Strategic Management Assignment: Developing Potential Strategic Option for Ffestiniog Power Station
Question
Task: Your task in this strategic management assignmentis to produce a consultancy report for that company that clearly outlines the Strategy that it should pursue in order to compete in the selected strategy.
You should develop one potential Strategic Option for the company and recommend and justify this for the company.
You should use appropriate tools and frameworks in order to develop the strategy.
Answer
Introduction
The report on strategic management assignment discusses about the hydroelectricity organisation named Ffestiniog power station that was developed in the year 1963 in the United Kingdom. The power station was established to generate power facilities through hydroelectricity. The power station generates an annual power of 370MW, which is enough to provide electricity to an entire place of New South Wales (Fhc. 2021). The power station cycle operates at LlynStwlan that is the higher reservoir. Water is stored in the reservoir and later is driven back into LlynStwlan to generate the whole process of the cycle. The water is, however, are drained into the power station and later they are converted into electricity that provides power supply to the entire place. Furthermore, the report will discuss the market scope, market segment, market size, key competitors, market share, and segmentation of the Ffestiniog power station. Additionally, in the report it will be discussed about the predicted growth, predicted developments, regulations of the government, new technologies, new business model, the stable value of the customer, business to business behaviour, modern behaviour of supplier and existing services and products that mark the end of the business of the designated power station. Finally, the analysis of findings will be made to generate a conclusion about the power station.
Details of the industry
a. Market Scope
The Ffestiniog power station is monitoring a time of significant changes as the power station industry is developing itself from a large scale power generator to intermittent generation of renewable resources. The electric power station is predicted to grow at a CAGR of around 2.10% from 2018 to 2025 (Mordorintelligence. 2021). The power station has planned to interconnect its power generation with other countries like Irelands, Netherlands and Ireland. The power station will get maximum support when it starts its business with other foreign countries. However, they try to expand their business to other parts of the world to gain maximum revenue from the market.
b. Market size
The Ffestiniog power station is expected to grow at $4.8 billion in the year 2021 and is expected to reach 6.2 billion by the year 2031, growing at a compound annual growth of 5.1% from 2021 to 2031 (Mohite and Danekar, 2021). The designated power station is used for an extended term of energy supply through an electricity supply and conventional energy station across the world. The power station provides a more innovative, integrated, and modular generation of power through the demand management system. The power plant can also reduce emissions of carbon dioxide.
c. Key Competitors
Several integrated power stations provide electricity supply to several places in the United Kingdom. Some power stations like Ashford, Barking and Barton are situated in different parts of the United Kingdom. Like Ffestiniog power stations, the other mentioned power stations also provide electric supply covering areas of greater London and southwest.
d. Market share
The power station has a market share of 8.4 per cent in the United Kingdom. The UK-based electric provider had a total income of around 90 billion in 2021 (Statista. 2021). The power plant controls the power generation market, where it provides a range of electricity to the houses living in the area of New South Wales.
e. STP
Segmentation
The industry has monitored that the use of mobile phones and the internet is increasing daily with other positive outcomes. The Ffestiniog power plant has segmented up to 2 megawatts and 1 to 12 megawatt that can be associated with small range centralised projects (Market, 2021).The Ffestiniog power station is predicted to grow at an integrated revenue by developing the CAGR on the forecast during 2020-2030. The market's rise can be regulated by the growing demand for electronic appliances across the world, the structure of traditional electricity, and the growing use of power in remote locations (Researchnester.com. 2021). In the year 2018, about 4.2 billion people use smartphones internationally. The usage of smartphones grows more up to 5.6 billion in the subsequent years in 2021 (Researchnester. 2021). Improving customer investment is predictable to generate market expansion in the upcoming years.
Targeting
The power station has targeted mobile users across various places in the United Kingdom. The industry has segmented its audience according to its needs and preferences. It had made use of policy pricing so that people of all income ranges from low to middle can afford electric power.
