AGL Company Case Study: Analyzing Management Problems & Decisions

This case study delves into the management and decision-making challenges faced by AGL (Australian Gas Light) energy company, a public limited company involved in gas and electricity generation and retail in Australia. The company has encountered issues in decision-making, leading to criticism from stakeholders, including the state government and customers. The study identifies key research questions to address these problems, employing a qualitative research design using secondary data sources like books, journals, and company reports. It analyzes poor decisions made by AGL, such as divesting the Hazelwood power plant and selling gas to international markets, highlighting their negative effects, including financial write-downs and increased energy prices. The study proposes alternatives like stakeholder relations management and thorough analysis before execution, recommending that AGL learn from past mistakes, enhance communication, and develop sustainable development goals. Ultimately, the case study emphasizes the importance of informed decision-making and stakeholder involvement for AGL to achieve sustainable management goals.

The AGL Company
Management Problem

Introduction
The AGL (Australian gas light) energy company is a public limited
company that is based in Australia that is involved in the generation
and retail of gas and electricity for commercial and residential use.
The company generates its energy from various power stations that
make use of natural gas, hydroelectricity, thermal power, solar
energy, wind power, coal seam gas and gas storage sources.
The firm has over the years experienced some issues when it comes
to decision making and the strategy that the management applies is
poor and has seen it face serious consequences and criticism from
key stakeholders in its operational process.
Among these stakeholders is the state government of Australia,
customers and the company management.

Management problem
Among the various management problems that seem to affect many firms of the
same category and level as AGL is the one on decision making.
Decision making involves planning and execution of key company operations
towards development and growth of a company.
The firm has over the years experienced some issues when it comes to decision
making and the strategy that the management applies is poor and has seen it face
serious consequences and criticism from key stakeholders in its operational
process.
Among these stakeholders is the state government of Australia, customers and
the company management.
The company by 2017, October claimed to be financially worse-off since it made
and executed its decision to be locked up in a long term business deal with
Santos to sell its gas to the country by shipping the product internationally from
the Curtis Island (Pettigrew, 2014, p. 45).

Research questions
The various research questions that help to address the management problem in
the company include the following;
 What management problem affects the AGL Company in achieving the
sustainable management goals?
 What alternatives and solutions help avoid or solve the management issue
identified?
 Who are the various stakeholders who can help in making proper decisions?

Research programThe research program for this paper involves the use of qualitative design technique. It will include the use secondary sources
of information such as books, journals, articles and company websites.
It will also target newspaper reports about the company that will involve obtaining such content as progress reports and other
related information.
Literature review of content about the company will be done before doing data analysis.
The reason for the use of qualitative design is that the report targets only qualitative data about the company The other reason
for the use of the method is that there are a lot of sources that contain secondary information about the company (Boyle et al.
2012, 47).
The aspect of time saving will also be considered in that the use of qualitative data may not necessarily require going to the
field but can target only available online which have enough information of what is required. It is time involving to carry out
the research by going to the field.
Other resources such as finances that are needed to conduct field studies will not be needed and thus the researcher will make
some significant saving.

Key stakeholders
The various stakeholders that need to be
involved in decision making by the AGL
company include
a. The company management
b. The state government of Australia
c. The ministry of energy
d. The customers
e. The ministry of labor
f. The climate change mitigation agency
representatives

Analysis and discussion
The examples of poor decisions made include;
 Giving off the Victorian Hazelwood power plant in 2015 to GLNG (Golar
liquefied natural gas) Company
Some other time the company had sold almost a quarter of
the Australian annual gas supply to Japan, Malaysia, Korea
and China.
The coal seam project at Camden in Sydney is also expected
to be closed down by 2023 which is 12 years earlier.
The company has already made plans of closing the Liddell coal power
plant that it claims is old and unreliable, by 2022.
ditching of the $ 1 billion has production venture at the
NSW Gloucester region coal seam (Dew, Read, Sarasvathy, and
Wiltbank, 2009, p.297).

