Dominion Resources Incorporated
Yüklə 3,7 Mb.
|
- Bu səhifədəki naviqasiya:
- I: Executive Summary
- II: Introduction
- III: Analysis of the International Business Situation
- Primary Target Market Demographic
- Secondary Target Market Demographic
|
Table of Contents Section and Title Page Number(s)
VII. Appendix .....................................................................................................................30 
I: Executive Summary The Republic of South Africa is currently facing one of the largest energy crises ever witnessed in modern history. Electricity consumption in the country has risen 70% in the past 16 years while electricity capacity, generated by the country’s government-backed Eskom Company, has stagnated. This fact has lead to the current situation in which the company is struggling to meet consumer electricity demand in the country. Eskom has run operating losses of over $1 billion annually for the past several years and has thus been deferred from funding new electricity generation projects, given the government’s plan to shutter the company. The South African government has begun to aggressively illicit foreign companies’ investment into new energy production operations in the country to alleviate the coming crisis that threatens to leave millions of citizens, factories, and businesses in the dark. These incentives are taking the form of generous tax breaks, varied write-offs, and eased government regulations for certain companies that set up operations in the country. These incentives will ultimately serve to fill the void left by Eskom by attracting new companies to enter the South African electricity industry to usurp market share and run profitable business ventures in electricity production. Dominion Resources Incorporated is a major energy company that operates within the United States in Virginia, North Carolina, Massachusetts, Illinois, Pennsylvania, and Ohio, among other states. Founded in 1983 and headquarted in Richmond, Virginia, the company employs 18,000 workers and serves over 5 million customers nationwide. Although the company currently accrues $14 billion in annual revenue, it has found the maintenance of an environmentally-conscious image to be difficult as the majority of the power plants in its portfolio run on coal-fire and natural gas-based combustion systems, which are unclean to say the least. Thus, the proposed plan to extend Dominion’s operations to South Africa and build a biomass-combustion power generation facility with advanced carbon capture systems stands to proliferate the company with an environmentally-friendly image. This transplantation is poised to take place by September 30th, 2013 to South Africa’s highly-urbanized Gauteng Province; home to its economic hub city of Johannesburg along with 12 million citizens. The prospect of extending Dominion operations to South Africa presents a unique opportunity for the company. If this proposal is acted upon, Dominion stands to gain a greener image, gain a position as a future vanguard in the country’s energy industry, along with gaining an increased consumer threshold for its electricity generation services. Expanding the company’s operations to such a robust economy like South Africa will yield untold benefits and opportunities for expansion for many years to come. The South African economy is based upon the Rand currency, which has an exchange rate of 1 Rand for every 6.8 United States Dollars. With a gross domestic product purchasing power parity of $524 billion, South Africa is currently the 24th largest economy in the world with strong growth expected in the future. In fact, the nation was invited to join the B.R.I.C. economies; recognized by Goldman Sachs as having prospects of being the largest or among the largest economies in the world by the year 2050. Its robust economy is anchored by an effective constitutional government that has high public approval ratings and is thus effective at dealing with social and economic obstacles in the country. A strong government that’s capable of social and economic intervention will be necessary in deploying the incentives for attracting new energy production companies, like Dominion to the country. South Africa’s currently-strong economic growth in conjunction with its relatively stable government, make for an ideal location in which to integrate Dominion Resources Incorporated’s operations and set it up for future success and growth II: Introduction Dominion Resources has an operations scheme that’s stratified into three major divisions; electrical power generation, energy transmission, and oil & natural gas exploration. In preparation to extend operations to South Africa, Dominion plans to generate electricity using state-of-the-art biomass combustion technology. Upon meeting our proposed transplantation date of September 30th, 2013, Dominion’s specialized power generation and transmission methods will solve two pressing issues there; the severe scarcity of electricity and current waste management and disposal problems. Our electricity generation method is designed to cleanly burn biomass and waste from landfills, which contain 95% of South Africa’s total waste output, while giving Dominion an environmentally-friendly image. Besides alleviating trash overloads in South Africa, this method of power generation has another benefit; the elimination of the excess costs of exploring and extracting natural resources for use as fuels. Traditional fuels for electricity generation, like oil and coal, are found in deposits deep within the Earth, forcing energy companies to conduct costly fuel exploration and extraction projects before such fuels can be utilized. We will eliminate those costs typical of a traditional energy company by using readily-available, discarded biomass and waste. The energy market in South Africa is a notable one; as the leading industrial producer of Africa, it constitutes 40% of all electricity usage on the continent. From what it can produce, the government-backed electricity conglomerate, Eskom, is currently running yearly losses of nearly $1 billion. This fact has led the South African Government to heavily subsidize and seek private and/or foreign investment into energy production and distribution – exactly what Dominion Resources will provide while also solving the country’s waste disposal problems. These incentives will be discussed further within the context of this proposal.