Positioning
Ffestiniog power station wants to develop an excellent relationship with its internal and external stakeholders like managers, engineers and government bodies, including NGOs, respectively, to positively impact the global environment. Also, the company needs to create a particular board that can deal with the issues that will arise regarding power generation and its supply.
f. Perceptual map
Industry Trends
The supply of hydroelectricity continued to take a massive range of electric power from the Ffestiniog power station. Hydroelectricity is the traditional form of energy that generates its power usage for watermills (Power-technology. 2021). Hydroelectricity in recent times has been the dominant source of renewable energy in the world. Hydropower is generally protruding in the United Kingdom. The selected power station is expected to grow by 130 gigawatts by 2024, but the annual growth has slowed down in recent times. The power station has the potential to go under high-scale dams and challenges associated with the projects. After adopting digitalisation, the industry has been predicted to emit carbon by 30 metric tonnes while enhancing the output by 2% (Power-technology. 2021). Furthermore, it can operate five billion costs of operation while savings.
a. Predicted Developments
TheFfestiniog power station has developed pumped storage that will be useful for counteracting in the supply of power chain. The energy delivery will be started from tidal scheme to barrage system in the year 1953 (Icevirtuallibrary. 2021). The turbine has, however, worked better than the expectations. The installed pump storage power plant is predicted to cope with the increased demands to generate similar services as earlier.The designated power station has the opportunity to generate thermal plants to ensure energy sufficiency at night time and end of the week.
b. Government Regulation
The electric act of 1989 provided the development of the United Kingdom'sFfestiniog power station. The traditional electric boards were regulated by regional electric industries. The central generating board of electricity owned the power station of the United Kingdom (Practicallaw. 2021). The generating boards are divided into four industries which are generally personalised. The transmission of the United Kingdom was transformed into national grid companies. The suppliers of the industry are, however, licensed for the sales of electricity to end clients. The regular competition was incorporated in 1998 with both industrial and domestic consumers that made them change and select the supply of electricity.
c. New technologies in the industry
The Ffestiniog power plant plans to adopt a virtual power plant to forecast, monitor, analyse and optimise their energy. The virtual power plant guides the power generation and develops the conditions for regulating renewable sources in the industry (Next, 2021). The VPP allows integrated technology which makes the industry easier to sustain and develop the consumption of energy. The managers of the industry, by sitting in their offices, control the whole system with the help of the software that is installed on the computer. The power plant also makes use of artificial intelligence to enable voice command in regulating the whole system of the power plant.
d. The business model of the industry
The mix of generations is the fundamental business model that is taken into consideration while regulating the market change. The Ffestiniog power plant is generating huge expenses in hydrocarbons to change water into electricity. Storage of energy is another business model that regulates substitute paths to divergence. The storage of electricity provides reliability and generates a more robust supply of energy from renewable sources.The joint venture is the primary business model that makes the Ffestiniog power plant expand its competencies (Beaney and Colin, 2021). The generation of power business model regulates from one method supply to two method supply that makes the consumers active.
e. Customer behaviour
The behaviour of customers changes according to the time as the preferences and needs change to meet the requirement of the industry. Ffestiniog power plant has targeted the choices of the individual that have generated customer behaviour that demands existence. Technological innovation and connectivity of the Internet have started the establishment of side management that generate energy network. The distribution supplier monitored the growth of customer demand for a solid customer base.
f. Business to business behaviour
The business-to-business environment is associated with several shareholders that involve the latest projects that are applicable for motivating and buying customer behaviour that drives the decisions of the customer (Apollo. 2021). The customers have a unique option for purchase that a customer generally needs to segment the advantages and disadvantages of the Ffestiniog power plant. In the power plant industry, generate quality details through a digital medium that has to make the buyer gain information self-reliantly. The buying team of the business-to-business market has a strong solution that includes many decision-makers, and each decision should have to deconflict with the team.
g. Supplier behaviour
The supplier behaviour changes according to the time and place in the designated power plant industry (Inria. 2021). In recent times the customer wants information about the supply management and wants to understand their preferences. Supplier development is a necessary process to develop supplier behaviour. The development can be executed in several industries by integrating with the companies to maintain a good customer relationship. Supply chain management is the regulatory management to control chain management that helps the industry keep track of their customers.
The supply behaviour changes according to the needs and preferences of the customer.
h. Value proposition
The wide range of shareholders associated with the power plant industry creates dismantlement, disposal, and recycling of the project. The stakeholders include the project manager, constructer, and board producers. The power plants have few ranges of power supply management to provide end products for the generation of power to control the end of the lifecycle. The existing products and services are presented services and products that make the industry more minor and more extensive, creating it more comfortable with increasing the value of the product. To improve the existing service and product that will create the development of customers. However, Ffestiniog power station aims to fulfil the customer's needs appropriately by focusing on the generation of hydropower. The company is entirely concerned about environmental sustainability, due to which Ffestiniog power station wants to focus more on the cleanliness of its plants and also reduction of carbon emission. By reducing the emission, Ffestiniog power station can fulfil its business goals and also it can generate optimum revenue by managing good relationships with its customers. Apart from that, the organisation will also reduce the use of resources in order to save the environment from the hazardous effect of any power generation. This approach of the company will be beneficial to achieving business growth and increasing the market share. The new services and products increase the present scope of the customer. Suppliers are the dominant aspect to be established a relationship between supplier and customer. One of the critical aspects is the motivation for the supply management that regulates supplier development that leads to better business development.The supplier behaviour is associated with longer-term to establish the ability of buyers to regulate the behaviour of suppliers to meet the needs and preferences of the customer.
