Ovo Energy: Business and Globalisation - Expansion in Europe

This report provides an overview of Ovo Energy's business and globalisation strategies, focusing on the importance of global trade and expansion opportunities in Europe. It examines the external environment using PESTEL analysis and explores competitive forces, Porter's Generic Strategies, and the Ansoff Matrix. The report discusses potential entry modes and market selection, highlighting Norway and Denmark as promising locations for expansion. It emphasizes the significance of international trade in enhancing living standards and economic development, while also considering the various drivers and challenges associated with international market expansion. The analysis covers market drivers, cost drivers, government drivers, and competitive factors, providing a comprehensive understanding of the strategic considerations for Ovo Energy's global growth. Desklib offers a range of resources, including past papers and solved assignments, to aid students in their studies.

Business and
globalisation- Ovo
Energy

Table of Contents
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
OVO energy overview...........................................................................................................3
Retail supply of energy and home telecommunications........................................................4
The importance of Global trading..........................................................................................4
Expansion opportunities in Europe........................................................................................6
External Environment PESTEL.............................................................................................6
Competitive forces.................................................................................................................6
Porter’s Generic Strategies and the Ansoff Matrix................................................................6
Entry Mode and Market Selection.........................................................................................6
CONCLUSION..........................................................................................................................7
REFERENCES...........................................................................................................................8
Books and Journals:...............................................................................................................8

INTRODUCTION
Today’s business environment is found to have become complex and competitive
which makes pressure on organisations to expand their business globally (Kharat, 2019).
Globalisation is the process in which organisations are allowed to trade across borders so that
they can run their business internationally and expand their business very well. For the
success and growth of any organisation, it is very important that they need come out of their
comfort zone and try to do some extra efforts. In this context, OVO energy will be discussed
in this report which helps in understanding to expand their business in other countries. OVO
Energy is found to be a British organisation that deals with the energy supplier. It was
founded in 2009 by Stephen Fitzpatrick. This report aims to understand the importance and
impact of global trade. It will also include in-depth awareness which is required to expand the
business internationally. In addition to this, it will also discuss some important theories and
tools which are very important for finding the solutions to problems.
MAIN BODY
OVO energy overview
OVO Energy is found to be an independent energy technology company and supplier.
It is a developer of an energy supply platform that is basically designed to distribute
electricity and gas in the UK. The platform of the company is supporting buying and selling
of gas and electricity to domestic properties (Jahan and et.al., 2021). Their focus is on
enabling customers to use gas and electricity in a greener, simpler and fairer way. It is
founded in 2009 in the UK that offers an unparalleled scope of digital energy services,
technologies in solutions to their customers. In addition to this, it is identified that over
energy is redesigned the energy experience in more green, effortless, simple and fair for each
and every customer. It is identified that OVO is currently running their business and the UK
supply market since 2009 but it is necessary for them to expand their business in other
countries also. But for that purpose, they need to understand the market conditions in an
effective way. Due to Brexit, it is identified that now European Union and UK market has
separated and that's why the Global market in Europe has also become their target which is
really helpful in order to achieve their goals and objectives. They firstly need to expand their
market in Europe because it becomes a big market for OVO energy.

Retail supply of energy and home telecommunications
The energy retail market is found to be the main interface between the energy system
and consumers. It is also identified that the primary mechanism for recovering the cost of
electricity and gas systems is very vital (Cherunilam, 2020). It is found that this industry is
growing only when petrol and diesel are displaced by electricity. It is identified in the UK
that supplying energy in the home involves three important elements such as transporting gas
and electricity, making electricity through the generation and selling it to customers. It is also
identified that the energy market of the UK is regulated by the gas and electricity market
authority which is termed as Office of Gas and Electricity Markets (OFGEM). British gas is
found to be the largest energy company in the UK which is run its business in the global
market and in the same way over energy is also so largest supplier of energy in the UK. But
they are not supplying energy outside the UK and that's why it is important for them to plan
for expansion of business in other countries as well. There is information taken from the
Ofgem analysis of the distribution network operator. In the below-mentioned chart, there is
information about the number of active domestic suppliers by fuel type in the UK are
mentioned. This diagram is helpful in order to understand the dynamics of market
concentration over time. It is identified that from July 2021 to September 2021 there is a
decline in the number of active domestic suppliers are found. It was because of the exiting of
five suppliers in the market.

