Business and Business Environment Analysis: Transco (LO3 & LO4)

This report analyzes Transco, formerly known as National Grid, a public limited company founded in 1990, focusing on its business environment and strategic positioning. The report examines the macro-environmental factors impacting Transco, including political, economic, social, technological, legal, and environmental considerations. It delves into the effects of Brexit, fluctuating oil and gas prices, and technological advancements on the company's operations. Furthermore, the report conducts a SWOT analysis to identify Transco's strengths, such as its extensive gas pipeline network and diversified operations, and weaknesses, including its reliance on subsidiaries. It also highlights opportunities like expansion through LNG importation and threats such as market competition and compliance costs. The analysis provides a comprehensive overview of Transco's challenges and prospects within the gas distribution industry, supported by relevant references.

BUSINESS AND BUSINESS
ENVIRONMENT
Task 2 (LO3 and LO4)

Transco
Transco was initially named as National Grid and it is also a public limited
company.
Transco was founded in the year 1990. Revenue of the organisation was £15
million in the year 2017 and operating income of the organisation was £3.2
billion.
Net income of the organisation was £7.7 million (Nationalgrid.com 2018).
The organisation has 25,900 employees and it has it headquarter at Warwick.
The scope of the organisation is that it can grab the market share of
transmission of gas distribution through pipeline.
In previous time, the organisation had single ownership of distribution of
products.

P4: Identifying the positive and negative impact the macro
environment has upon business operations in Transco
Political Factors
Political factors of a country are associated with the inter-
countries relation, trading policies and lobbying.
Oil and gas energy markets are unstable as the changing oil
requirements in the countries that have been creating
unpredictability.
Transco supplies gas through pipe line and it is open to the
political boundary as the business gets distracted through the
political instability.
Political factors of recent Brexit in the UK can negatively
impact on the business like quality of infrastructure,
workforce and pipeline distribution through EU members’
countries (Yusuf et al. 2016).
In oil and gas industry, Middle East countries play large role
and political conditions in these countries can affect the
business of Transco.
Economic Factors
◦ Higher interest rates may influence the investors as
cost of lending will increase automatically.
◦ The rate of oil and gas fluctuates much and strong
currency can make the price costly. Inflation may lead
to the higher wage and cost of distribution will
increase.
◦ Transco may face issue if the GDP rate goes down in
the UK and higher income growth will boost up the
demand in the market (Peterson 2017).
◦ Last few years in the UK economic condition does not
help the UK based business.

Contd…
Social factors
Social factors are associated with the religion, culture,
income migration, demography and ideological views.
Transco needs to understand the customers’ preferences as
they can come up with new products and better process.
Living standard of the people is related to the gas
distribution and no culture is against the gas distribution
as it is needed by all (Ebert et al. 2014).
Technological factors
In gas distribution, technologies are very important as
they have to set up the pipe line for delivering the Gs.
Transco uses unique techniques and this impact on the
organisation.
Technologies improvement can impact on the
development of better process (Carroll and Buchholtz
2014).
Gas distribution can be changed through technologies
and the organisation can communicate with the
customers through use of the technologies.
Technological improvement can positively impact on
the business.

Contd…
Legal factors
Koyto protocol has signed by the countries where it is
told that much importance must be made on the
carbon emission.
Government and organisations both must look into the
matter of the health and safety policies, employment
act and personal health of the employees (Fernie and
Sparks 2014).
In gas distribution, the employees need safety in
distribution, drilling and disposal of the raw materials.
Transco has to follow the international legislation when
it distributes the pipeline line through different
countries
Environmental factors
In gas distribution, the organisations have to take proper
control of the environment before leaking of harmful
gas.
Emission of carbon needs to handle strategically.
Negative impact on the business occurs when distributing
the gas and crude oil are harmful for the people.
UK Environment Management system assists to control
the oil function emission (Grant 2016).

P5: Conducting internal and external analysis of Transco in
order to identify strengths and weaknesses
Strengths
1. Transco targets mainly the entities that require gas, electricity and LNG storage. Transco has electricity
assets in the UK and Wales. Transco has its assets also in the US that helps the organisation to increase
efficiency of distributing of gas and electricity (Nationalgrid.com 2018).
2. Transco’s gas distribution operations’ network covers approximately more than 132,000 km of gas
pipeline. In the US, it has the gas distribution with 42,000 km of pipeline. This enormous cover of gas
distribution provides competitive advantage.
3. Transco has diversified operations in the UK and it has UK transmission, Gas distribution. This
diversified business helps them to reduce the risk of the business.
4. It has financial banking help and it has workforce of more than 24,000 ( ).
5. Transco does the advertisement in the national television, radio and print to earn higher profit and
branding

Weaknesses
1. Transco is a private company and it depends on the subsidiaries.
Transco has to depend on the subsidiaries payment. It can put the
company on risk
2. The subsidiaries can impact on the business through generating
substantial portion of revenue generation (Nationalgrid.com
2018).
3. The business is operated following the UK laws which can
impact on the business for the Brexit

Opportunities
1. Transco follows the expansion of Isle Grain importation advantage. In the UK, only LNG importation
facility is there and it can provide company with the opportunity of penetrating further market.
2. Transco has signed an agreement with the Statnett regarding the development of electricity
interconnector between the UK and Norway.
It will offer Transco to do business in diversified market (Hamilton and Webster 2017).
3. The branding of Transco can eventually provide better market and it can start with the smart grid to help
the robust top line growth.

Threats
1. Transco has been facing the competition in the market.
2. The organisation has been facing the threat for financial resources,
geographical reach, credit access
3. The operation of Transco are excessively require permission from the state,
federal and local environment that can increase the compliance cost of the
organisation (Hutchinson et al. 2015).
4. In the gas business, Transco has to depend on the external pricing and it has to
depend on the weather condition. Fluctuation of weather can impact on the
business operating that results in the financial condition changes.
Competitors are:
Consolidated
Edison
Duke Energy
Dominion
Resources

Reference List
◦ Kelland, M.A., 2014. Production chemicals for the oil and gas industry. London: CRC press.
◦ Yusuf, Y.Y., Gunasekaran, A., Musa, A., Dauda, M., El-Berishy, N.M. and Cang, S., 2016. A relational study of supply chain agility,
competitiveness and business performance in the oil and gas industry. International Journal of Production Economics, 147, pp.531-543.
◦ Paterson, J., 2017. Behind the Mask: Regulating health and safety in Britain's offshore oil and gas industry. Routledge.
◦ Nationalgrid.com. 2018. Gas | National Grid UK. [online] Available at: https://www.nationalgrid.com/uk/gas [Accessed 12 Mar. 2018].
◦ Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and stakeholder management. London: Nelson Education.
◦ Ebert, R.J., Griffin, R.W., Starke, F.A. and Dracopoulos, G., 2014. Business essentials. Pearson Education Canada.
◦ Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new challenges in the retail supply chain. London: Kogan
page publishers.
◦ Grant, R.M., 2016. Contemporary Strategy Analysis. New York: John Wiley & Sons.
◦ Hamilton, L. and Webster, P., 2017. The international business environment. Oxford University Press, USA.
◦ Hutchinson, K., Donnell, L.V., Gilmore, A. and Reid, A., 2015. Loyalty card adoption in SME retailers: the impact upon marketing
management. European Journal of Marketing, 49(3/4), pp.467-490.