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British Gas Business Strategy Analysis

This report aims to develop a strategy for British Gas to improve its operations and address issues such as faulty meters and high energy bills. It analyzes various strategic management tools, including the Ansoff Matrix, McKinsey Matrix, and BCG Matrix, to assess the company's position and recommend strategies for growth. The report concludes with recommendations that emphasize market penetration and cost leadership to enhance customer retention and operational efficiency.
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0% found this document useful (0 votes)
5 views26 pages

British Gas Business Strategy Analysis

This report aims to develop a strategy for British Gas to improve its operations and address issues such as faulty meters and high energy bills. It analyzes various strategic management tools, including the Ansoff Matrix, McKinsey Matrix, and BCG Matrix, to assess the company's position and recommend strategies for growth. The report concludes with recommendations that emphasize market penetration and cost leadership to enhance customer retention and operational efficiency.
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

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Reference style: Harvard
Number of words: 3978
ASSIGNMENT 2: CASE STUDY

1
Executive Summary

The purpose of this report is to create an appropriate strategy for improving the business
operation of British gas and eradicating issues that the company has been facing. To create the
proper strategy this paper analyse various strategic management tools and identify the position of
the company according to those tools. This report finds that the faulty meter issue and excessive
energy bills are two important issues that the company has been facing and these issues are
making great impacts on the business operation of the company. To mitigate these issues this
paper recommends some important strategy that can be very beneficial for British Gas.

2
Table of Contents
Executive Summary.........................................................................................................................1

Introduction......................................................................................................................................3

Analysis of Various tools.................................................................................................................3

Ansoff Matrix...............................................................................................................................4

Mckinsey matrix..........................................................................................................................5

BCG matrix..................................................................................................................................6

Bowman’s strategy clock.............................................................................................................8

Porter’s generic strategy.............................................................................................................10

Roger model...............................................................................................................................12

SAFe model................................................................................................................................13

Conclusion.....................................................................................................................................14

Recommendations..........................................................................................................................14

References......................................................................................................................................16

3
Introduction

The UK-based energy and home service provider company British Gas is known for delivering
quality service to its consumers. From the very first day of its business operation, the company
has been delivering an effective service to its consumer and such a thing helps the company to
enhance its overall business operation (Veitch, 2022). However, the unprecedented spread of the
COVID-19 virus made a great impact on the business operation of the company (Wei et al.,
2018). On the other hand, the faulty smart meter issue is also a great issue that makes a negative
impact on the business operation of British gas. A huge number of consumers made their
complaints related to faulty meters and they mentioned that such an issue increased their energy
bills. This faulty meter issue decreases a huge number of consumers of British gas. The number
of consumers decreases by 2% (Aldy and Gianfrate 2019). The decrease in the number of
consumers of British gas has been increasing the number of consumers of its competitor. There is
huge competition in this Sector and Companies like Ovo. SSE, Npower has been providing a
great service in the UK (Wang et al., 2022).
The huge competition has also been making a great impact on the business operation of British
gas. That is why the company has been looking for a way to mitigate these issues and improve its
business operation (Leverkuset al., 2018). This paper is going to analyse several strategic
management tools that can be very beneficial for British gas to create a strategy that will be very
imperative for them in reducing those issues.

Analysis of Various tools

Strategic management tools help a company to understand several strategic issues like
opportunity, threat, risk, and many more (Kapustin and Grushevenko 2018). As British gas has
been facing several issues in its business operation and those issues have been making a great
impact on its business operation, therefore, the strategic management tools will be very effective
in providing an effective framework for increasing its productivity and profitability (Marraro and
Spada 2020).

