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Strategic Analysis of Turkish Company Zorlu Energy

Essay 2012 21 Pages

Business economics - Business Management, Corporate Governance

Excerpt

Table of Contents

Executive Summary

1. Introduction

2. Zorlu Energy
2.1 Company Overview
2.2 Group Companies
2.3 Company Objectives and Principles

3. SWOT Analysis of Zorlu Energy
3.1 Internal Factors
3.1.1 Strengths
3.1.2 Weaknesses
3.2 External Factors
3.2.1 Macro Environmental Analysis – PESTEL Analysis
3.2.2 Micro Environmental Analysis – Porter’s Five Forces Analysis
3.2.3 Opportunities
3.2.4 Threats

5. TOWS Analysis for the Generation of Strategies

6. Evaluation of Strategies

7. Examination of the Organizational Structure for the Proposed Strategies

8. Conclusions and Recommendations

9. References

Executive Summary

This paper deals with the strategic analysis of the Turkish company Zorlu Energy and the derivation of alternative strategies and the selection of the final strategy derived amongst all strategies to compare the current strategy of the company.

In the paper, an overview of the Zorlu Energy is given and to understand the current situation, a SWOT Analysis is done followed by an environmental scan, using the PESTEL and Porter’s Five Forces Analyses. After that TOWS Analysis is done for the generation of SO, TO, WO and TW strategies. All the strategies are tested from suitability, acceptability and feasibility point of view. Finally, the selected strategy and the reasons for the selection of it are explained and compared to current strategy of the company and also the organizational structure of Zorlu Energy is examined for the implementation of the proposed strategy.

1. Introduction

This paper deals with the strategic analysis of one of the largest, strongest, well-established energy companies of Turkey, Zorlu Energy. There is currently a huge competition, large companies with their foreigner partners, in the energy market in Turkey. In this paper, current environment will be analyzed; strategies will be generated, tested for the selection of the final strategy and this final strategy/ies will be compared to current strategy of Zorlu Energy for reaching the aim of improving the efficiency and competitiveness of Zorlu Energy in the market. Additionally, the organizational structure of Zorlu Energy will be examined for the implementation of the proposed strategy.

2. Zorlu Energy

2.1 Overview

Having invested in each field of the energy business line and rendering high added value services, Zorlu Energy Group is one of the strongest participants in the Turkish energy sector.

Initially entering the energy generation business as Zorlu Energy Electricity Generation Co. Inc., Zorlu Energy Group, with its 16 companies (11 of which are located in Turkey and 5 abroad) currently commands a distinctive place in the energy sector with a presence in each stage of energy production, from project designing to construction and from operation to maintenance of power plants while providing “turn-key” solutions. Zorlu Energy Group provides high quality services in Turkey and throughout Europe, Asia and the Middle East.

Zorlu Energy Group has set a target to unleash the potential of energy to ensure a clean environment and a better life, as well as investing in domestic resources and installing technological systems producing efficient energy in industry. Realizing each stage of energy production, from project design to construction, and from the operation to the maintenance of power plants the through companies under its organization, the Group renders such “turn-key delivery” services, which distinguish the company in the energy sector both at home and internationally, in Europe, Asia and the Middle East.

Building on its growth in compliance with the principle of product and service variation in a bid to more efficiently use the planet’s natural resources, Zorlu Energy Group attaches a great deal of importance on studies into fields of renewable energy, such as hydroelectric, wind energy and geothermal energy, as well as thermal power plants.

Bringing its total installed electricity generation capacity up to a total of 420 MW with the natural gas combined conversion plants in operation, Zorlu Energy Group signed an Emission Sale Contract with EcoSecurities Group for a 135MW capacity wind farm, which is being built in Osmaniye. The project, which will be Turkey’s largest wind farm, is scheduled to enter operation in Osmaniye in 2009 and generate 500,000 MWh of electricity per year with zero CO2 emissions.

Apart from electricity generation, Zorlu Energy Group plays an active role in the search, exploration, drilling, production, and distribution activities of natural gas. Apart from natural gas distribution activities, which it carries out in Thrace and Gaziantep, the Group also extracts and sells natural gas in regions where it has a license, such as Thrace. The Group also has a license to search for oil in regions such as Adana, Izmir, and Muğla (Zorlu Energy Group 2012).

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Figure 1. Zorlu Energy Activities in Turkey (Zoren Faaliyet Raporu 2011)

2.2 Group Companies

Domestic Companies

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Figure 2. Zorlu Energy Group Domestic Companies

International Companies

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Figure 3. Zorlu Energy Group International Companies (Group Companies 2012)

2.3 OBJECTIVES and PRINCIPLES

Vision

To be the leading company in Turkey and a regional global power in each field of energy.

Mission

- To produce and distribute environmentally friendly, safe, high-quality and sustainable energy
- To create value with our effective and market- and customer-oriented activities for our shareholders, customers, and employees

The mission of the energy sector has gained a more critical and important dimension due to increasing needs of the rising world population, the limited available of resources and the rising threat posed by climate change.

