Strategic Management in the Renewable Energies Sector

Table of Content

  List of tables and illustrations  2

1  Introduction  3

1.1  Strategic Management  3

1.2  Photovoltaic and the Renewable Energies Sector  3

2  The Process of Strategic Management  4

2.1  Purpose Goals and Objectives  4

2.2  Analysing the External and Internal Environment  5

2.3  Schools of Thoughts  5

2.4  Strategic Analysis  6

2.5  Competitive Strategies  7

2.6  Forecasting the Future  8

2.7  Formulating the Strategies  9

2.8  Implementing the Strategies  9

3  Conclusion  10

  References  12

List of tables and illustrations

  Fig 1: Hierarchy of goal-setting activities  4

  Fig 2: External influences on a PV producing company  5

  Fig 3: Porter s Five Forces Model  6

  Fig 4: A view of the strategy process  7

1 Introduction

1.1 Strategic Management

There are various definition of strategic management in the literature because of the complexity and different approaches to deal with strategies. To give a brief idea what strategic management is all about the following definition is given. “Strategic management is a process, directed by top management, to determine the fundamental aims or goals of the organisation, and ensure a range of decisions which will allow for the achievement of those aims or goals in the long-term, whilst providing for adaptive responses in the short-term”. (COLE, 1997) Companies in the photovoltaic (PV) sector need to pass through the process of strategic management as well as their competitors. They will reach their aims and forecast or react on changes in the market to ensure the survival or development of the firm. This process will be presented in this work.

1.2 Photovoltaic and the Renewable Energies Sector

The need for strategies in this particular sector is getting demonstrative by the following statement:

“The enhanced importance of renewable energies is seen as one inevitable consequence of the acceptance Royal Commission on Environmental Pollution’s (RCEP’s) recommendation that the UK should attempted to reduce carbon dioxide (CO 2 ) emissions by about 60% from current level by 2050. An estimated 30-40% of electricity demand will need to be derived from renewable resources in order to achieve this objective, a target which implies a massive increase in development in renewable energy schemes”. (KELLETT, 2003)

The mentioned authors in this work have different ideas about aims and goals of this sector. Also the environment of PV producing companies is more or less discussed in academic papers and books in this field. The used schools of thought and various strategic analyses will be handled as well as the competitive advantages and future visions of companies in this sector.

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2 The Process of Strategic Management

2.1 Purpose, Goals and Objectives

Companies set out their purpose, goals and objectives to achieve them by creating and implementing strategies. According to COLE (1997), the purpose or mission statement should define the key arguments of the company’s business and behaviour towards their external and internal environment. “[They]… are intended to provide a vision of why the organisation exists, where it intends to operate and how it intends to achieve its goals” (COLE 1997). For a company which produces PV panels these statements could include the ideas of SHEFFIELD (1999). He reports that the demand of the increasing energy use must be meet by replacing fossil energies against renewable energies to save fossil resources and to minimise greenhouse-gas emissions.

In accordance with COLE (1997) the aims and goals are more focused on the success-criteria of the company’s operations. A realistic goal could be correspondent to VAN OVERSTRAETEN

ET AL (1996), “[…] to obtain a power generation system which is able to convert solar energy

into electricity at a cost/kWh which is comparable with other generation or delivery schemes […]”. The objectives describe the intentions of specific units within the company. SHEFFIELD (1999) thinks that the companies need to improve the efficiency of the energy production of the PV cells and arrays and lower the cost by developments to be competitive in the sector of energy production. The following hierarchy classifies these goal-setting activities under the terms of COLE (1997):