Corporate strategies for the National Power Corporation

• Main Author: Raymundo, Jose Ferlino P.
• Format: text
• Language: English
• Published: Animo Repository 1998
• Subjects: Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/2244
• Institution: De La Salle University

This Strategic Management study was conducted on the National Power Corporation. The NPC is an non-stock corporation wholly owned by the Republic of the Philippines. The corporation has held the principal responsibility for power generation throughout the country since 1978. Profits, if any, are required by law to be used to fund capital expenditure. Rates must be approved by the Energy Regulatory Board, with the return on rate base limited to a maximum of 12 percent. NPC is responsible for the strategic and rational development of the Philippines power grids in support of the countrys vision to attain NIC-hood status by the year 200. The Corporation aims to secure stable supply of electricity through adequate reserve provision. It also encourages private sector participation in energy generation. NPC is identified as a player in the Electric Power Industry. The industry is found to be threatened by more intense competition due to the planned Governmental policy framework or reforming and re-structuring the industry. However, growth in the market size of the industry is assured due to the growth of the countrys economy. Internally, with the aid of its value chain, NPC is found to be strong in its technical operations and financially capable of meeting the minimum 8 percent return on rate base required by its creditors. However, due to the inability of the government to infuse additional capital, the company has resorted to long term debt to finance its capital expenditures. This has therefore resulted to a highly leveraged capital structure. The formulation of strategies also considered the societal expectations of having a reliable supply of electric power at all times at reasonable cost coupled with environmental acceptability to the host community. With the objectives of total electrification of the country under a single national grid and increasing its energy sales to 48 billion kilowatthours, its operating revenues to P 135 billion and its net income to P 9.8 billion within a five year time frame, business strategies of attaining overall cost leadership are herein recommended. These strategies consist mainly of (1) Improvement of operating efficiency and worker productivity, (2) Installation and procurement of new generating capacity to meet projected energy demand, and (3) Providing beyond the meter services to customers. The five functional divisions are each given a list of sub-strategies in support and fulfilment of the proposed corporate strategies. All well-thought-out strategies need a good implementation plan to succeed. Recommended herein is an implementation plan that harmonizes the seven elements of strategy, structure, systems, style, staff, skills and shared values. Upon implementation of these strategies, the projected financial condition of the company is also presented over a proposed five year period.