Answer To: MBA600_T3_2020_Assessment_02_v01_Capstone_Strategy (1) COMMONWEALTH OF AUSTRALIA Copyright...
Arunavo answered on May 17 2021
STRATEGIC MANAGEMENT
LUMO ENERGY AUSTRALIA
Executive Summary
Proper functioning of an organization is dependent on many factors, among which the most important factor is the strategic management of the organization. Nig companies spend millions and billions of dollars directly on the energy production every year. Among which millions of dollars are spent indirectly on the supply chain, outsourcing and in the cost of logistics. The majority of the energy intensive firms are approaching to the energy as merely the cost to be managed, however, this is the major strategic mistake that the companies are doing, which leads to overlooking the enormous opportunities to reduce risk, improve resilience and creating the new value. In this report the similar discussion is done on the strategic management of Lumo energy which is one of the leading and oldest renewable energy generators of Australia, a 100% owned by the government.
Table of Contents
Executive Summary 2
Introduction 4
Organization’s Strategy 4
Competitive Strategy of Lumo Energy 5
Performance Measurement 6
Balance Scorecard of Lumo Energy 7
Recommendations 7
Conclusion 8
References 9
Introduction
The success of the company is dependent on the manner in which they make the strategic decision. It helps the company in gathering competitive advantages over other companies and also proper strategic decision will help the company for their internal growth and also that will help them managing their assets in proper order. In this report a detailed discussion is done with respect to the strategic management of Lumo Energy Australia, where the discussion is done on the company’s competitive advantage, competitive rivalries, the market analysis, distinctive capabilities and the performance strategy of the company. Further the recommendations have also been provided in order to further strengthen the corporate strategy of the company.
Organization’s Strategy
Lumo energy or Red energy are 100% Australian owned subsidiaries of the Snowy Hydro Limited, which collectively retails gas and electricity in Victoria and New South Wales and also supplies electricity to almost 1 million customers in South Australia and Queensland (Lumo Energy, 2021). Started their operation in the year 2010, the company had controlled a lot of market for the supply of electricity and the market where Lumo energy is operating is the part of Australia’s National Electricity Market (NEM). NEM facilitates the exchange between the electricity providers and the consumers through the process of gross pool, where the output is generally combined and planned in order to fulfill consumer demand. As discussed by Abdel-Basset et al. (2018) that for a company who is in charge of delivering to the customer demand must work with certain strategic decisions in order to operate in proper manner. Lumo Energy has certain strategic priorities which enables them to perform in a proper manner. The strategic priorities are as follows:
Consumer Priority:
Lumo energy has a belief that the consumers not actively engaged in the market is not the sign that the market is falling. This was a belief that remained effective up to the demand response and the reformation in the tariff is considered. It is necessary that sufficient information must be available to the consumers and the consumer must have the opportunity of cost acting on the price signal is too great, and this decision must not be discouraged. With the clear communication between consumer and the company it is necessary because this will help the company in making proper strategies in order to sustain their position in the market (Chattopadhyay and Gupta, 2017).
Markets and Network Priorities:
Proper market and network arrangements encourages the efficient investment and flexibility for a company. Lumo energy has focused on the network evolution coupled with the technology along with new business model, which has provided both flexibility and consumer protections. In order to achieve this competition in the market regarding the new products and services, it must be on the competitively neutral basis. This strategic move will benefit the consumers for a sustained longer period of time and the business model will also be subjected to the same regulatory requirements, which ensure that the consumer will receive benefits from the continuous protection from the present situation of the energy market (AEMC, 2021).
Competitive Strategy of Lumo Energy
For any organization the most important factor to consider is their competitive advantage in the market with respect to the other companies operating in the same industry. As discussed by Varelas and Georgopoulos (2017) that to analyse the competitive advantage of the company, Porters Five Force Analysis method is used, which is a strategic management tool for conducting the analysis of the industry and also the underlying levels of profitability existing in the industry. Lumo energy is one of the leading energy suppliers in Australia, and Porters Five Force will help in analysing the five competitive forces that influence the profitability and also develop proper strategies to enhance their operation.
Threats of New Entrants:
There are many new companies that are bringing new innovations and ways for doing the things in...