The United States and South Africa already have strong economic ties, as the U.S. accounts for 11.1% of South Africa’s imports. Both are members of the World Trade Organization and are cooperators with the African Development Community. Trade barriers between the two countries are minimal as the United States has already established a unilateral trade agreement with South Africa that may become a free trade agreement in the near future. This comprehensive trade agreement has led to a steep reduction of tariffs, fees, and taxes for imports and exports going to and from the respective countries. Thus, the process of shipping supplies, equipment, and miscellaneous items between the two countries will be a relatively simple undertaking. III: Analysis of the International Business Situation Section A The Republic of South Africa is organized as a mixed-free market economy; meaning that the means of production and distribution of goods and services are stratified between private business proprietors and government-backed enterprises. The federal government has a notable role in regulation and management of privatized industries. This is pertinent to our proposed operations in that we will need to account for a notable amount of government regulation in our daily operations, in addition to perks that are outlined in the government’s new economic incentive policies. The country’s continuously-precipitous development will create ample opportunities for companies such as Dominion to embed themselves in South Africa’s infrastructural development. The country is currently a member of several blocks of trade and economic cooperation, which facilitate its international trade relations. Notably, it’s a member of the Group of 20 Industrialized Nations (a block of 20 major world economies), the World Trade Organization, the South African Development Community, and it works very closely with the European Union in matters of trade facilitation and logistics. In conjunction with its noteworthy trade relations, South Africa’s reductions of protective tariffs, easing of environmental standards, and implementation of several recent investment treaties have contributed to both the estimated $9 billion in direct foreign investment into the country in 2008 and the numerous trade partners it boasts. This will catalyze the process of importing and exporting necessary equipment and supplies necessary for our operations while easing the process of securing funding for the start-up costs of our operations. The vivacious economy is currently dominated by developing agricultural, manufacturing, and service sectors, all of which are energy-intensive and will utilize the electricity we plan on producing. This fact is two-sided, however, as South Africa’s recent economic growth has contributed to its current energy shortage, stemming from electricity shortfalls from the South Africa’s currently-failing national energy company, Eskom. Rolling blackouts for several hours, occurring several times a day, have become commonplace. The deficit in production verses consumption, a difference of 25 billion kWh in 2007, is projected to rapidly expand proportionate to South Africa’s continually-precipitate economic progression. This fact will necessitate the expansion of Dominion and its energy production services to the country to fill the void in the domestic electricity industry left by the outgoing Eskom Company. Johannesburg, to where Dominion Resources will be transplanted in South Africa, is the wealthiest and largest city economy in South Africa and is a primary economic hub on the African continent. The city alone produces roughly 17% of the GDP output of the country overall and it is host to the Johannesburg Stock Exchange– one of the top twenty stock exchanges in the world. The city’s exceptionally-high GDP output is extenuated by an educated urban population in the larger Gauteng Province that fills jobs in energy-intensive industrial and retail sectors of the city’s economy. Economic output in the city is aided by its well-developed infrastructure, such as rail lines, highways, and mass transport, which catalyzes private and commercial transport within the city proper and connects it to other areas of economic output in South Africa. These aspects of Johannesburg, and the Gauteng Province at large, make it an ideal place to develop Dominion Resources Incorporated’s operations. It will provide a broad customer base, both commercial and industrial, for electrical services especially amidst South Africa’s current energy crisis while its developed infrastructure will allow for easy transport of by-products and waste to and from the proposed power plant during construction and operation. Pertinent to Government, the South Africa is a constitutional republic that’s stratified into 9 provinces, each with semi-independent administrative powers. The current form of the South African government, established by the 1994 constitution, codified amidst the country’s emergence from Apartheid rule, consists of a bicameral legislature, a judicial branch composed of the Constitutional Supreme court along with lower circuit courts, and an executive branch headed by the current President, Jacob Zuma. The Zuma administration is steadfast and stable because it has a relatively high approval rating of 68% among its constituents. This means that the current government is able to efficiently and effectively carry out its duties, including providing government services such as schooling and public security, appropriating funding to solve major social issues including the AIDS epidemic, and increasing the competitiveness of South African industry, all with the consent and cooperation of the South African citizenry. The many initiatives carried out by the government to reduce crime, increase the population’s literacy, and facilitate the exit of the population from the depths of poverty towards the middle class have created a stable, well-functioning socio-economic atmosphere in South Africa that looks brighter every day. An ideal atmosphere for investment and development of an additional arm of Dominion Resources Incorporated has been created by the South African government. 
