Study of strategies for power industry in a de-regulated electricity market environment

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Study of strategies for power industry in a de-regulated electricity market environment


Author: Wong, Hon-kwong
Title: Study of strategies for power industry in a de-regulated electricity market environment
Degree: M.B.A.
Year: 2001
Subject: Hong Kong Polytechnic University -- Dissertations
Electric utilities
Strategic planning
Department: Dept. of Management
Pages: 69 leaves : ill. ; 30 cm
Language: English
Abstract: Around the globe, the electricity industry is undergoing sweeping restructuring. The forces, ranging from political reform to global economic crisis, in addition to technology, economic, political and socio-cultural environmental factors, have driven utilities to change their modes of traditional business operations to adapt the new environment. Not everyone will be a winner in the new competitive world of electric power. Losers will likely outnumber winners. Based on the Fortune's Five Most Admired Utilities, the study identified seven common strategies that would lead to success of utilities in the new competitive environment. Delphi methodology, with questionnaires and interviews dispatched to five professional/engineers having depth knowledge in the electricity business environment, was conducted to rank the strategies alternatives. The identified ranked strategies are: 1. Having a good CEO with strong advance strategic insight. 2. Maintaining virtually vertically integrated business structure holding different segments of business under a parent company. 3. Business diversification into other businesses that would create synergy effect, especially gas energy business. 4. Negotiation with regulators to gain favorable terms on stranded cost recovery, timing of de-regulation, market structure, and incentive systems. 5. Be a low-cost and reliable power service providers. 6. Fast growth strategy gaining first-mover advantage. 7. Unified brand name strategy holding all subsidiaries with strong corporate identity. Since most of the strategies need several years to implement, the organizations should plan their directions of move years ahead before they can have a fruitful success in the changing environment. Their move should also be fast enough because the utilities may have only one chance to grasp the opportunity.

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