analysis of case study of french electricity market

ANALYSIS OF CASE STUDY

of

Poweo: David and Goliath in the French

Electricity Market

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Executive Summary

The present investigation case is all about options available with in the view of the

political and economic development of french electricity market. The case represents that Poweo,

a leading company of electricity market is facing major issue of unfavorable economic and

regulatory environment. French electronic market is to be regulated by the authorities and they

have to provide the rights to effective use of production. Capacities. It was found that the lack of

switching costs for end-users leaded by liberalization has increased opportunities for new

companies to enter the electricity market, hence, competition increases. Government of France

has taken initiatives for liberalizing its energy market, but was not yet reach up-to the EU market

liberalization directives. From the report analysis, it can be said that the company can go for

prompting new companies for investment in markets. Further, it is recommended to improve the

financial position through improving the cash management.




Table of ContentsChapter 1- Case study background.......................................................................................................4

Introduction..................................................................................................................................4

Statement of the problem.............................................................................................................4

Aims.............................................................................................................................................5

Objectives....................................................................................................................................5

Research questions.......................................................................................................................5

Structure of the rest of the report.................................................................................................5

Chapter 2: Case Brief...........................................................................................................................7

Chapter 3: Problem statement and plan of analysis............................................................................12

Chapter 4: Analysis and findings........................................................................................................17

Heckscher- ohlin model.............................................................................................................17

Greet hofsteid model..................................................................................................................17

Mintzberg management role......................................................................................................17

Mckinsey 7’s model...................................................................................................................18

Porter five forces........................................................................................................................18

PEST Analysis :.........................................................................................................................18

SWOT Analysis :.......................................................................................................................19

Bench marking:..........................................................................................................................19

Ratio analysis :...........................................................................................................................20

Chapter 5: Solutions to the problem and issues..................................................................................21

Solution to unfavorable economic and regulatory environment................................................21

Solution to problem of liberalization.........................................................................................21

Solution of problem competition...............................................................................................21

Recommendations......................................................................................................................22

Limitations.................................................................................................................................22

Future area of research...............................................................................................................23

REFERENCES...................................................................................................................................24

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Chapter 1- Case study background

Introduction

The present case study discuses about the operations of Poweo, a leaning manufacturing

company of electricity and gas sector which was incorporated in 2007 and based in Paris, France.

Poweo Company is involved in production of electricity from renewable sources. The case is all

about options available with in the view of the political and economic development of french

electricity market. It has been witnessed that, in 2009, the mentioned organization has faced net

loss of €94 million, that was all time higher among last years. Unfavorable economic and

regulatory environment is a major cause behind this loss. The organization is facing major

Although, government of France has taken initiatives for liberalizing its energy market, but was

not yet reach up-to the EU market liberalization directives.

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But , it was found that the lack of switching costs for end-users leaded by liberalization has

increased opportunities for new companies to enter the electricity market, hence, competition

increases. The the company was not having production capacity to serve large non-residential

customers. However, due to electrical heating is widely spread in France, the sensitivity of

French power consumption to changes in temperature is very high that affects the operations of

company. The market structure and the adverse regulatory framework was also the issue faced

by the mentioned company. The overview of french electricity market is provided in the present

case study. The present case analysis is going to describe the problem faced by the companies as

well as the application of various tools to overcome such issues.




Statement of the problem

After an in-depth investigation into the case of Poweo: David and Goliath in the French

Electricity Market, it has been found that net loss generated by Poweo and unfavorable economic

and regulatory environment is the major problem associated with the case. Furthermore,

improper liberalizing of energy market of France is the major problem that has been witnessed.

The competition faced by Poweo in French Electricity Market with EDF or GDF, with vertical

integrated production and supply operations, is also a problem associated with the company.

Aims

The major aim of present investigation is to identify the problems associated with French

Electricity Market and Poweo and related solutions through applying wide range of management

tools and tactics.

Objectives

To study the Electricity Market of France

To study the unfavorable economic and regulatory environment of French Electricity

Market

To evaluate the problem faced by Poweo for operating business within French Electricity

Market

The impact of liberalization of French Electricity Market to Poweo and entire Electricity

Market

To identify and recommend suitable solutions for the current position of Poweo and

mitigate the adverse effect of existing problems.

