AGL Energy (AGL), an Australian company was responsible in 1841 to provide the first gas lighting to Sydneys residents. By March 2016, the firm had become an integrated energy provider that generated AU$10.7 billion in annual revenue in FY2015. However, the return to a more distributed picture of electricity generation left utilities, including AGL, with many challenges. The biggest problems that AGL faced included first, falling demand for electricity from the grid following some aspects, for example, improved efficiency of end-user devices and customers generating their power. Second, the generation of their power and the possibility of leaving the grid translated to loss of clients for AGL, which implied a loss of revenue, increased unit costs and lower profitability. Third, AGL faced increased complexity brought by the need to incorporate additional intermittent renewable generation into the system. Finally, AGL faced uncertain pricing resulting from frequent occurrences of price spikes.
This method focuses a company on delivering high quality, durable, sustainable, and reliable products at low cost (Crane et al., 2014). Notably, the value could be thought about and experienced in two different ways. First, is the exchange value that reflects the price a buyer is willing to pay for a particular commodity or service. Second, the use value represents a broad range of benefits received from using a product or service, which include intangible outcomes, for example, consumer satisfaction, and tangible results such as environmental impact. In particular, this approach revolves around a service-dominant logic that focuses on optimizing use value between companies, customers, and the society.
Adopting the value driven approach is a significant step for AGL. Moreover, it is a vital step to overcoming the challenges currently facing the company. First, the experiences emanating from the value-driven services lead to customer satisfaction. When AGL satisfies its clients, then it benefits from customer loyalty and retention, which translates to steady demand and revenue. Second, value-added approach ensures that AGL upholds corporate social responsibility in creating and sustaining a safe and healthy environment for the community (Peloza & Shang, 2011). Third, a value-driven approach is essential in enabling AGL to gain a competitive edge in the energy industry (Herrera, 2015).
Methods to Add Value to Stakeholders
AGL can create and increase the value to its stakeholders in various ways. First, AGL can enhance the value to its customers by facilitating the development of renewable and clean energy sources to meet their new energy-savvy needs. Additionally, it can accelerate the development and distribution of energy research and new technologies that advance efficient production, transmission, and utilization of clean and conventional energy sources (Simnett & Huggins, 2015). Second, the company can create and add value to the community by developing and enhancing a modern, reliable, environmentally safe, and efficient transmission networks for sources of energy. Additionally, the development of renewable, green and clean energy will contribute to environmental priorities.
Third, AGL can develop and implement approaches to meet the employees needs in particular job security and career growth. Such methods include developing a good internal communication strategy for explaining the firms marketing decisions. Fourth, regarding key partners such as the government, AGL can improve the timeliness and certainty of regulatory approval decision-making processes while maintaining protection of the environment and the interest of the society. Additionally, AGL should pursue formalized participation in international discussions and negotiations related to energy (Crane et al., 2014). Finally, AGL must invest in profit-making ventures to ensure the company continues to grow regarding consumer base and revenue, which is an important aspect to the investors.
Crane, A., Palazzo, G., Spence, L. J., & Matten, D. (2014). Contesting the value of creating shared value. California management review, 56(2), 130-153.
Herrera, M. E. B. (2015). Creating competitive advantage by institutionalizing corporate social innovation. Journal of Business Research, 68(7), 1468-1474.
Peloza, J., & Shang, J. (2011). How can corporate social responsibility activities create value for stakeholders? A systematic review. Journal of the academy of Marketing Science, 39(1), 117-135.
Simnett, R., & Huggins, A. L. (2015). Integrated reporting and assurance: where can research add value?. Sustainability Accounting, Management and Policy Journal, 6(1), 29-53.
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