Analysis of AGL Energy's Strategic Management Practices & Framework

This report provides an in-depth analysis of AGL Energy's strategic management practices within the context of contemporary business issues. It begins by outlining AGL's history and its position as a leading energy provider in Eastern Australia, highlighting its diverse energy sources and commitment to reducing greenhouse gas emissions. The report then delves into AGL's strategic management framework, emphasizing business design, strategic activities, and organizational member capabilities. It explores various strategic management theories, including resource-based theory, agency theory, network view, and resource dependency theory, to evaluate AGL's approach to resource utilization, stakeholder relations, and competitive positioning. The report concludes by underscoring AGL's systematic approach to strategic management, its focus on personalized customer service, and its commitment to transitioning to lower-emission technologies and exploring new market opportunities. This analysis demonstrates how AGL Energy aligns its strategic practices with modern concepts to achieve its organizational goals.

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CONTEMPORARY ISSUES

Executive Summary
An organization is well defined by the strategic management practices because it helps the
organization to steer in the desired direction. Without the presence of strategic management,
it is difficult for the organization to prosper. However, the strategic management is entirely
based on the domain of the organization and the line of business. For the purpose of this
report, AGL energy is selected. The major emphasis will be on the strategic management
practices of the organization and then an evaluation will be done whether the same is in tune
with the modern practices or concepts. Overall, an in-depth discussion of the strategic
management practices of the company has been done.
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Contents
Introduction...........................................................................................................................................3
Strategic management practices...........................................................................................................3
AGL strategy..........................................................................................................................................4
 Strategic management framework................................................................................................4
Theories.................................................................................................................................................5
 Resource-based theory..................................................................................................................5
 Agency theory................................................................................................................................6
 Network view................................................................................................................................6
 Resource Dependency theory........................................................................................................6
 Strategic Management Process Framework..................................................................................6
Conclusion.............................................................................................................................................8
References.............................................................................................................................................9
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Introduction
The operations of the firm AGL limited started in the early 1937 and this long journey has led
it to become one of the best achievers of the Energy companies. The company has a great
overview with best in the game technologies and workforce. It also provides its customers
very secure and affordable energy which is also free of emission of the greenhouse gases
which are very dangerous for the environment. It serves the customers of the whole eastern
Australian region and is providing them with a source of energy for 175 long years. They
have a variety of energy sources which includes gas, solar power, electricity and many other
related energies (AGL, 2017). This long tenure of serving its customers has increased their
credibility in the market thus making them a much-known energy provider. When it comes to
the background of the firm, it is very bright as it has not only generated energy using the
thermal power generation but it has also used the renewable sources of energy like the wing,
water turbines, solar energy, biofuels, etc.
Strategic management practices
As per the functioning of AGL Limited stated it can be commented that the energy generation
industry has been facing and undergoing a lot of changes in the recent years. There are many
leadership changes in the institution that may help him to capitalize the firm and thus create a
dynamic environment for the firm to prevail upon (AGL, 2017). These changes will also lead
to the improvement of the product range they provide thus increasing the diversity of the
products and services provided by them.
The structure that he will be using to maintain different departments will have seven different
execution teams which are the energy market operations, shareholders relations, new
energies, organizational transformations, people, and culture, group organization and at last
the finance and technology (Bodie et. al, 2014). Also, the firm has decided to appoint a
separate company secretariat but have not thought to put it on the executive team. Also a
detailed study of the companies upstream gas business is on its way. Only after the proper
assessment and reviewing of the companies new upstream gas business, it will tend to stand
constantly in the field (Douma & Hein, 2013).
There will be a recruitment of the new executive roles for the different departments and also
the existing members have been invited to be given with some existing jobs for them which
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are much needed in the new structure (Peirson et. al, 2012). The most of the recruitments are
asked to be made until the 1st of May but there may be an external research required for few
placements which will be announced on the 1st of July. The new structure will lead to many
changes in the line of reporting of the institution which will also be taken into force from the
1st of May. The process of restructuring will lead to an observational decrease in the cost and
expenses as because of the fewer employees thus will also affect the operational functions of
the firm’s employees (AGL, 2017).
AGL strategy
 Strategic management framework
This framework consists of three major elements. Firstly, it is the design of business,
objective or strategy of the organization, secondly, it is the actions which are involved in the
formulation of strategy and its implementation and lastly it is the ability of the members to
execute the strategy (Hemmer & Labro, 2008).
Business design (Objective/ strategy) - the element of the business organization is identified
first. An inquiry to understand the business organization is made here. This helps in designing
the plans to achieve goals in innovative techniques.
Strategic management principles and activities – under this step we form the strategy and
ways to execute the same. This step is wholly concerned with the execution of the strategic
plan in a detailed way so that the designs can be successfully implemented. It helps is training
the members of the organization to do better by developing the competitive advantage (Siraj
et. al, 2011).
Organization member capabilities – the members play a very vital role in order to achieve the
targets. The capabilities of these members can be classified into three broad heads, these
include the strong foundation, that is the management, secondly comes the innovation and
lastly, it is the design of the business. Under this strategy, the focus is to be shifted from mass
to individual. Personalised service is the major objective of this strategy. It also helps to share