4
Ansoff Matrix

The Ansoff Matrix is an effective “strategic planning framework” that helps a company to
develop its strategy for growth. This matrix provides four strategic options and highlights the
risk associated with the option (Bogerset al., 2019). Those four options are
Market penetration
It is the concept of enhancing the sales of an existing service or product in an existing market.
This matrix is very beneficial for those companies that have been thinking of increasing their
sales in the market where they operate (Steiss, 2019). British Gas has been looking to increase
and improve its business operation in the existing market (UK market) that is why the concept of
market penetration will be the most effective concept for increasing its revenue (Ginter et al.,
2018). The concept of market penetration will help the company to execute strategies like
enhancing the marketing efforts, increasing the productivity and effectiveness of business
operations and many more. The company can increase the quality of service by mitigating the
faulty meter issue (Werner et al., 2021).
Product development
This concept of the Ansoff matrix is about launching new products to a market where a particular
company already operates its business (Fonseca, 2018). When a company launch a new product
of them in the existing market then the concept of product development helps them a lot to create
an appropriate strategy for increasing the popularity and sales of that product. As the focus of
British gas is to increase its sales of existing products in the existing market, therefore, this
concept will not be suitable for British gas (Gil et al., 2020).
Market development
This concept of the Ansoff matrix is very suitable for those companies that have been thinking of
commencing their business operation in totally a new market with their existing product
(Kyrylovet al., 2020). As British gas is not going to start its business operation in any other
countries, therefore, the concept of market development will not be an effective concept for
British Gas (Archer et al., 2018).
Diversification
This concept is related to commencing the business operation of a company in totally a new
market with totally a new product (Adams et al., 2019). The diversification concept will not also

5
be an appropriate concept for British gas in this scenario as the company has not been going to
introduce totally a new service in totally a new market.

Figure 1: Ansoff matrix


(Source: [Link], 2022)

Mckinsey matrix

The Mckinsey matrix is also a very important matrix for the development of the business of an
organisation. This matrix helps to give proper information to a company regarding its
performance (Zheng et al., 2018). On the other hand, it helps a company to get the best return by
utilising the limited resource only. So, this matrix will be very beneficial for British gas to
improve its business operation by providing an appropriate strategy (Cabral et al., 2019).
Invest or grow
This concept is related to making investments in those business areas where improvement is
required. This concept will help British gas to focus on faulty meter issue and to mitigate the
issue the company has to invest in service improvement area (Hoffmann et al., 2018).
Harvest or Divest
This quadrant of the Mckinsey matrix is about harvesting or divesting investment in poor-
performing products or services that is “in less attractive markets and industries” (Choudhury et
al., 2021). This concept stated that if the particular business unit is able to contribute “revenue
generation equivalent to the investment” then a company can make their investment in those
products or services. The service of British gas is low performing but the industry where the
British gas has been operating its high performing. Hence, this will not be an appropriate strategy
for the company (Luger et al., 2018).
Selectivity or earning strategy

6
This quadrant of the McKinsey matrix is very beneficial for those companies which are operating
their business operation either in a very low competitive market or in a highly competitive
market with a “less attractive industry” (Canhoto and Clear 2020.). British Gas has been dealing
its operation in a market which is very attractive and the business competition is quite huge.
Therefore, this strategy will not be a helpful strategy for British Gas (Nisar et al., 2019).

BCG matrix

The BCG matrix is another very vital strategic management tool that helps a company to choose
the appropriate strategy for increasing and improving its business operation (Stevens et al.,
2018). The BCG matrix is consisting of four quadrants. These four quadrants determine the
business operation process of a company and how efficiently the company has been operating
their business operation (Stone et al., 2020).
Star quadrant
Companies that generate the same amount of cash as they invested in their business operation
those companies belong to the star quadrant (Awayshehet al., 2020). It has already been
mentioned that British Gas has been operating its business operation quite effectively and they
have been earning a huge amount of cash from their business operation. Though the ongoing
scenario creates a huge problem for British gas and decreases the profitability of the company, a
lot still the revenue of the company is more than its investment. Therefore, the service of the
company will not stand in the star quadrant (Duranaet al., 2020)
Cash cow quadrant
Companies that generate a huge amount of cash from their business operation and the outflow of
cash is more than their investment, those company comes under this quadrant (Aguinis and
Solarino 2019). British gas delivers its service to a huge number of consumers in the UK. The
financial statement and annual report of British gas clearly reveal that the earnings of the
company are more than its investment. Therefore, the company belongs to the cash cow quadrant
(Qi et al., 2021).
Dogs' quadrant
The product or service of companies that have very slow growth and very low market share
comes under the Dogs quadrant in the BCG matrix (Rees et al.,2022). Companies that are
dealing in the energy sector of the UK have a great growth rate and the market share of those