The importance of Global trading
Global trade is allowing wealthy countries to use their resources in a more effective
and efficient way. With the help of this, other countries are able to produce the same more
effective and efficient resources quickly and at a lower cost. It will result in countries are
selling goods and services more cheaply than other countries (Riveras, Beaton and Arteaga-
Ortiz, 2021). It is necessary to understand that international trade is a really important factor
in order to increase the living standard of people. This can be possible with the help of
providing employment and enabling consumers to enjoy the products and services in a more
effective way. It is found that international trade is playing an important role in the process of
improving living standards and reduction of the poverty level in the country. It also included
a concern about unequal distribution effects. International trade is helpful to make the use of
abundant raw materials. For example, there are some countries which have naturally
abundant in raw materials such as Qatar in oil, Congo in diamonds, Iceland in fish, etc. If
they are not trading on the international market then they will not be able to gain benefit from
the natural endowment of raw materials. In addition to this, consumers are enabled how to
choose best as they have greater choices due to international trade. It provides Global growth
and economic development which can be easily understood with the below figure. There is a
bar graph which is mentioned below that shows about global GDP started to rise from 1960
to 2020.

International Drivers
It is important for an organisation to consider all the various drivers and related
challenges in the path of expanding their business and international market (Top drivers for
international expansion, 2018). There are many drivers found in the expansion plan of
business which includes market drivers, competitive drivers, cost drivers and government
drivers.
 Market drivers are defined as the drivers found as underlying forces that pressurize
consumers to purchase products and services of an organisation (Osita-Ejikeme and
Amah, 2021). It can be trends, consumer demand, government demand and policy.
 Cost drivers include scale economies, favourable logistics and country-specific
differentiations. For example, if OVO energy is expanding their business in other
countries they need to increase the volume of sales in the Nations which helps them to
become a positive scale of economy.
 Government drivers all include different trade policies which become difficult for
the organisation to follow because their home country and host country are different.
 One more important driver is the competition which includes interdependence
between countries and also includes competitors Global strategies. When one
organisation like British gas is expanding business and many countries then OVO
energy can understand the strategy of their competitors and be able to extend their
business in different nations.

Expansion opportunities in Europe
It found that there is a rapid decline in the use of fuels and coals which increase the
electricity usage in the UK. It found that there is a rapid decline in the use of fuels and coals
which increase the electricity usage in the UK. It is also found that Global demand for energy
is continuously rising (Expanding your business into Europe, 2020). The reason behind this is
that developed countries are consuming a huge amount of energy while demand is increasing
in developing countries. The UK is the nation where it reduces the use of energy as compared
to 1970. This is due to efficiency in production and the use of energy. The UK is focusing on
increasing renewable sources. So it is very important for OVO energy to expand its business
across do the United Kingdom in other Nations. Europe is a big region that includes many
countries that require energy and gas. It is founded in Russia is the biggest supplier of natural
gas to Europe and that's why it is a big opportunity for over energy to expand their business
in European countries. When European Union is importing energy and gas from Russia then
it becomes costly as compared to purchasing from the United Kingdom. This is due to an
increase in many duties and transportation costs. It is identified that GDP of European Union
is amounted to approximate 13.39 Trillion Euros which is currently decline due to COVID-
19. But now it is expected to increase after pandemic situations and that’s why OVO energy
needs to take extra efforts so that they can run their business very well.

It is founded in European Union that they have 28 countries which is one of the
world's largest economies and it is competing with China and US. So that's why OVO energy
can enjoy the benefits of doing international trade and Europe as they will get millions of
consumers and the largest single market in the world. It is also found that there are
transparent rules and regulations which are really helpful for over energy to deal fairly. It is
identified that there are plenty of opportunities in Europe as it is a strong stable environment
and easily accessible by organisations. In order to expand business in Europe, it is very
important for an organisation to make sure the factors which impact this decision. It should
include ease of doing business, barriers in entry, stable governance, skilled workforce,
advanced innovation and Technology, etc. After considering all these factors, now OVO
energy can take decisions related to business expansion. Two countries are selected by over
energy in order to expand their business which includes Norway and Denmark (5 Best
Countries in Europe for Business Expansion, 2021).
Norway Overview
Norway is found to be the food best country in Europe for the purpose of business. It
is only because of the nation's strong commitment towards innovation, its world-class
industry and its economy. It is also identified that it is one of the world's lowest carbon
footprints only because of its renewable energy. It is also found that Norway is one of the