the energy (Levine & Prietula, 2013). The focus of this tragedy is not only to make use of big
assets for self but also use small assets and bring them to the advantage of others. Carbon
emissions control is another part of this strategy. Implementation of new generation
technology helps in cost saving and lesser pollution (AGL, 2017). Being environment-
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friendly will not only help the environment but also help create value for the company.
Creating market opportunities for the small investors is another part of this strategy. This
helps in capital formation and benefits the small investors too (Caradonna, 2014). The
strategic management practices of the firm are involved in being a personalized retailer. As
seen the company is taking the serious initiative in empowering the customer to manage their
energy usage and this is done through the presence of simple solutions, smart technology, and
services that are personalized (Freeman & Alexander, 2013). Hence, the main focus is to
provide comfort to the customers and to enhance its base in the market.
Secondly, the strategic management of the company aims at being an owner, as well as the
operator of large assets to both large and small assets. The main concern of the company or
the strategic vision is to invest in a future that is shared where the generation of energy can be
done, stored and shared by people (Davies & Crawford, 2012). Thirdly, the strategic aim is to
move from high to lower emission technology (Carmichael & Graham, 2012). Therefore, the
company aims at making way for new and low carbon emission. Lastly, the company aims at
moving to markets that are new and left unexplored. The expansion process has led to new
opportunities in the retail segment.
Theories
 Resource-based theory
The firm is a huge bundle of the resources and capabilities which are generally made up of
the physical, financial, human and the intangible assets. According to the big theories, these
resourced are non-renewable and exhaustive in nature and thus have limited mobility and also
are of homogeneous nature. The firm can thus use these resources to grow if it is capable of
understanding the use of them and thus applying them to work to complete the organizational
goals (Needles & Powers, 2013).
Going by the resource-based theory, it can be said that AGL Energy is using the resource-
based theory into practice. The company is using the resources, however, devising new and
improved means that helps to safeguard the resources. It is noted that the company has made
way for new and low carbon emission (AGL, 2017). Therefore, the major emphasis is on the
attainment of the organizational goals, on the other hand, it even ensures that the resources
are used in a manner that does not exploit it.
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 Agency theory
It is the difference between the top management of the firm and the employees. It mentions
the firm as a contract of nexus. Both the sides need to interact and work together so that they
can share the risks and damage thus leading to the increase in the efficiency of the firm and
also recognizing that the intermediate goals of the firm which were set as targets are achieved
(Deegan, 2011). In the case of AGL Energy, it can be noted that the top management and the
employees share a cordial relation and this is one of the major reason for the success of the
company (AGL, 2017).
 Network view
A firm is the aggregate of the buyers, suppliers, rivals and other agencies. These are thus
linked by the individuals who lead to the increase in the legitimacy of firm’s resources and
thus make the diverse reach of the firm. When the firm has high reachable it can be
centralized easily but also this reach may lead to forming constraints within it (Brigham &
Daves, 2012). As seen by the mission and vision that the company tends to target the
customers and this is done by the suppliers, agencies etc. Hence, it can be commented that the
company has a strong network that has led to the attainment of success.
 Resource Dependency theory
This theory tells that the firm can have a secure path built on its resources and capabilities
which may be used to survive by the firm in the harsh situations. These may help the firm to
take another path thus helping them to survive the new or immediate environmental changes.
Thus this theory believes that the firms are interrelated and thus they also have a mixed
system of cooperation (Alter, 2013). As seen by the progress of AGL Energy, it can be said
that the company has faced severe competition from Origin Energy, Delta electricity, etc
however ensured a smooth movement owing to the resources and capabilities (AGL, 2017).
 Strategic Management Process Framework
Under this system the mission or the purpose of the organization is rooted with the strategy
formulation, it is a systematic approach under which the actions or decisions of the firm
which are against the goal or mission are tested (Parrino et. al, 2012). The bases on which the
targets of the firms are expected to be achieved are formed under this approach. The
evaluation of the firm and its environment along with nature and form is also defined. It also
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helps in deciding the nature of decision made by the business and the corporate (AGL, 2017).
Last but not the least it defines the state or order which will help the firm to achieve its target
mission. Going by the discussion and the process, it can be said that AGL Energy has ensured
a systematic approach and this is one of the major reason why the company has been
successful in the attainment of the goals (AGL, 2017). The framework of the company is
clearly defined and is done in accordance with the line of business. The strategy of the
company resides on four important notions and there are two major strategic imperatives that
are carbon-constrained future and catering to the customer's requirements.
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Conclusion
When it comes to strategy as a perspective, it can be said to be more abstract in nature that
helps in attainment of the goals because it is not related to a market or business in a directs
manner. However, it is related to the manner in which a firm performs. As per the discussion
on AGL Energy, it can be commented that the company has desired values in mind and is
performing as per the objectives that are laid down. Moreover, the strategic objective
influences the mission and vision of the company. When it comes to the concept of a rational
system, an organization designs a strategic objective and keeps a strong strategic
management. Similarly, AGL Energy performed in a strong manner because the strategic
management approach of the company is well defined and ensure that the aims are attained.
In short, the concept of strategic objective helps the firm in attaining the most economical
way that is possible. However, to ensure this, it is essential for the company to have strong
standards for control, as well as coordination.
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References
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Caradonna, J. L., 2014. Sustainability: A History. Oxford University Press
Carmichael, D.R. and Graham, L. 2012. Accountants Handbook. Financial Accounting and
General Topics, John Wiley & Sons.
Davies, T. and Crawford, I. 2012. Financial accounting. Harlow, England: Pearson.
Deegan, C. M. 2011. In Financial accounting theory. North Ryde, N.S.W: McGraw-Hill
Douma, S. and Hein, S. 2013. Economic Approaches to Organizations. London
Freeman, E. and Alexander, M. 2013. Stakeholder management and CSR: questions and
answers. Oxford Press
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managerial and financial reporting systems. Journal of Accounting Research, 46, pp. 1209–
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April 2018]
AGL, 2017. Our strategy. [online] Available at: <https://www.agl.com.au/about-agl/who-
we-are/our-strategy> [Accessed 16 April 2018]
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Performance. Organization Science, Harvard Press
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