NextEra Energy Strategic Plan - Essay Example

Overview The NextEra Energy Inc. is also known as NEE, is a leading clean-energy company headquartered in Juno Beach, Florida. The company is holding191th position in the list of 2014 Fortune 200 companies. The company was founded in 1925 as Florida Power & Light Company (FPL) there was a desperate need of a dependable supply of electricity. The company was founded by Thomas Edison and the General Electric Co., which was later purchased by American Power & Light. On a later date, the company was consolidated by American Power & Light to Florida Power and Light Company (FPL). Currently, the chairman and CEO of the NextEra Energy Inc. is James L. Robo, the President and Chief Executive Officer at NextEra Energy Resources is Armando Pimentel, the Executive Vice President and General Counsel at NextEra Energy, Inc. is Charles E. Sieving, the President and Chief Executive Officer at Florida Power & Light Company is Eric Silagy, the Vice Chairman and Chief Financial Officer at NextEra Energy, Inc. Moray P. Dewhurst and the Executive Vice President of Human Resources and Corporate Services at NextEra Energy, Inc. is Deborah H. Caplan. Today, NextEra Energy Inc. is one of the leading providers of affordable, clean and reliable energy. The company has three subsidiaries, the principal subsidiary, FPL, NextEra Energy Resources and FPL Fibernet. By the end of fiscal year 2013 the company’s net income reported $1.9 billion. Timeline The NextEra Energy Inc. has a long journey of evolution and the following list is showing an insight of its growth and success throughout its life span. 1925-1929: Founded by Thomas Edison and General Electric Co. On 25th December 1925, the company was purchased and consolidated by American Power and Light. Constructed several plants, including 50 megawatt Lauderdale plant. Coped with 1926 hurricane which hit Miami at 138 mph winds and 1928 hurricane which hit buffeted Palm Beach. 1930-1932: Dealt with some depressed years when people started to steal electricity. 1933- 1938: FPL shareholders were acknowledged about no dividends. FPL offices were turned into display centers for selling appliances. 1939-1944: Doubled its power generating capacity and had served 141,000 electricity accounts and 18,700 gas accounts. Played a vital role in energy conservation with the beginning of the war era in 1941. In 1944, FPL received Citation for Meritorious Wartime Service from Admiral W. R. Munroe, commandant of the Seventh Naval District for its exceptional services. 1945-1960: Quadrupled its power generating capacity by building new plants. Expansion of plant facilities in Miami, Lauderdale and Sanford. In 1950, FPL was listed on the New York Stock Exchange. In 1960, a new unit was built by FPL at Port Everglades. 1961-1973: Dealt with numerous weather challenges which brought hurricanes in different areas including Cleo, Dora, Betsy, Alma and Inez. In 1972, Turkey Point Unit 3 was brought on line and Turkey Point Unit 4 was brought online in 1973. 1974-1999: Made several amendments to its policies to emerge successfully from crises. Focused on conservation of energy. Formed FPL Group Inc., in 1984 to expand its business through acquisition. Won the Edison Electric Institutes prestigious Edison Award in 1986 and the Deming Prize in 1989. Grown its service area to meet the challenges of energy market outside Florida. 2000-2010: Renamed to NextEra Energy Inc. Achieved Dramatic growth outside Florida. Listed its 4 millionth customer in 2002 in Florida under its subsidiary FPL. Disclaimer: All events are taken from http://www.nexteraenergy.com/company/history.shtml. History The NextEra Energy Inc. is a leading clean-energy company headquartered in Juno Beach, Florida. The company is holding 191th position in the list of 2014 Fortune 200 companies. The company was founded in 1925 as Florida Power & Light Company (FPL) there was a desperate need of a dependable supply of electricity. The company was founded by Thomas Edison and the General Electric Co., which was later purchased by American Power & Light. On a later date, the company was consolidated by American Power & Light to Florida Power and Light Company (FPL). The unexpected patchwork of ventures included small electric producing plants, ice plants, water, gas, fish, sawmill and road auto organizations, telephone, steam laundry, an ice plant, a limestone quarry, a sponge fishing boat and even 35 mules and wagons (Nexteraenergy.com 2014) . The company started its operations with 76,000 gas and electric customer accounts, 230 mile transmission lines and 1,139 miles of distribution lines. At the time the production capacity of the FPL was 70 megawatts and 8¢ was charged at an average price per kilowatt hour for residential purposes. The main company was later on transformed to NextEra Energy Inc., and the FPL is now the name of the principal subsidiary of the company that is serving more than 4.4 million customers across the Florida. The current CEO of the company is James L Robo. Products and Services The NextEra Energy Inc. is the leading provider of clean, efficient, affordable and renewable energy of the United States and America. With the help of its three subsidiaries it became able to deal different regions in the United States and Canada, including the most popular regions Florida and North America. The company and its subsidiaries are generating power from environmentally friendly, renewable, and natural resources such as wind, solar, fossil fuels, nuclear and distributed generation. The company is also providing some services to the energy market such as its specialized wind services that is providing technical and engineering analysis and consulting services in the field