The privatization of the electricity industry in
England and Wales in 1990/91, split the former public utility into three parts:
electricity generations, electricity distributions and the national grid.
Responsibility for electricity distributions was given to 1 regional
electricity companies, each of which became a shareholder in the privatized
national grid company which the control through a holding company called
Gridco. Electricity generation-with the exception of the nuclear power plan –
was vested in two new generating companies. National Power and Power Generatins
which replaced the old Central Electricity Generating Board.
As the larger od the two generating companies which
sell theory electricity to the regional distributors, National Power is in a
strong position on the UK energy market and its purchasing policies have a
fundamental impact on the UK coal industry. Desoite this influence the companu
has fdaced a number of important challeanges since privatizations which have
required it to look for new market opportunities beyond its initial sphere of
operations. For a start a succession of mild winters has reduced the domestic
demad for electricity and this cut in comsumption has been made worse by a
recession which affected the UK economy I the early 1990s causing a decline in
industrial usage. Added to this, pressure from the regional electricity companies
who are independently developing generating capacity – particularly through
gas-fired power stations- has limited the possibilities for growth for National
Poower and its rival PowerGen, both of whom have joined the “dash for gas”
which is seen as more environmentally friendly.
Faced with these problems in itsmain marketr,
National Power has embarked on a strategy of international expanision in
slected overseas location. In July 1993, for example, the company announced the
acquisition of a subsidiary of the Texas-based Transco Energy gas pipeline
company as parts of its £ 1 billion investment programme. The business,known as
Transco Energy Venture (TEVCO), has interest in power generations in the
south-east of the United States and is to be run by a newly established holding
company called National Power America Inc.
REVIEW AND DISCUSSIONS QUESTIONS
- In what senses
could a college or university be described as a business organization? How
would you characterize its ‘inputs’ and ‘output’?
- Taking examples
from a range of wuality newspaper, illustrate ways in which business
organizations are affected by their external environment.
- Give examples of
the ways in which business
organization can affect the external environment in which they operate.
- With regard to the
case study, explain how National Power’s competitive envirnmeat has
changed since privatization.
ASSIGNMENTS
1. Assume you are a trainee in a firm of management
consultants. As part of your inductions process you have been asked to colled a
file of information on an organization of yous choice. This file should conain
not only informations on the structure of the organizations and on its
products, but also on the key external influences which have affected its
operations in recent years.
2. Using newspapers and periodicals , produce a short
report on the reasons for the government’s recent decision to close a
substantial unber of pits in the UK coal industry.
FURTHER READING
Daniels, J.D. and Radebough, L.H. International Business: Environments and
Operations, 5th editions, Addition Wesley,1989.
Palmer, A., and Worthington, L. The Business and Marketing Environment, McGraw-Hill. 1992.
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