AES Corporation management (Organizational Behavior) - Essay Example

AES Corporation has enjoyed uninterrupted growth for 21 years with a market value of $70 per share in the year 2000. No doubt, investors have lost confidence in the company but the problem that we are facing today is not due to any internal crisis. We are all well aware of the external turbulence. Let us examine the pros and cons of changing over to the standard management practices. Both the directors are Harvard Graduates and hence experienced in crisis management. Challenges and crisis are a part of any industry.

No situation ever remains the same and strategies have to be changed to adapt to the demands of the situation. Bakke has acted promptly in shifting focus from AES’s ability to maintain its values and live its principles, to address the fallout. They have already taken aggressive action to restructure and de-leverage AES. This is not a time for trials and errors but for action. A new board now may be detrimental to the interests of the company. Finance management is crucial and the fact that we have been able to survive the current financial pressures proves our financial strength.

We immediately took steps to reduce capital expenditure, disposed off assets, liquidated equity to meet the margin calls, retrenched, and withdrew from risky business areas. We are aware that AES may not be able to access the capital market and has to rely on the internally generated funds. Besides, as per the analysts report we may not be able to command a fair value for the assets that we put up for sale but the directors have already taken additional steps to provide a more substantial liquidity cushion.

This will definitely leave us a better-capitalized and stronger company with less earnings volatility. Bidding power contracts is not an issue because people have the expertise to sustain competition like Shell and Bechtel. The focus now should not be on the investors, but on attaining liquidity. All the other fronts have been attacked simultaneously. Organizational changes have already been made with a view to enhance operating performance, further reduction of operating costs, revenue enhancements.

Two special offices – the Cost Cutting Office and the Turnaround Office would assist in better coordination on management of expenses. It would also assist in taking prompt decisions to dispose off or retain businesses. Apart from these, what else can a new board of directors do? Failures of companies like Kellogg and Apple, who shared the vision of alternative type of enterprise, is no argument that AES should follow suit. Companies who have been following the standard management practice also undergo hard times and this should not be deciding factor.

We have not even failed in discharging our social, local, and environmental responsibilities. Vicissitudes are part of the game and we have the experience to tackle it. Hence, I see no reason why we should step down.