British Gas Crisis

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My research focuses on a case story about British Gas and the effects of successful strategizing. British Gas was facing serious financial challenges when subjected to deregulation, (Paroutis, Heracleous, & Angwin, 2013). At one time, British Gas had monopolized the market with exclusive control over natural gas, (Paroutis, et al., 2013). British Gas was not subjected to strict regulations or competition; they were holding 100% of the market, (Paroutis, et al., 2013). During this time, British Gas made some poor decisions regarding contracts, they signed contracts with their providers that required payment for all natural gas produced, (Paroutis, et al., 2013). Therefore, if excess gas was produced British Gas was still responsible for…show more content…
British gas held 100% of the market, which would be reduced through deregulation by over 50%; this reduction was the beginning of collapse for British gas, (Paroutis, et al., 2013). By May of 1998, domestic gas was an open market, the customers who were at one time dependent on one company could now choose between several providers, (Paroutis, et al., 2013). This sudden turn of events created great hardship for British Gas as they soon began losing financial profits. They were still obligated to honor their binding contracts with their producers, while holding only 40% percent of the market, (Paroutis, et al., 2013). They were also degraded as a primary supplier after the deregulation was completed. In 1990, the company was taking on great loss and needed to take immediate action in order to survive, (Paroutis, et al., 2013). It was during this period that the demerger occurred, British Gas would demerge into two companies, BGplc and Centrica, (Paroutis, et al., 2013). This demerger was forced by deregulation; each company would focus on specific components of the organization, (Paroutis, et al.,…show more content…
This diversity created a need for improving the intellectual skills of their employees, (Paroutis, et al., 2013). In order to be competitive, it is essential to enhance employee skills at all levels within the organization. With increased skill building Centrica maintained their focus on customer satisfaction realizing this is their key to continued success and expansion, (Paroutis, et al., 2013). According to the author, Centrica’s diverse portfolio was noted as a concern, due to questionable focus on specific markets, (Paroutis, et al., 2013). Centrica felt their diversification was driven by customer relationships that reinforced the need for expansion through extended services for the consumer, (Paroutis, et al.,
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