The federal government’s Department of Trade and Industry is responsible for monitoring international trade, and ensuring that trade laws passed by the national legislature are abided by. As Dominion Resources Incorporated is an energy and resources company, importing and exporting activities will be kept to a bare minimum. The only restrictions on trade that may affect our company are those pertinent to the weight and breadth of shipments of hazardous materials, heavy equipment, and some raw materials. However, these forms of cargo can be transported into, out of, or throughout South Africa by use of special permits granted by the Office of the Director of Import and Export Control, provided that we pay appropriate tariffs (currently set at 14% but set to be lowered pending a free trade agreement with the U.S.) and registration fees. As long as we comply with relevant trade guidelines based upon the gross tonnage and amount of cargo being shipped, there should be no problem with transporting required cargo. Much of the country’s trade policies are offshoots of the World Trade Organization’s regulations, which are observed in the U.S., so most standards of trade and commercial regulation in the country will be easy to comply with. The Department of Trade and Industry, Department of Labor, and the Department of Mineral and Energy affairs are major influences over the everyday operations of commercial interests in South Africa and likewise, they will yield influence over Dominion Resources’ South African operations. The Companies Act of 1973 is a major piece of legislation that governs how employees can be paid (with over-time wages mandated on federal holidays) while it also lays out guidelines for ethical operations of businesses. Such guidelines govern the methods for waste and refuse disposal by industry and they lay out workplace equality standards for personnel of all races, genders, and political affiliations. Likewise, the Competition Act of 1998 regulates business in a way to promote plentiful and fair consumer choices, gives small businesses a chance to compete against monopolistic multinational corporations, and promotes fair pricing and diversified opportunity in commerce for all citizens of South Africa. These and other legislation are enforced by the aforementioned government agencies to produce a fair and favorable business climate in South Africa and will likewise be mandated onto Dominion.
Section B The 470,000 mile2 area of South Africa has a predominantly sub-tropical climate with mostly semi-arid conditions. Topographically, South Africa consists of a large plateau in the center of the country called the Highveld, a surrounding ring of low, rugged mountains, and finally a small coastal plain along the full length of the country’s ocean shores. Occasional, prolonged droughts occur where the Namib Desert extends along a portion of the country’s western coast. South Africa has a fragile ecosystem that’s framed by minimal usable freshwater supplies and a wealth of mineral resources. These mineral resources include gold, diamonds, timber, and fertile soils that support extensive agricultural activity across the country. Especially integral to the country’s agricultural and consumer interests is the use of irrigation from the South Africa’s small streams and rivers. The city of Johannesburg, which will be the primary location of Dominion Resources Incorporated in South Africa, is located inland in the northeastern portion of the country’s Highveld plateau. In fact, Johannesburg is the largest city in the world that isn’t directly located on a major river system. The city itself features a subtropical highland climate, meaning that it has consistently warm weather that ranges between 60 to 80 degrees between the summer and winter seasons there. The city is in proximity to the confluence of two of southern Africa’s largest rivers, the Limpopo and the Orange, yielding ample and convenient transportation connections to the South Africa’s coastal ports. The society of South Africa is heavily influenced by the presence of a collectivist culture in the country, meaning that the good of the nation and its people are emphasized. Many of the national holidays in the country are focused around the celebration of freedom and equality, such as the Human Rights Day holiday on March 21st. This sense of equality is roughly analogous to the social conditions in the United States. Although South African society is still partially patriarchal, both sexes and virtually all ethnicities have relatively equal opportunity in holding jobs, owning property, and participating in the political process. In essence, the egalitarian society of South Africa is heavily-influenced by solid family values and the ethics associated with the country’s major religious denomination, Christianity. The professional world of South Africa is governed in much the same way as the social mainstream. Signs of respect and acknowledging authority, such as scheduling meetings at appropriate times or inviting colleagues over to the home for a meal are essential to conveying a respectful relationship with others. A western style of dress and most behaviors is accepted as the professional norm. Physical contact is used in excess to