7
companies is also quite huge. As British gas deals in the energy sector in the UK and the service
that the company is providing to its consumers have a high market share and high growth rate.
Therefore, the service of British gas will not come under the Dogs quadrant (Teece, 2019).
Question mark quadrant
The service or product of a company that has a low market share and high market growth comes
under the question market quadrant in the BCG matrix (Rashica, 2018). The service of British
gas has high market growth in the UK market and high market share. Therefore, the service of
British gas does not belong to this quadrant (Sudiardhitaet al., 2018).

Figure 2: BCG matrix


(Source: [Link], 2022)

Bowman’s strategy clock

Bowman’s strategy clock is another most important strategic management tool that helps to
create a strategy for a company and gives them a huge competitive advantage. The strategy clock
of Bowman consists of eight different positions and each position highlights a different strategy
for success within a particular marketplace (Ferreira et al., 2018).
Position 1: Low price and low value-added

8
This strategy is about increasing the quantity of selling products or services by decreasing their
price. The products or services in this position are low in value (Lu et al., 2019). British gas
provides quality service to their consumers across the UK and the service of the company has
great value. Therefore, the service of the British will not come under position one and the
strategy of position one will not be an effective position for the British gas (Ghobakhloo, 2018).
Position 2: Low price
The second position of Bowman’s clock is related to cost minimization with quick and cheap
production. Position 2 of Bowman’s strategy clock also aims to increase the quantity level only
(Basias and Pollalis 2018). This strategy does not focus on the quality of the product or service
that much. Hence, the strategy of position 2 will also not be an effective strategy for British gas
(Wang et al., 2018).
Position 3: Hybrid
This position focuses on the low price with high added value. This position ensures that the price
that the company has been taking from its consumers is competitive and they are lower than its
competitor (Kumar et al., 2019). On the other hand, this position is about providing great service
or products to consumers (Tabeshet al., 2019). The strategy of this position will be the most
effective strategy for British gas. By using the strategy of Position 3 the company can provide
quality service to its consumer at a rate lower than its competitor. This strategy can also be very
helpful for the company to increase the number of consumers in the UK market (Jacobideset al.,
2018).
Position 4: Differentiation
This strategy is about providing different products than competitors with a high value-added to
consumers (Babalola et al., 2019). This strategy focuses on providing a great quality product at
an average price and providing a product that is different and superior to its competitor. As
British gas deals in the energy sector so they can provide better quality service to their
consumers but it is not possible to give totally new service to its consumers. The British gas is
known for providing their service in energy sector and it is not possible to give totally a new
service to their consumers. Hence, this strategy will not be an appropriate strategy for British
gas (Bailey and Lee 2020).
Position 5: Focused differentiation

9
This position is about providing a great quality of service at a high price. This can be one of the
most effective strategies for a company to enhance its profitability but it is difficult to maintain
(Moutinho and Vargas 2018). British gas is already facing a huge issue related to its faulty meter
and a huge amount of bill-related issues therefore it will not be an effective strategy for British
gas to increase the price of their service more. So, this will not be an appropriate strategy for
British Gas (Duanmuet al., 2018).
Position 6: Risky high margins
This is a “short-term strategy” that can help an organisation to gain a huge profit for a particular
time. In this strategy, a company provide its product and service to a consumer at a very high
price to increase its profitability (Baker et al., 2020). This strategy will not be an appropriate
strategy for increasing its profitability and business process as the increase in price can reduce
the number of consumers of British Gas a lot (Rialtiet al., 2019).
Position 7: Monopoly pricing
This strategy is the most effective strategy for companies those deals in the Monopoly market
and they have the power to fix the price of products (Redpath et al., 2018). In this type of
market, a company makes a huge profit as there is no competitor of the company in the market.
British gas operates its business in a market where perfect competition is present. Hence, it will
not be possible for the company to fix the monopoly price for their service (Hutorovet al., 2018).
Position 8: Loss of market share
A company takes this strategy when it plans to exit a market or move to a new market. So, this
will also not be a proper strategy for British gas (Ozkeser, 2019).

