Business Strategy and E-Commerce Spring 2000 Business to Business Electricity

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Business Strategy and E-CommerceSpring
2000Business to BusinessElectricity

• Isnezawati Azali
• Chad Carter
• Connie Chen
• Emily Coyle
• Jawe Cheatum

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The US Electricity Sector

• The electricity sector is the nation's most
  capital intensive industry
• Holds assets with a book value close to 700
  billion in 1994
• Has total sales of 212 billion in 1996, larger
  than the telecommunications industry
• Total government spending on electricity was
  19.5 billion in 1995

Source http//www.energyonline.com/Restructuring/
models/white01.html
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Major Players Across the United States

• Pepco
• http//www.pepco.com/
• Edison
• http//www.sce.com/
• Alliant Energy
• http//www.alliantenergy.com/
• Duquesne Light
• http//www.duquesnelight.com/
• Mid American
• http//www.alliantenergy.com/
• The Southern Company
• http//www.southernco.com

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B2B E-Commerce Strategy Model

• Real time management inventory system
• Online parts ordering
• B2B online store
• Daily online auctions and vendor contract bidding

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Who are the Customers?

• Agricultural
• Office Buildings
• Retail Stores
• Restaurants
• High Tech
• Manufacturing
• Hospitals Medical Facilities

• Hotels Motels
• Recreation/
• Entertainment
• Warehouse
• Cities Counties
• Federal State Government
• K - 12 School / Colleges

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Strategies to Attract Customers

• Participate in Electric Choice Program
• Allow customers to choose electricity suppliers
• Offer attractive combination of price and bundled
  services
• Improve services for environmentally conscious
  customers
• Duquesne Light was the first utility company to
  install a plant-wide scrubber system to improve
  air quality

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Value Added

• Online Accounts / Bill payment
• Energy Consulting
• Industry Specific Workshops
• (example Certified Food Handler Program)
• Business Development Resources
• (example How to start your own business)
• Company Information
• (example 24-hour customer service background)

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A Sample of Online Bill
Pepco allows customers to view and pay their
electricity bills.f
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Southern California Edison (SCE)
SCEs business development services has had
significant results

• Helped 539 firms with Economic Development Rates
  and other incentives.
• Preserved 118,114 jobs for Californians.

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Words from Customers

• "The rate we received from Southern California
  Edison will enable us to expand our business,
  install state-of-the-art equipment, stay
  competitive, and hire nearly two dozen new
  employees.
  - vice president of General
  Clinical Plastics
• "In addition to addressing our energy costs, SCE
  also provided assistance with planning our new
  construction, so that we can achieve optimal
  energy-efficiency in our new plant," - Yoshio
  Morakami, chief financial officer and treasurer
  of Panasonic Disc Services Corp.

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Policy Issue Electric Deregulation

• Advantages for consumers
• Keep your current utility or choose another
  provider.
• You can choose a pricing plan that fits your
  needs (different rates for day and for night, or
  for different seasons).
• Increased efficiency should produce lower
  electric rates.
• Having more time-of-use options will give
  consumers more incentive to use electricity
  efficiently to lower their costs.
• Advantages for suppliers
• Electricity producers will have incentive to
  operate as efficiently as possible so they can be
  competitive, remain financially viable, and earn
  a profit for their shareholders.
• Reducing costs will encourage businesses to
  remain in the states they are in, as prices
  should equalize across the country. This could
  mean more jobs and more business investment.

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Recommendation
Indirect Business Promotion and Targeting

• Establishing Community online networks
• Developing a community presence in communities
  where they conduct business
• Using their market position to educate B2B
  consumers about the benefits of electricity,
  while at the same time promoting their business
  services and products to future consumers.

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Recommendation

• Expanding Value Added
• Leverage existing brand strength and market
  dominance into divergent business areas
• Energy-Related Consulting Services
• - tariff and trade strategic planning
• - environmental regulatory strategic planning
• - energy feasibility and optimalization planning
• Economic Development Strategic Planning Practice
• Using market capitalization to integrate
  services, which help lure a repeat clientele
• Developing strategic partnerships and alliances
  with high-tech partners such as Motorola

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Recommendation

• Business Strategy Positioning
• Electric companies should follow the lead of
  industry leader of The Southern Company, and
  diversify their holding into other related high
  return consulting services.
• Develop a global strategy that looks to take
  advantage of the emerging economies of Asia,
  Eastern Europe, and Latin America.
• Enter into strategic alliances with industry
  leaders in other sectors of the economy.

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Recommendation

• Interface Enhancement
• Explain subsidiary and supplemental services
  separately
• Make customer feedback forms in survey and
  comment box form
• Offer a discount and free switching cost for
  customer to try main or supplemental services.
• Clearly state purpose of company on the first
  page