowed to partner with any other organization as long as the partnership was profitable. They were also to organize their financial reports and other activities of their units. This also gave them the mandate to make investments in projects that were necessary for their various operations. The independence that was granted to such units’ enhanced diversity with the corporation which made the organization to satisfy its customers even the more. The central branch mainly oversaw such activities and minimized on any interruption. The units proved to go on well which gave the central office a confidence in letting them engage in other development projects. The units were to expand and grow as they deemed it necessary so as to reach a wider group of clients.
How PowerGen’s core competencies and capabilities accounts for its ‘market share’ and ‘profit before tax’ in England and Wales during the period 1991-1998
PowerGen has maintained a substantial share in the market despite the various challenges that came with their operations. The economic environment is usually faced with issues that may make a company not to generate as per their output. This is mostly due to the changes in people’s interests as well as competition from other similar corporations. PowerGen has however been able to counter such situations by adapting strong management skills. The company has been served with dedicated leaders who understood the objectives of the company. They have been careful to ensure that every decision made on behalf of the company would bear fruit. There was basically no idea that was implemented without a through consideration of its impact on the organisation.
The company has maintained a good relationship within its leadership and the other subordinate staff (Wickham, 2000). The company generally considers all its employees as important assets without which it would not reach such higher heights. This has in turn made them to adequately participate in the decision making process of the company. The manpower that is used by the company is also skilled in their work and responded fast to its development projects. They are a group of people that have confidence in the leadership of the company and hence working according to their directives.
The trust that the entire fraternity of the company holds towards each other has enabled it to venture in many activities. It was easy for the company to diversify and come up with other branches simply because they had competent workers. They were able to take up managerial positions due to the prior experience and training they had undertaken in the organisation (Deresky, 2006). The top managements had such confidence in them that they were given the responsibility of making decisions basing on their branches. To manage competition from other similar corporations, the company laid down a strategy way before when the organisations were dependant on them. It chose to partner with them so that they facilitate in the distribution of company products. Other corporations were basically looking for a means of partnering with the company as it had taken a strong base in the country. The company hence decided to involve them in their activities so that they don’t think much about competing them.
Core competencies and capabilities of the electricity suppliers, Electricité de France (EDF)
Electricite de France (EDF) is a utility company that has branches in Africa, Europe, Asia and Latin America. The company has total revenue of € 66. 34. It is hence ranked as the world’s largest utility company. The company was mainly established in France but has branches worldwide. It has continuously experienced a substantial growth which has in turn increased its income (Jain, 2001). The success of the company can be related to the various investments that have enabled tem increase their production capacity. Electricity being an important commodity for both domestic and industrial purpose has made this company to enjoy a vast market. The company has invested in power generating plants that which have a capacity of transforming hydro electric power into electricity. There are also high capacity generators that enable the company to effectively supply electricity to all its clients. The income that is generated by the company is mostly used to invest in other development procedures. The company also makes use of modern technology which has made its customers to enjoy fast and reliable services.
E.ON is an energy generating corporation which is based in Germany, Düsseldorf. The company was established in 2000 after a merger between VIAG and VEBA. A similar company that was established in UK was taken over by PowerGen. The company has entered through various mergers and acquisitions which have contributed to its good performance. The different mergers that the company has gone through have enabled it to intensify their activities and thus being able to reach variety of customers (Czinkota & Ronkainen, 2007). The company is specialized in the production of both electricity and gas and serves a wide variety of customers in Europe and other continents. The company has been credited for the various development projects that have enhanced the supply of electricity in the country. There has however been one criticized on the issue of wanting to set up a coal plant which is likely to increase the rate of pollution. Companies are aimed at employing environmental friendly measures and the decision by the company to install a coal plant has not been welcomed by the people.
E. ON and Électricité de France are hydroelectric companies that are doing well in the various countries. This is basically because of the management strategies that have been adapted by the companies. The companies have invested in installation of modern electricity generating plants and generators that have ensure a steady supply of electricity. The companies also realize the water shortage that may tamper with the generation of electricity (Leer, 1997). It is for these reason that they are engaged in water harvesting technologies to ensure that there is adequate water resources for such purposes. The companies also employ and encourage their customers to use energy saving appliances for their home and office use. This will not only minimize on their electricity charges but also enable the companies to adequately supply them with electricity all through the year.
