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Exelon Company Strategic Plan Evaluation Essay


Executive Summary

Exelon Corporation is one of the largest electric utilities based in U.S, Chicago. The company primarily engaged in generation of energy, transmission of energy and distribution of energy. Exelon is also engaged in distribution of natural gas, solar, nuclear, and hydroelectric energy. Organizations that desire to operate competitively in the future have to do business differently.

They have to plan and device strategies to guarantee a competitive edge that will keep them in business. A strategic plan by itself does not achieve long-term goals, but it facilitates the realization of the goals given that it acts as a synergistic map for all stakeholders in the organization. In other words, the management works within a stipulated framework. This report considers the strategic options at the disposal of Exelon.

The company’s strategic plan will include analysis of both external and internal environment, strategy formulation, strategy implementation and strategy evaluation. When developing policies and strategic approaches, the management should ensure that they:

  • Develop and ethical code of conduct, which the organization must follow.
  • Have in place a formal committee that mandate ethical practices and see that they are upheld.
  • Train and teach their employees on the need of business ethics
  • Align their internal processes that will help in setting the code of ethics.

The energy sector has the role of producing the much-needed energy for industries and other human activities: from a general angle, companies in the sector have the role of ensuring

Company Background

Exelon Corporation was initiated in the year 2000 with the merger of PECO Energy Company and Unicom Corporation. This contract created one of the largest firms in terms of utilities in the United States. With revenue of over 15 billion US dollars, the company has emerged to be the biggest energy corporation in the world. The company serves 5 million electric and natural gas customers.

Exelon Corporation has three main business segments.

  1. Energy generation
  2. Energy delivery
  3. Un regulated enterprises

The firm has 17 nuclear units and 10 stations in United States, which represent about 20% of U.S nuclear power capacity. The company has its head quarter in Chicago. The company distributes natural gas to 490000 customers and its nuclear plants have a capacity of producing 25620 MW. The corporation has employed about 8500 professionals working in these power units.

Exelon power team is responsible in producing and maintaining on power from variety of sources such as fossil fuels, wind, hydroelectric and solar power generating assets (Hoovers, 2010). Despite developing an integral growth strategy, Exelon’s operations depend on sustainable renewable energy sources.

Power generation companies are known to be the largest pollutants, massive emitters and surface disposal. Therefore, as the company considers growth strategies, going green are a strategic option to consider going into the future.

Exelon Company Mission, Vision and Core Value

Company’s mission, vision, and value statement guide strategic planning because they offer the platform that other business strategies are developing. The mission that the company must fulfill will influence the decisions a manager will make.

Management must follow the mission of the business in case there is a crisis between what the company wants to do and what the managers have decided. The mission, vision, and value statement of the company stands out to offer direction.

Mission

Generation and supply of electricity in a safe and reliable manner and recognize the diversity of the company’s customers.

Vision

To be the best group of electric generation and electric and gas delivery companies in United States.

Core Values

Safety: Exelon Company is committed to safe delivery of energy and safe working environment for its employees.

Care and concern: We are dedicated to providing superior services to our customers and have a responsibility to create a better environment for the community.

Innovation: We are committed to exploring new ways of generating and providing energy to our customers.

Integrity: Exelon will always conduct its operations and activities in a transparent and honest manner

Diversity: We encourage different culture and background working with us.

Environmental Analysis

The company operates in a dynamic environment that is on a constant change. The environmental analysis assesses both the internal and external environment. Internal analysis provides understanding about the strengths and weaknesses of the organization while the external analysis will look at opportunity and threats.

Internal Analysis

Strengths

Strong financial backing: The Company has revenue of about 15 million dollars a year. The company expects 60 to 100 billion dollars worth of investment in the next 10 years

Experienced human capital: The Company has employed about 8500 professional working in the company.

Sustainable operational excellence: Exelon Company has gained recognition for it operation in power production and supply. This has been possible due to its management capabilities in carrying out its core operations.

Organizational culture: Exelon Company has a culture of excellence and safety in its operation. This culture ensures that the company employs work in a safe condition and at the same time achieving the organizational goal.

Green supply chain: Exelon supply is committed to the environment. The company has policy demanding suppliers to disclose their GHG emissions and energy consumption

Market leader (domination): Exelon is the one of the biggest energy corporation in the world with 17 nuclear units across United States. The company has a capacity of producing 25620MW and serves over 490000 consumers (Hoovers, 2010).

Weakness

Resources: Resources that Exelon has invested in production of power are scarce and expensive to attain. Production of power via hydroelectric power may be unreliable as it depends on the climate factor. The resource in terms of finances in expansion is also a challenge to the company.

Indolent revenue growth: Over the last few years, the company revenue has not been stable in growth due to economic condition.

Opportunity

Market opportunity: There lies foreign market in Europe, Asia, and Africa for the company expansion.

Growing popularity of renewable energy: Renewable energy sources are gaining popularity across the world due to its non-polluting nature. This is an opportunity of investment by the company

Increased demand of electricity: in the United States and investment in solar energy projects

Partnerships: Due to the success of the company, there are potential of forming partnership to other companies to diversify the scope of energy sources and better methods of distribution.