Research questions

What are the major forces affecting the environment of French Electricity Market?

What are the uses of various management tools and tactics to identify solution of

problems faced by Poweo and French Electricity Market ?

How current market conditions and competition of French Electricity Market put

financial impact to Poweo?




What are the opportunities available for Political and economic development of the

French electricity market?

Structure of the rest of the report

The present report is structured in a well manner and a chapter-wise presentation is

followed:

Chapter 1: Background of Case: This is the first chapter of the investigation in which

the brief point of case are discussed along with defining the main aim of case analysis and the

objectives of entire study. The major objective of study is to identify and recommend suitable

solutions for the current position of Poweo and mitigate the adverse effect of problems.

Chapter 2: Case Brief : The next in line chapter is case brief that presents the overview

of entries business case in the most surmised way. This is the crucial part to make regard

understand about the major points of case and the reason for conducting study. In this chapter,

the case situations are described clearly.

Chapter 3- Problem statement and plan of analysis: The third and the most important

chapter of present case analysis is of identifying problems based by the company and specific

analysis of each problem along with a strong application of management tools and theories. In

this section, reader can find the statement of the problems in the case, the application of relevant

literature review on various concepts, theories, models that are relevant to the case, However a

proposed plan of analysis and sources of data collated are explained in this case.

Chapter 4: Analysis and findings : This chapter represents the assessment of the current

position of Poweo and application of concepts, theories, models referred and discussed in

chapter 3 are presented.

Chapter 5: Solutions to the problem and issues : The last chapter of the study represents

the integrated assessment of the analysis along with a best solutions to the problem. However,

this section represents a an action plan to resolve the problems. Limitations of the study and

scope for further research are explained in this chapter.




Chapter 2: Case Brief

The present case discusses about Poweo, an alternative electricity and gas operater in

France. The major concern area of this case is the development of political and economic

developments of the French electricity market. Poweo was founded by Beigbeder in 2002 with

an initial investment of €1.6 million and stated supplying electricity to French consumers. In

2004, the electricity consumption was steadily increasing across Europe, and the French grid so

the operators were looking for power producers for new investments to sustain growth in the

energy market. For this Poweo came up with a public offer in 2005, for construction of first

French CCGT plant. In the similar year, French ministry of industry’s authorization has allowed

company to diversify its activities in the gas supply business.

The revenue of Poweo company has reached to €565 million and it has attained high

growth in the marketplace however, in 2009, aforesaid company has generated net loss of €94

million which was three times higher from than last year. In this years company has faced the

unfavorable economic and regulatory environment. The impact of financial crisis held in US in

2007 were gradually spread over the world.

Poweo’s 2008-2009 Financial




As per the case investigation it was found that France, electricity demand which was

amounted to be 486 TWh, has reduced by 2% in 2008. The government of France has taken

initiatives for liberalizing the energy market but it was still behind in the implementation of the

EU market liberalization directives. The new players which are allowed to operate in the

electronic market were facing strong competition, and are not enough capable in competing

effectively with the incumbent Electricité de France (EDF) mainly in the non-residential (i.e.

industrial) segment. Poweo has faced intense competition with two major firms in French

electronic market such as EDF or GDF, with vertical integrated production, supply operations

and an incumbent consumer base, however, there are very few suppliers who supply electricity to

end consumers in French electricity market.



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The organization do not has enough capacity to serve large non-residential customers as

the current Poweo’s production capacity is 412 MW which is generated by combined cycle gas

turbine (CCGT) plant, 85 MW of wind energy, 3 MW of solar, and 6 MW of hydro power. The

overall French market capacity is 100 GW which is 505 MW is available capacity of Poweo.

The mentioned company has adopted several measures so as to to face gloomy economic

landscape. The major initiatives is of adoption of cost-cutting program which worth around €2

million. The headcount is reduced by 30% and salaries have frozen and a significant decrease in




bonus payments. However, it was believed that all these actions would not be sufficient to foster

the future growth of Poweo’s in the French electricity market. This was the time when company

is planning for building a second power station with a CCGT in the east of France that worth

around €400 million. The company had to major options , one is of investing into second CCGT

power plant in order to better compete on the French electricity market, as the market is goimg to

be fully liberalized and second one was of implementing optimization measures, cutting back

investment plans, and waiting for the electricity market reform to be approved.

