V Wk 6 - Final Strategic Plan [due Mon] Assignment Content 1.         Resource: Final Strategic Plan Grading Guide   Create the Final Strategic Plan. The Final Strategic Plan contains the elements of

STRATEGIC PLAN, PART 2: INTERNAL ENVIRONMENTAL ANALYSIS 10

Strategic Plan, Part 2: Internal Environmental Analysis

Internal Environmental Analysis

Internal environmental analysis examines the internal factors affecting the company’s decision-making process. The internal environment factors may also determine the competitiveness and success of the company. This paper will address the internal organization of Allete, the strengths, and weaknesses of the organization, the internal environmental factors of the general, industry, and external environments. The paper will also present Allete’s competitor analysis, the structure of the organization and the influence on performance, before summing up with the organization's competitive position.

Organization’s Internal Environment

The internal environment of a company refers to the culture, events, resources, and people within the organization with the ability to influence the decision-making process of the organization (Al–Rawashdeh, 2019). People in the internal environment of Allete can be a synonym to the owner(s) of the company, employees, shareholders, the board of directors, and others involved either directly or indirectly to the company. Allete is a company that is publicly held and operating in a complex, dynamic, competitive, and a regulated environment (Allete Inc., 2020). The board of directors is mandated and accountable to report to the stakeholders in addition to being responsible for giving direction and control to Allete. On the other hand, managers and the staff of the company are expected to comply with the ethics policy of the company, the policies and procedures making the company’s culture, and the laws and regulations governing the business.

Strengths and Weaknesses of the Organization

One of the strengths of Allete includes the investment of the company in environmental, social, and governance sustainability practices. The company seeks ways to use minerals like copper and other natural resources responsibly in addition to environmental stewardship to provide a reliable and affordable supply of energy. The Ethics Statement clearly articulates that Allete will protect the environment when carrying out its activities (Allete Inc., 2020). Social sustainability lies in the ability of the company to improve the well-being of the employers and the people living in communities served by the company by ensuring their safety, community engagement, and employee development. The company strives to provide a safer workplace through strategies like the zero tolerance for harassment, illegal discrimination, or violence while providing donations totaling $948,987 in 2017 after employees locate local needs (Allete Inc., 2020). Finally, sustainability at governance level focusses on using a value-based approach to ensure the societal, environmental, and economic benefits to employees, investors, customers, and communities Allete serves (Allete Inc., 2020). Sustainability thus is a great strength for the company as it helps create a better and personal relationship with customers and the local community, increasing the customer base and loyalty due to the company’s commitment to reduce the impact of climate change.

Allete has its own share of weaknesses that affect the company. For instance, the lack of aggressive and clearly focused marketing campaign strategies articulating the goals of the firm have given other competitors a higher ground over Allete. According to Johnson-Snyder and Chandrasekran (2017), companies should adopt all marketing strategies that suit the purpose. As a company that little is known about despite being in the market for long, Allete should use aggressive marketing strategies including social media marketing. The quick expansion of the company has also been a weakness negatively affecting the company. As the company explores new markets to supply its reliable and affordable energy, this has proven to be a challenge. For example, the company requires new hires from time to time due to expansion who require to be trained and organizational structures to learn. This consumes the company’s resources like finances and time. These impede the success of Allete in achieving its goals.

Allete’s resources include human resources, physical resources, informational resources, financial resources, and technological resources. Human resources are considered to be the most valuable resource as the success of Allete depends mostly on human resources. Physical resources include the Minnesota Power electric utility, which serves more than 145,000 residents, 16 municipalities, and some of the largest industrial customers (Allete Inc., 2020) helps the company achieve competitive advantage. The company indicated the financial resources to be at $5.17 billion as of 31st December 2018 (Allete Inc., 2020). Technology is highly valued by the company as through technological resources, the company has been able to provide clean energy for more than a century.

Internal Environmental Factors of the General, Industry, and External Environments

Internal environmental factors of the general environment include the corporate culture. The general environment has a corporate culture consisting of the attitudes, values, and priorities to guide employees during their day-to-day activities. Employees competing with each other creates a toxic culture that hinders collaboration and teamwork in the general environment (Ahmed & Hasan, 2019). The employees are also an important factor in the internal environment of the energy industry. The energy industry should manage lower-level employees to avoid talented and capable employees from destroying the energy industry. Lack of proper management of employees may turn out to be a major internal environmental factor that may impact the external environment. For example, it may lead to threats from the competition and stricter government regulations on the company.