Aware of this mission, Zorlu Energy Group feels a great sense of responsibility in its activities in a many of fields ranging from the environment to the quality of our product, and from worker health to social challengers. By signing the Global Compact, it has carried its principles and values which it has adopted since the day of its establishment to the dimension of global social responsibility; with this contract, based on human rights, respect for the environment, the establishment of a healthy working environment, tacking abuse, qualified production and awareness of social responsibility, it underpins its promise to be a good “corporate citizen” (Objectives and Principles 2012).

For further information about Zorlu Energy, it is requested to visit the web site of the company: http://www.zoren.com.tr/EN/INDEX/default.asp

In this paper, a final strategy will be determined and compared to Zorlu Energy’s current strategy. The current strategy of Zorlu Energy is to do investments to the renewable energy and being a local and regional player (Zoren Faaliyet Raporu 2011).

3. SWOT Analysis of Zorlu Energy

For the SWOT Analysis of Zorlu Energy, the internal factors and external factors are discussed below.

3.1 Internal Factors

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Table 1. Internal Factors: Strengths and Weaknesses

3.1.1 Strengths

- First Turkish operation and maintenance company in energy sector: Zorlu Energy Electricity Generation Inc. was founded to provide electricity and steem requirements of industrial companies of Zorlu Group (Zorlu Energy Annual Report 2010).
- Very high knowledge and facility properties: Zorlu Energy domestically has six thermal plants (from natural gas and diesel), seven hydroelectric power plants, one geothermal plant and one wind power plant which is the biggest of Turkey. Additionaly, Zorlu Energy has projects in Israel, Russia and a wind power plant in Pakistan.
- Very high brand recognition: Zorlu Energy is one of the first private companies which will manufacture electricity in Israel. Also, it has one wind energy plant in Pakistan and a natural gas plant in Russia which proves that it is a known brand to expand to these countries and getting project (Zorlu Enerji Faaliyet Raporu 2011).
- Production power with high capacity: 803.9 MW is the total installed power of the energy plants of Zorlu Energy and 264 MW total production power.
- Qualified manpower: Zorlu Energy has highly qualified manpower which makes it different and competitive in the sectorial competitiveness (Zorlu Energy Annual Report 2010).
- Low manpower and conversion costs: The manpower and conversion costs in Turkey are basically low.
- Diversity in sources and services: Zorlu Energy has plants from natural gas, geothermal, hydroelectric and wind energy plants (Zorlu Enerji Faaliyet Raporu 2011).
- High investment in R&D: Zorlu Energy thinks that state of art I one of the keys for renewable energy resources’ development and that is why, it does big investments in R&D as being the leader in Turkey (Zorlu Energy Annual Report 2010).
- Very good operated quality system: Zorlu Energy is the first auto producer in Turkey which was given the full quality certification and holds TS/EN ISO 9001: 2000, OHSAS 18001, and ISO 14001 certificates (Zorlu Enerji Faaliyet Raporu 2011).

3.1.2 Weaknesses

- Importing machinery which increases production costs: Zorlu Energy as the other companies import the required machinery which increases the production costs.
- Low innovation capabilities: Even though Zorlu Energy received the innovation award for the Gökçedağ wind power plant project (Zorlu Enerji Faaliyet Raporu 2011), the company is still not innovative enough.
- High rate of accidents: Zorlu Energy has still high rate of accidents in the maintenance and operation activities.
- Poor infrastructure capabilities: Basically, Zorlu Energy has inadequate infrastructure capabilities.
- Having only one wind energy plant in Turkey: Even though, it is the biggest one in Turkey, Zorlu Energy has only one wind energy plant. For instance, one of the strongest competitors of Zorlu Energy, AKSA Energy has three wind energy plants

(Zorlu Enerji Faaliyet Raporu 2011 & Operational and AKSA Energy Wind Parks 2012).

3.2 External Factors

For the determination of the external factors, PESTEL Analysis and Porter’s Five Forces Analysis will be done.

3.2.1 Macro Environmental Analysis – PESTEL Analysis

POLITICAL: Turkey has commenced an assertive reform program in the most important segments in the market of energy. It entails privatization, liberalization and rad alteration of the structure of these industries. However, there is no general accord that the measures presented are ideal.

Laws which are relevant to the energy industry are parallel with EU legislation. Electricity Market Law is the main body which account for controlling and giving allowances for manufacturing. In company with the new Electricity Market Law, Turkish Electricity Sector will also be in a harmony with EU energy markets.

Turkey plans long-term nuclear power construction, but currently makes no contribution to territorial nuclear consumption (Turkish Energy Market: An Investor’s Guide 2012 & Erdogdu 2005).

On the other hand, Turkey gives a support to renewables with feed-in tariff mechanism (Wind Businesses in Turkey 2012).

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Details

Pages
21
Year
2012
ISBN (eBook)
9783656294931
ISBN (Book)
9783656296850
File size
1 MB
Language
English
Catalog Number
v200838
Institution / College
Prifysgol Cymru University of Wales
Grade
Distinction
Tags
SWOT Analysis PESTEL Analysis Zorlu Energy

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Title: Strategic Analysis of Turkish Company Zorlu Energy