In the first half of 20th century the entire electricity industry was fragmented and it take

into consideration more than 200 small generators along with 1100 transmission system

operators. Further, law associated with merging and nationalizing all the private owned

electricity and gas firms led to the development of EDF, which is vertically integrated state

owned entity. After the occurrence of oil crisis in the year 1970 government of French introduced

a nuclear power program with the aim to secure self sufficiency in the electricity production.

Country like France has been directly benefitted from large scale investments in nuclear power

generation since 1973 and it is regarded as world’s second largest self sufficiency in electricity

production. Apart from this the low marginal cost of French nuclear park was regarded to be

highly competitive when prices of oil increased in the past decade. Further, due to wide spread of

electrical heating in France overall sensitivity of French power consumption to change in

temperature is very high. During the entire year Nuclear plant produced a large amount of energy

and at the time of peak season France imports power from neighboring countries and is exported

during off season. Moreover, the government of France does not hesitates in adoption of first

electricity directive.

Poweo’s Competitors in the French Retail Electricity Ma arket declare ed at CRE




Development of national law in the year 2000 when came into force exceeded the EU

deadline and it opened up to competition with the minimum share of the market laid down by the

directive. Further, the French reform has been one of the most minimal and conservative in

Europe where people living in the country have strong sense of public service and it has

influenced around 50 year old preference for centralization. At present government of French

owns 85% of EDF. In the year 2000 France established an independent regulatory authority

named Commission Regulation de l’Electricite as required under the second EU directive.

Further, enterprise holds the responsibility for regulating non discriminatory access to

transportation along with distribution network. Further, after few years government of French set

up first transmission system operator named Reseau de Transport de l’Electricite. In country like




France no entry along with exist tariff system exists and consumers have to pay fixed fee for

accessing the grid no matter where they are located. Further, operators are allowed to book their

entry along with exit on the basis of production capacity and estimated demand of end

customers. Moreover, it is required for operators to be balanced in the energy supply in real time

basis.




Chapter 3: Problem statement and plan of analysis

Strategic management

Problem 1: Unfavorable economic and regulatory environment

According to case investigation, it has been found that the major problem faced by

Poweo company is of unfavorable economic and regulatory environment of business. The

company has faced various financial downturns due to unfavorable condition of market.

However, the major reason was found the financial crisis which were held start in the U.S

in 2007. In order to resolve the issue French government has decided to liberalized the electronic

market. Due to such unfavorable economic and regulatory environment, the company has gained

losses around €94 million which was three times higher from than last year. Within 320th century,

it was seen that monopoly had been the predominant choice of European countries to organize

electricity markets.



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Problem 2: Role of Management towards the production and supply of electricity

In the given case it was also assess that role of management towards the production and supply

of electricity was also not appropriate. From the case scenario it was assessed that management

has not monitored the supply of electricity and management of its resources in order to operate

their business profitable manner.

Problem 3: Involvement of regulatory authorities

After 2003 the market of electricity has greater involvement of regulatory authorities as

previously there was not such role of higher regulatory. Due to this company has to follow




different regulations in the area of transmission and supply, generation of electricity and also

while trading through cross border frontiers.

International business

Problem 1: Improper liberalizing of energy market of France

From the in -depth investigation in to the case, it has been witnessed that to improve the

condition of electricity market, French government has taken initiatives for liberalizing the

markets. However, the government has taken initiatives for liberalizing the energy market but it

was still behind in the implementation of the EU market liberalization directives. This was the

major problem faced by the energy market of France and the players. There were two option

available to the company, these are of investing a second plan in CCTC plant or implementing

optimization measures and cutting back investment

plans. The new players which are allowed to operate in the electronic market were facing

strong competition, and are not enough capable in competing effectively with EDF, primarily in

the non-residential due to production capacity.

