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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 defense law, and regulation
of influences
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, activitiesprojects.
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
5 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.
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.
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,
1.
Optimistic policies for the energy in the
forthcoming years.
2.
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
1.
The rising power of cost and economic conditions
for gas storage.
2.
Increase in the prices of gas and electricity
services
3. 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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