Report on POWEO Harvard Case Solution & Analysis

Question 1

Risk register is classified into eight categories. The risk register for Poweo as at 31 may 2010 is given below:

Part a

Division 1

Division

 

 

Objectives

 

Risk

 

Priority*

 

Effect of risk

 

Mitigation/Strategy Responsibility

 

Due Date
Upstream Built power generated plants Increase in capital cost.

 

 

Low  likelihood & High impact

 

Low rate of return to reduce the cost of equity an organization should control its debt structure President of Poweo  5

Aug 2010

Increase in operating cost. Low likelihood & High impact

 

Losses may be incurred Should control its administrative expenses, marketing and selling expenses Finance Team  of the Poweo 18 July 2010
Upstream Built gas processing infrastructure Subsequent release of gas.

 

Low  likelihood & High impact

 

Penalties may be suffered By training the technical team of the company. Risk assessment team of the Poweo 20 July 2010
Increase in the gas prices. High   likelihood & High impact

 

Low demand of the gas Poweo can book  future contract in order to avoid this increase in gas prices Risk assessment team of the Poweo 16 Aug 2010
Upstream Focus on the liberalization of the upstream segment of European market. May not be cost effective

 

Low  likelihood & High impact Increase in the expenditure cost Poweo should only target those customer which increase their profitability Finance officer of the Poweo 2 Nov

2010

Adverse  economic conditions  

High  likelihood & High impact

 

Decrease in the  demand The company should need to makes important decision like training of the  employees ,innovative marketing strategies Chief risk officer  8 June

2010

Upstream Work on new energy sources Heavy research expenditure

 

High  likelihood & High impact Losses or may result in low profit By adopting the latest technology in the research Finance officer of the Poweo  15  Dec 2010
Limited options available  

Low likelihood & High impact

 

Threat of competitors The company should  hire new skilled and experienced workers on their salesforce Strategy director of the Poweo 15 sept 2010

 

Division 2

Division

 

 

Objectives

 

Risk

 

Priority*

 

Effect of risk

 

Mitigation/Strategy Responsibility

 

Due Date
sourcing Market poweo’s electricity Intense competition

 

 

 

High likelihood & High impact

 

Decrease in market shares By targeting more new customers market segments. President of Poweo 14 June

2010

 

 

Limited capacity

Low likelihood & High impact

 

 

 

Reduction in the customer base. Poweo by making new investment in the capital can enhance the capacity. President of Poweo 29 June 2010
sourcing Resold any surplus in the market Decrease in the demand

 

 

High likelihood & High impact

 

Decrease in the profit margin.

 

Should target new profitable markets around the world. Chief risk officer  7 June 2010
Fluctuation in the sale prices. High  likelihood & High impact

 

 

May result in the increase in the inflation

In depth analysis of the market condition in order to avoid this risk. Strategy director of the Poweo 15  July 2010
sourcing Manage the sales and marketing department Increment in the expenditures

 

Low likelihood & Low impact

 

Decrease the           net income By increasing the sales and growing the business by making it more profitable. Strategy director of the Poweo 12 July 2010
Misallocation of resources Low likelihood & Low impact Output of power generation decline Focus on the areas of the business that are generating more productivity. Strategy director of the Poweo 18 Oct 2010
sourcing Sourcing long term contracts for electricity supply. Increase in sourcing costs.

 

High  likelihood & High impact Decline in the  electricity sales of domestic market Poweo should focus to  increase their production capacity to sever large non-residential customers President of Poweo 10 Aug 2010
Regulated tariff High  likelihood & Low impact

 

 

Negatively impact the  growth of the electricity market By supplying the electricity to its customer base at price that built on regulated tariff discount. Risk assessment team of the Poweo 25 Sept 2010

 

Division 3

Division

 

 

Objectives

 

Risk

 

Priority*

 

Effect of risk

 

Mitigation/Strategy Responsibility

 

Due Date
Commercial Offer power supply services. Line losses when distant supply

 

Low  likelihood & High impact

 

Leakage of in the structure of electricity supply By making high level of investment in the infrastructure. Strategy director of the Poweo  6 Jan 2011
Decrease in market shares

 

 

Low  likelihood & High impact

 

Reduce the poweo profitability & growth By attracting more new customers market segments internationally. Finance officer of the Poweo 16 Aug 2010
Commercial Contract with partners Misunderstanding b/w partners High  likelihood & High impact

 

delay in the beginning of the project Meeting on the timely basis to discuss the uncertainties that may occur. Strategy director of the Poweo  18 July 2010
Lack of communication Low  likelihood & Low impact

 

 Conflict may arise  trained professionals should contact  with the  dealing partners on regular internal Strategy director of the Poweo 25 sept 2010
    Commercial Sales to downstream Decrease in the revenue Low  likelihood & High impact

 

Increase in the liability Effective marketing and selling campaign Finance officer of the Poweo  20 Jan 2011
Oil crisis High  likelihood & High impact

 

Increase in the oil prices & storage of oil The company should research for other energy resources Chief risk officer 2 Oct 2010
Commercial

 

 

 

 

 

 

Determining economic feasibility Uncertain policies of Government.

 

High  likelihood & High impact

 

Unable the poweo to enter the new markets Negotiation with government and keep in constant contact with the government officials  for upcoming  policies Chief risk officer 11 July 2010

.................

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