Problem 2: Problem of considering the different factors of market

Poweo has not considered all the factors while operating its business in different areas as

expansion of business in other places, it is essential for the company to consider the favorable

factors. Company has not considered the favorable factors of supplying electricity in different

regions.

Problem 3: Change in TaRTAM system

Another problem which occurs in context to international business was change in the TaRTAM

system which was introduced by the government. This regulation was introduced by the

European Commission and they have set the new tariffs rate for the companies. This decision has

created the infringement againg the French company and penalty fees was also imposed by the

European Commission.

Marketing management

Problem 1: Competition faced by Poweo in French Electricity Market




The main issue faced by Poweo in the of French is rise in competition level in the market

where major competitors of company are EDF or GDF with vertical integrated production,

incumbent customer base and supply operations. Further, these companies are also producing

electricity but they vary in terms of production capacity and overall units produced. But on the

other hand only few suppliers are present who are supplying electricity to the end consumers in

the French electricity market. All the small company such as French Direct Energie are strongly

focusing on the downstream business. With 108000 business and 303000 household sites poweo

is respectively having share of 15% and 22% of the alternative supplies market share in the year

2009. Due to rise in overall level of competition companies are not able to enhance their market

share and survival becomes little bit difficult in the modern era. Therefore, it is one of the major

issue being faced by Poweo in the market of French.

Problem 2: Change in regulation of Electricity market of France

In context to marketing the policy of French Government in electricity segment also changed and

it has created problem for the existing companies. Change in policies of retail electricity market

in France has affected the market share of companies as number of new entrants in market has

increased. It has make impact on revenue of the organization.

Problem 3: Customer segment of French electricity Market

In 2009, customer segment of electricity market has also created problem for the organization.

There was big difference in number of electricity sites and electricity consumption. Inappropriate

segment of electricity market has made greater impact on managing demand and supply of

electricity.

Research methods

For conducting the present study different tools and techniques have been employed.

Information has been gathered from the secondary source where case study has been undertaken.

Inductive approach has been applied where findings are based on Poweo. For analyzing

information different themes have been formed (Sreedharan., 2007). Further, descriptive design

has been undertaken through which in-depth analysis of the topic being chosen for research has




been done. Interpretivsim as a philosophy has been used through which results derived from

conducting study has been interpreted and it has supported in accomplishing aim of the research.

Therefore, in this way the range of research methods employed has been used in the present

study.

Proposed plan of analysis

1. Pestle

The PESTEL model is used to assess the global market forces that affects the business of

mentioned company in the French market (Brian, 2014). There are political, economical,

social and technical that affects business. The analysis of French electricity market is going

to done in the market place.

2. Swot

The SWOT analysis is used to assess the internal strength and weaknesses as well as the external

opportunities or threats of the French electronic market (Tsitsipati and Athanasios, 2014). This

model is going to used for the analysis of French electricity market.

3. Porter's

Porter's five forces analysis is going to be used for the present case analysis in which the five

market forces are going to be assessed in the French electricity market.

4. Heckscher- ohlin model

This model has been applied in order to know about the condition of import and export.

Further, this model is based on the assumption that countries will produce and export

commodities which require resources. Therefore, applicability of this model has shown that

what are the range of important factors required in producing any good and it has to be

considered by enterprise.

5. Greet Hofsteid model

This model has been implemented in the present study which highlights the range of

dimensions which can distinguish one country from another (Piepenburg, 2011). Further, it

also undertakes different issues prevailing in the society which every business has to consider




for its growth along with survival. Therefore, applicability of this model is effective and can

be applied by company like poweo for knowing the range of factors which affects society.

6. Mintzberg's management roles

This model has been applied in the present study where different roles of management are

present such as leader, monitor, Laision, spokesperson, entrepreneur etc (Mintzberg, 2009).

Through this model it has been known what are the effective roles which management can play

so that overall operations of the business can be carried out in appropriate manner.



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7. McKinsey 7s model

This model has been applied in the present study in order to know about the range of factors

which affects business operations (Michalski, 2011). It undertakes soft and hard elements

which is associated with growth and development of business in the market. Applicability of

this model has shown how company can enhance its performance in the market by

considering large number of factors.

