HYDRO ONE SWOT ANALYSIS

Executive Summary

Background

Hydro One Incorporated is a fairly new public company fully owned and operated by the province of Ontario. It is a holding company in the business of delivering electricity. The company’s history dates back 100 years to the former company Hydro-Electric Power Commission of Ontario. Hydro One has four main subsidiaries through which it offers the following services: electricity transmission, energy distribution and fibre-optic telecommunication. The transmission and distribution subsidiaries are the main players in their respective markets. The transmission segment has a customer base of nearly all the consumers of electricity in Ontario and accounts for approximately 57% of the assets of the business. The distribution segment covers approximately 75% of the province and accounts for 43% of total assets of the business. The telecommunication segment focuses on the niche market of telecommunication carriers and commercial customers requiring broadband network services. This accounts for just under 1% of total assets. Due to its long history, the aging workforce and increased demands for clean renewable energy, the company faces ongoing challenges which must be addressed in order to maintain the commitment to provide safe, reliable and cost effective transmission and distribution of electricity to users in Ontario.


Objectives

This report is an analysis of the internal strengths and weaknesses of the company as well as the analysis of the external opportunities and threats faced by the company.


Conclusions and Recommendations

Both the distribution and the transmission arms of the business have the largest market share in their respective industry. This is a very dominant position and can be used to keep out competition. Hydro One has a strong credit rating which should facilitate the ease of borrowing to deal with the costly infrastructure upgrade. The process of locating clean and renewable energy sources must be explored in an effort to meet the changing demand of customers. The Human Resource initiative to stem the impact of the retiring baby boomers must be sustainable. With the acquisition of the new ERP system, the company should focus its energy on improving the business processes with the aim of improving productivity and efficiency. Developing cities provides opportunities for growth of the business, this is to be pursued vigorously by the company.


In an effort to ensure that the company improves its performance and maintains its position in the market, it is recommended that the following initiatives be undertaken: Infrastructure upgrade, timely recruitment of skilleConclusion



SWOT Chart

See Figure 1

Conclusion

Both the distribution and the transmission arms of the business have the largest market share in their respective industry. This is a very dominant position and can be used to keep out competition. Hydro One’s dominance in the market is also sustained by its size, geographic scope, competent board of directors and its prudent management team. Hydro One has a strong credit rating and a solid history of financial performance which should facilitate the ease of borrowing to deal with the costly infrastructure upgrade. Over the years, the company has been upgrading its infra-structure, but with the introduction of Smart meters coupled with the requirement for new high voltage links, the company has been faced with massive infra-structure investment costs. The process of locating clean and renewable energy sources must be explored in an effort to meet the changing demand of customers. Incentives available to facilitate research in alternate sources of energy, not only controls the cost but provided unlimited possibilities for growth in the business. The company must remain committed to the Human Resource strategy to meet the gap in human resources caused by the aging baby-boomers, and must continue to measure and monitor the impact. With the acquisition of the new ERP system, the company should focus its energy on improving the business processes with the aim of improving productivity and efficiency. Developing cities provides opportunities for growth in the business, this is to be pursued vigorously by the company.


Recommendations

In order to take advantage of the opportunities in the market, minimizing threats, leveraging strengths and managing weaknesses, it is recommended that the company embark on the following initiatives: infrastructure upgrade, timely recruitment of skilled human resources, business process review, renewable energy sources, and expansion into developing areas.