Economic and Financial Management: Impact of Covid-19 on Octopus Energy Limited

This report analyzes the impact of Covid-19 on Octopus Energy Limited, including the micro and macro economic factors affecting the company. It also explores the application of Neo classical and Keynesian economic theories in relation to the company.

Economic and Financial
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1.Impact of global pandemic on Octopus energy limited.......................................................1
2.Micro and macro economic factors of environment affecting Octopus energy limited.....2
3. Neo classical and Keynesian economic theories in relation to Octopus energy-...............4
CONCLUSION ...............................................................................................................................4
REFERENCES ...............................................................................................................................6

INTRODUCTION
Economics and financial management is the branch of knowledge which deals with the
management of resources because resources are scare and it has alternative uses. Financial
management is the process of integrating all the functions of management for proper acquisition
and utilisation of funds required to carry out business operations smoothly (Ahmed, Abbas, &
Zia, (2020)). This report includes the impact of global pandemic on Octopus energy, a British
company deals in generating sustainable energy at low cost by using advanced technology. Due
to pandemic there are numerous micro as well as macro factors which effect the working of the
renewable energy company. It also encompasses application of theories like Neo classical and
Keynesian theories of economics on Octopus energy limited at the time of Covid-19.
MAIN BODY
1.Impact of global pandemic on Octopus energy limited
Covid-19 is a global pandemic which hit the each sector of the economy. Renewable
energy is a form of energy which is provided naturally to humans but its preservation is crucial
to save energy for the future as well. For maintaining and storing energy, Octopus limited is
operating at its best. There are several points to ponder while observing impact of covid -19 with
respect to Octopus limited company.
 Effects during pandemic-
There are various factors which impact the working of Octopus energy limited can be
explained as given below-
 Variation in demand- Due to pandemic there was a change in patterns of
demand that simply means that commercial demand was declined and residential
demand of energy was increasing. Changing pattern of consumption was observed
during pandemic (Arnott & Gao,( 2019)) .
 Fear of supply security- Supply chain is becoming narrow due to inflexibility of
transportation and importing of various raw materials was minimised because
lock down was imposed globally.
 Technological transformation- While dealing with financial hardship, Octopus
energy limited developed a Octo assist fund which enables its users to quickly get
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feedback about various financial problems and pay without any hurdle. Providing
loan for thermal imagery camera for locating heat leaks at home (Bouri, Roubaud,
& Shahzad, (2020)) .
 Effects after pandemic-
Outbreak of Covid-19 showed various consequences on renewable energy sector which is
working to create a sustainable form of energy while balancing environmental protocols as well.
Given below are some of the results observed after pandemic are as follows-
1. Disturbing trade relations- Due to massive lock downs, ban was imposed on travelling
which reduces the revenue of Octopus energy limited. International trading was closed for
months which blocks the flow of materials required in operating industry of generating
replenished form of energy.
2.Rise in price level- After pandemic there was sharp rise in the wholesale prices. Margin was
decreasing due to fall in wind output and unavailability of services at thermal power stations. A
new innovation was done to use batteries in the balancing mechanism to meet the need for
provision.
3. Merger-At the time of pandemic, Octopus energy limited and Sterlite company join hands to
reduce the cost of energy and fulfil the target of decarbonising the environment.
2.Micro and macro economic factors of environment affecting Octopus energy limited
Micro factors includes all the internal components such as suppliers, competitors and customers.
SWOT is one of the tool used to study the micro environment of Octopus Energy limited. This
can be elaborated are as follows-
SWOT analysis-
 Strength-It is one of the largest retailer of electricity and gas supplier in the
(UK.Cramer, (2018)) It enjoy monopoly in Ripple Energy in which large
investors plough their shares in wind turbines. It developed Octopus go by which
drivers charge their vehicle in a cheap and fast mode. Many new innovations ease
this company to capture good market share in Europe.
 Weakness- These are the internal features which operate against the business.It is
dependent upon wholesale market which results in mismanagement of various
managerial operations (Davis & Rhodes, (2020) ).
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 Opportunities- It is a external component which is used to tapping extraordinary
opportunities and define it unique from its other competitors. It has abundant
opportunities which makes it unique from its competitors such as Agile octopus
through which people are benefited from half hourly pricing system.
 Threats- Business include this analysis to identify the risks involved in a
particular concern. Sudden rise in the prices of electricity impacts its consumption
level by which Octopus energy limited is suffering lack of profitability.
PESTEL analysis-
PESTEL analysis is a tool used to analyse the macro factors of an enterprise. These
