PORTFOLIO

Portfolio



Portfolio

Week 1

About the company

Centrica plc is a British based company with global presence in number of countries. It has significant interests in North America. Centrica plc is the biggest supplier of gas to household customers in the United Kingdom, and one of the major suppliers of electricity; it is active under the name of "Scottish Gas" in Scotland while rest of the UK, it is known as "British Gas". Centrica plc is an integrated energy company with global operations but majority of the stakes are in the United Kingdom and North America (Wild 2005, p. 450). In the Upstream, the company source, generate, trade, process and store energy. On the other side, in the Downstream, the company supplies gas and electricity to a vast number of homes & businesses (Wild 2005, p. 448). It also offers a distinct variety of home energy solutions as well as low carbon products and services.

Origin

In 1986, British Gas plc was incorporated subsequent to the privatization of state-owned British Gas Corporation. The British government issued more than 4025 million shares to privatize the company. The gas industry was privatized to reverse the 1949's nationalization in which more than thousand private as well as municipally owned companies were nationalized. As the obvious outcome, the newly incorporated corporation inherited well established and vast network which strengthen the overall position within the gas & electricity industry (Walton 2000, p. 279). The same network allowed the company to capture nationwide customers in the wake of 1990s deregulation under the trading name of British Gas.

On 17 February 1997, British Gas plc was demerged in to two distinct companies namely BG plc and Centrica plc. Centrica plc controls Gas Sales and Trading as well as services and retail businesses. It also took over the gas production operations present in the South and North Morecambe Gas fields. In December 1999, BG plc name changed to BG Group plc. It employs the British Gas trading name abroad however it is a distinct company to Centrica plc and has no connection with the retail brand of 'British Gas' in the United Kingdom (Watson 2007, p. 222).

Strategy

When it comes to Strategy in case of Centrica, one can observe both the strategy drifts as well as significant strategic change initiatives undertaken by top management of the company. These strategic drifts and strategic change initiatives were being influenced by internal along with variety of significant external issues prevailing in the industry.

Top management had always pursued diversification strategy for the company. They company acquired number of business to diversify its business portfolio. Subsequent to demerger in late 1998, Centrica endeavored to diversify initially by developing the Goldfish credit card. CEO Sir Roy Gardner along Finance Director Mark Clare continued to pursue acquisition strategy by acquiring the AA in 1999 for £1.1 billion. In 2000, acquisition of OneTel, a residential telecoms operator in the UK, diversified the business portfolio further. It also purchased the Dyno franchise group soon after the acquisition of Onetel (Megginson 1996, ...