What is the current state of your organization?
As an electricity company, CLP Power Hong Kong Limited is a large company that has dominated and monopolized the energy industry in Hong Kong, with markets in China and other parts of the Asia Pacific. It has been a global company with alliance with a large company like ExxonMobil Energy Limited to be able to operate many stations, expanding CLP’s market.
What needs to change in your organization / section?
CLP Power, due to its large and diversified market, is very vulnerable to technological changes. Technological changes such as development of new gadgets, tools, equipments, development in transportation, and improvements in processes, principles and practices have been the contributors why large companies such as CLP Power continuously change their strategies in order to address such changes.
Technological changes increase the demand for energy supplies. As technology improves, the needs of the people also increases and different companies, establishments and manufacturing companies emerged, adding up to the increasing demand for electricity supply (Buchanan, 2004). In Hong Kong, there are a vast number of commercial establishments such as theme parks, recreational establishments, and hotels, while in China manufacturing plants are emerging, contributing to the demands for power supply. Development of infrastructures such as additional railways, air transportation, and telecommunication infrastructures driven by the changes in technology also increases the demand for electricity.
According to the World Energy Outlook 2004 (IEA, 2006), due to the accelerated deployment of new technology, world primary energy demand is set to rise by 59% till 2030, 85% of that will be in the form of carbon-emitting fossil fuels which are carbon, oil and, natural gas; two-thirds of the new demand will come from the developing countries especially China and India, two of the countries where CLP is a major supplier of energy.
What is the change?
Technological changes provide many opportunities for the internal operations of CLP Power. The opportunity to adopt new practices and capitalize on newer technologies is a great opportunity for the company. For example, the emergence of the internet technology provides improved customer service and internal communication. The development of renewable energy also drives CLP to include this in the services they provide and in their practices. CLP initiated the commercial-scale wind turbine, which uses wind as a source of energy which is expected to generate about 800kW, supplying almost 420 homes in Hong Kong (CLP, 2006).
These changes in technology enable CLP to achieve economies of scale. Defining economies of scale, it is achieved when a good or service can be produced on a larger scale but on average or less input costs (Senior, 2002). In the case of CLP, it used specialized inputs to achieve economies of scale. Specialized inputs can be defined as the employment of specialized labor and machinery resulting in greater efficiency (Wit, 2004). CLP invested in machineries and R&D which the company can use in the long run while increasing its capacity to supply electricity and improve services.
Who is involved?
The Engineering Department of CLP Power determines the best ways to utilize its basic factors of production. These resources include the power plant’s people, materials, information, and energy needed in the production. The Engineering Department of CLP Power is the bridge that links the goals of management and operational performance. They are concerned with the increase in productivity through the proper management of people and choosing the appropriate methods of business organization.
This power company’s engineers perform the careful analysis of their power plants and their requirements. In this process, they make use of various mathematical methods in its operations research to meet the requirements. They also develop systems of management control in order to aid in the planning of finances and cost analysis (Carnall, 2003). These systems are eventually subjected to improvements for the effective distribution of power.
The engineers perform the tedious task of selecting which among the various power plant locations have the best combination of raw materials availability and costs. This time, engineers make use of computers for simulations and robots for controlling various activities and devices.
How was the change implemented and managed?
CLP utilizes different technologies to increase production and for continuous service. CLP invested amount for the use of technology and for the research of practices that helped ensure increased production and uninterrupted power supplies. CLP adopted Heli- wash to clean up the dust and dirt on the insulators of CLP’s power grid to ensure reliability. The company also installed Lightning Locator System to detect the precise time location and intensity of lightning strike that may damage its power system equipment.
CLP uses the Automatic Fault Location System which is a wireless reporting system that accurately monitors the condition of the overhead lines and detecting line faults thus eliminating the need for manual inspection along overhead lines (CLP, 2006). It is also common to suspend power supply when emergency repair is needed. CLP eliminated this problem by using special insulated tools and techniques that allow its workers to perform repair even on live power lines.
What was the impact of change?
All of these techniques and practices with the aid of new technologies, although have required considerable amount initially, can be used on the long run and have allowed CLP to improve its services and increase power supply production in Hong Kong and in other markets, achieving economies of scale internally.
Furthermore, since Hong Kong is a very small region, CLP has achieved external economies of scale, that is, CLP does not need to have many power stations and has easily monopolized the market of electricity in Hong Kong. CLP opted to have few large scale power stations than many small stations, each station used different fuels: the Castle Peak Power Station uses coal as the primary fuel and medium fuel oil as the secondary fuel; the Black Point Power Station uses natural gas and distillate oil as back up fuel; the Penny’s Bay Power Station has three gas turbine and is used as support to the other power plants. Having few but large power stations helped save maintenance and monitoring cost for CLP. It also learned to diversify its fuel sources for in case that there is a shortage on one source, there will be alternative sources, allowing the company to balance supply and address price issue.
Conclusion
The results of the analysis carried out on the technological changes of CLP Power indicated very significant effects, even amidst the threats of unrest. Therefore, we could conclude that the technological changes of CLP Power could still be expected to improve faster than average.
CLP has learned to take advantage of technological changes and integrate it to the companies operations and strategies to achieve economies of scale. For CLP, impacts of technological changes are more positive and should not be perceived as threats but as opportunities to be able to achieve economies of scale.
Credit:ivythesis.typepad.com
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