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The strategic management can be
defined as management activity of the organization that can be used to have a
focus on the energy, priorities, and resources that lead to ensure the
employee, strengthen the operations, and establish the agreement of assessing
and intended outcomes. The five steps of strategic management include goal
settings, analysis of the requirements, the formation of strategy,
implementation of strategy, and monitoring of the strategy
At the same time, the investment hit
in clean energy reached at the highest record in 2015 as $ 330 billion that was
six times more than in 2004. The further growth of clean energy is related to the
COP 21 agreement that was signed by the governments, and it was related to the
implementation of policies and delivery of committed services. The main aim of
present work and this project is to analyze the British gas at an in-depth
level. The environment of the organization is competitive
Company Background of British Gas UK Strategic
Management and Change
British Gas is a home service and
energy provider based in the United Kingdom. British Gas is the trading name of
British Gas New Heating Limited and British Gas Services Limited, both
Centrica’s subsidiaries. British Gas is serving approximately twelve million
homes in the UK that makes it the biggest supplier of energy in the country,
and the company is considered as one of the large six dominated gas and
electricity markets in the UK. The company is a supplier of energy for homes
across the United Kingdom while the pipes or other related infrastructure by
which gas is being delivered to the consumers is maintained and owned by other
companies, not British Gas. However, those outsider companies do not manage the
cables and towers network by which electricity is being distributed; DNOs
(Distribution Network Operators) manage the cables and towers network that
varies region to region. For instances, if power outrage is there in some
region, then contacting the appropriate DNO is necessary rather than the
supplier of energy. Now, British gas is being led by Sarwjit Sambhi, a chief
executive, who is responsible for overseeing the business that employs more
than 28 thousand staff across the UK and provides energy services to 10 million
homes
Audit External and
Internal Analysis of British Gas UK Strategic Management and Change
PESTLE, Five Forces, and SWOT analysis are used to audit the external and internal factors which support the business activities of the British Gas. These analyses are applied to determine further strategy for the company.
PESTEL analysis of British
Gas UK Strategic Management and Change
Macro environmental analysis is a
complex procedure that is used to identify the impact of different factors on
the company. Through the analysis, it is possible to identify the negative
impact of different conditions on the growth of British gas
Political factors of British Gas UK Strategic Management and Change
According to the research of
Sustainable Production and Consumption, politicians have a significant role in
responsibilities and exceeding legislation of companies. In fact, it has a direct impact on the
business, for instance, workers’ protection, client defence law, and regulation
of influences
long term acquisition agreements with other
manufacturers. Below these agreements, it is indulged to purchase 16.5 bn
therms of gas, or specific 60% of the marketplace, commencing third parties in
the year of 1996
Economic factors
of British Gas UK Strategic Management
and Change
In the case of British Gas, the
economic factors are significant because they are directly associated with GDP
(gross domestic product), redundancy rate, inflation rate, and economic
development. The modifications in economic conditions have a direct influence
on the business of British gas. The increase in gas prices induces impact on
the whole chain, for example, use of raw materials, gas prices and gas delivery
service to the customers. It is important to identify the significance of
economic monitoring procedures at either internationally or nationally to
recognize possible threats and possibilities for the services.
Social and cultural factors of British Gas UK
Strategic Management and Change
The social-cultural environment is an
important factor to evaluate the relation between the services provided to the
customers and change in the social norms of people such as attitudes, social
variation, ethics, priorities, and philosophical changes. On the other hand,
the crucial part of a business is to identify the cultural values of the
company and society and to monitor customer requirement and desires. To do
that, the British Gas has been elaborate in numbers of Corporate Responsibility
initiatives throughout a decade. From current ventures such as rising money
intended for Shelter over the British Gas Treks Britain to a long-standing obligation
that supports people to reach their energy costs over the British
Gas Energy Trust
Technological factors of British Gas UK Strategic Management and Change
The use of technology in the British
gas have an overwhelming influence on the accuracy and speed of services. The
gas is protected in the service pipes by using monitoring tools and sensors.
Efficient and effective services are catching many customers. It is the
responsibility of the company to use new products and technology with the
excellence to satisfy the clients.
Environmental Factors of British Gas UK Strategic Management and Change
The environmental factors are
constantly increasing for the customers and the service providers. The company
is facing many challenges related to social responsibility, activities, and
projects. The important factor is to have a contribution to social development.
The proactive environmental strategies are used by the British Gas to improve
the eco-efficient activities, reduction of water and petroleum consumption
rate, and generation of effluents. The preoccupied conditions are used to
develop projects with the partnership of communities that could lead to the
improvement of factors such as social projects, education levels, and quality
of life lead by customers.