Key trends and developments analysis
The hydroelectric power plants faced integrated disturbance from the renewable source of energy include carbon, gas prices that are changing the customer preferences (Maciel, 2021). In recent times as the designated power plant industry is shifting itself to a new normal stage accepting the recent technological development and advanced data analysis that has made the whole system critical. The Ffestiniog power plant has adopted digital development along with technological development like data models that help to enhance operating selection mode. The government regulation of the United Kingdom is supportive that makes the active development of Ffestiniog power plant. The electricity act 1989 generate the transmission system from supply management to electric management. The electric industry integrated itself with the power plant to provide additional requirements so that they can achieve success in the future. The Ffestiniog power plant should target the audience who are the daily user of electricity, like people who use electrical appliances more often. The Ffestiniog power plant should shift its focus over condensers which is one of the essential parts of the power plant industry. The company should regularly clean and maintain the condenser while improving the condition of the power plant. Some of the basic parameters they need to improve their focus are condenser range, approach in the tower, the flow ratio of floodwater, and approach of the tower (Allied Valve Inc. 2021). While power generation in New South Wales, the Ffestiniog power plant lignite coal. Coal burning is insufficient because moisture evaporation devours 8% of the input of fuel (Allied Valve Inc. 2021).The power plant industry is monitoring their flaws, and they try to mitigate their challenges and issue while they are regulating their business in the United Kingdom.
Scenario analysis
|
The adverse effect of COVID-19 on Ffestiniog Power Station
|
Effect of political instability on Ffestiniog Power Station
|
|
Impact of the rising price of the product on Ffestiniog Power Station |
Impact of the overwhelming inflation on Ffestiniog Power Station
|
The adverse effect of COVID-19 on Ffestiniog Power Station
The global lockdown due to COVID-19 has affected power stations severely. In lockdown period demand of electricity in the industrial and commercial sectors. According to IEA (International Energy Agency), in 2020, the electricity demand will decrease by 2.5 % globally. In many countries, IEA experienced, on average, a 15 % drop in electricity demand (Google, 2021). The Ffestiniog power station also will be affected by this situation as due to lockdown, many industries are experiencing slow manufacturing rates, and hence, the demand for electricity demand is not the same. The lockdown due to COVID-19 has also increased the unemployment rate. As a result, many people may face problems paying electricity bills. The utility bills delinquency, and payment delays by the customers may increase. Lower power demand in the industrial and commercial industry and customer payment stresses may slow down the production rate. The COVID-19 has strongly affected the global energy system worldwide. According to a report of IEA (International Energy Agency), six out of forty-six sectors and technologies lost track in 2020 due to the global pandemic caused by COVID-19 (IEA, 2020). The power sector is not the exception. The Ffestiniog power station may fail to achieve the annual goal for this situation.
Effect of political instability on Ffestiniog Power Station
Political stability is crucial for the growth of any industry. Government plays a vital role in almost every industry and sector all over the world. If the political factors become unstable, that can affect the production of the Ffestiniog power station. Risk reduction is one of the significant roles of the government in power sectors, and it helps to promote private investment in the industry (OAS, 2021). Government reduces the risk factors in the power sectors through several techniques, such as resource evaluation, least-cost planning, national energy planning, market evaluation, omitting obstacles to unbiased market, providing access to financing and capital, and project evaluation and oversight (OAS, 2021). If the political condition gets unstable, the risk management may disrupt. This can affect the power plant negatively. The Ffestiniog power station may struggle to get funding if the political condition gets unstable.
The energy sector is strongly connected with political factors as the energy sector is a large-scale production sector. The electricity or power supply needs to have a large amount of logistical aid. For this, several governmental bodies need to back up the power stations. If the political condition of the country gets unstable, it can affect the logistical aid of the Ffestiniog power station (open access government, 2018). As a result, the power supply in the country might be disrupted by political instability. Even the instability of international politics can affect the Ffestiniog power station. The immediate cause of the political condition is the disruption in electricity supply and price hikes in the energy sectors.
