Business Strategy: Bord Gais - Essay Example

?Bord Gais Submitted by: XXXXXX Number: XXXXX XXXXXX of XXXXXX XXXXXX XXXXXX Submission: XX – XX – 2011 Porter's Five Forces: Bord Gais is a major energy player in the Irish markets. In terms of the customers (buyers), it has been noted that the company faces a high threat as in the current times there has been a major trend where customers have been ‘Debt Hopping’, i.e. customers who are unable to pay their bills, shift their service to other energy providers without having paid the bill for energy at one company. This is a major concern and can cause a major difficulty for the company (Frawley, 2011). Considering the suppliers, the company faces low or medium threat from the suppliers. Here it is essential to note that Bord Gais has a wide range of options to choose from in terms of the suppliers. Hence if one the arrangements with the suppliers do not work effectively, the company has a choice to change over the suppliers. Considering the threats of the new entrants, it is clear that the company has built a strong brand image for itself and has also been able to effectively retain its customers by staying in track with the latest market changes and requirements. Hence here the company faces Low to medium levels of threats. Although new entrants can enter into the markets, the company’s current customer base as well as the goodwill will permit Bord Gais to effectively fight against the newer entrants. The company however faces a High and Very High levels of threats in terms of the substitute products and the rivalry respectively in the current markets. The current trend in the markets where customers are opting for the ‘debt hopping’ option, the rivalry and substitute products prove to be a major level of threat for the company. However although the company does lose out on customers, they do gain customers who have hopped from other companies as well. The above figure provides a clear overview of the threats faced by the company and the intensity of the threats has also been displayed. Strategic Group Analysis The strategic group analysis helps the management to gain a better idea of the direct competition for the company. Here the main competitors for Bord Gais are: a) Mott MacDonald Group Limited, b) Papierfabrik Palm GmbH & Co. KG, c) Tembec Inc., d) Mainstream Renewable Power Ltd., and e) Phoenix Natural Gas. The figure below provides a clear view of the position of each of these companies in terms of each other and their strategies. It is essential to note that not all of the above mentioned companies act as direct competition to Bord Gais as this is determined more so by the size and the market position of the companies (Kotler, Keller, Koshy, & Jha, 2009). It is evident from the above figure that Bord Gais has a relatively higher position and overall standing in the current markets as compared to its competitors. The company has shown intense position in terms of the energy providers. Companies like Papierfabrik Palm, Tembec Inc., although are not direct competition do pose a threat to Bord Gais. Industry Life Cycle Analysis In the current times, the need and demand for natural gas has been increasing highly. As explained in an article by Wall Street Journal, it is expected that gas usage will grow to as much as three times faster than oil or coal in the developing countries. The energy forecasts as have been discussed in the report, clearly show that the global demand for natural gas will see an increase of 2% p.a. through 2030, and this change is one which is relatively high (Gonzalez, 2011). Hence considering this factor and the forecasts of the natural gas sector, it is evident that Bord Gais will continue to rise and the company will continue to remain in the growth stage. As long as the company is able to keep up with the suppliers, all the companies in the industry will face a period of growth. With the rising demand of natural gas, all companies that provide natural gas will see an increase in the customers and also the overall revenues of the company as well (Gonzalez, 2011). Hence it can be concluded that the industry is presently in a growth phase which will continue on until there is a clear balance in terms of the demand and supply. Market Segmentation In terms of the market segmentation, Bord Gais has proved to take a major part of the overall markets not only in terms of business electricity markets as well as the domestic electricity sector. The company has shown immense attention and focus on every sector, irrespective of how big or small it is. This is evident from the company’s current position and the increase that the company has been seeing on a regular basis that on the whole, Bord Gais has been able to not only achieve a wider market but has also been able to successfully acquire companies and increase the number of towns for natural gas as well. The company has also been able to increase the gas users by almost 4% totally to 63,000 (Bord Gais, 2011). In comparison to the competitors the company has been able to achieve high market segmentation and has spread its brand image across several different sectors. Bord Gais has proved to be one of the major energy suppliers in Ireland and has also been able to effectively increase its total electricity supply market to 12% (Bord Gais, 2011). On the whole, Bord Gais has shown intensive performance and this has gained the company a major position in the market segmentation. Bibliography Bord Gais. (2011). About Bord Gais. Retrieved January 31, 2011, from http://www.bordgais.ie/corporate/aboutus Frawley, M. (2011, January 30). Energy suppliers report surge in bad debt. Retrieved January 30, 2011, from Tribune News: http://www.tribune.ie/news/home-news/article/2011/jan/30/energy-suppliers-report-surge-in-bad-debt/ Gonzalez, A. (2011, January 27). Exxon Predicts Gas Use Will Surpass Coal's. Retrieved January 31, 2011, from The Wall Street Journal: http://online.wsj.com/article/SB10001424052748704062604576106310422123304.html?mod=googlenews_wsj Kotler, P., Keller, K. L., Koshy, A., & Jha, M. (2009). Marketing Management. Dorling Kindersley. Read More