world leaders in the Maritime, seafood and oil industry. There are many reasons found by
OVO energy for choosing this country. It ranks 9 numbers in the world in terms of its
friendly business regulations. It is also found that Norway has posses a highly competitive
and skilful workforce. In addition to this, there are some more reasons such as highly
advanced infrastructure, politically stable and economy is very strong.
Figure 1: <https://datacommons.org/place/country/NOR?
utm_medium=explore&mprop=amount&popt=EconomicActivity&cpv=activitySource
%2CGrossDomesticProduction&hl=en>
Denmark Overview
Denmark is ranking post in the list of best countries in Europe in terms of doing
business. It is very important for an organisation to select this destination for the purpose of
business as it has a free market capitalism economy (Glover, 2021). It offers a favourable
business environment for companies so that they can run their business effectively and
efficiently. In addition to this, there are more reasons to select this nation for doing business
such as a large pool of talented professionals and multilingual professionals, the research and
development department of this country is one of the best in the world, highly advanced in
food innovation, energy and technology industry, etc.

Figure 2: <https://datacommons.org/place/country/DNK>
External Environment PESTEL
When OVO energy is expanding its business in other countries then there are many
types of barriers that come into the path but it is necessary for the organisation to identify all
those barriers. In addition to this, organisations need to use a relevant framework that helps to
compare countries in order to select the best one for the expansion of their business (Hack-
Polay, Opute and Rahman, 2020). CAGE framework is one of the important frameworks
which identify cultural, administrative, geographic and economic differences between
countries. Cultural distance includes authenticity, social aspects and religion which impact
the expansion of business in the international market. In the case of the administrative part, it
includes institutional weakness and political distance. In a geographical aspect, it includes
expansion and shrinking of physical distance. The last economic distance includes the
economic situation of the market.
PESTEL analysis for Europe
It is important for over energy to compare the external environment of Denmark and
Norway so that they are able to identify the threats and opportunities which impacts their
expansion plan. It can be possible with the help of PESTEL analysis. PESTEL analysis
includes six important factors as political, legal, social, economic, technological and
environmental.
 Political includes all the rules and policies of Government which is different from one
country to another country. It is important for OVO energy to identified the political
freedom and which country so that they can run their business with fewer rules and

regulations. In comparing Norway and Denmark, it is identified that Norway's
national government debt is reached up to 183.0 US dollar billion. Where is in the
case of Denmark they have 151.42 USD billion. So it is clear that if the organisation
is expanding their business and Norway then they are not able to manage borrowings.
 In the case of the economy, it is found that Denmark has a low inflation rate as
compared to Norway. The current inflation rate of Norway is 1.29 % and Denmark
has 0.33%.
 There are continuous change in taste and preferences of customers. It is found that
both country needs to understand the customers’ needs and preferences so there are no
difference in this aspect.
 It is identified that Denmark is highly advanced in energy industry which is really a
big opportunity for OVO energy.
 In terms of environment friendly, it is found that Norway is in the top list as they are
working on 98% of its electricity which is produced from renewable energy.
 In the terms of laws in Norway, it is found that they are highly protected for
employees so OVO energy needs to understand that is they select Norway then they
may be face many industrial actions (Pegoraro, De Propris and Chidlow, 2020).
Figure 3: <https://www.ceicdata.com/en/indicator/norway/national-government-debt>

Figure 4: <https://www.statista.com/statistics/531482/national-debt-of-denmark/>
Entry into Denmark
After understanding all the facts and figures with the help of PESTEL analysis, it is
found that Denmark is best for expansion purpose. So OVO energy needs to expand their
business in Denmark (Planing, 2018). The important reasons which identified from the
PESTEL analysis are as follows:
 It is identified that the debt of Norway is comparatively high to Denmark which
becomes one of the important factor should be considered in the decision of choosing
country for expansion of business.
 Another important reason as inflation rate which is found to be higher in Norway as
compared to Denmark. It makes the production services more costly which is not
affordable by customers.
 OVO energy needs high advanced technology which they can easily found in
Denmark as they are expert in highly advanced energy.