Impact of the rising price of the product on Ffestiniog Power Station
In every industry, the main target of the company is to make a profit, and on the other hand, customers want to buy products and services at a low cost. Businesses never can assure the exact outcome of the price hike of the product (Thompson, 2020). In general, when prices increase, the demand for the product or service gets low, affecting the sales of the product and service. If the electric power increases, the Ffestiniog power station will experience low demands of electricity. If the company increases the price of their product, industrial and commercial sectors, depending on this plant, can try to find other power supply options. As a result, the company will face low demand. The increasing rate of electricity will also affect the end customers, as they will face issues to afford electricity and the number of payment delays which will affect the revenue of the company adversely.
Impact of the overwhelming inflation on Ffestiniog Power Station
Inflation can cause several issues for Ffestiniog Power Station. The most obvious outcome of inflation is the reduction in the demand for the product or service due to the price hike of the product or service (McMahon, 2017). Inflation can increase the power cost, due to which industrial and commercial sectors may find some alternative power supply option that can provide power at a comparatively low price. As a result, the demand and production will also reduce. The end customers will be out of excessive money to pay the increased bill in the inflation situation. As a result, there will be an increasing number of payment delays, which will eventually affect the FfestiniogPowe Station to achieve its target revenue.
Analysing the scenario
The COVID-19 was first identified in China in 2019 (Macola, 2020). The global lockdown due to COVID-19 has affected almost every industry. The power industry is no exception. The COVID-19 pandemic can affect the company severely. The power demand in the industrial and commercial industries will reduce, which will cause lower production. The end customers will also face difficulties to pay the electricity bills as the pandemic has caused many payment delays (Google, 2021). However, the COVID-19 situation can also benefit the FfestiniogPowe Station.
In the COVID-19 situation, many country governments have driven a moratorium of electricity payments for a few months (Google, 2021). In this situation, if the government gives support to the general public, there will be fewer delayed payments of electricity bills. In this COVID-19 crisis, the International Energy Agency has worked closely with the national authorities, international partners, and private sectors to support the power industry. The initiatives taken by IEA can also help the FfestiniogPowe Station to ensure sustainability. In a time of crisis, if the government supports the power sector monetarily and promotes investment, the sector will be levitated in the situation.
In the COVID-19 situation, if the company takes proper safety measures in the workplace, t can minimise the effects of the COVID-19 crisis. The proper use of disinfectants around the workplace may lower the risk of transmission and keep the power station safer (Elavarasan et al. 2020). the staff of the plants can work rotationally in different shifts. If a team member gets affected by COVID-19, the whole team will be quarantined, and the other team of different shifts can take over the work. In this situation, the COVID-19 crisis can be avoided. The workers and engineers working in the power station may get risk and financial packages from the company, which will motivate them to work with safety measures. The security of supply is one of the most critical themes in the energy sector (PWC, 2021). It has much broader relevance in the time of the COVID-19 crisis. the company may move quickly for securing supply chains. Strategic recommendation using Porter’s generic strategy model It can be argued that Covid-19 can impact the company positively if the organisation can play tactically in the market by focusing on the pattern of carbon emissions, the environmental impact of power generation and so on. However, the authorities of Ffestiniog power station need to use the generic strategy of Porter in order to penetrate the market and sustain its business. Porter’s generic strategy has four quadrants that state other concepts with each other(Mindtools. 2021). In this case, the cost-leadership strategy will be the most effective strategy for Ffestiniog power station as it can help the company to achieve bugger market share and also to attain high-quality bonding with customers. The quadrant of the model represents that an organisation needs to keep its price as low as possible and improve the quality of the product to attract customers to the company. Hence, Ffestiniog power station should use the aspect in order to enhance its power generation capability and beat its rivals in the market. Alongside this, some crucial strategies that need to be taken into account by the company are as follows;
• Improve the supply chain in order to increase the availability of resources.
• By developing a low-cost base for the service line.
• Dealing with customer complaints properly and
• Investing capital in technological advancement.
In COVID-19, the carbon emission level decreased at a high rate due to a sudden reduction in industrial production. In this situation, many country governments are promoting eco-friendly power supply options to keep this lower carbon emission. If the government focuses on the renewable power sector, the FfestiniogPowe Station will get government support to enhance its production. The government may increase investments in the company to generate more renewable power supply. The government may focus on promoting investment in this sector which will benefit the company.