Threats

Environmental liabilities are also revealed and criticisms from various social organizations are present regarding emission of various dangerous gases. Businesses in the energy industry are affected by environmental conservation campaigns; they need to uphold ethics in their processes.

With globalization and increase in people awareness of their rights, there have been calls for conducting business ethically. Ethics in business means conducting a business in a socially, economically, politically and environmentally friendly manner; the energy industry has the potential of affecting a country’s environmental and economic situation of a country (Wilson & Sasseville, 1999).

Competition from other energy producing companies poses stiff competition to the company market share and growth.

Technology is dynamic and expensive to maintain its consistency. It is however important in the operations of the power company. As the world energy sector is going green, technologies that support this policy will be needed and this will. This will mean new investment of resources in order to be relevant (Mintzberg, et al. 2003).

Government policies: Concerning the environment may pose a threat to energy generating plant such as nuclear and fossil fuels. The emergence of global warming phenomena brought about by carbon emission into the environment has brought policies that ensures drastic cut to energies that bring about pollution to the environment. This may pose a threat to fossil fuel source of power to the company.

Strategies and Objectives

Objective

Go green: Climate change is of concern to all countries worldwide. Climate change has become an enormous challenge that organizations have to respond. Exelon deals with nuclear energy, Fossil fuels, and gases, which is subject to dangerous emissions to the environment.

Strategy

The organization’s strategic plan identifies the need to lower carbon emissions as a priority. The aim is reducing the amount of carbon emitted by 15 million metric tons of greenhouse gas (GHG) each year. Exelon Company has set aside $5 billion to invest in inexpensive clean energy projects.

The projects that Exelon wants to set up wil produce renewable (wind) energy that will lead to increased output nuclear plants, smart grid programs and retiring four inefficient carbon-intensive plants. The sustainable environment strategy is in accordance with the requirement of international environmental stability. The environmental sustainability strategies adopted by the organization makes the world a better place.

Investing in friendly environmental energy sources not only enhances the organization’s reputation, but it also allows it to compete effectively with other world leading firms.

Framework for environmental strategy

Source: Exelon Corporation

Objective

Growth: Exelon has adopted a growth strategy that aims at revolutionizing the company’s entire operations. The growth strategy is aimed at expanding output margins and geographical coverage.

Strategy

Exelon is planning to increase its geographical expansion in an attempt to reach new market niches. The other expansion area is diversification through mergers and acquisitions. Two years ago, the organization began planning a merger with Public Service Enterprise Group. The success of this merger would ensure the organization becomes the largest utility company.

On the other hand, the operations would generate revenue worth $ 27billion in annual revenues. This expansion would help to employ 28,000 people and extend its services coverage by more than nine million institutions. The other area of growth targeted is improvement in operation through utilization of strong information systems.

This would help improve leadership and resource stewardship management. The two will work to reduce the operational costs while creating financial value. In addition, Exelon is making large strides by using clean energy such as wind energy, and efficient projects in operating the operations.

Objective

Environmental leadership: As the organization strives to meet its immediate and future requirements, both environmental strategy and growth strategies that best fit the organizational plan need to be devised.

Strategy

By undertaking environmental sensitive projects, the organization is ensuring that it complies with international environmental requirements such as the Kyoto protocol. Moreover, the projects will help the Exelon to increase its voltage production, which will enable it fulfill its vision of becoming the best electric generation company.

This strategy will also help it in meeting its safety core values by ensuring safe internal and external environment. Similarly, environmental leadership is in line with continuous improvement core value that aims expanding its operation and engaging on new challenges and wide goals.

Objective

Technology leadership: Exelon Corporation will surely be needing technology adoption when investing in renewable energy in terms of solar plant, hydroelectricity, and landfill gas. Solar plant requires solar panel, which converts sunrays into clean and reliable electricity.

Strategy

Exelon has a strategy to invest in its research and development (R&D) to construct these renewable energy-generating resources. Exelon Corporation will surely be needing technology adoption when investing in renewable energy in terms of solar plant, hydroelectricity, and landfill gas.

Solar plant requires solar panel, which converts sunrays into clean and reliable electricity. Exelon has a plan to purchase new technologies and alliances with foreign energy giants that have resources to generate energy from renewable methods. Companies that can willingly transfer technologies can be very accommodating for Exelon to made alliance with, it will very beneficial in terms of future perspective.

Objective

Economic development: As the company expands to meet its other objectives, the most important will be economic development.

Strategies

Initiating energy: energy generating projects should attract international partnership. Expand the company to new frontiers all over the world. Invest in innovative means of providing new and modern energy generating means to attract both local and international investors. Competitive advantage obtains from renewable energy alternative strategy will result in zero emission of tons of perilous gas.

Exelon will be able to offer low carbon electricity in the market giving a cleaner image to the world, it will help the company to retain its strong retail customer base as today people look for socially responsible companies to invest in, allowing Exelon in overcoming or meeting all its financial obligations.

Objective

Customer satisfaction: One of the underlying success factors lies in the sound customer company relationship. A good record on a consistent and reliable power supply has been the source of the company success.

