Question

what type of strategy would you suggest an Electric Utility Industry implement and why?(500 words)

Answer 1

The “electric utility industry” or the “power and utilities industry” has been reshaped in the last years and decades due to reasons including opening up of new markets, an introduction of disruptive technologies, and emergence of new competitors among others. The customers have evolved from being passive consumers to be more active and hopeful participants. Because of the economic, regulatory, and other conditions affecting the electric utility industry, it was not tuned for fast paced changes but carried out its moves following the regulatory constraints, in deliberate ways, which needs to be changed now. Concerns arising over fossil fuel and the pressure over the industry have increased due to certain market volatility and uncertainty conditions as well. New value propositions including electric charging, energy management, and home automation are clearly evident. The services as well as the prices of electricity may now be more flexible and tuned better with the needs of industrial as well as individual consumers. The industry should stress on consequential strategies now, which are aggressive and intentional, and not result merely due to policy changes or time flows.

Understanding the Competitors

The electric utility industry’s market has now been encroached by many new players. These include the technology OEMs (producing actively used products like equipment monitors and the programmable thermostats), electric vehicle OEMs, and infotainment vendors among others. These new competitors may have many new strengths including economies of scale and a global reach among others. When electric utility industry wants to maintain its competitiveness, it should understand how the non-traditional businesses are contesting the new markets. The strategy objectives should be to provide for long-term piloting as well as short-term efficiency. Because the new consumer and industrial companies that are the competitors do not focus on beyond two years, the utility industry should also plan for the shorter terms while not compromising with the long term sustainability objectives.

Choosing the Right Business Model

Business models form an important link between strategies and their execution. The electric utility industry should focus on creating accurate blueprints on proper execution and designs to ensure that the activities and attention are in the right areas. Electricity utility industry's upstream segment now also covers many important business activities including supply, production, marketing, as well as trading. The midstream segment includes the networks, grids, and the decentralized or distributed supply resources. The customer-facing business activities are found in the downstream segment, which includes retail, energy services, and customer engagement activities. To be successful, firms in the electric utility industry needs to have a clear blueprint and strategic plan for the best combination of the different segments they wish to pursue.

Strategic Choices for Growth

There are a broad number of growth strategies available when a company in the electric utility industry wants to grow. The choice made may depend on the risk tolerance capacity they have as well as their positioning objectives. After variables including external challenges, starting point, as well as the management aspirations have been evaluated, a company may choose from the below given growth strategies and/or their combinations.

Expanding- new technologies ensure that companies in electricity utility industry can easily increase their load and create new sources. They need to offer new offerings that appeal to the customers. Certain new measures including equity investments may also provide for growth.

Enhancement- companies may enhance their business by thinking in more innovative ways about penetration, customer portfolio, and margins and also need to reinforce or build on the customer relationships.

Extension- electric utility industry companies may also gain entry into certain related business segments for enhancing value for the customers. One of these may be the energy services segment which may shape the customer perception of the utility industry and companies.

Exiting- companies should also take a more pragmatic approach and should try to know about the business activities and assets that may be better operated and managed by other companies and owners.

Other focus areas of strategic importance may also include improving financial performance and maintaining reliability and safety. Emerging technologies, changing government policies, and environmental issues require a revision in the approach through the electricity utility industry operates, and a more careful scanning of the environment and the competitors is required.