Effect of ‘privatisation’ and ‘deregulation’ in the UK Electricity Industry on the merger between PowerGen’s and Midlands Electricity Plc in the mid-1990s
Privatisation is a measure that is usually undertaken by the government to enhance the productivity of an organisation. Private entities usually operate at higher standards which makes them more productive. The government may also be faced with other involving management activities and hence selling off their other entities to the private sector. There are different ways in which an organisation may be privatised. First the government may allow individuals or other organisations to have a biggest percentage in share capital while the government retains a smaller percentage. This hence means that the management activities are shared by the government and other private entrepreneurs in the organisation and retaining a smaller percentage (Ahlstrand & Lampel, 1998). This is like a partnership yet the private sector has a bigger say in the entity. The other kind of privatisation is where by the government sells the entire organisation to the private sector. This means that the private sector will take up the entire control of the management of the organisation. They will have the power to modify the entity into what they feel is right without having to be intimidated by anybody on the same. This is usually considered when the government is completely overwhelmed with such activities and needs an external body to play a bigger role in reviving the institution.
Privatisation of electricity plants in United Kingdom has had a number of both positive and negative impacts on the country. Privatisation was deemed necessary due to the need of the country to effectively manage the corporations. The private sector dedicated to effectively manage the corporations to ensure that the customers have access to a steady supply of the same (Lynch, 2006). The privatisation process involved a substantial amount of income considering the changes that had to be made. Even though the privatisation process had a positive impact on the way electricity was being supplied in the country, there were high costs that had to be incurred by the final consumer. This was mainly to incur for the other extra expenses that were incurred by the company to install modern plants. After privatisation, many organisations invested into the supply of electricity which enhanced on such supplies. The high expenses that were incurred on electricity expenses also made the citizens to opt for electricity gadgets that would ensure a minimum use of electricity.
A critique the ‘centralised approach to planning associated with the Central Electricity Generating Board (CEGB)’ in the context of Geert Hofstede’s (1993) article entitled “Cultural constraints in management theories
Even though the centralization planning approach was aimed at giving the company a competitive advantage, it has been viewed as a selfish strategy that was employed by the government. The company took advantage of the fact that similar corporations could not basically function without them. They seemed to partner with them when in real sense; they were aimed at keeping them completely under their management. They were not involved in the decision making process of the organisation but were obliged to act according to the wishes of the organisation. The company has wanted to have monopoly by being in charge of all electricity supplies in the country. Other corporations were basically not given an opportunity to fully venture into the generation and supply of electricity and were basically supposed to act as brokers to PowerGen (Johnson, 2008). When a company has monopolistic advantages, it means that they will high prices to their customers as they will have no alternative but to derive the resources from them. It also hinders other similar organisations from growing as they rely on PowerGen to make any managerial decision.
Central Electricity Generating Board was the main body that facilitated the supply of electricity in Britain. It was only after through consideration that the company privatised its activities. The privatisation process however took quite some time which delayed development projects in the sector. Most of the powers of the body were transferred to PowerGen which was not ready to allow other corporations into the field. PowerGen is considered to bear the qualities of a government entity by taking up monopolistic features. It took quite sometime before the company allowed other corporations to be independent (Mühlbacher, 2006). There was a fear among the managers of the company who thought they will lose their customers to subsidiary companies. They hence invested into other development projects that would ensure that they have gained a strong ground in Britain. Even though the company has tried its best to satisfy the needs of its customers, there was a need for it to empower other organizations so that the supply and production of electricity is enhanced in the country.
Electricity is an important commodity without which most organizations will be rendered dysfunctional. It is for this reason that Britain and other nations of the world have a lot of interest on how the sector is managed. Any poor management of the corporation will have an impact on the economy of the county as it is the basic source of energy. Companies that have invested in such supplies are also at an advantage due to the income they will be assured in the same. In the earlier years before the 1990’s most electricity generating corporations were owned by governments (Mullins, 2008). This was considered to be a sensitive sector that could not be left in the hands of private organizations. However as times changed and the private sector proved to be better managers, such corporations were privatized to enhance their performance. Privatization came with many issues that impacted on the society in one way or the other. All in all, substantial improvements have been experienced in the sector. Privatization ensures that there are a number of such corporations which will engage in quality production with the aim of attracting customers their way. As the procedure continues, customers will be sure of receiving competitive packages on their electricity supply which will improve their living conditions and standards.
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