Report on POWEO Harvard Case Solution & Analysis

Objectives of Each Division of the Poweo Company

Each Poweo business division in the risk register consist of four critical objectives.

Upstream Division

  • The first objective of the upstream division is that to build and operate the power generation plants by making the use of the different sources of the energy to better compete in the market.
  • Another objective of this division to build and operate a gas processing infrastructure in order to further diversify their activities in the business of the gas supply.
  • To focus on the liberalization of the upstream segment of European electricity markets in order to expand their market in Europe.
  • Lastly, the most important objective of the upstream division is to work with new energy sources for the development of their new projects.

Sourcing Division

  • The main objective of the sourcing division is to market the electricity of the Poweo to enhance the production capacities of the company.
  • To resold, any surplus available in the market on the daily basis.
  • A Sourcing unit of the company’s goal is also to manage the sales and marketing department of the Poweo.
  •  Fourth objective of this division is sourcing long term contracts for electricity supply in order to secure their supply along with the aim to supply electricity its customer base efficiently.

Commercial Division

  • First objective of the commercial division is offer power supply services through a network of wholly owned key partners and regional agencies.
  • Contract with partners in order to increase their production capacities and to expand their number of plants.
  • Commercial unit of the company also sales to downstream business with the objective to operate effectively in the highly competitive environment.
  • Determining economic feasibility to analyze the conditions of the market while making any new investment.

Part d

The above given risk register shows risks of the each objective of the all three Poweo Company’s divisions.

Risks of Upstream Division Objectives

The first objective of the upstream division of the Poweo may contain the risk of increase in the cost of capital that may result in the low rate of return. The second risk of this objective is the increase in the operating cost may occur that causes losses in the net profit of the business.

The Second objective of the upstream division includes the risk of Subsequent release of gas by built gas processing infrastructure that may result in the penalties of the team responsible of the project. Another risk that may occur because of this is increase in the prices of the gas that may lower the market demand which can affects the performance of the Poweo Company.

The third objective of the upstream unit to expand the market Europe may have the risk of cost ineffectiveness which may increase the cost of expenditure. The adverse economic conditions is another that may occur which decrease in the demand of the production as it can greatly depend upon the economic conditions of the market.

The forth objective of the upstream unit of the company may have the risk of   heavy research expenditure which may result in the revenue losses or may lower the net profit of the business in the future. Limited options available is another risk that may appear in the future which increase the threat of competitors. 

Risks of sourcing Division Objectives 

The first objective of the sourcing division contain the risk of increase in the competition that may decrease the market shares of the company as compared to its rival in the industry. The limited capacity production is another risk in the market of the electricity that may result in the decrease in the customer base of the Poweo.

The second objective of the sourcing division of Poweo may result in the reduction in the demand of the consumption which can reduce the profit margin of the company. The fluctuation in the sale prices is another risk that may result in the increase in the inflation.

The third objective of the sourcing unit of the Poweo may have uncertainty of increase in the expenditure that might be occur in the future that may result in net income of the company. Another risk of this objective is misallocation of the resources in the company that can result in the decline in the output of the Poweo power generation.

The last objective of the sourcing division may have the risk of increase in costs of sourcing that if occur may result in the decline of the sales of the electricity in the domestic market for Poweo. Secondly, the regulation on the tariff is another risk of this objective that company that impact the growth and the profitability of the electricity market negatively..............................

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