Energy Industry Situational Analysis in Sri Lanka: A Case Study

This case study provides a situational analysis of the energy industry in Sri Lanka, employing both PESTLE and McKinsey 7S frameworks. The PESTLE analysis examines the external environment, focusing on economic factors like the ongoing economic crisis and currency devaluation, political and legal factors including regulatory bodies and renewable energy incentives, technological advancements in grid-connected solar power and energy storage systems, environmental concerns and the push for carbon neutrality, and social factors such as residential electricity demand and income levels. The McKinsey 7S framework analyzes the internal environment of Tata Power, assessing its strategy for sustainable and customer-centric energy solutions, a flatter organizational structure promoting employee engagement, well-defined systems for managing business operations, core values emphasizing safety and ethics, and a democratic leadership style encouraging employee involvement. The analysis considers both external challenges and internal capabilities to provide a comprehensive overview of the energy sector in Sri Lanka.

Source: CBSL
Situational Analysis
External Environment Analysis
PESTLE Analysis
This is a framework that is used to assess the environment that a company is operating or hoping to
launch a new product/service. In the case of __________, Energy industry in Sri Lanka has been
evaluated using this concept.
Economic Factors
Currently, Sri Lanka is going through an economic and political crisis in which the country is almost
empty on their foreign currency reserves which has drastically reduced the ability to import and largely
caused inflation. Consequently, the Sri Lankan rupee devalued by 44% against US dollar so far this year.
As a result, the country has been experiencing long power cuts as it was unable to import fuel to
generate electricity and is hoped to continue at least for the next three years to meet with the
increasing demands.
Sri Lanka has been greatly dependent on India for fuel to help allay its crisis. In January, 2022, India
signed off on a $400-million credit swap facility and deferred an Asian Clearing House settlement of
$515.2 million.
The Russian-Ukraine war can also worsen Sri Lanka’s economy as Russia is one of its largest importers of
tea, while arrivals from the warring nations form a major chunk of its tourists. With the ongoing crisis
and depreciated Ruble, declining imports and tourism from the region have hit Sri Lanka hard.
Political and Legal Factors

Due to the political turmoil in the country, many sectors were affected, especially the energy industry.
The CEB Engineers boycotted as a way of opposing government plans of amending the power sector
legislation (proposed by Power and Energy Minister Kanchana Wijesekara) to remove restrictions on
competitive bidding for renewable power projects. This amendment was believed to have connections
with the wind power deal with Adani Group.
Two ministries are responsible for policy formulation and supervision of energy sector institutions and
utilities: Ministry of Power, Energy and Business Development prepares energy policy, supervises CEB
and other entities and The Public Utilities Commission of Sri Lanka (PUCSL) ensures safety regulation of
electricity industry.
Moreover, according to the budget, a seven-year exemption period was granted for any “renewable
energy project” established with a capacity to generate not less than one hundred Mega Watts solar or
wind power and supplies such power to national grid.
**Taxes**
The Electricity Act 2009 introduced limited unbundling, where all businesses remain under one
corporate ownership, while generation, transmission, and distribution functions were separately
licensed.
Technological Factors
Although Sri Lanka is behind in technology compared to developed countries, it is striving to bring in
advanced technology for power generation. Grid-connected solar power technology is becoming
popular among residential, commercial and industrial building owners.
Moreover, there are three emerging technologies in ESSs (large-scale Energy Storage Systems) that
could become viable for solar and wind in the near future.