8. Benchmarking

Bench-marking is the most important model that is going to be used for the present case

study so as to set the benchmarks of company for providing the best results as compared to

the competitors (Hill and Jones, 2009). The Poweo company is facing the issue of

competition and it can improve the performance by setting the benchmarks for the business.

The Bench marking model is applicable to the present case.

9. Ratio analysis




Ratio analysis is the financial model that is going to be used for the present investigation.

The applicability of ratio analysis is the most appropriates so as to access the feasibility of

the investigation. For this, liquidity and profitability performance of Poweo company is

going to be assessed on the basis of financial information provided in the case. On the basis

of financial information, financial feasibility of company can be accessed.

Sources of data

Data has been collected from secondary sources where information has been obtained

from the case study provided. Further, different books and journals have been undertaken for

collecting information (Saunders, 2003). Apart from this, the source employed for research is

appropriate and through this it is possible to focus on the objectives framed for the study.

Primary source of data collection has not been considered in the study as it is not possible to

collect data from this source by considering the nature of the research. Therefore, the source

adopted for conducting research is appropriate and this can enhance reliability of the entire study.

Data Analysis

It is one of the most important parts of the study where information collected is analysed so as to

gain expected findings with the help of this. Two techniques of data analysis are present named

qualitative and quantitative. Considering the nature of the present study qualitative technique has

been used where themes have been formed for analysing information (Sreedharan., 2007).

Further, it supports in gaining expected findings and it can be ensured whether all the aims and

objectives set for the research have been accomplished or not. Therefore, in this way data has

been analysed for knowing overall condition of Poweo in the French electricity market.

Ethical issues : The present study is going to address the ethical issues that are going to be faced

by the research while completing the entire study. During the research study, the secondary is

going to be collected from the ethical sources (Sekaran, 2006). For collecting the data, proper

access to the sources is going to be used. The issue of plagiarism is to be avoided and the

information is accurately cited with the right authors. The information is acquired from the

Limitations of study : In respect with the present research study, various issues are going to be

faced by the researcher. recent publications and no more old data is used to support the data.




The major limitation of the study is of limited time to completed the project due to this issue the

research may be affected (Walden, 2006). It has been witnessed that the issue is going to be

resolved by providing proper time to each activity of research. The monetary issue can also be

faced by the investigator that is going to be resolved by planning a budget for each activity. The

issuer can be faced for collecting the information from ethical sources, hence, authenticity and

reliability into the entire project is going to be followed in the entire investigation.




Chapter 4: Analysis and findings

Heckscher- ohlin model

The model relies on the assumption that countries will only export and manufacture

commodities which require large number of resources. Further, commodities are manufactured

that require resources which are relative in short supply. This model is based on large number of

assumptions which takes into consideration labor, capital flow between different sectors etc. By

considering this model it is possible for Poweo to consider different factors such as labor, capital

in production of electricity. Further, this model is based in the assumption that countries are

having different identical production technologies which are present in production technologies.

Analysis of this model has supported in knowing that by utilizing all the resources in appropriate

manner it is possible for Poweo to operate efficiently and firm can easily deal with large number

of challenges present in the market.

Greet hofsteid model

This model relies on four dimension and supports in distinguishing one country from

another. Further, various issues are present in the society which involve uncertainty, inequality

etc. Through this model it has been identified that different dimensions are present in the market

of French which Poweo has to consider so as to operate efficiently. Power along with inequality

are regarded as the two fundamental facts of society. Further, in case if company plans to expand

in the international market then it is necessary to consider culture of different customers to whom

electricity is being supplied. By considering all the key dimensions of this model it is possible

for firm to operate efficiently in the market and can easily deal with challenges in the

environment.

Mintzberg management role

Mintzberg has introduced ten roles of management which are figurehead, leader, liaison,

monitor, disseminator, spokesperson, entrepreneur, disturbance handler, resource allocator and

negotiator. By considering all the roles it is possible for management of poweo to handle each

and every operation of the business in appropriate manner. Further, the most important role is of

leader where by company can manage its workforce in appropriate manner and it becomes easy




to enhance overall performance of enterprise in the market. Apart from this, role of resource

allocator is also crucial through which company can easily utilize all the resources in appropriate

manner and can support in accomplishing overall aims along with objectives. Further,

monitoring is also key role which management plays and through each and every activity related

to production of electricity can be carried out easily.