of wind. The company is a dynamic provider of electricity to residential and commercial customers. The best thing about the products of NextEra Energy Inc. is its diversity. Its customers have a range of energy solutions to choose from including 100% wind power, stable and affordable plans as well as fixed rate electricity products that are saving customers from pressure of electric consumption and increasing amounts in electricity bill. For commercial customers, the company has some cost effective electricity plans to help companies in controlling costs of doing business. Commercial users can also access standard and customized energy solutions from the NextEra Energy Inc. The NextEra Energy Inc. and its subsidiaries has sensed the increasing demand and need for renewable energy sources because of the increasing consumption of energy in almost all sectors. Advertising In advertising, the NextEra Energy Inc. has employed a very effective strategy through which it presented itself as an environmental conscious energy generating company. They are advertising through different channels including internet and print media. The focus of the company is on developing a brand name and unique image as a leading provider of green and clean energy. The company is continuously improving and advertising its corporate social responsibility, clean energy generation capabilities and its expertise in keeping costs low. NextEra Energy Inc launched several programs through which they advertised the company, its efforts and its different productive programs to increase awareness among people. For example, NextEra Energy Inc. launched a campaign “Zero Today”. The purpose of this program was to ensure a zero injury environment, both at home and at the workplace and through this program they developed a unique image of safety while meeting industry standards. Operations NextEra Energy Inc. is managing its operations through its subsidiaries because this is the only way to cover different regions of the United States and Canada. Each subsidiary has a significant contribution in the revenue generation of the company, therefore, by the end of fiscal year 2013; NextEra Energy Inc. generated a total of 15.1 billion with the contribution of all of its subsidiaries. FPL (Principal subsidiary) FPL is the largest fixed-rate electric power company in Florida and is also the biggest generation based electric power company in the United States. FPLs administration to its retail clients is given principally under a franchise agreement arranged with municipalities and counties. Districts and counties can possibly structure their service organizations to offer services to inhabitants of a particular region. In a couple of cases, the franchise understanding gives the region or district the right to purchase the dispersion stakes serving nearby customers after the expiry of the contract. The district or region concurs not to structure its own utility during the terms of the agreement that is usually based on 30 years contract, and the power to offer electricity to residents remains only with the FPL. FPL as of now holds about 178 franchises concurrences with different districts and regions in Florida with differing expiry dates through 2042. These franchise understandings cover about 83% of FPLs retail client base in Florida. FPLs key operating income source is its retail client base; it likewise serves a determined number of wholesale clients in Florida. For both retail and wholesale clients, the rates (prices) that FPL may charge are controlled by regulation, by the FPSC in the instance of retail clients, and by the FERC on account of wholesale clients. , Generally, according to the U.S. and Florida law, regulated prices are planned to take care of the expense of giving services, including a stable rate of return for capital utilized. NextEra Energy Resource (NEER) NEER was formed in 1998 to total NEEs aggressive energy business. It is a constrained risk organization composed under the laws of Delaware and is an entirely possessed subsidiary of NEECH. Through its subsidiaries, NEER at present possesses, creates, builds, oversees and operate power generating offices in wholesale vitality showcases fundamentally in the U.S., and in addition in Canada and Spain. Furthermore, NEER gives full energy and capital requirements basically to distribution utilities in specific markets, offers modified power and gas and concerned risk management services to wholesale clients and participates in gas and power advertising and trading pursuit. NEER additionally claims a retail power supplier serving clients in 13 states and the state of Columbia and participates in the constrained improvement of natural gas reserves, as well as pipeline infrastructure, through non-operative ownership interest, hence alluded to as the gas framework business. FPL Fibrent FPL Fibernet manages its business through two different wholly-owned subsidiaries of NEECH. One subsidiary was shaped in 2000 to upgrade the estimation of NEEs fiber-optic system holdings that were initially fabricated to backing FPL operations and the other was structured in 2011 to hold acquired assets of fiber-optic system. Both subsidiaries are limited liability companies regulated under the laws of Delaware. FPL Fibernet leases fiber-optic system limit and dull fiber to FPL and different clients, essentially telephone, web, wireless and other telecommunication firms. FPL Fibernet’s systems cover most of the metropolitan zones in Florida and a few in Texas. FPL Fibernet additionally has a prolonged system offering bandwidth at wholesale prices. LONE Star Lone Star, a rate-regulated transmission services supplier in Texas, is a limited liability company regulated under the laws of