 Smart batteries
 Thermal energy storage
 Hydrogen fuel cells
In addition, advanced technology is further used in improving the reliability in transmission and
distribution of electricity. Sophisticated software and hardware are readily accessible in the country to
maintain commercial quality of services by distribution utilities.
Potential offered by vehicle energy storage systems (ESS) will be studied considering ESS as a local
standby energy storage device, deploying those as an automated demand response (ADR) option and a
load profile management too.
Development of novel information and communications technology (ICT) applications such as for power
system automation, remote control, distributed real time event and data acquisition systems, and smart
metering will be encouraged.
Environmental and natural Factors
Nearly all parts of the electricity system can affect the environment, but varies in intensity. Energy
sector utilities are forced to strictly comply with environmental standards stipulated by the government.
There are concerns particularly for particulate matter, sulfur dioxide, carbon dioxide and source-specific
atmospheric emissions which is regulated by Central Environmental Authority.
Due to climate change and other environmental degradation, there is a high concern for alternative and
sustainable options such as non-conventional renewables, inter-fuel substitution, sector reforms and
alternatives to coal.
Moreover, Sri Lanka aspires to become a carbon neutral country by 2050 by making the most out of the
energy available and developing cleaner energy resources.
Social and demographic Factors

Electricity users can be grouped into several sectors. Therein, the residential
demand constitutes a large percentage of the overall electrical energy demand. For example,
domestic buildings consume around 40% of global generated energy (Saberbari & Saboori,
2014). Electricity users can be grouped into several sectors. Therein, the residential
demand constitutes a large percentage of the overall electrical energy demand. For example,
domestic buildings consume around 40% of global generated energy (Saberbari & Saboori,
2014). Family size, income levels, lifestyle choices, age structure are some determinants of electricity
usage.
Usually household energy consumption increases with the family income, so it is
reasonable to use family income as a factor to predict the energy usage of family. Here the
lowest income group uses a few electrical appliances and when the income goes high people
tend to use more appliances. Hence more electricity to have more comfort in life.
This graph shows that power consumption gradually increases up to family size 6,
and families that have more than six members show sudden increase.
***Skilled migration***

Internal Environmental Analysis
[2022] Tata Power Co. Mckinsey 7S Analysis / Framework (embapro.com)
Mckinsey 7s Framework Of Appropriation of Technology Tata Power Delhi Distribution Limited
(essay48.com)
https://www.tatapower.com/pdf/corporate-profile.pdf
103Annual-Report-2021-22.pdf (tatapower.com)
Solved VRIO / VRIN : Tata Power: Corporate Social Responsibility and Sustainability Analysis
(embapro.com)
Use company profile to fill in the resources
Internal Environmental Analysis
McKinsey 7s Framework
Strategy
Tata Power, India's largest integrated power company, is dedicated to its mission of "empowering a
billion lives via sustainable, affordable, and creative energy solutions."
Some of the strategic objectives for the upcoming years would be,
 Profitable expansion of the renewable energy, transmission and distribution, services, and
energy solutions industries.
 Placing a priority on sustainability with a goal of achieving carbon and water neutrality.
 Making use of digital platforms to power customer-focused enterprises.
 Creating upcoming energy-related services and solutions.
TATA Power Company is intending to achieve these objectives through differentiation by revolutionizing
into a customer-centric company with a bouquet of new services. Through data analytics, it seeks to
digitize many business sectors, including the production, transmission, and distribution of electric
power. The company further plans to introduce value-added services, improve customer satisfaction as
means of rendering customer-centric services. Also, TATA Power will be involving in developing
organizational capacities to drive the character change.
Tata Power being one of the India’s largest integrated power companies is committed to its vision to
“Empower a billion lives through sustainable, affordable and innovative energy solutions”. Some of the
strategic objectives for the upcoming years would be
 Profitable scaling up of renewables, transmission & Distribution, services & Energy solutions
business.
 Focusing on sustainability, with an intent to attain carbon and water neutrality.
 Leveraging digital platforms to drive customer-centric businesses.
 Developing future energy services and solutions.

