The macro environment analysis of the
recently restructured electricity industry has brought about a mix of
opportunities and threats, which are likely to determine the future course for
a majority of firms involved in this business. Given that electricity is a
necessity in the end user’s lifestyle and there are only 4 companies in
Victoria which provide the majority power supply, automatically this provides a
market power to these companies to influence price in their favour.
However, attention must also be paid to
threats such as relatively easier access to this industry which is making it
lucrative for potential new entrants. This threat by new competition can
undermine the monopolistic positions held by existing players; ultimately
leading to competitive battles such as price wars, ousting weaklings and loss
of customers to competitors. Attention must also be paid to the influence of
international communities to bring into force (through the government)
legislations such as CPRS (Carbon Pollution Reduction Scheme) which promote use
of clean fuels and inflict levies on units utilising ‘polluting fuels’ such as
brown coal. This will make such ‘polluting’ units financially unattractive to
the end users, due to the increased prices.
A brighter side to this picture is painted
by the fact that generation firms are coming together (by means of trade
association, organisations and strategic partnerships) to lobby for favourable
government policies and to help each other in undertaking capital intensive research
and development for mutual benefit. Diversifying in terms of fuel sources and
electricity distribution may help firms to reduce supplier’s bargaining power
and control and command costs and prices.
Also firms having good relationship with stakeholders such as customers
tend to benefit from competitive advantage in this regard.
Regulating market power of firms will help
protect consumer’s interest. Also, government help to sustain the industry in
difficult times and the gradual adoption of clean technologies light the way
for the future.
No comments:
Post a Comment