10
Figure 3: Bowman’s strategy clock
(Source: [Link], 2019)

Porter’s generic strategy

The generic strategy of Porter’s is also a very effective strategy for a company dealing in any
industry as it helps a company to create a proper strategy based on three approaches. Those
approaches are “cost leadership, differentiation, and focus”(Gnyawaliet al., 2018).
Cost leadership
This concept focuses on enhancing the profit margin of an organisation by reducing its cost of
service and product and enhancing the market share of an organisation by charging very low
prices from consumers for their service (Jones et al., 2018). The concept of cost leadership can
be the most appropriate concept for British gas as the company can eliminate the issue that they
have been facing by implementing the strategy of cost leadership (Kabirifaret al., 2020). It has
already been mentioned that the faulty meter issue increases the expenses of a huge number of
consumers that is why it can be very beneficial for the company to reduce the unit rate of its
service. That is how the company will be able to increase the number of consumers again and
such a thing will eliminate the issue of low number of consumer of British gas (Heron et al.,
2020). There is no doubt that with this strategy the profit margin of British gas will decrease a lot
but they will be able to increase the number of their consumers and this thing will help them to

11
gain a huge amount of revenue. Growth in revenue will raise the net income of British gas a lot
and the company will be able to eradicate the issues they are facing properly (Fountaineet al.,
2019).
Differentiation strategy
This is the concept of boosting the efficiency and profitability of a company by delivering a
service different from its competitor (Behan, 2020). It is not possible for British gas to provide
totally a different service to its consumer as the company operates its business in the energy
sector. So, this concept of Poter’s will not be a helpful strategy for improving the business
process and operation of British Gas (Jamshidiet al., 2018).
Focus strategy
When a business hub or institution focuses on delivering its product to a particular market and
focuses on delivering its product to particular consumers then the concept of focus strategy helps
those companies (Morgan et al., 2020). In this strategy, a company manufacture its product in a
way that will be very beneficial for fulfilling the demands and necessities of a particular
consumer or a particular sector. The focus strategy will not be a proper strategy for British gas as
the service of the company fulfils the needs of a huge number of people in the UK (Claus, 2019).

12
Figure 4: Porter’s Generic Strategy

(Source: [Link], 2018)

Roger model

The Roger model is also a very important model that helps a company in its innovation process
by providing an appropriate strategy for its business operation (Tang et al., 2018). According to
Roger (2003), the innovation process of a company involves five important stages. Those stages
are “knowledge, persuasion, decision, implementation, and confirmation”.
Knowledge stage
An innovation process of a company starts with this stage. In this stage, a company get the idea
about the existence of innovation and gather information about the innovation (Kuczeraet al.,
2020). This stage of roger model will help British gas to get knowledge about the required
innovation and which type of innovation is needed for them (Latanet al., 2018). British gas will
be able to gather the knowledge by evaluating the effectiveness of that innovation in other
companies.

13
Persuasion
In this stage, a company identify whether a particular innovation process will be fruitful for them
or not (Awan et al., 2018). In the persuasion stage, British gas can also evaluate whether the
innovation process they have been thinking about will be beneficial for them or not. The
company can evaluate this process by measuring its performance in companies those deals in
energy sectors and faced similar kind of issues like British gas. However, in this stage, a
company does not approve or reject the idea of innovation (Susko and Roger 2020).
Decision
This stage is the most appropriate stage for an innovation process as companies take the decision
about whether they should accept the innovation process or they should reject it. In this stage,
British gas will be able to choose the proper innovation process for them which will be very
beneficial for improving its business process (Ghezzi, 2019).
Implementation
In this stage, a company implement the innovation that they chose in the decision stage ( Wilson
et al., 2020). After identifying an effective innovation process a company implements it in their
business process. In this stage, British gas will be able to implement an innovation process after
choosing the best alternatives for them (Olawumi and Chan 2018).
Confirmation
It is one of the key stages for any organisation to measure the effectiveness of the innovation
process that has been implemented in the implementation stage (Dalenogareet al., 2018). After
deciding the effectiveness of the innovation that the company has implemented, they can alter or
reverse the decision. Hence, this stage is also a very important stage for the company and it will
help British gas to identify the effectiveness of its innovation decision (Dewnarainet al., 2019).