Competitive forces
Competition is found to be one of the important factors which need to understand by
the organisation when they are expanding their business (Flew, 2018). It is important to
understand the competitive market with the help of using Porter's five forces model. So OVO
energy needs to use this model which helps to make a strategic plan in order to compete with
their competitors. It includes 5 important forces which are mentioned below:
 The bargaining power of buyers is found to be low in Denmark. It becomes helpful
for the organisation as they are able to sell their goods and services with profit.
 The new entrance in Denmark is high as they have nowhere entry into the market
which becomes a thread for the company as they can see high competition in the
market.
 The supplier power is found to be low which may be limited the stock to OVO
energy. Becomes a threat for the company because of limited suppliers.
 In the energy market of Denmark, the substitution is found to be low which an
opportunity for OVO energy in order to expand their business more effectively.
 Due to the low entry barriers, it is found that there is a high competitive rivalry that
pressurise OVO energy to increase their efforts for survival in the market.
Porter’s Generic Strategies and the Ansoff Matrix
In order to survive in the new market, it is important for OVO energy to use a generic
strategy that helps them to stay longer in the market. It includes three important a strategy
that is cost leadership, differentiation and focus strategy. For the survival of OVO energy in
the market, it is identified that they need to use a focused differentiation strategy as they are
selling energy to the customers which should be a premium price. They are offering goods

and services with fewer carbon emissions so the prices should be premium. This is strategy
office existing products to the new locations which is found to be low risk as per the Ansoff
matrix grid.
Entry Mode and Market Selection
It is identified that Denmark has low entry barriers so OVO energy can enter into the
market with many types of entry modes which include exporting, joint venture, alliances, and
franchising, licensing and foreign direct investment. It is found that franchising is found to be
a good option for OVO energy as it has low cost and less risk as compared to other entry
modes.
CONCLUSION
It can be concluded from the above discussion that entering into the global market is
crucial for the expansion of the business. Every day the competition is increasing in the
domestic market which makes pressure on the organisation to come into the Global market.
But for that purpose, they need to identify and understand all the important considerations
such as competition market, external environment analysis, etc. This will help to make
solutions to prior problems.

REFERENCES
Books and Journals:
Cherunilam, F., 2020. International business. PHI Learning Pvt. Ltd..
Flew, T., 2018. Post-globalisation. Javnost-The Public, 25(1-2), pp.102-109.
Glover, N., 2021. Sweden, South Africa and the business of partnership in the 1990s:
Marketing internationalism in an era of globalisation. Culture Unbound, 13(1), pp.41-
65.
Hack-Polay, D., Opute, J. and Rahman, M., 2020. Globalisation and HR Practices in Africa:
When culture refuses to make way for so-called universalistic
perspectives. International Journal of Business and Globalisation.
Jahan, S., and et.al., 2021. ANALYSING THE IMPACT OF GLOBALISATION ON
BUSINESS PERFORMANCE: CASE OF UAE FOOD INDUSTRY. International
Journal for Quality Research, 15(2).
Kharat, K., 2019. International Business and Globalisation. Think India Journal, 22(32),
pp.55-58.
Osita-Ejikeme, U. E. and Amah, E., 2021. Globalisation and survival of small and medium
scale enterprises in Rivers State. African Journal of Business and Economic
Development| ISSN, 2782, p.7658.
Pegoraro, D., De Propris, L. and Chidlow, A., 2020. De-globalisation, value chains and
reshoring. Industry, 4, pp.152-175.
Planing, P., 2018. Towards a circular economy-how business model innovation will help to
make the shift. International Journal of Business and Globalisation, 20(1), pp.71-83.
Riveras, J., Beaton, A. and Arteaga-Ortiz, J., 2021. A globalisation model analysis on
unauthorised immigration's impact on the USA. International Journal of Business and
Globalisation, 29(2), pp.248-274.
Online:
Top drivers for international expansion, 2018. [Online] Available through:
<https://www.safeguardglobal.com/resources/blog/international-expansion>
Expanding your business into Europe, 2020. [Online] Available through: <
https://www.capital-ges.com/expanding-your-business-into-europe/>
5 Best Countries in Europe for Business Expansion, 2021. [Online] Available through:
<https://aadmi.com/5-best-countries-in-europe-for-business-expansion/>