make points during meetings and to engage both parties as equals in conversation. The sense of unity and connectedness that transcends South African social and professional culture extends to the population’s environmental consciousness. Thus, many South Africans tend to favor policies by the government and international community that prevent the environmental degradation as a result of human actions, such as unclean energy production, and littering. This fact is especially pertinent in that the natural ecosystem in South Africa is very fragile– small changes in weather patterns could yield disastrous consequences for the country. This environmental consciousness in South Africa’s population will aid the rise of Dominion Electric’s South African division. Our planned use of human waste to fuel energy production will provide our company a positive, environmentally-friendly among our customers and the country at large. Demographically, as previously stated, South Africa is an extremely diverse country. This diversity is exemplified by the fifty million citizens of South Africa who represent over 10 major ethnic groups, including the Xhosa, Zulu, and Sotho tribes and even those people drawing European ancestry from African colonizer nations like the Netherlands or the United Kingdom. South Africans are predominantly young, as the population’s median age is 24.8. The population is well-educated, with relatively-solid educational systems encompassing high school and university-level education, an 86.4% literacy rate, and 15% of the population holding higher-education degrees. This fact means that the population is relatively well-suited for tasks in advanced technology fields such as those involved in constructing and running a biomass-fueled power plant. 61% of the South African population currently resides in urban areas, thus catering Dominion Resources Incorporated’s electric generation to suit the urban landscape will be integral to capturing as large of the market as possible in an efficient and effective way. Our selected primary target market is geared towards the most energy-intensive electricity consumers; individual households which consume 47% of all energy produced on Africa, the second-most populous continent in the world. Our primary target market is defined as the following: Primary Target Market
Secondary Target Market
The current electrical crisis in South Africa is influential and pertinent to our selected primary and secondary target markets. The state-controlled, and highly indebted, electricity conglomerate, Eskom, is currently being forced to ration electricity among its South African energy consumers. The numerous factories, retail stores, office buildings, hotels, and private consumers who depend on Eskom’s electricity production across the country are dangerously close to being left in the dark, which already occurred briefly in April 2009. Eskom produced 260 billion kilowatts of energy in 2009, while consumption was 241 billion kilowatts, representing a 16% rise from 2008 levels, and is expected to continue to rise dramatically as South Africa’s economic advancement continues. Indicative of this fact are the alarming figures that the South African government has released pertinent to its “reserve energy” supplies: electrical capacity set aside in a given year for use only in emergency situations. The level of reserved electrical output in South Africa has fallen from 25% of total electric production in 2002 to only 8% in 2008, as the government has tapped into emergency energy reserves to supply normal electricity to Eskom consumers. This trend of electrical production shortfalls that has continued over the past several years has led Eskom, which is already extremely unprofitable as it is losing nearly $1 billion in public funds annually, to have to incur costly transactions in order to import an estimated 10 billion kilowatts of energy from its neighbors annually. These costs have compounded emergency spenditures to try and upgrade current production infrastructure to ensure enough energy is available for seasonal usage spikes and in emergency circumstances. Both policies have proven myopic and only marginally effective in alleviating electrical production shortfalls in South Africa. To compensate for financial losses, Eskom has been forced to jack up prices for nearly all consumers, especially the working classes, which has shown high levels of public dissatisfaction with the current system of electrical production. Yet another problem is the South African government’s financial inability to fund such an expansive operation. Estimated costs for the country to update current transmission and production infrastructure in the short term and build new power plants is nearly $100 billion USD, in addition to future projections of operation losses from the Eskom company. South Africa desperately needs increased energy production capacity in order to support its quickly growing base of consumers. All of these issues have given the South African government, which itself is trying to maintain its positive perceptions by its constituents, additional stimuli to catalyze the country’s transition towards a private-controlled energy industry. Yüklə 3,7 Mb. Dostları ilə paylaş:
|
