(PDF) Europeanization of the French Electricity Policy

ANALYSIS OF CASE STUDY
of
Poweo: David and Goliath in the French
Electricity Market
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Executive Summary
The present investigation case is all about options available with in the view of the
political and economic development of french electricity market. The case represents that Poweo,
a leading company of electricity market is facing major issue of unfavorable economic and
regulatory environment. French electronic market is to be regulated by the authorities and they
have to provide the rights to effective use of production. Capacities. It was found that the lack of
switching costs for end-users leaded by liberalization has increased opportunities for new
companies to enter the electricity market, hence, competition increases. Government of France
has taken initiatives for liberalizing its energy market, but was not yet reach up-to the EU market
liberalization directives. From the report analysis, it can be said that the company can go for
prompting new companies for investment in markets. Further, it is recommended to improve the
financial position through improving the cash management.
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Table of Contents
Chapter 1- Case study background.......................................................................................................4
Introduction..................................................................................................................................4
Statement of the problem.............................................................................................................4
Aims.............................................................................................................................................5
Objectives....................................................................................................................................5
Research questions.......................................................................................................................5
Structure of the rest of the report.................................................................................................5
Chapter 2: Case Brief...........................................................................................................................7
Chapter 3: Problem statement and plan of analysis............................................................................12
Chapter 4: Analysis and findings.......................................................................................................17
Heckscher- ohlin model.............................................................................................................17
Greet hofsteid model..................................................................................................................17
Mintzberg management role......................................................................................................17
Mckinsey 7’s model...................................................................................................................18
Porter five forces........................................................................................................................18
PEST Analysis :.........................................................................................................................18
SWOT Analysis :.......................................................................................................................19
Bench marking:..........................................................................................................................19
Ratio analysis :...........................................................................................................................20
Chapter 5: Solutions to the problem and issues..................................................................................21
Solution to unfavorable economic and regulatory environment................................................21
Solution to problem of liberalization.........................................................................................21
Solution of problem competition...............................................................................................21
Recommendations......................................................................................................................22
Limitations.................................................................................................................................22
Future area of research...............................................................................................................23
REFERENCES...................................................................................................................................24
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Chapter 1- Case study background
Introduction
The present case study discuses about the operations of Poweo, a leaning manufacturing
company of electricity and gas sector which was incorporated in 2007 and based in Paris, France.
Poweo Company is involved in production of electricity from renewable sources. The case is all
about options available with in the view of the political and economic development of french
electricity market. It has been witnessed that, in 2009, the mentioned organization has faced net
loss of €94 million, that was all time higher among last years. Unfavorable economic and
regulatory environment is a major cause behind this loss. The organization is facing major
Although, government of France has taken initiatives for liberalizing its energy market, but was
not yet reach up-to the EU market liberalization directives. But , it was found that the lack of
switching costs for end-users leaded by liberalization has increased opportunities for new
companies to enter the electricity market, hence, competition increases. The the company was
not having production capacity to serve large non-residential customers. However, due to
electrical heating is widely spread in France, the sensitivity of French power consumption to
changes in temperature is very high that affects the operations of company. The market structure
and the adverse regulatory framework was also the issue faced by the mentioned company. The
overview of french electricity market is provided in the present case study. The present case
analysis is going to describe the problem faced by the companies as well as the application of
various tools to overcome such issues.
Statement of the problem
After an in-depth investigation into the case of Poweo: David and Goliath in the French
Electricity Market, it has been found that net loss generated by Poweo and unfavorable economic
and regulatory environment is the major problem associated with the case. Furthermore,
improper liberalizing of energy market of France is the major problem that has been witnessed.
The competition faced by Poweo in French Electricity Market with EDF or GDF, with vertical
integrated production and supply operations, is also a problem associated with the company.
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Aims
The major aim of present investigation is to identify the problems associated with French
Electricity Market and Poweo and related solutions through applying wide range of management
tools and tactics.
Objectives
 To study the Electricity Market of France
 To study the unfavorable economic and regulatory environment of French Electricity
Market
 To evaluate the problem faced by Poweo for operating business within French Electricity
Market
 The impact of liberalization of French Electricity Market to Poweo and entire Electricity
Market
 To identify and recommend suitable solutions for the current position of Poweo and
mitigate the adverse effect of existing problems.
Research questions
 What are the major forces affecting the environment of French Electricity Market?
 What are the uses of various management tools and tactics to identify solution of
problems faced by Poweo and French Electricity Market ?
 How current market conditions and competition of French Electricity Market put
financial impact to Poweo?
 What are the opportunities available for Political and economic development of the
French electricity market?
Structure of the rest of the report
The present report is structured in a well manner and a chapter-wise presentation is
followed:
Chapter 1: Background of Case: This is the first chapter of the investigation in which
the brief point of case are discussed along with defining the main aim of case analysis and the
objectives of entire study. The major objective of study is to identify and recommend suitable
solutions for the current position of Poweo and mitigate the adverse effect of problems.
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Chapter 2: Case Brief : The next in line chapter is case brief that presents the overview
of entries business case in the most surmised way. This is the crucial part to make regard
understand about the major points of case and the reason for conducting study. In this chapter,
the case situations are described clearly.
Chapter 3- Problem statement and plan of analysis: The third and the most important
chapter of present case analysis is of identifying problems based by the company and specific
analysis of each problem along with a strong application of management tools and theories. In
this section, reader can find the statement of the problems in the case, the application of relevant
literature review on various concepts, theories, models that are relevant to the case, However a
proposed plan of analysis and sources of data collated are explained in this case.
Chapter 4: Analysis and findings : This chapter represents the assessment of the current
position of Poweo and application of concepts, theories, models referred and discussed in
chapter 3 are presented.
Chapter 5: Solutions to the problem and issues : The last chapter of the study represents
the integrated assessment of the analysis along with a best solutions to the problem. However,
this section represents a an action plan to resolve the problems. Limitations of the study and
scope for further research are explained in this chapter.
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