Delaware. Lone Star owns and operates about 330 miles of 345 kilovolt (kv) transmission lines and other related offices that were put in services in 2012 and 2013. Lone Star is liable to regulation by various governments, state and other organizations, including, yet not restricted to, the PUCT, the ERCOT, the NERC and the EPA, and certain constrained regulations of the FERC. The NextEra Energy Inc. has invested in different types of renewable energy generating resources and is looking forward to expand its products and services by increasing the number of its subsidiaries. By the end of fiscal year 2013, the company had a total generating capacity of 42,576 megawatts, total assets of 69.3 billion, earning per share was $4.47 and dividends per share were $2.64. All these things are showing that the company has a very strong financial condition that is making it capable of making investment in different profitable programs. The company is showing its keen involvement in community development through education, consulting, coordination with union and non-union contractors and partners. They have some very strong and effective training programs for their employees to improve their expertise as well as have an effective safety program to ensure a safe environment for their employees as well as to their clients. Vision NextEra Energy, Inc. is focused on building a comprehensive business workplace with an environment that values and powers the different abilities, viewpoints and plans of all workers. Diversity in thoughts, experiences, society and point of view is imperative for the company. To that degree, Nextera Energy is focused on selecting, creating, compensating and holding an assorted and comprehensive workforce to its business strategy. Mission Statement NextEra Energy Incorporation’s mission statement is representing its interest in new talent and respect for its employees. “We will foster an inclusive business environment that values and leverages the diverse talents, prospective and ideas of all employees.” (“NextEra Energy Inc. CEO”, 2014) Purpose “Inclusion is a sense of belonging. Feeling respected and appreciated for who you are; and feeling a level of supportive energy and commitment from others so that you can do your best work -- thats what matters to us.” (NextEra Energy Inc. CEO, 2014) Corporate Values Being the CEO of the NextEra Energy Inc., James L. Robo and other members of the company’s leadership are managing the company on environment based values. Therefore, the company’s corporate value is to become the leader of clean energy induatry all over the world. For the purpose they are delivering clean energy benefits to five key stakeholders: customers, communities, environment, employees and shareholders. They are communicating their core values effectively with their employees to improve their performance and contribution as well as to communicate an image of unity outside the company. Their corporate value has been passed down through their business setup since 1925. They are heavily investing in clean energy projects with an aim to benefit its five stakeholders by delivering emission free wind and solar energy, low emission natural gas energy, emission free and safe nuclear power, energy efficiency programs and transmission lines to provide renewable energy to potential clients. In 2012, the NextEra Energy Inc. avoided and estimated 47 million tons of environment and life threatening CO2 emission. In this regard the company is operating in a successful manner by contributing effectively in the cleanliness of the environment. Business Objectives Unlike many businesses, the aim and objectives of doing business of NextEra Energy Inc. is not the maximization of profit, but is to become a market leader in the industry of emission free renewable energy. NextEra Energy Inc. does want to maximize its profit to launch new projects however, as compared to profit maximization; their focus is on creating value for the company as well as for their stakeholders. In the long run, the company aims to expand their business in many other regions because they want to become market leaders in the industry of renewable energy. According to the CEO of the company, their focus is on the achievement of strong financial performance because they have to generate more clean energy in the long run which needs huge investments. For the achievement of their objectives, NextEra Energy Inc. has a proper and well managed strategic plan through which they are leveraging in house and third party resources to assure safe, clean, efficient and reliable maintenance programs for their assets. Currently, the company has a very strong market presence and brand image in North America, Florida, New Hampshire, Iowa, Wisconsin and in many other regions. The company owns and operates about 17% of the US installed base wind power generation capacity, 14% of the installed base utility scale solar power generation capacity as of December 2013. SWOT Analysis The accompanying table represents the strengths, weaknesses, opportunities and threats (SWOT) within their existing business environment. Strengths Strong brand recognition in the 22 states in the US and four provinces in Canada Lots of subsidiaries Expertise in generating energy and power from natural gas, wind, fossil fuels, solar, nuclear and distributed generation Emission free and clean generation Reduced more than 47 million tons CO2 emission Care for community and environment Significant position in Fortune 200 Strong financial performance Strong image due to high Corporate responsibility Weaknesses High dependence on US customers, especially in Florida and in North America Limited International operation i-e, only in four provinces of Canada High