In order to deal with the consequences of globalization and the internationalization of trade, countries have come up with growing energy needs. Emerging countries are investing heavily in infrastructure and need electricity to power them.The United States alone account for 25% of global consumption.France imports half of its energy consumption as it faces a shortage of electricity. Thus, energy is becoming a major economic and political issue for the states of the world.
Faced with this shortage, nuclear energy is a booming market today. This can be attributed to the development of emerging countries. At present, we are witnessing a period of the revival of nuclear power in the world and its rehabilitation. Nuclear energy offers several advantages compared to competing energy sources such as oil, gas, and renewable energy: high returns, low cost, and almost zero pollution.
Today, nuclear energy is produced only by a small group of companies: General Electric, BNFL-Westinghouse, Rosatom, AREVA, AECL. We'll look at the case study of a French industrial group, Areva, specializing in the entire chain of nuclear energy (uranium mining, logging, waste ). It is a leader in the nuclear market. We will question the key success factors that enabled Areva to become one of the largest companies specializing in nuclear energy.
To examine the success factors, we will firstly give an overview of AREVA (what it is, its features and characteristics of the organization). In the second step, we will focus on the five forces model of Porter:actors with influence on AREVA and its competitors, potential entrants, substitute products and their influence on the nuclear rivalry between competitors and, will highlight the key success factors of AREVA.
AREVA is a French industrial group specialized in the sector of nuclear energy and is the leader in this sector. It was created in 2001 under the impetus of the French state to reduce energy dependence of 50% of France, to control its activities and its outlets.In 1973, 75% of the energy consumption of France was dependant on outside sources.
The French industrial group now has 61,000 employees, with a turnover of 11 billion euros and operates in 43 countries. It was born from the merger of Framatome, Cogema and the branch of the Atomic Energy Commission.
Tags: nuclear energy, strategic management of Areva, Atomic Energy Commission
[...] III.The influences of new entrants to the market of nuclear power Given the consolidation in the sector and its key players, major mobilization of capital, advanced technology (experience effect) and the barriers to entry are numerous. New entrants therefore have relatively small influences. China has sufficient capital to invest in factories and equipment. But it is delayed in the advanced technology sector and hence, technology in this area continues to progress. The influence of China on the world market will be fairly low, but it may be important in the Chinese market. [...]
[...] Playing the lobbyist to lobby the government Porter's model neglects the influence of the state. However, it has a fill control. In the case of AREVA, the French state owns 94% of its capital and is very much present in the control of the nuclear industry, and assists the company in international markets. Lobbying is done to precede interventions aimed at influencing public policy decisions for the company. The state may be involved in the competitive game or favor certain mergers or cooperation. [...]
[...] The organization AREVA is divided into three main subsidiaries: - Subsidiary CN: making fuel from uranium - Subsidiary NP: design, construction and maintenance of nuclear reactors - Subsidiary TA: construction of research reactors II) The five forces model of Porter and the key success factors of AREVA a. Actors influencing AREVA and its competitors (suppliers, customers) i. Suppliers These are the companies concerned with the extraction and enrichment of uranium: - AREVA is the leader in the nuclear market. After the acquisition of specialized Eurodef for uranium enrichment, AREVA owns 50% of Urenco. [...]
[...] According to this definition, the issue of substitute products is relative to their value.The product quality is associated keeping the public and environmental concerns in mind. Electricity prices are linked to production costs. The volume of product is also essential to determine the influences. Public opinion is in favor of renewable energy because it goes against the toxicity of nuclear energy. In this sense, it competes with nuclear energy, but is a low threat to it.Indeed, nuclear energy has a significantly higher return, a lower cost than renewable energy in the first category and has very little pollution when compared to thermal power. [...]
[...] In addition, AREVA has two types of strategies to differentiate itself from its competitors: the vertical integration strategy and the strategy of sustainable development. Vertical integration strategy AREVA is the only industrial group in the world that deals with the entire nuclear industry: uranium fuel production, construction of nuclear reactors and reprocessing. The advantages of this strategy of vertical integration are: - It controls the entire production process (supply chain): thus, there is no delay in supply, there are no products in poor conditions or surplus production.There is a better coordination between the various production processes. [...]
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