Meaning Of Strategy And Corporate Planning Business Essay Example

planning process. This division included sub-divisions such as sales and marketing, business planning and development, and fuel procurement. Within this commercial division, a team of planners facilitated the development of the corporate strategy by formulating specific strategies related to price, market share, and competitors' positions.Various business units created plans, while the finance division projected financial outcomes based on these plans. This planning procedure had the disadvantage of focusing on centralized decision-making, primarily involving the planning and development section and the finance division. Other divisions such as engineering, technology, and corporate services had minimal involvement. As a result, it is likely that the procedure did not consider all potential circumstances that could arise from it. Additionally, when the electricity market opened up and the company started focusing on both commercial and operational activities, the old planning process became irrelevant because it required active participation from all divisions.

In 1992, PowerGen's structure was changed again to form three new divisions: new ventures, UK electricity and technology, and business services. Planning teams from each of these divisions replaced the previously established central planning team. However, a small central strategic planning team still existed. Financial planning remained a separate task solely handled by the finance division. Under this new structure, the planning process occurred at various levels. The central strategic planning team developed corporate strategy while each concern unit produced a concern program which was then reviewed by the divisional board.
The guidelines for the planning exercise were provided by the corporate planning staff. However, problems arose in 1993-94 due to a mismatch between the group's financial needs and the strategic decisions made during that planning cycle. This issue occurred because

of an improper allocation of planning responsibilities, which resulted in a lack of participation from the finance department.

In 1996, the company underwent restructuring and formed six new clusters, each led by a managing director. The new planning system under this structure encouraged business units to take specific initiatives within the corporate context and promoted coordination among them. Importantly, this system bridged the gap between the strategic and financial objectives of PowerGen.

The entire planning process of PowerGen can be analyzed in relation to the concept of strategic fit, which emphasizes alignment between company strategies, structure, and planning process. From 1990 to 1996, PowerGen was unable to achieve strategic fit because their schemes were not aligned with their construction and planning process.

According to Anders Drejer (2002), Hamel and Prahalad originally proposed the concept of core competence. They defined it as "the corporate learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies."According to the authors, core competence should be evaluated based on three parameters: if it provides a significant competitive advantage, if it is difficult for rivals to copy, and if it extends beyond a single business. If these criteria are met, it can be considered a core competence of the company (Source 1). Dr Glenn Parry defines core competence as a skill, technology, or asset that enhances business growth and sets the business apart from its current and future competitors (Source 2).

The analysis of core competency from a strategic perspective reveals a relationship between core competency and strategy. Both strategy and competency must be considered simultaneously in order to drive business growth. Strategy is necessary for identifying development needs

in core competency while core competences are required when planning the strategy (Parry, 2005) (Source 2).

On the other hand, dynamic capability refers to the ability to identify and seize new opportunities for reconfiguring and protecting knowledge assets, complementary assets, and competences in order to achieve sustainable competitive advantage. Each component of this definition is crucial for organizations in the current business environment. With numerous opportunities constantly arising, organizations must first identify and then leverage these opportunities to the best of their abilities (Source 3).Once the opportunities are capitalized and properly protected, it is crucial to achieve sustainable competitive advantage (Teece, 2009). When analyzing PowerGen in this context, it becomes evident that their primary business revolves around selling electricity to electricity pools. This aspect provides them with a durable competitive advantage. Furthermore, PowerGen possesses dynamic capabilities and has recognized significant prospects within the natural gas market. Consequently, they have formed an agreement with certain electricity providers to seize this opportunity. Additionally, PowerGen has acquired EME to facilitate the sale of both gas and electricity. They have also made substantial investments in emerging markets like India, Thailand, and Indonesia where there is continuous growth in power demand. Establishing a strong presence in these emerging markets will contribute significantly to overall business expansion.

EDF Energy holds the position of being the largest electricity manufacturer in the UK as they generate almost one fifth of the nation's total electricity output. With approximately 8 million customers that include businesses and domestic users alike, EDF Energy primarily focuses on atomic energy operations with eight nuclear plants capable of producing 9,000 megawatts of electricity. In addition to generation activities, they also supply electricity

and purchase gas for their customers' needs. However, their main source of revenue stems from selling electricity; their core expertise lies within effectively managing atomic power systems.The EDF group, the largest nuclear power generator in the world, had total sales of approximately ?6,621 million in 2008. E.ON, one of the leading energy companies, serves millions of customers in the UK and is involved in gas distribution as well as retail electricity supply to businesses and homes. They also have a significant presence in wind farms. With around 17,000 employees in the UK, E.ON heavily relies on coal and natural gas for energy production. Natural gas accounts for 45.2% while coal accounts for 43.4% (EON, n.d.). Unlike EDF, E.ON does not purchase gas to supply their own customers and has minimal involvement in nuclear energy with only 11.9% of their total electricity produced from atomic sources. In comparison, about 16% of EDF Energy's total energy comes from nuclear sources (Source: EDF Energy). Both companies prioritize renewable energy with approximately 6% of EDF's total energy and 5.9% of E.ON's total energy generated from renewable sources.