focus on Solar and Wind generation Low contribution in nuclear generation in the US No expansion in global markets Opportunities Expanding opportunities in different regions across the world Expanding opportunities in other six provinces of Canada and in other parts of the United States Improving focus on other types of renewable energy generation sources such as nuclear generation, Bioenergy, geothermal energy etc. Threats Hurricane threats to many US regions, including numerous regions in Florida, including Miami, Boca Raton, Springhill, Boynton Beach etc., Increasing demand for energy consumption Market entrance of many energy generation firms in the renewable energy industry High dependency on Florida and North America NextEra Energy Inc. Image NextEra Energy Inc. has a very strong image in the United States and in Canada and is known as one of the best clean energy providers. For their strong efforts and unique values, the company has received several awards as an appreciation since its inception. The company won the Edison Electric Institutes prestigious Edison Award in 1986 and the Deming Prize in 1989. For corporate sustainability, the company was named to the Dow Jones Sustainability Index (DJSI) in North America for four consecutive years: 2009-2012. In 2013, NextEra Energy Inc. was named the No. 1 “green utility” company in the United States and No. 3 in the world on the basis of carbon emissions and renewable energy capacity among top 100 green utilities. In 2014, the company was named No. 1 among electric and gas utilities for a remarkable eighth straight year on Fortune magazines posting of "Most Admired Companies." In that same Fortune overview, the organization was named No. 1 electric and gas utility in advancing, No. 1 in social obligation and No. 1 in products and service quality. It has been named a component company of the 2013 Sustainable Utility Leaders Index (SULI) by Target Rock Advisors (TRA) in three categories: Economic, Social and Environmental. Apart from these few awards, the NextEra Energy Inc. have been receiving many other awards for its efforts and performance. In this regard, the overall public image of the company is very clear, strong and admiring which could benefit it in the long run compared to emerging companies. Competition On the basis of the awards and recognition of the NextEra Energy it is clear that the company has superior quality of products and services, cleanliness, high value, affordable and efficient technology and environmentally friendly operations as compared to other companies in the industry. The company holds top three positions in different categories when it comes to economic, environmental, social and quality factors of their operations. The V has to compete in different sectors of the renewable clean energy and in different categories, for example, in domestic markets, commercial markets and wholesale markets. Compared to its potential competitors, NextEra Energy has a competitive advantage because of its long and successful history. I will take years for emerging competitors to achieve recognition and to provide expertise similar to the NextEra Energy, which is keeping it on the safer edge. In addition to commercial power supplies, the company has to face competition from residential customers who are preferring self-generation solutions. Key Strategies Although, currently the NextEra Energy Inc. is performing very well and is growing effectively, however, they need to improve their capabilities to avoid any sort of pressure from the emerging competitors in the industry. Following are a few strategies that will help the company in exploiting opportunities to achieve their goals. Strategy 1: The NextEra Energy Inc. should continue their expansion through franchise agreements and subsidiaries. In this way they can expand their business to a number of regions within a short period of time. However, for the purpose, they should revise their current regulations and terms and conditions for agreements and subsidiaries. The NextEra Energy has already achieved great success through this sort of expansion and hence they have lots of experience in this strategy. Strategy 2: The NextEra Energy should focus on other types of renewable energy sources other than wind and solar. Solar power generation resource is increasingly admired by people and many clients have installed their own solar panels on their roof to generate their own energy. This will reduce the dependence of customers on energy generating companies as everyone will prefer to have their own power generation facility. To avoid such issues in the long run, the NextEra Energy should increase their investment in nuclear, Bioenergy and other types of renewable energy generation to stay in the competition (Fogarty & Lamb, 2012). Currently, they are market leaders in wind power and solar power by 17% and 14% of installed base power generation capacity in the US, whereas it has only 6% of nuclear power generating capacity in the US. In this regard, they have great opportunities in increasing their contribution in this category. Strategy 3: The NextEra Energy should focus on emerging markets that are now getting awareness about renewable energy sources. In this regard the most suitable markets for NextEra Energy will be Gulf countries and Asian countries where people are still dependent on traditional sources of power generation. In these countries, electric power is very expensive and people are eager to opt for some affordable resources. If NextEra Energy Inc. expand their business in these regions they can enjoy a monopolistic approach there and can generate high revenues to invest in the US and Canada in different projects (Nolan, Naftel IV & Reaves, 2011). Major Goals In