Strategy

The Customer education will form one of the most essential corporate social responsibilities. Creating awareness about global warming and emission of hazardous gases will grab customer attention toward understanding the zero emission electricity generation projects. The customer base with interactive displays of renewable projects of create electricity and most important is demonstrations about how to conserve energy.

Provision of customer relation department is one of the ways to provide an interactive forum with the customers. According to Barney (2007), companies in whichever industry have to uphold good corporate governance in their processes. Corporate governance is the manner in an organization plans to have an increasing value to its stakeholders; companies in the energy sector have the role of maintaining good corporate governance with others.

Business need to attain business objectives and satisfaction of all persons affected by a certain decision in business. This includes the structure of the board (audit, nomination, and compensation committees), management/board relationships, carrying out value creating activities, shareholders ‘ rights, record keeping, information disclosures and management compensation and its disclosure.

Effective corporate governance should include issues of ethics in their compositions. Decisions must consider the human point of view and should consider that the business is operating in environments that it affects people positively. Developing policies as if corporate social responsibilities will ensure that a business develop good relations with its customers and the environment that it is living in (Duska, 1999).

Risk Management

Risk oversight committee at Exelon Corporation consists of at least three or more directors who meet quarterly in a year to review risk management strategies. The risk oversight committee assesses monitors and controls the risk that the company is exposed to. The committee is responsible in ensuring that the risk management program within the company is fully implemented, also review, and approve nuclear decommissioning charter.

The committee reports to the board of directors sector (Hoovers, 2010). Exelon Corporation is faced with a number of risks from global warming phenomena to price fluctuation and recession in the market. There is also a risk from competitor and ever changing technology. Risks are categorized as environmental, social, technical, or economic.

Training of employees who are in direct contact with customer and other stakeholders is very essential in minimizing the potential of social risk factors. The training program ensures standard methods of operation that make the company have uniformity in its service delivery (Pearce & Robinson, 2009). The company has a strategic plan to invest in new technologies to remain relevant in today’s competitive market.

This plan involves introduction of Geothermal and wind power generation with latest technology means of distribution. Diversification of product through innovative approach is a key factor in mitigating environmental risk associated with the energy company. The company considers developing an illustrative contingency plan to mitigate the effects of these risks.

Implementation Plan

The implementation committee is comprised of Company board of governance, financial department operating council and strategy management team. The strategic plan is to be implemented within a period of eight years.

Implementation Plan

The implementation phase starts with the company board of governance approving the strategy goals and objectives presented. The operating council committee’s members who give their own suggestion on the objectives in the strategy for review.The council committees also draft implementation plan to be adopted by the organization.

The implementation plan is then taken back to the board that may either approve or take the plan back to the committee for correction. After the plan has been approved, it is taken to the committee responsible for preparation of the 2012 budget and other recommendation.

The board also gives go ahead to the financial committee to review activities and the cost of the budget. At this point staff goals are also developed to support the strategy goals. After the financial committee has made the budget, it is taken back to the board for approval. The board reviews the budget and approves it (Emery, Finnerty & Stowe, 2007).

Sources of Finance

The company is considering issuing additional share to the public both local and international. The company has also mechanisms in place to acquire a $ 15 billion loan from the Federal Reserve Bank during 2012-2013 financial years.

Financial Budget 2012-2020

Objectives Lead responsibility resources implementation schedule
Go green Environmental analysis department 5 billion US dollars January 2013-December 2020
Growth Finance unit, Environmental analysis department 12 billion US dollars April 2014-May 2016
Environmental leadership Environmental analysis department 5 billion US dollars February 2013-January 2016
Technology leadership Engineering unit 15 billion US
dollars
May 2013-June 2018
Economic development Finance department 10 billion US
dollars
July2012-May 2017
Customer satisfaction Public relation department 4 billion US dollars January 2013-December 2015

Gantt Work Plan Chart
Gantt Work Plan Chart

Gantt work plan illustrate objectives activities and the schedule period they are to take in order of their implementation. All activities in the budget are to be implemented in a period of nine years. Some activities will run concurrently while others will commence in an earlier stage than others will.

The activities involved in the six objectives are going green, growth and environmental and technological leadership economic development and customer satisfaction. The various departments concerned with objective activities are to develop activity plans as per their budget.

References

Barney, J. (2007). Gaining and sustaining competitive advantage. Upper Saddle River, NJ: Pearson Prentice Hall.

Duska, R. (1999). Employee Rights: A companion to business ethics. Oxford: Blackwell.

Emery, D., Finnerty, J. & Stowe, J. (2007). Corporate financial management. 3 Ed. New Jersey, NJ: Pearson-Prentice Hall.

Hoovers, M. (2010). Description about Exelon Energy Company. Web.

Mintzberg, H. et al. (2003). The strategy process: Concepts, context, cases. Upper Saddle River, NJ: Prentice Hall.

Pearce, J. & Robinson, R. (2009). Strategic management: formulation, implementation, and control. New York, NY: McGraw-Hill.

Wilson, W. & Sasseville, D. (1999). Sustaining environmental management success. New York, NY: John Wiley & Sons.

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