Effects of poor decisions
The company incur a write down of $795
million as write-down at its profit (Norgate, and
Haque, 2010, p.271).
Increased prices of energy sources such as gas
Increased demand of gas energy
Reduced profits to the company
Loss of employment opportunities to the locals
Pitfalls that include economic challenges to the
country
Lack of income to the state government

AlternativesThere are various alternatives to avoid making poor decisions that exist and which
the AGL Company could have applied to avoid conflicts with the government, avoid
negative outcomes such as reduced profits and the failure of customers from the
inability to offer gas supply services. These include one, practicing good stakeholder
relations management (Macaulay, 2018, p.161).
The strategy requires that the company seek the opinion of all the various
stakeholders including the government, customers and the management. This will
ensure that no wrong or conflicts arise after the execution of plans.
The other alternative involves doing a good analysis and assessment concerning any
plan before its execution. The company needs to avoid rushing to achieve unrealistic
goals and go slow in its implementation on sustainable development goals (Hastie, and
Dawes, 2010, p. 67). In as much as the company is after executing its transition to
clean sources of energy, it should ensure that proper plans are made to avoid negative
results.
The other alternative involves seeking good information about the issue of energy
and avoiding common pitfalls (Ho, Xu, and Dey, 2010, p.19). The move involves
learning from past mistakes and do research about what other relevant companies are
doing to achieve the same goals. The strategy can mean seeking content from research
and literature about decision making.

Recommendations
 The company needs to practice good stakeholder management relations by
involving all the various stakeholders in decision making process
 The company needs to learn from past mistakes and install strategies that are
meant to bring solutions to the problems identified
 AGL needs to enhance good communication skills among the various
stakeholders to encourage them to be actively involved in decision making
process
 The company should practice good analysis and assessment concerning any
plan before its execution. The company needs to avoid rushing to achieve
unrealistic goals and go slow in its implementation on sustainable
development goals
 It also needs to seeking good information about the issue of energy and
avoiding common pitfalls (Hastie, and Dawes, 2010, p. 67).
 It needs to take time in making decisions to avoid setting unrealistic goals
 It needs to come up with proper sustainability development goals that include
the transition from the use of coal energy to clean and renewable sources of
energy

Conclusions
From the analysis, it can be noted that the management problem that seems to affect many
firms of the same category and level as AGL is the one on decision making.
The firm has over the years experienced some issues when it comes to decision making
and the strategy that the management applies is poor and has seen it face serious
consequences and criticism from key stakeholders in its operational process. Among these
stakeholders is the state government of Australia.
There are alternatives to avoid making poor decisions that exist and which the AGL
Company could have applied to avoid conflicts with the government, avoid negative
outcomes such as reduced profits and the failure of customers from the inability to offer
gas supply services.
These include one, practicing good stakeholder relations management, seeking good
information about the issue of energy and avoiding common pitfalls and doing a good
analysis and assessment concerning any plan before its execution.

References
Boyle, P.A., Yu, L., Wilson, R.S., Gamble, K., Buchman, A.S. and Bennett, D.A., 2012. Poor decision making is a
consequence of cognitive decline among older persons without Alzheimer’s disease or mild cognitive impairment. PloS
one, 7(8), p.e43647.
Dew, N., Read, S., Sarasvathy, S.D. and Wiltbank, R., 2009. Effectual versus predictive logics in entrepreneurial decision-
making: Differences between experts and novices. Journal of business venturing, 24(4), pp.287-309.
Hastie, R. and Dawes, R.M., 2010. Rational choice in an uncertain world: The psychology of judgment and
decision making. Sage.
Ho, W., Xu, X. and Dey, P.K., 2010. Multi-criteria decision making approaches for supplier evaluation and selection: A
literature review. European Journal of operational research, 202(1), pp.16-24.
Macaulay, S., 2018. Non-contractual relations in business: A preliminary study. In The Law and Society Canon (pp.
155-167). Routledge.
Norgate, T. and Haque, N., 2010. Energy and greenhouse gas impacts of mining and mineral processing operations. Journal
of Cleaner Production, 18(3), pp.266-274.
Pettigrew, A.M., 2014. The politics of organizational decision-making. Routledge.