MGT530 - International Business Plan: AGL Limited's India Expansion

This report presents a comprehensive international business plan for AGL Limited's expansion into the Indian market, focusing on the energy sector. It begins with an executive summary and background information on AGL Limited and the Indian market, including economic, political, and cultural analyses. A SWOT analysis identifies strengths, weaknesses, opportunities, and threats related to AGL's expansion. The report then delves into market entry options, recommending a preferred strategy, and considers marketing, R&D, and production aspects. It also addresses international HRM issues and provides recommendations for AGL Limited's successful entry and operation in India. The report includes an appendix with additional supporting information and a bibliography of cited sources.

Running head: MANAGEMENT
International business of AGL Limited
Name of the student:
Name of the university:
Author note:

1
MANAGEMENT
Executive summary
Technological support enhances the supply chain network of AGL Limited, assisting in
catering to large number of customers. Contact with the research and development team
causes the advent of innovation in the tools and resources. Training is provided to the staffs
regarding effective use of these resources for achieving sustainable development. Monitoring
is performed through information management systems, which helps in conducting audits and
reviews. All these aspects reveal an upgraded infrastructure, directly indicating preparedness
towards expansion. However, skills and capabilities are needed to overcome the challenges of
political instabilities and strict cultural norms. For this, explicit market research on India is
needed in case of AGL Limited. Training would acquaint the staffs with the needs of the
customers and the technologies through which it can be solved. Post training tests would, in
turn, act assistance in terms of estimating the extent to which the performance has reached to
the identified targets. Continuous improvement strategies, accompanied with evaluation
would be fruitful for upgrading the standards and quality of the energy generation and the
services.

2
MANAGEMENT
Table of contents
Introduction................................................................................................................................3
Brief background of the selected company................................................................................4
SWOT analysis...........................................................................................................................4
Analysis of destination country..................................................................................................5
India Power Sector Analysis..................................................................................................6
Financial and economic analysis............................................................................................6
Macro-environmental analysis...............................................................................................7
Political and legal factors...................................................................................................7
Social, cultural and ethical analysis...................................................................................7
Technological analysis.......................................................................................................7
Environmental issues.........................................................................................................7
Competitive strategy analysis....................................................................................................8
Market entry option analysis and preferred option recommendation........................................9
Marketing and research and development considerations.......................................................10
Recommendations for production............................................................................................11
International HRM issues and considerations..........................................................................12
Conclusion................................................................................................................................12
References................................................................................................................................14
Bibliography.............................................................................................................................16
Appendix 1...............................................................................................................................17
Appendix 2...............................................................................................................................18

3
MANAGEMENT
Introduction
In the present competitive era of the market, expansion strategies have attained much
popularity in the market. Lack of proper planning in this case yields detrimental results for
establishing the brand in the destination country. Explicit market research is needed in terms
of averting the risks in the expansion process. This comprises of in-depth study regarding the
business prospects in the host country. This research seems fruitful for gaining an insight into
the preparedness towards expanding into the foreign markets (Hamilton & Webster, 2018).
Typical components of this research are that of the capabilities of dealing with the external
challenges. This report attempts to shed light on the international business dynamics of AGL
Limited.

4
MANAGEMENT
Brief background of the selected company
AGL Energy Limited has achieved accolades and glory by emerging as one of the leading
companies in the field of energy generation. The business operations are directed towards residential
and commercial purposes, indicating large scale customer satisfaction. As a matter of specification,
the sources of energy generation are thermal power, wind power, solar energy, coal seam gas, natural
gas, hydroelectricity and gas storage. Investments in expanding the business to Australia have
broadened the scope and arena of the operations (Agl.com.au, 2019). In this, continuous improvement
strategy seems beneficial for upgrading the standards and quality of the business. Operating under the
private sector, AGL Limited exposes diversification in the form of operators, developers and private
owners. The marketing activities of the company are divided into four segments: customer market,
group operations, investments and wholesale, strengthening the base of more than 3.6 million
customers across the globe. The recent trends indicate the expansion plans to Asia. Narrowing down
the search, India is selected as the preferred country for expansion.
SWOT analysis
Strengths
In the previous financial year, Renascent Power Ventures Ltd emerged successful in
accumulating 75.01% stake of Prayagraj Power Corporation Company Limited. The amount was US$
854.94 million, which provides countries like India with an access to set up their business in India.
Acquisition with the other energy companies is beneficial for AGL Limited in terms of expanding its
business within the threshold of India. Typical reference can be cited of the Ramky Envio engineers,
who were acquired by Kohlberg Kravis Roberts and Co for US$ 530 million (Agl.com.au, 2019). The
deal was finalized by ReNew power, acquired by Ostro Energy at US$ 1668.21 million. The capacity
of renewable sources of energy is 69022 megawatt, which indicates 20% growth in the power
generation sector. Drastic growth of 6.1%, mounting the Bn units to 1203 is an added advantage for
India in terms of power generation.
Weakness
The statistics indicate that Australia, France, India, Nordic countries, UK, US, China, Japan,