Mckinsey 7’s model

This model relies on 7 elements which are segregated into hard and soft element. Hard

element involves strategy, structure and system where soft one considers shared value, skills,

style and staff. It is required for Poweo to consider all the range of elements so that overall

operations can be carried out by business in appropriate manner.



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Further, the element such as strategy represents the plan developed by poweo so as to deliver

appropriate service to target market, structure is associated with the line of command within firm

and shows who reports to whom. System highlights activities carried out by employees so that

responsibilities assigned to them can be done. Apart from this style indicates leadership style

along with staff members and skills.

Porter five forces

Bargaining power of buyer: In case of poweo bargaining power of companies who purchase

electricity of company is high as other companies are also operating in the market and presence

of substitute allows firms to dominate the market.




Bargaining power of supplier: Poweo produces electricity on its own and does not purchase any

kind of raw material from outside parties. Therefore, this option is not applicable in case of

Poweo.

Threat of substitutes: It is high in case of Poweo as other companies such as EDF or GDF are

also producing electricity in the market due to which firm has to face challenges in the market.

Competitive rivalry: Threat of competition is quite high in the market where other companies are

allowed to enter into this market and they can produce electricity.

Threat of new entrants: It is low in case of French electricity markets as some restriction along

with laws are present. Further, high investment is required so as to operate efficiently in the

market which is major drawback.

PEST Analysis :

The PEST analysis of French electronic market is as followed :

Political factors The political factors include the government policies and laws that areto be followed by the companies. In respect with the present case, it wasseen that the French government has liberalized the electricity marketand companies have to follow the rule of market regulators. On theother hand, the political environment of company also affects thebusiness of Poweo company.

Economic factors Economic factor such as financial crisis and changes in tax rate, interestrates are the major factors the affects the business of Poweo. In additionto that the financial crisis held in U.Sin 2007 were the major economic impact on the business. However, tosolve the problem French government has decided to fully liberalizedthe electronic market.

Social factors Social factors such as the demographic profits of customers especialtheir income level and habit of customer to consume electricity affectsthe business of company in the electricity market of french

Technical The use of advanced technology as well as the initiatives of frenchelectricity market towards the use of improved technology affects thebusiness of company.

SWOT Analysis :

Strengths Weaknesses




Strong Brand image High production capacity

Inefficient management Lack of market knowledge Impact of European crisis

Opportunities Rising expansion opportunities in other

market Rising demand for electricity

Threats Rising competition level Introduction of new government laws Market fluctuations

Bench marking:

Bench-marking is the model that is used to assess current performance of company as well as to

identify the factors that are to be improved for improving the future performance. In respect with

the present case, it can be said that the company is facing competition from other electricity

generation companies in terms of production capacity. Hence , it can be said that the Poweo

company can improve performance and can make continuous improvement in the business by

making use of bench marking. This model also allow company to improve the satisfaction level

of customers of customers as well as improve competitiveness of business entity in the french

electricity market. The major issue of company is with current production capacity that can be

improved with the help of using this model.

Ratio analysis :

2009 2008Current Assets 535885 454249Current Liability 512151 439026Current Ratio 1.0463421.0346745

Revenue 577.3 543.5Operating Profit/Loss -85.3 -21.7Net Profit/Loss -93.5 -20.5

Operating profit ratio -14.78% -3.99%Net Profit Ratio -16.20% -3.77%




Ratio analysis is used to identity the financial performance of the Poweo in the french market

just after US financial crisis and its impact on the European market. Form the above

calculation , it can be seen that the current ratio of the company is improved from a significant

rate as in 2008 it was 1.03 which is significantly improved to 1.04 in 2009. However, it can be

said that the liquidity performance of company is improved to a normal rate as the company is

able to meet the short term financial obligations. On the other hand, profitability position of

company is seen to be negative in both the years. From the analysis of this model, it can be said

that the company's profitability is decreased to be a higher rate after the crisis. Hence, it can be

said that the liquidity performance of company was good as compared to the profitability

position in the years 2008 and 2009.