In the COVID-19 lockdown situation, people need to stay at home (Elavarasan et.al. 2020). As a result, the power demand in the residential areas has increased, and the power demand in the industrial and commercial sectors has decreased. The company can still supply electricity to the residential areas. The company may execute its disaster management plan to assess the financial condition of the company. In this time of crisis, the financial plan may be helpful for the company. The company may develop a detailed financial plan which includes the possible loss of revenue and discuss it with the government authorities and policymakers to get government support.
Conclusion
It is to be concluded that the FfestiniogPowe Station is one of the most important power stations in the United Kingdom. The power station provides hydropower and can generate 360 megawatts of energy in one minute. It is the UK’s one of the largest hydropower stations. The report has also presented the industry trends like the potential of growth, development, government regulation regarding this industry, new business models. The report has analysed the impact of the industry trends on the power sector and the company. The report has predicted the four main scenarios which can affect the FfestiniogPowe Station. The adverse impact ofCOVID-19, the effect of political instability, the impact of the rising price of the product, impact of the overwhelming inflation on Ffestiniog Power Station has been discussed in detail. These scenarios will affect the company severely and may reduce the sustainable growth of the company. In the COVID-19 situation, the company may be benefited if it takes proper initiatives. The report also presents the positive impact of the COVID-19situation. The power station can get adequate government support to retain its production in the COVID-19 situation.
References
Allied Valve Inc. 2021. 5 Ways to Make Your Power Plant More Efficient -. [online] Available at:
Apollo B. 2021. Understanding B2B Buying Behaviour. [online] Available at:
Beaney, C. and Colin, M., 2021. New Business Models in Power Generation and Energy Industry. [online] IFS Blog. Available at:
Elavarasan, R.M., Shafiullah, G.M., Raju, K., Mudgal, V., Arif, M.T., Jamal, T., Subramanian, S., Balaguru, V.S., Reddy, K.S. and Subramaniam, U., 2020. COVID-19: Impact analysis and recommendations for power sector operation. Applied Energy, 279, p.115739.
Fhc. 2021. First Hydro Company - Ffestiniog Power Station. [online] Available at:
Google. 2021. The Impact of COVID-19 on the Power Sector. [online] Available at:
Icevirtuallibrary. 2021. [online] Available at:
Inria. 2021. [online] Available at:
Maciel, R., 2021. [online] Available at:
Market, S., 2021. Small Hydropower Market Size, Share, Industry Report - 2024. [online] Marketsandmarkets.com. Available at:
McMahon, T., 2017. Effects of Inflation on Businesses. [online] InflationData.com. Available at:
Mindtools. 2021. Porter's Generic Strategies: Choosing Your Route to Success. [online] Available at:
Mohite, S. and Danekar, R., 2021. Portable Power Station Market Size, Share Analysis | Statistics - 2030. [online] Allied Market Research. Available at:
Mordorintelligence. 2021. United Kingdom Power EPC Market | 2021 - 26 | Industry Share, Size, Growth - Mordor Intelligence. [online] Available at:
Next, 2021. [online] Available at:
OAS. 2021. Chapter 4. Government S Role In The Electricity Sector. [online] Available at:
Open accessgovernment. 2018. How will politics impact the energy sector in 2018. [online] Available at:
Power-technology. 2021. UK power market 2 - Power Technology | Energy News and Market Analysis. [online] Available at:
Power-technology. 2021. What does the future hold for hydropower energy. [online] Available at:
Practicallaw. 2021. [online] Available at:
PWC. 2021. Energy industry and COVID-19 (coronavirus): strategising for the ‘new normal’. [online] Available at:
Researchnester. 2021. Portable Power Station Market | Demand Analysis & Opportunity Outlook 2030. [online] Available at:
Thompson, J., 2020. The Effects of Price Increase on Sales Volume. [online] Small Business - Chron.com. Available at:
Appendices
Appendix 1: Power market UK
Source: (Power-technology. 2021)
Appendix 2: UK electricity generation
Source: (Mearns, 2013)
Appendix 3: Utilisation of models
It can be argued that all the models like Porter’s generic strategy, STP, perceptual mapping are appropriately used in order to showcase the market position and the aim of the company in future to sustain its business. Also, the value proposition model is used to showcase the company's approach in managing loyalty bonding with its customers. Lastly, some crucial and strategic recommendations are also given by considering which power generation company can utilise the positive side of the scenario and attain a good market share in the UK.