Competitor Analysis

Comparing the revenue of Allete to that of its competitors, it is notable that the revenue decreased by 15% in the previous financial year. Allete also had lower profitability that of its competitors due to a net margin of 11.78%. The annual revenue of Allete is approximated to be $1.4 billion, and it is less than that of the Excel Energy, Ameren and Alliant Energy, which are the company’s main competitors. Xcel Energy is Allete’s top competitor in the energy sector. Xcel Energy was founded in Minneapolis, Minnesota in 1909 and operates in the Multi-Utilities industry (Xcel Energy, n.d). Xcel Energy has been the top competitor to Allete, generating approximately $10.4B more revenue in the same financial year. This can be attributed to the higher customer base Xcel Energy has over Allete.

Structure of the Organization

Allete uses a bureaucratic or functional organizational structure. The functional organization structure employed by Allete defines the roles and responsibilities of each employee and how the roles and responsibilities fit within the overall system to meet the company’s goals and objectives. The board of directors consists of ten people heading various departments like the marketing department, sales department, and the operations department (Allete Inc., 2020). This has greatly increased the performance of the company over the years. For example, the structure aids in increasing specialization as each department focusses on one area increasing productivity, has increased accountability due to the clear lines in management, and has contributed to clarity as all employees understand their roles and responsibilities and are held accountable for what they do (Brescia, Colombo, & Landoni, 2016).

Organization’s Competitive Position

Allete has managed to create a competitive advantage through various strategies that the company has deployed. In 2019, Allete ranked the second-largest investor in solar and wind energy in the United States, as compared to the fourth-largest the company had ranked in the year 2018 (Allete Inc., 2020). The company also gained an eight percent equity interest in the American Transmission Company, ranking eighth among 42 companies within the peer group (Stanny, 2018). This provides Allete with possibilities to expand its market base and earn higher revenues ranking among the best in the energy sector. Conducting research and development to find regions the company can cover where the need for renewable and clean energy surpasses everything could be a better strategy to help the company. Allete could utilize the power of social media marketing to reach more people to extend the market base. This can open up more possibilities for the company to compete with other top-ranking companies.

Conclusion

In conclusion, internal organizational factors affect the decision-making process within the organization. Allete possesses environmental, social, and governance sustainability practices as its strengths while lack of aggressive and clearly focused marketing campaign strategies that articulate the goals of the firm and the quick expansion of the company are the weaknesses of the firm. Resources influencing the firm include human resources, physical resources, informational resources, financial resources, and technological resources. Corporate culture and employees are internal factors associated with the general energy industry. Lack of proper management of employment can lead to threats from the competition and stricter government regulations. The functional organizational structure has helped Allete compete favorably and attain sustainability. This has made the company also to be ranked eighth among 42 companies within the peer group and as the second-largest investor in solar and wind energy in the United States.

References

Ahmed, A., & Hasan, M. (2019). The role of internal environment factors in improving employee performance. Qalaai Zanist Journal, 4(4), 1071-1102.

Allete Inc. (2020). Allete Inc. Retrieved from http://www.allete.com/

Al–Rawashdeh, E. T. (2019). Factors of the Internal Environment and Their Impact on Organizational Excellence in the Public Universities in Southern Jordan from the Point of View of Workers. International Business Research, 12(4), 175-186.

Brescia, F., Colombo, G., & Landoni, P. (2016). Organizational structures of Knowledge Transfer Offices: an analysis of the world’s top-ranked universities. The Journal of Technology Transfer, 41(1), 132-151.

Johnson-Snyder, A. J., & Chandrasekran, R. (2017). Acceptance Or Rejection Of An Audit Client: Understanding Risk In The Auditing Environment. Journal of Business Case Studies (JBCS), 13(2), 49-58.

Stanny, E. (2018). Reliability and Comparability of GHG Disclosures to the CDP by US Electric Utilities. Social and Environmental Accountability Journal, 38(2), 111-130.

Xcel Energy (2020, February 14). Xcel Energy. Retrieved from http://www.xcelenergy.com