5
MANAGEMENT
Germany and other countries hold the responsibility of generating the fossil power, accounting up to
68%. In this, one of the serious challenges is that India contributes only 21% income from generating
energy from the fossil fired power. Limitation in the energy generation practices indicates low levels
of production from the usage of the non-renewable sources of energy (Agl.com.au, 2019).
Opportunities
Technological support of devices like variable frequency drive can help AGL Limited in
achieving infrastructural development. As a matter of specification, it would act as an agent in terms
of enhancing the efficiency of the plant operations. However, these devices are not that popular in
India, which indicates the need of indulging in contracts with the research and development team.
This device is assistance in terms of using the electricity on a low amount. In this situation, the plant
runs on half capacity mode. Therefore, training from the engineers can be fruitful for achieving an
understanding towards the operations of the frequency drives for averting the risks of malfunctions,
virus attacks at the time of actual operations. Along with this, mention can be made of Pradhan Mantri
Sahaj Bijli har Ghar Yojana (SAUBHAGYA) scheme, which has been implemented for the political
parties for controlling the power generation in India (Agl.com.au, 2019). According to the scheme, the
aim is to ensure that every household has equal access to power and electricity. These schemes reduce
the burden of expansion to a great extent.
Threats
The tariffs on the solar power pose high threats in terms of the energy generated from the
thermal power. According to the agreements of State Electricity Board, higher difference rates have
been found regarding the renewable and non-renewable sources of electricity. In case of the
renewable sources of energy, the price is as high as the Indian rupee. Here, the calculation is done
according to the electricity consumption per unit. In case of the non-renewable sources of energy, the
calculation is according to Indian rupees 2.68 per unit. Unless and until, the customer base is
expanded, there is an impending threat for AGL Limited in terms of encountering severe losses in the
energy generation (Agl.com.au, 2019). The focus area can pertain to countries outside India.
Analysis of destination country

6
MANAGEMENT
India is the preferred country to which AGL Limited can expand. This is in terms of
diversification, which prevails in the power sector of India Along with this, diversification is also
evident in the sources of energy generation, which ranges from lignite, oil, coal, natural gas, nuclear
and hydro power and non-conventional sources of energy. Variety is also found in the types of
conventional sources of energy, which are solar energy, wind energy, agricultural and domestic waste.
Rapid increase in the electricity demand and installation of the power generating sources shapes the
major sources of income in case of the India threshold. India has been enlisted in the 4 th position
according to the power generated in the Asia Pacific region among the 25 countries. Significant
changes in the outlook of the industry have altered the dynamics of the business operations. Statistical
data of 2019 indicates the capacity of installed power stations, which totals to 350.16 Gigawatt
(India.gov.in, 2019). This indicates the opportunity to the industries and firms to establish their
business in the threshold of India.
India Power Sector Analysis
The power sector of India can be analysed through four segments: growing demand, attractive
opportunities, policy support and higher investment. With the growing population, there has been
simultaneous growth in the electrification and per capita usage. Planning regarding the installation of
latest and modern software is estimated to increase the power consumption to 1,894.7 TWh by 2022.
Installed capacity of the renewable sources of energy has acted assistance in assessing the prospective
sources of revenues in the power segments. The estimates relate to the installed capacity of 175 GW
by the financial year of 2022. In this, the role of policies is crucial. Typical evidence of this is Deen
Dayal Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS)
(India.gov.in, 2019). Attracting investments worth 11.56 trillion is estimated to result in the advent of
financial stability by the financial year of 2022 in the fields of thermal, hydro, nuclear and renewable
sources of energy.
Financial and economic analysis
According to the records of 2000-2018 December, the foreign direct investments of electrical
generation industry accounted to US$14.18 billion. This is 3.48% of the total inflows of FDIs in India
(India.gov.in, 2019).