factors are not directly under control of any organisation. Octopus energy PESTEL analysis can
be described as given below-
 Political factors- Every economy is influenced by its policies and regulations set
up by the government. Fiscal policy of every country such as tariff,tax
policy,budget these all factors determine the political structure. In UK, changes in
the government also impact Octopus energy working and tax structure suggested
by the government reduces the profitability of a respective company.
 Economic factors- Every country faces several phases of economic cycle such as
boom,depression,inflation,globalisation etc. these all factors are included in
economic factors. In relation to Octopus energy limited, to survive in the dynamic
environment it has to stable its prices. At the time of inflation, rise in price level
reduces its profitability and revenues (Hkiri, Hammoudeh, & Shahbaz, (2018)).
 Social factors-Factors that are socially responsible for an organisation such as
demographic factors,ethics,cultural values and career attitude etc. impacts
respective company. In context of Octopus energy, it creates employment
opportunities at the time of pandemic and providing jobs and safety to its many
people of the country etc. which satisfies its social values as well.
 Technological factors- New innovations,up gradations,technology for
production all these are technological factors which impacts a company. Octopus
energy is adopting variety of techniques which is reducing manpower and
increasing advancement with the rising demand of society( Nicolini, (2019)).
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 Environmental factors-Besides profit a company must consider environmental
and ecological aspects such as energy consumption laws, waste disposal
laws,environmental protection laws. It is working on zero net carbon emission as
well as focusing on protecting ozone layer. They use solar and wind energy to
utilise natural resources in an effective manner.
Legal factors-Legal factors include both internal and external aspects. Some laws are affected
internally or some externally. Every law must be considered while running a particular
organisation either consumer protection act,intellectual property right. In UK, employment right
act,1996 and employee relation act,1999 are required to be adhered by Octopus energy.
3. Neo classical and Keynesian economic theories in relation to Octopus energy-
 Neo classical- This theory is propounded by Alfred Marshall who was an English
social scientist. In this theory major component is demand and supply and its
effect on the demand of a particular commodity. Scholars of new classical era
believe in attaining personal satisfaction so,they make decisions on behalf of a
utility of a specific product or service( Parrado-Martínez, & Sánchez-Andújar,
(2020)). Few assumptions supported by this theory are rational choices of people
and individual's separate perception about a specific product. Utility is the total
satisfaction derived from consuming a particular good or service. Concept of
marginalism is also mentioned in this theory which shows the additional unit of
satisfaction in consuming a additional commodity.
 Keynesian theory- It is given by John Maynard who was an literature social
scientist. He took major initiatives about changing the entire economy and wrote a
book named “The General theory of employment,interest and money”. Investment
is the result of dynamic nature of interest. He also suggested that government
policies can boost employment level and focuses on short term fluctuations of
demand (Whyman, & Petrescu, (2020) ).
CONCLUSION
From the above report it can be concluded that the sustainable renewable energy
company, Octopus energy is impacted by the situation of Covid19 which results in the global
crisis and disturb the operations of every organisation. Analysing its micro and macro factors
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reveals the actual scenario of renewable energy company. Theories of economics are cruical to
be studied for knowing the actual consumption patterns of the society.
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REFERENCES
Books and Journals
Ahmed, S., Abbas, S. M., & Zia, H. (Eds.). (2020). Smart Cities—Opportunities and Challenges:
Select Proceedings of ICSC 2019 (Vol. 58). Springer Nature.
Arnott, D., & Gao, S. (2019). Behavioral economics for decision support systems
researchers. Decision Support Systems, 122, 113063.
Bouri, E., Roubaud, D., & Shahzad, S. J. H. (2020). Do Bitcoin and other cryptocurrencies jump
together? The Quarterly Review of Economics and Finance, 76, 396-409.
Cramer, G. L. (2018). An introduction to The Routledge Handbook of Agricultural
Economics (pp. 1-9). Routledge.
Davis, G., & Rhodes, R. A. (2020). From hierarchy to contracts and back again: reforming the
Australian public service. In Institutions on the Edge? (pp. 74-98). Routledge.
Hkiri, B., Hammoudeh, S., & Shahbaz, M. (2018). The interconnections between US financial
CDS spreads and control variables: New evidence using partial and multivariate wavelet
coherences. International Review of Economics & Finance, 57, 237-257.
Nicolini, G. (2019). Financial Literacy in Europe: Assessment Methodologies and Evidence
from European Countries. Routledge.
Parrado-Martínez, P., & Sánchez-Andújar, S. (2020). Development of competences in
postgraduate studies of finance: A project-based learning (PBL) case
study. International Review of Economics Education, 35, 100192.
Susilo, D. (2018). Transformational leadership: a style of motivating employees. MEC-J
(Management and Economics Journal), 2(2), 109-116.
Whyman, B., & Petrescu, A. I. (2020). The Economics of Brexit. Springer International
Publishing.
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