Alliant Energy Case Study Answers

Table of Contents
1. Who are the main players (name and position)? .............................................................................. 1 2. In what business or businesses and industry or industries is the company operating? ...................... 1 3. What are the issues and problems facing the company? (Sort them by importance and urgency.) ... 1 4. What is the primary problem for the company/organization in this case? ........................................ 2 5. Why have the problem (s) you cite emerged? Identify the causal chain (the events or circumstances that caused the problem-Some will be Internal Weaknesses, others EXTERNAL Threats)...................... 2 6. What are the characteristics of the industry that the company is in and how is the industry changing over time? ........................................................................................................................................... 2 7. What is the firm s strategy for differentiation, enabling them to compete within the context of their industry? ............................................................................................................................................. 2 8. What are possible solutions to the problems you have identified? ................................................... 2 9/10. What are the advantages and possible disadvantages of your solution(s)? Are there any possible problems with your suggested recommendations? What contingencies need to be accommodated? .................................................................................................................................. 3

1. Who are the main players (name and position)?

y y y y One million customers William D. Harvey, CEO Jamie Toledo, Manager, Corporate Diversity and Inclusion 15 employees, Diversity Steering Team

2. In what business or businesses and industry or industries is the company operating?

Alliant Energy is an energy production and distribution company, providing natural gas and electricity to customers throughout Wisconsin, Minnesota, Illinois, and Iowa.

3. What are the issues and problems facing the company? (Sort them by importance and urgency.)
y y RMT unit, which provides environmentally-friendly energy solutions, is experiencing significant cost overruns and has led to 9 cents a share loss in 2011Q3 Aging power plants are becoming increasingly expensive to maintain, and are subject to frequent failures and outages which affect customers

Multiple lawsuits against Alliant Energy regarding issues ranging from alleged abuses within the RMT unit to racial discrimination to a class action suit regarding the pension plan

4. What is the primary problem for the company/organization in this case?

Mismanagement and cost overruns occurring within the RMT unit.

5. Why have the problem (s) you cite emerged? Identify the causal chain (the events or circumstances that caused the problem-Some will be Internal Weaknesses, others EXTERNAL Threats).
Internal: y y y Lack of staff expertise in alternative energies Lack of focus, too broad a range of specialties

External: y y y Regulatory pressure to use cleaner fuels for the production of energy Competing power providers leveraging green technology in a more cost-effective way Decreasing resource availability is driving supply costs sharply upward

6. What are the characteristics of the industry that the company is in and how is the industry changing over time?
The two chief characteristics of the energy industry are: downward price pressure, as competition and alternative energy sources allow consumers to demand cheaper power; and increasing energy production costs, as resource scarcity and regulator pressure drive up the cost of producing each kilowatt hour. Both of these factors, and in particular the latter, are increasing over time.

7. What is the firm s strategy for differentiation, enabling them to compete within the context of their industry?
There is little leeway for differentiation within the energy industry aside from public image. As Alliant Energy is essentially a monopoly, they can charge whatever prices the regulators permit. However, more and more local and small competition is emerging, so their monopolistic attitude may soon need to change. As far as their public image is concerned, Alliant Energy is aware of the public s increasing concern for the environment, and was attempting (chiefly through the RMT unit) to find and develop cleaner sources of energy.

8. What are possible solutions to the problems you have identified?

y y y Sell or spin off the RMT unit Replace management within the RMT unit Re-focus the RMT unit on just one or two core competencies

9/10. What are the advantages and possible disadvantages of your solution(s)? Are there any possible problems with your suggested recommendations? What contingencies need to be accommodated?
Selling or spinning off the RMT unit will save money, but may cripple the company s desire to pursue alternative energy sources, and may harm their public image as it will leave them largely dependent on environmentally-unfriendly energy sources. Alliant would do well to form a new and much smaller alternative energy research group, and leverage their PR department to offset any negative publicity arising from the sale of the RMT unit. Replacing management within the RMT unit may not actually solve the mismanagement problems, as they may simply continue under new leadership, or simply be exchanged for a new set of problems. It will also significantly disrupt ongoing programs, increase HR costs, and harm morale. In the long run, however, it may allow the RMT unit to become a profitable and effective part of Alliant Energy. The main concern would be greater than expected employee turnover resulting from the management shakeup. Alliant should proactively begin recruiting and interviewing prospective employees even as the management change takes place. Re-focusing the RMT unit on just one or two core competencies will actually save money in the nearterm as downsizing will most likely result from the change in focus. However, choosing the correct targets for the RMT unit s refocused attention will be problematic, as will gaining stakeholder buy-in regardless of the choices. It will also take significant time and money to adjust existing processes, programs, and installations for the new primary competencies. The CEO should consult with the board and other C-level executives, and then select no more than two core competencies on which Alliant will focus. The faster the re-focusing is accomplished the less chance there is for the choices to be wrong or the process to become mired in politics.