7
MANAGEMENT
Macro-environmental analysis
Political and legal factors
Governmental interventions play a crucial role in enhancing the standards and quality of the
power industry in India. Mention can be made of the amendment draft, which was enforced in 2018 as
the Electricity Act (2003). In this, the focus was on the differentiation between the content and the
carriages, seeking full commitment towards power supply, direct transfer of subsidies, regulating and
penalizing the firms violating the rules and regulations. Apart from this, reference can be cited of the
Ministry of New and Renewable Energy, which is in charge of setting the solar power tariff caps
according to the Indian rupees 2.50, which is, US$ 0.04 and Indian rupees 2.68 for the developers,
utilizing the local and international solar cells (India.gov.in, 2019).
Social, cultural and ethical analysis
Determination of the specific needs, demands and requirements of the customers helps AGL
Limited in achieving sustainable business expansion. For this, social media is one of an efficient
option, assisting in enhancing the trafficking of the audience towards the brand image. Using Data
Protection Act and Ethical Code of Conduct is apt in terms of reaching to the customers in an ethical
manner.
Technological analysis
Most of the thermal power plants lack the latest technologies. Variable frequency drives acts
as an agent in terms of enhancing the effectiveness of the plant operations. Half capacity mode of the
drivers necessitates the need of the introducing more devices. Along with this, one of the serious
issues is that of the lack of MIS, which has stalled the infrastructural development (India.gov.in,
2019). As a matter of specification, it has aggravated the complexities in taking notes on the unit
readings. IT models needs upgradation for effective dealing with the systems like CMMS, OPPMS
and MSMS.
Environmental issues
Developmental approach towards the NGO’s enhances the corporate social responsibility of
the power industry of India. Some of the initiatives in this direction are supporting the oxy fuel
combustion for reducing the environmental pollution. In spite of this, there has been an output of 1100
Gigatonnes of waste generated from the smoke in the power plants. This waste accounts for 70% of

8
MANAGEMENT
the gases like carbon dioxide, methane and traces of oxide. This has compelled the government
agencies to intervene into the operations of the industry (India.gov.in, 2019).
Competitive strategy analysis
Mergers and acquisitions prove beneficial for the power industry in India. Licensing
in terms of the technology transfer improves the supply chain network of the industry. The
trade deficit in the PV cells in case of Germany has resulted in the debate regarding the
emotional charges and responsibilities. World Trade Organization has been compelled to
encounter several complaints in terms of the trade disputes. As a matter of specification, it
has disrupted the connections between Europe and China (Kuik, Branger & Quirion 2019).
In case of AGL Limited mention can be made of the plans regarding improvising on
the return on investments and sustainable earnings for achieving expansion (Agl.com.au,
2019). The strategic roadmap comprises of strengths, weaknesses, challenges and
opportunities evolving within the operations. Product differentiation enhances the efficiency
in the power generation, causing the growth of the profit margin. These aspects drastically
alter the outlook of the industry. The competitive strategy also includes creation of
anticipatory culture and commitment to carbon constrained outlook. In order to emerge as a
leader in the price factor, AGL Limited intends to shape their identity in terms of enhancing
the brand image. This is in terms of social media, which assists in managing the relationship
with the clients and the customers. Within this, assessment of the resource and capability is
crucial for examining the preparedness towards dealing with the external challenges. Mention
can be made of the National Electricity Market, which pertains to the operating cost of the
thermal electricity (Agl.com.au, 2019).