In the United Kingdom, both domestic consumers and businesses have the freedom to choose their electricity and gas providers due to market liberalization and privatization that started in 1990 when the UK government and energy market regulators decided to end regional electric company monopoliesThe market deregulation resulted in the opening up of previously inaccessible areas for electricity and gas provision. The first to be deregulated was the gas market, allowing companies to serve British Gas customers. Later on, the electricity market also became accessible to all companies. Each of the approximately 14 supply

areas had their own provision company catering to their respective customers. The deregulation occurred in two phases - initially, companies had to agree on pricing with Ofgem before making changes but later these limitations were removed, enabling regional supply companies to compete freely in a fully deregulated market. Consequently, new players entered the market with a focus on keeping prices low and gaining market share. However, as energy costs increased over time, many smaller energy companies were acquired by larger ones (Saveonyourbills). One notable example is PowerGen's acquisition of Midland Electricity Plc - a regional electricity supply company serving customers with a total demand of less than 100 KW. PowerGen made an offer of 1.9 billion euros for this acquisition. While the Monopolies and Merger Commission deemed it necessary for competitiveness in the international market, the government disagreed and blocked the merger.PowerGen successfully acquired East Midlands Electricity in 1998, following government approval. From 1990 to 1998, the UK electricity industry experienced significant influence from political, economic, and technological factors. Both the government and regulatory bodies such as the MMC had substantial control over electricity companies and the industry as a whole (Saveonyourbills, n.d.). The MMC's approval was necessary for any decisions regarding mergers or acquisitions. Additionally, UK authorities held a 'Golden Share' to prevent coup d'etat commands. During this period of transformation in the state's economic system, there was an increased demand for electricity. To meet this demand, companies began adopting advanced technologies in their production and distribution processes. These advancements had minimal impact on the environment; PowerGen specifically established two Combine Heat and Power plants where heat generated during electricity generation was utilized effectively.

Porter's five force model can be used to assess the overall electricity industry. After deregulation, buyers gained significant bargaining power as they were able to choose their own providers for both electricity and gas services. Gas and coal suppliers also exerted considerable bargaining power since they supplied raw materials for electricity generation. Furthermore, competition among competitors intensified due to increasing demand.Furthermore, the threat of new entrants diminished after market deregulation. Prior to 1989-90, the Central Electricity Generating Board (CEGB) was responsible for electricity generation and transmission in England and Wales. The CEGB managed the entire process of electricity generation and distribution. However, it became evident over time that the board's capacity had been declining. By 1958, there were 262 power stations under the CEGB, but by 1986, only 79 remained operational. Additionally, various technical challenges arose.

To address these challenges, the board underwent reorganization and divided into different functional areas. In 1990, three newly formed companies took over the board's generating activities while twelve electricity supply companies shared responsibility for transmission activities. Before these changes occurred, the CEGB had complete centralization in its planning process as it solely handled electricity generation and transmission.

However, this centralized approach proved inefficient after deregulation and privatization. With a more complex and competitive market emerging, a centralized approach did not achieve the necessary performance to remain competitive. It was discovered that this approach primarily involved top management within the organization.

To achieve desired success, it is crucial to involve all functional departments in corporate planning processes rather than relying solely on top management's inputIn Geert Hofstede's article "Cultural restraints in management theories," it is noted that different cultures have varying performances due

to cultural dimensions across countries. For example, power dimension plays a lesser role in the USA compared to France, but it is more significant in Germany and Netherlands. In the case of CEGB, a UK-based organization, power distance is not considered normal. However, their centralized approach takes into account power distance to ensure individual performance is taken care of and improve organizational performance. Strategy and corporate planning are crucial for achieving long-term goals for business organizations like PowerGen, which strives to gain a competitive advantage through effective strategies. The company has undergone various restructuring procedures that have influenced its corporate planning. Its main focus is selling electricity to the electricity pool, which generates a large portion of its revenue. After the industry was deregulated, PowerGen seized the opportunity to acquire a regional electricity company. They successfully acquired Midland electricity on their second attempt after their first attempt was blocked by UK authorities.In today's business world, it is essential for companies to recognize their main strengths and adaptable abilities in order to achieve a lasting competitive edge. EDF energy and EON energy are two major power generation firms operating in the UK. While EDF mainly focuses on nuclear plants and requires gas procurement for its customers, E.ON primarily relies on natural gas for generating energy.In summary, EDF's main competency is efficiently handling atomic energy, while EON specializes in utilizing natural gas. The mentions and bibliography include various sources such as books by Balchin, Campbell, Chandler, Drejer, Helfat et al., Grant, Great Britain.Parliament.In, Hofstede, Johnson and Scholes, Lynch, Oldroyd, Parry,G., Teece, Wit and Meyer. These sources provide information on topics related to housing foundations, business schemes and

strategy construction. They also cover subjects like cultural restraints in management theories and core competencies. Additionally, there are online sources from EDF Energy (key figures and about us), EON Energy (electricity source), Saveonyourbills (UK energy market) as well as a PDF document from the University of Warwick regarding core competence analysis.