TATA Power Company is intending to achieve these objectives through differentiation by transforming
into a customer-centric company with a bouquet of new services. It wants to digitize the business
verticals - including power generation, transmission and distribution - and enhance customer experience
through data analytics. For creating a customer-centric organisation, the company intends to roll out
value-added services for customers' delight, and improve and measure customer satisfaction. It will be
building organisational capabilities to drive the character switch.
Structure
TATA Power employs a flatter organizational hierarchy which is preferably a choice by progressive and
innovative organizations. Employees feel more comfortable and confident, and have more access to
information, with fewer administrative layers in between and more access to top management and
leadership. In other words, it has a short chain of command. Furthermore, this structure enables for
faster-decision making process for TATA Power that promotes employee engagement.
Also, to ensure proper communication between staff and different levels of management, the company
has put in place a sophisticated and detail communication system which greatly contributes to the
efficiency of the organizational structure. Communication that is systematic, specified, and organized
provides for a smooth flow of information and guarantees that no organizational objectives or goals are
jeopardized due to a lack of communication or misconceptions.
Appropriation of Technology Tata Power Delhi Distribution Limited has a flatter organizational hierarchy
that is supported by learning and progressive organizations. With lesser managerial levels in between
and more access to the senior management and leadership, the employees feel more secure and
confident and also have higher access to information. In other words, it has a short chain of command.
Moreover, the flatter hierarchy also allows quicker decision-making processes for Appropriation of
Technology Tata Power Delhi Distribution Limited and increases organizational commitment in the
employees.
Appropriation of Technology Tata Power Delhi Distribution Limited has a developed and intricate system
for ensuring communication between employees, and different managerial levels. The communication
systems at Appropriation of Technology Tata Power Delhi Distribution Limited enhance the overall
organizational structure. The systematic, defined, and organized communication allows an easy flow of
information and ensures that no organizational tasks and goals are compromised because of a lack of
communication, or misunderstandings.
**chain of command**
Systems
Appropriation of Technology Tata Power Delhi Distribution Limited has defined and well-demarcated
systems in place to ensure that the business operations are managed effectively and that there are no
conflicts or disputes. The systems at Appropriation of Technology Tata Power Delhi Distribution Limited
are largely departmental in nature, and include, for example:
- Human resource management
- Finance

- Marketing
- Operations
- Sales
- Supply chain management
- Public Relation Management
- Strategic leadership
TATA Power has specified and well-defined systems in place to guarantee that business activities are
managed seamlessly and that conflicts or problems do not arise. The company’s systems are primarily
departmental but interconnected in order to eradicate information silos.
Some of the systems that the company uses are as follows:
Customer Relationship Management: A system used by marketing, sales and business development
functions that helps to manage connections with existing customers and prospects.
Enterprise Resource Planning: The company relies on this system to handle daily operations such as
procurement, supply chain, project management, and risk management.
Human Resources Information System: TATA uses HRIS as a solution that maintains repository of
employee data and employee-related policies and procedures.
Electrical Power Management System: The organization has this system installed in its power
generation system and power stations to gather information on the power flow.
Plant Information Management System: This system provides TATA Power with information related to
plant operations and other manufacturing related information to improve efficiency and reliability.
Shared values
The core values of TATA Power Co. defines and communicates its core principles in order to develop a
creative and supportive organization that facilitates employees to perform efficiently while motivating
them. Some of their core values include:
Safety:
Care:
Agility:
Learning:
Ethics:

Style
Since the inception of the TATA Group, including TATA Power, the leadership style has been mostly
consistent. In order to improve its competitiveness in the present climate, the company has
implemented further leadership changes. The organization has a team-led culture and a communal
approach to leadership. Trust has grown to be a significant aspect and theme of the TATA Group since
Ratan Tata became its CEO, and its influence on TATA Power Co. has been significant. The organization
was completely restructured by adopting a more matrix-style to team development.
Praveer Sinha, CEO and MD of TATA Power Co., adopts a democratic style of management because he
encourages his employees to foster positive involvement and communication. The future leadership is
well-informed about future strategy and actively involved in making decisions. The leadership at lower
levels develops the majority of the group's long- and short-term strategies. This way, every employee is
given the chance to exchange ideas and participate in discussions harmoniously. However, in certain
occasions it has been noted that the CEO has exhibited some degree authoritarian style of leadership.
The TATA Group leadership style has been quite consistent since its existence way
back to 1868. The TATA Group has incorporated more leadership changes which are
essential in current environment to drive towards to be more competitive. In terms
of leadership style, TATA Group has adopted a team-led culture and collective
approach. With Ratan Tata as leader of the Group, the management style of the
entire TATA Group has changed considerably; trust became a huge facet and theme
of the group. Ratan Tata has put a complete organisational restructuring when he
took over in 1991 as leader of the TATA Group, by taking a more matrix-style
approach building teams.
Ratan Tata is a leader who engages more democratic style of leadership approach.
However at previous occasion has used other two kind of style as well. He is more
democratic because he always encourages his group leadership to be creating good
communication and participation. Future leadership are well informed about future