Chapter 5: Solutions to the problem and issues

Solution to unfavorable economic and regulatory environment

The major problem of French electronic market is seen to be the major problem of

electricity market of French, however, it Poweo company had faced net loss due to such

unfavorable economic and regulatory environment. The company has faced various financial

downturns due to unfavorable condition of market. To improve the condition of market the

government of French has to allow new entrance for improving the production capacity. The

company can go for prompting new companies. However, the major reason was found the

financial crisis which government has decided to liberalized the electronic market but it was not

fully liberalized. The company is recommended to improve the financial position through

improving the cash management. The French electronic market is to be regulated by the

authorities and they have to provide the rights to effective use of production capacities.

Solution to problem of liberalization

French government has to take some good actions towards the organizations which are

dealing power sector as it will help to enhance the output of the business organization and also

the performance of the companies. Currently the french government has regulated very strict

rules for the companies which are dealing in the electricity. Strict regulations of liberalization is

making huge impact on the performance of the companies. More positive efforts are required to

flexible the rules of liberalization for energy sector of France. Rules and regulations for energy

and electric sector are to be made in such a way that company should operate its business in

better way to fulfill the demand of its customer in efficient way. For example the regulations

related to generation of power capacity should be increased which will help to meet the current

needs and demands in better way.

Solution of problem competition

The proposed solution to the issue of competition to Poweo is that enterprise can enhance

its production capacity. Further, it is required for business to set low prices for the electricity

supplied as other firms are also operating in the market. By setting high prices overall

performance of firm will decline and this can have adverse impact on entire business. Further,




the challenge of competition can only be resolved if poweo enhances its production capacity and

is capable enough in dealing with the condition of rise in demand for electricity in the market.

The solution is effective enough in dealing with the challenge of competition and if corrective

actions are not taken by business then company has to exit from the electricity market of French.

Apart from this by applying model such as porter give forces it has been found that large number

of challenges are present in the market due to presence of competitors such as EDF or GDF who

are also supplying electricity in the market of French. By dealing with the challenge of

competition it is possible for Poweo to operate efficiently in the market and can easily deal with

the sustainability issues present in the business environment.



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Recommendations

It is recommended to poweo to enhance its production capacity so that it is possible for

business to deal with the condition of rising demand in the market for electricity

Effective strategies can be developed so as to deal with large number of barriers in the

market such as political, economical, social etc

Prices have to be kept low by firm as other competitors of the enterprise are offering

electricity at lower prices as compared with poweo

Decision linked with investment in new plant is feasible for company as financial

strength of the business is high and this can allow firm to allocate funds in new plant

Poweo can also sell electricity to consumers as through this profitability level along with

market share can be enhanced easily




It is recommended to business to comply with all the regulations introduced by

government along with different laws as it will have positive impact on the entire

business and can assist to survive in the competitive market for longer period of time

Providing training to staff members can also be beneficial for business as through this it

is possible for company to meet with the rising demand for electricity in the market.

From the above case , Poweo company is recommended to invest in the new plant east of

France that worth around €400 million. It will provide opportunities to better compete in

on the French electricity market

Limitations

The researcher has encountered many limitations at the time of carrying out this research.

One of the major limitation was regarding time as the scholar was having limited time to carry

out this research. Somewhere or the other this has affected the entire outcomes of the research. In

addition to this, the financial resources were also limited and this has also affected the findings of

this study. The data has been collected from secondary sources and the information regarding the

topic of research was limited. At the time of carrying out this research, the three main limitations

of faced by research was time, money and information. To carry out more effective research

more time and money was required which was not available with the researcher.

Future area of research

The present study was based on one particular market and in future the same study can be

carried out using different market. This will help in identify some other factors which are

associated with the topic of this study. On the other hand, this report demonstrate the impact of

of US crises in on the French electricity market and in future study can be conducted on the other

reason which has resulted in downfall of the market. Therefore, on the above stated two areas

future research can be carried out.




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