9
MANAGEMENT
The retail energy environment is competitive, as the customers prefer judicious use of
the electricity in terms of saving for the future generations. Digitalized solutions are
assistance for monitoring the operations in the energy generation and its price regulations.
Threat of substitutes is high in case of AGL Limited, as the lower pricing strategy,
reducing costs and providing new value propositions provides opportunity to the start-ups for
gaining new customers. Dominant position of the suppliers is apt in terms of the
accumulating greater share in the Indian market. Demand of renewable sources of energy has
increased, which aggravates the complexities of AGL Limited in terms of maximizing their
offerings, adversely affecting the profitability (Agl.com.au, 2019). The competition is high
with the Deltra Electricity, Origin Energy and Integral Energy. Core utility business model of
Origin is one of the areas, which adds vulnerability in the market position of AGL Limited.
Specific reference can be cited of extensive upstream gas deposits, which helps in enhancing
the production of coal seam gas.
Market entry option analysis and preferred option
recommendation
According to the budget 2019, India has gained the access of 100 FDI for single brand
retailing. This has ignited a spark in the business of the foreign retailers to expand the scope
and arena of their business dynamics. Explicit research about India indicates it’s attractive as
of the largest contributors to the economy. Market entry in India is governed by the factors of
strategic planning, partnership with the local brands, establishing contracts with the agents
and distributors, selecting the target market and promoting the products and services
(Washingtonpost.com, 2019). Based on these factors, it can be said that forming a subsidiary
or joint venture with the local energy producing companies would be beneficial for AGL
Limited in expanding their business.

10
MANAGEMENT
Before planning the explanation, the type of presence intended needs to be clarified.
Indirect presence would indicate limited financial and legal risks. In this case, hiring local
distributors for supplying the products would be an effective option. On the other hand, if
direct presence is intended, limited ability and partnership of a subsidiary or liaison would be
effective for controlling the operations. Foot-in-the-door strategy can be adopted by AGL
Limited for opening a branch through an agent or a wholesaler (refer to appendix 1).
Marketing and research and development
considerations
AGL Limited Company operates as a public company under Energy Industries.
Delivery of quality energy resources guarantees customer satisfaction. The services of the
company are mainly segmented into electricity generation, electricity distribution, electricity
retailing and natural gas retailing and distribution. Information management systems are an
agent for optimizing the finances. Mention can be made of 2008, when online payment
services resulted in single billing system. In the creation of sustainable energy future, the
stakeholders, shareholders and community are vital part (Agl.com.au, 2019). Integrated
strategy forms beneficial element in terms of enhancing the profit margin. Within this, risk
assessment matrix in the latest software is assistance in controlling the upstream demand and
supply of the energy resources (refer to Appendix 2).
Mention can be made of the performance management systems like balanced
scorecards, which is assistance in terms of assessing the effectiveness of the managerial
techniques to achieve sustainable development. Typical evidences of this lies in health and
safety management system, Life Guard, which documents the improvements in the
operations, especially in the health and safety for the employees, clients and the customers.
Monitoring of the information is done through online reporting (Agl.com.au, 2019). Central
offices measure the consumption through the footprints. Technological support has adversely

11
MANAGEMENT
affected the supply chain network. Conducting offshore marketing with the Indian
government through emails would be beneficial for AGL Limited to expand the scope and
arena of the business.
Recommendations for production
 Prior to the expansion, AGL Limite3d needs to conduct explicit research on the needs,
demands and requirements of the Indian people. Keyword search would be fruitful for
taking the personnel of the company directly to the information. This approach would
be effective in identifying the target market. Placing the focus on the rural people
would be effective in terms of contributing in the economy. However, many
governmental schemes have developed for providing access to the rural people
regarding the access to power and electricity. Therefore, AGL Limited can place the
target on increasing the streamline production of the fuel. For this, efficient and
flexible devices are needed for combating the changing climactic conditions.
 Continuity needs to be maintained in increasing the fossil fuel consumption. This is
accompanied with the estimations regarding threefold increase in the greenhouse gas
emissions, which can add to the environmental pollution. Therefore, meeting with the
statutory bodies of law would be effective for AGL Limited in terms of gaining an
insight into the latest versions of the environmental directives. This insight would be
apt in terms of generating the energy resources according to the requirements.
 Research and development team needs to be involved in the monitoring, audits and
reviews, so that examining can be done for the tools to measure the amount of energy
consumed. This is to be accompanied with mapping the impact of the consumption on
the productivity for excavating the extent to which the operations have reached to the
sustainable development.