strategy and they are very well engaged in decision making process. Most of the
group long-term and short-term strategies are formulated by the lower rank of the
leadership. They are treated as stake holders. Until now TATA Group has got
leadership within them. Ratan Tata has occasionally shown some form of autocratic
style of leadership. Sometimes when needed especially when quick and informed
decisions have to be taken, but he is never too commanding in his nature, being a
man of few words and being more of a man of action, this is evident from the
manner he aggressively pushes for bold international deals, such as during the
global acquisitions of business powerhouses such as Corus, Jaguar and Land Rover,
and Tetley Tea. One of his senior leadership team member, Muthuraman( Executive
Director) refers him “Ratan was the chief architect of the Corus deal. I was worried
about the magnitude and the amount of money. But he instilled confidence.”
Staff
TATA Power employs an adequate number of staff throughout its global activities. Employees for various
job types and positions are employed both inside and externally based on the demand and skill levels
necessary. The total employee base for 2021-2022 is as follows:
The company constantly reviews the employee demand with the ever-evolving external environment
which also is on par with their business needs. Their talent acquisition process is fair, effective and
systematic which ensures that the workforce is capable of dealing with challenges of tomorrow while
also helping to deliver on organizational goals today. In addition, their diversity policy guarantees that
the employee base is diverse in terms ranging from gender and ethnicity to experience and skill level.

Talent acquisition and retention
With a continuously evolving external environment, we constantly evaluate our requirements for skilled
professionals, aligned with our business needs. Through fair, effective and systematic talent acquisition
practices, we ensure that we have the talent to tackle the challenges of tomorrow, while helping deliver
on organisational goals today. Adding to this is our diversity policy, which ensures that our workforce is
balanced on various measures of diversity – from gender and background to experience and skill set.
Training design is based on in-house AMP leadership competency framework that has been copyrighted.
We have a robust employee development framework that comprises our 3 Tier Leadership Development
programs, Senior Leaders Development Program (Tier 1), Achieving Your Leadership Potential (Tier 2)
and Emerging Leaders Program (Tier 3), that have been conceptualised, designed internally and are
executed and delivered in collaboration with best in class management institutions, IIM A, SPJIMR
Mumbai, XLRI Jamshedpur and TMTC Pune, and our Future Skill academies in areas of Digital, Project
Management, Sales and Customer Centricity that are aimed to make our employees future ready. We
adopt a blended learning pedagogy for employee development pivoted on class room training, virtual
live training, e-learning, coaching, action learning projects, on job training and mentoring among others.
Our eLearning platform ‘Gyankosh’ now has over 1 lakh learning resources, accessible anytime,
anywhere, across any device. Gyankosh was awarded ‘Skillsoft Program of the Year’ in 2020, ‘Skillsoft
Champion of the Year’ in 2021 at Skillsoft Global Perspectives, competing with some of the best
organisations globally.
TATA Power also ensures continuous communication between employees and management through
formal and informal means. To strengthen employee engagement, they consistently focus on their
concerns and aspirations and ensure that their needs are met in the best possible way. Employee
opinions and voices assist the company in refining its policies and programs, allowing for ongoing
development in the workforce experience. The organization also has particular employee engagement
strategies in place to guarantee that their productivity remains high while also allowing them to
maintain a healthy work-life balance. Achiever's Portal, Pulse Connect, VOICES, Engagement Action
Planning, Town halls, and Connect 2 Solve are all avenues for encouraging open discussion with
employees and empowering them.
Employee engagement
We foster a continuous dialogue between the employees and the management with formal and
informal initiatives. Through various engagements, we continuously listen to their concerns and
aspirations, and ensure that their requirements are addressed in the most optimal way. Their feedback
and voice help us refine our policies and programmes, and enable continuous improvement on the
people experience front. About 47.66% of our employees are represented by unions and collective

