Jesselyn Rochelle R. MalimataIntroduction to Organizations and Corporate Strategy

Universidad Politécnica de MadridNovember 30, 2016

Introduction• Brief History• Ownership• Organization• Vision and Mission

Environmental Analysis• PESTEL Analysis• Electricity Supply Chain• Key Factors for Success• Five Forces Analysis

Corporate Strategy

Introduction

1903Manila Electric

Railroad and Light Company

1946World War II

1961Lopez

Acquisition

1969First billion-peso company in the

Philippines

1970Generating Facilities’

Turnover to National Power

Corporation

2009Partnership with PLDT and San Miguel Groups

BriefHistory

cOwnership

Meralco is owned by the biggest conglomerates in the country...

cDiversification

…and has widely diversified.

Vision“to be a world-class company and the service provider of choice “

Mission“to provide our customers the best value in energy, products and services“

EnvironmentalAnalysis

Demographics

300,000 km2 Land area

92 millionPopulation

$ 285 billion2014 GDP (Current US$)

6.1%2014 GDP Growth

0.2%

13%

36%

2.1 PPS

Source: Philippine Statistics Authority

Politicalcontrolled by

conglomerates

SocialLower & middle-class

heavy

43GINI

21%XElectricity

access

Sources: World Bank, International Energy Agency, Meralco, Central Bank of the Philippines

6.5%System

loss charge

$ 16,697

$ 1,352

$ 397

$ 277

GrowingEconomy

Source: Rappler

GrowingEnergy

Demand

Source: Philippine Electricity Market Corporation

⇠ Monopoly in distribution

⇠ Single supplier

⇠ Captive customers

⇠ Many suppliers

⇠ Venture in power generation

⇠ Monopoly in distribution⇠ Venture in retail electricity supply

⇠ Captive customers

⇠ Contestable customers

Legal Implications

Supply Chain

Source: Philippine Electricity Market Corporation

cKey Factors for Success

Infrastructure Size Customers

cFive Forces AnalysisNew

Entrants

Substitutes

CustomersExisting Rivalry

Suppliers

Low bargaining power

Public interest –Highly-regulated

Self-consumption

High barrier to entry

Monopolistic

CorporateStrategy

I. Strengthen core distribution business

II. Build the power generation portfolio

III. Participate in the RetailElectricity Supply

IV. Grow the electric distribution service area

V. Drive the expansion of subsidiaries

36 cities

75 municipalities

113 years in service in 2016

9,337 km2 franchise area

5.8 million customers

cDistribution

Source: Meralco

cPower Generation

600 MW RP Energy Coal460 MW San Buenaventura Coal1,200 MW Atimonan Coal

Registered Capacity : 15,661.58 MW

Market Share by Registered CapacityMeralco Developments

2,260 MW

MGEN

Total projectson their way

Source: Philippine Electricity Market Corporation, Meralco

Energy Volume Market ShareEnergy Consumption

cRetail Electricity Supply

Source: Philippine Electricity Market Corporation

cAs a company

#7Philippine publicly listed company (2015)

Top 50ASEAN Publicly-listed companies (2015)

US$ 7.7 billion Market capitalization

BB++S&P long-term credit rating

Meralco is one of the biggest

in the Philippines.

Source: Meralco

Resources• Economic ~ political power• Capital• Implicit alliances

cConclusion

Environment• First entrant advantage• Geography• Growing economy

Strategy• Expand core business• Occupy as big part of supply chain as possible• Diversify à total energy solutions company

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