the coming 3-4 years, the NextEra Energy should try to achieve the following goals to ensure their success in the long run. The NextEra Energy should build a separate headquarter in Canada to oversee the NextEra Energy operations in different provinces of the Canada as well as should expand their access to other six provinces. The NextEra Energy should design a committee based on experts to deal with different weather challenges in their main locations such as in Florida which is more likely to hit by hurricanes periodically. They should increase the numbers of subsidiaries to about 15-20 subsidiaries in different regions of the United States and Canada. The company should increase their spending on nuclear power generation to increase their nuclear power generating capacity. They should try to maintain their existing position in the coming years to become an industry leader and to set industry standards. The company should fix any sort of inabilities and defects in their equipments at each facility and should try to use approved new technology for increasing production. Just like their projects of St. Lucie and Turkey Point nuclear power plants, they should start some new projects in other regions to expand their business globally. NextEra Energy should build a training institute for their employees where they would train employees from different parts of the world. This will increase diversity in their workforce and will help them in managing talent effectively. Apart from traditional means of advertising, NextEra Energy should arrange seminars in different engineering institutes to increase awareness about renewable energy resources. This will help them in improving their brand image in the eyes of a new generation. Strategic Action Plan To increase profitability of the NextEra Energy Inc., the company will need to implement the following action plans. These plans will help the company to retain their position while expanding their access to different territories. 1. The CEO James L. Robo should develop an R&D department whose responsibility will be extensive market research for the company. In this way they will be able to analyze market conditions, potential opportunities and threats and potential markets expand their business globally. The R&D department will also help the company in exploring various yet potential renewable energy resources. This plan should be implemented within next 3 to 4 months. 2. As the mission statement of the company is “We will foster an inclusive business environment that values and leverages the diverse talents, prospective and ideas of all employees.” In this statement it is clear that the secret of the success of the NextEra Energy is its diverse talent. To improve their access to diverse talent across the world, the company should organize some seminars in different engineering institutes to access brilliant and creative students. Being youngsters, the new generation students will be able to handle new technology effectively and will share new and more innovative ideas. This plan should also be implemented within 4-5 months. It is good to initially implement this plan in the US and Canada and should expand gradually to other parts of the world. 3. The NextEra Energy should build new subsidiaries outside United States to exploit growth opportunities that are available in the global market. The most appropriate place for expanding their business would be Gulf countries. Though, these countries are oil rich countries, but are getting aware about the renewable energy resources and energy saving techniques. This plan should be implemented in the next 2-3 years with a proper strategic plan and extensive market research. 4. The NextEra Energy should acquire small renewable energy providing companies in other parts of the world to step in global markets or should partner with such well reputed companies to understand the potential of the business in other regions of the world. This plan should also consider implementing within next 2-3 years. The NextEra Energy can even use this strategy for stepping in the Gulf countries. References Fogarty, T., & Lamb, R. (2012). Investing in the Renewable Power Market (1st ed.). Hoboken: John Wiley & Sons. Fpl.com,. (2014). Florida Power & Light Company (FPL): Electric Power Utility. Retrieved 27 August 2014, from http://www.FPL.com Nexteraenergy.com,. (2014). Clean Energy Leader. Retrieved 27 August 2014, from http://www.nexteraenergy.com/crr/clean-energy-leader/index.shtml Nexteraenergy.com,. (2014). NextEra Energy | President and CEOs Letter. Retrieved 27 August 2014, from http://www.nexteraenergy.com/company/corporate_responsibility.shtml Nexteraenergy.com,. (2014). NextEra Energy, Inc. | Awards & Recognition. Retrieved 27 August 2014, from http://www.nexteraenergy.com/company/awards.shtml Nexteraenergy.com,. (2014). NextEra Energy, Inc. | Diversity & Inclusion. Retrieved 27 August 2014, from http://www.nexteraenergy.com/careers/message.shtml Nexteraenergy.com,. (2014). NextEra Energy, Inc. | Our History. Retrieved 27 August 2014, from http://www.nexteraenergy.com/company/history.shtml Nexteraenergy.com,. (2014). NextEra Energy, Inc. | Our History. Retrieved 28 August 2014, from http://www.nexteraenergy.com/company/history.shtml Nexteraenergyresources.com,. (2014). Next Era Energy Resources | Annual Report 2013. Retrieved 27 August 2014, from http://www.nexteraenergyresources.com/ Nolan, M., Naftel IV, J., & Reaves, P. (2011). Predictive Analysis of Global Renewable Energy and Infrastructure Growth in Developed, Developing and Emerging Markets. Sec.gov,. (2014). Definitive Proxy Statement. Retrieved 27 August 2014, from http://www.sec.gov/Archives/edgar/data/753308/000119312513143987/d472941ddef14a.htm Read More