bargaining agreements. We maintain strong and enabling labour relations practices, to ensure that their
rights are respected and needs addressed.
We have a process of annual engagement survey process of capturing feedback and actioning to
enhance employee experience. We are now looking to capture more real time and frequent feedback
focusing on specific employee cohorts which have specific needs and challenges of each group, and
action upon feedback received. We have specific employee engagement initiatives that ensure that their
productivity remains optimal, while helping them maintain a fine work-life balance. Avenues such as
Achiever’s Portal, Pulse Connect, VOICES, Engagement Action Planning, Town halls and Connect 2 Solve
help in promoting open dialogues with employees and empowering them. It also offers employees a
platform to express themselves, recognise each other, share their views and provide feedback on policy
development as well as deployment. These initiatives have emerged and are continuously improved
based on feedback received from employees and organisation's changing imperatives. Efforts are made
to resolve employee grievances in a timely manner.
TATA Power Co. is an equal opportunity employer which operates on the core principle that diversity
alone can provide viewpoints that can foster innovation and create a company that is fit for the future.
Although they operate in a male-dominated sector, they are actively endeavoring to provide equal
opportunity regardless of gender.
Diversity and inclusion
Our diversity ratio for campus was over 30% last year. We have 22% gender diversity in sales and
customer facing roles, 34% in finance and accounting roles and 40% in digital and technology roles.
We are an equal opportunity employer working with the core belief that diversity alone can bring in
perspectives that can promote innovation and enable a future-fit organisation. Even as a heavy industry,
we take active interventions in ensuring that our workforce has notable non-male participation. We

have an articulated vision and clarity on D&I outcomes we want to achieve at the Tata Power Group
level. This dovetails into our performance scorecards, with specific goals for leaders, managers and HR,
and these metrics get tracked on a quarterly basis and discussed with leadership with clear actionables.
To create a culture of teamwork and to capitalise on the diverse thinking of the workforce, especially
our younger workforce, various cross functional teams, across the levels of the organisation, are formed
to work on critical projects for the organisation, e.g. Innorise.
Skill
One of the company’s main competitive advantages is its human resource. TATA Power Co. has a highly
skilled and capable workforce who are hired on the basis of their merits and qualifications. The company
takes pride in employing the best individuals and nurturing them further to promote growth and
development. They make sure that all job-related requirements are fulfilled and that the staff are
equipped with the necessary capabilities to carry out specific tasks in line with the company values,
cultures and business objectives.
In addition, they place a high priority on developing their employees’ skills. The training is designed
based on a proprietary in-house Advanced Management Program (AMP) leadership framework. This
includes their 3 tier Leadership Development programs: Senior Leaders Development Program (Tier 1),
Achieving Your Leadership Potential (Tier 2) and Emerging Leaders Program (Tier 3) which were
formulated and developed internally. Furthermore, they employ a blended learning philosophy that
involves on-the-job training, virtual live training, e-learning, action learning projects and many more.
2.4.1. Employee skills
Appropriation of Technology Tata Power Delhi Distribution Limited has a commendable workforce, with
high skills and capacities. All employees are recruited based on their merit and qualifications.
Appropriation of Technology Tata Power Delhi Distribution Limited prides itself on hiring the best
professionals and grooming them further to facilitate growth and development.