The British Gas promotes a renewable
energy project which able to decrease the carbon footprint and save more money
on the energy bills. In fact, the British Gas states that 43% of its
electricity comes from the ecologically friendly resources, which is considered
to be more than the mediocre in the United Kingdom
Legal factors of British Gas UK Strategic Management and Change
British gas is working according to
the law, and in case deviation from the original law, it could lead to a
collision of the business. The company is performing according to market
constitution and law of the state. This can be seen from the terms and
conditions which made by the British Gas as a part of the contract between the
company and its customers, which apply the UK laws as references
Force analysis of
British Gas UK Strategic Management and Change
Porter’s five force analysis is a
strategic tool to evaluate the potential threats and opportunities of the
energy industry. The five key factors of this model include competitive
rivalry, the threat of new entrants, the threat of substitute, bargaining power
of buyers, and bargaining power of suppliers
The diagram of Porter’s five force analysis can be seen from the diagram below.
Competitive rivalry of British Gas UK Strategic
Management and Change
The competitiveness in the energy
sector is significantly intensive. The intense rivalry is existing between the
competitors due to equality in capabilities, power, and size. The increase in
the intensity is manifesting the price war and influence the prices of the
services. The slowdown in the production and services to the customers can
result in the decline of reserves economic performance. British gas UK is
managing rivalry through potential competitors
The threat of new entrants of British Gas UK
Strategic Management and Change
UK energy sector is facing future
challenges and current risks. British gas is facing upstream in the huge
capital and increase in the R and D spending that boosts the existing
technology and innovation in the company. The possibility of new entrant is
higher for new capacity and for the desire to gain in the market share. The
threat of new entrants in the industry induces pressure on the cost, prices,
and the rate of the investment. The major barriers due to new entrants are
large capital requirements, government regulations, ownership of resources, product
differentiation, predatory behaviour by cartels, and patents
Threat of substitute of British Gas UK Strategic
Management and Change
The threat of substitute is associated
with the product and direct competition. The effect of the substitute is to
limit the anticipated profit and price of the services. The competitors could
use advanced technology and alternative resources of energy
Bargaining power of buyers of British Gas UK Strategic Management and
Change
The powerful customers of British gas
can reduce the prices, services, and demand of the quality. The expense and
profitability can be altered due to powerful buyers. The company is obtaining a
powerful position in-demand prices, bargain quality, and additional services.
The other effect of the bargaining power of buyers include the gain in the
market power, reduce the shared risk and acquiring process to share the
information
Bargaining power of suppliers of British Gas UK
Strategic Management and Change
The bargaining power of suppliers
illustrates the effect on charging higher prices, integration and limiting
production. In British gas, the supply shortage and a dramatic increase in the
competition are the main issues. The suppliers and gas companies are bringing
power to recipient countries. British gas company is balancing the operations
and then protecting the market instability
The suppliers of UK gas can be seen from the image below.
Resource: https://www.britishgas.co.uk/the-source/our-world-of-energy/energys-grand-journey/where-does-uk-gas-come-from
Section 2 of
British Gas UK Strategic Management and Change
SWOT Analysis of British
Gas UK Strategic Management and Change
The aim of SWOT analysis for the British gas is to have a comprehensive and critical insight of weaknesses and strengths of British Gas. The opportunities can be examined to explore the threats.
Strengths of British Gas
The largest energy supplier of UK is
the British gas company. The company dominates the electricity and gas market
with having 20% market shares in the supply market. The market shares of the
company in the domestic gas supply market are 29%
Technological innovators
Consultancy advice
Sports marketing services
Different types of
services according to needs
Weaknesses of British Gas
The regular high price hikes are the
main issue for criticism on the British gas. The price hikes are due to
slumping in the customer base. The company lost 823,000 customers between July
and October 2017 due to a higher increase in the price of services and the
increase in price was 12.5%. This resulted in a fall of share prices
The company mainly depends
on the wholesale market
The price hikes on
residential energy have led to a major slump in the customer base
Scrutinization by the
government of the UK caused an increase in the tariff prices, and then it was
tarnished to demolish the British gas services for the customers.
Opportunities of British Gas
The company has a wide range of
opportunities that grow faster in commercial and residential markets of
electricity and gas. The huge demand for the smart app can increase the number
of customers. The customers are focusing on smart apps such as Hive that is
provided by the company to the customers. The potential offers provided by the
company for the millions of customers is the highest opportunity for the
customers. The other possible opportunities are listed below,
Optimistic policies for
the energy in the forthcoming years.
The retail business is
having huge growth of opportunity.
Threats for British gas
British gas is facing stiff
competition with the other service providers of gas and electricity. The main
competitors of British gas are SSE, Scottish Power, EON, and EDF energy. The
legal challenges are also turning out as a threat to British gas. The best
example is Ofgem incident in which compensation for the late and incorrect
bills was $9.5 million in 2017. The issue was due to the failure of IT in 2014.
British gas was agreeing to repay and donate the charity for apologizing the
affected customers
The rising power of cost
and economic conditions for gas storage.
Increase in the prices of
gas and electricity services
Regulations implemented by
the existing government in the retail energy sector
The condition
of the market to material recovery and power stations
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