SAFe model

The “Scaled Agile Framework” or SAFe model is a set of workflow and organisational patterns
to implement an agile practice in an organisation (Buhalis, 2022). This model is very imperative
for a company to increase their performance as this model helps an organisation to plan and
manage its work properly and increases the value of the organisation. This model will also be
very beneficial for British gas to implement an appropriate strategy for their business operation
and can mitigate the issue that the company has been facing (Antony, 2018).

14
Meeting the needs of consumers faster
This model focuses on increasing the business operation of an institute by providing appropriate
strategies to meet the needs and necessities of consumers (Di and Varriale 2020). This concept of
the SAFe model will be a very imperative model for British gas to fulfil the necessities of
consumers properly and they will be able to provide a proper service to its consumers. To meet
the needs of consumers the company can provide a proper and uninterrupted service to their
consumers. By meeting the needs and demands of customers properly British gas will be able to
improve its overall business process and will be able to eradicate issues that they are facing
(Mohamed, 2018).
Improvement of service quality
The strategy of this concept will be the most appropriate strategy for British gas in its proper
business operation in recent times (Albukhitan, 2020). The issue related to service quality is a
huge issue for British gas and the company has been facing a huge problem related to this issue.
Hence, a proper strategy is very much required for British gas to eliminate this issue and improve
the service quality of the company (Lin et al., 2018). The company can hire some skilled
employees in its organisation. Inclusion of skilled employees can be very helpful for
improvement of service quality as the skilled employees will be able to provide quality service to
consumers and can address the issue of consumers more quickly.
Improve the productivity
This concept is related to increasing the productivity of a company by empowering high-
performing teams (Pausas and Keeley 2019). By building a high-performing team British gas
will be able to increase the efficiency and effectiveness of its organisation. This will also help
British gas to provide a better quality service to their consumers. Hence, this concept will also be
a very important concept for British gas to improve its business operation (Almeida and Simoes
2019).
Effective employee engagement
The concept of the SAFe model is also very beneficial for effective employee engagement. A
proper engagement of employees will be very beneficial for British gas to fix the problem and
issue that British gas is facing more appropriately (Attaran et al., 2019). The company can
engage its skilled employee to address the issue. Skilled employees will be able to mitigate the

15
issue of faulty meter properly. They will quickly change all faulty meter and provide a good
meter to consumers.

Conclusion

In summary, analysis of several strategic management tools helps to understand the position of
the service of British gas and what will be the appropriate strategy for the company to eliminate
issues they are facing. Discussion of the Ansoff matrix demonstrates that the market penetration
strategy will be the most appropriate strategy for the company to increase their business
operation. Analysis of the Mckinsey matrix reveals that invest or growth strategy will be the
most appropriate strategy for British gas to increase its business operation. On the other hand, the
discussion of the BCG matrix reveals that the service of the company comes under the cash cow
quadrant as the company has been generating cash more than its investment. Moreover, the
discussion of the Roger model and SAFe model also demonstrates some strategies that can be
very beneficial for British gas to improve its business operation process in the UK.

Recommendations

There are some key areas where the company needs to focus on improving its performance and
● The British gas need to change all those faulty meters immediately with a good one
(Ratten, 2020). To change all faulty meters the company can gather information of
consumers that has been facing this issue and can provide a free meter replacement
service to them (Sanders et al., 2019).
● The company should also provide some rebates on the overall power bill of consumers.
As the faulty meter issue increases the power bill of many consumers so the company can
provide an extra rebate to their consumers. It will help the company to attract consumers
(Ciminiet al., 2020).
● It is necessary for the company to focus on decreasing the cost of business operation
(Bhat et al., 2022). To reduce the cost of operation the company can introduce
automation process in its business operation. Automation process will help the company
to decrease their dependency on human force. By decreasing the dependency on human

16
force, the company can reduce its expenses as their expense related to hiring employees
or training employees will decrease (Marroneet al., 2019).

17
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