Assignment 2 is linked to assignment 1. In assignment 1 I have addressed the actor which is Saudi Electricity
Company (SEC), and I have briefed the SEC and explained the reasons why this company should change and
the challenges against SEC to change. Which is presented as follow. The questions and answers of the
assignment 2 are presented as follow.
Q1: which actor did you choose? Describe it concisely in a way that everyone, including people who have
never heard of it, can understand.
About the Saudi Electricity Company ("SEC") is the largest electric energy company in Saudi Arabia. In
2000, an order from the Council of Ministers formed the Company by merging the existing regional
electricity companies in the Central, Eastern, Western, and Southern regions of Saudi Arabia into a single
joint stock company. In 2019, Forbes ranked SEC as 5th largest Company in the Kingdom, and 578
worldwide, with total annual sales of $17.9 billion.
SEC enjoys the monopoly of electric power in Saudi Arabia through power generation plants, transmission,
and distribution networks of power electric.
SEC's vision is to provide world-class energy services to its national and its customers, while its mission is
to empower the nation to power the world.
Aside from SEC, it's worth mentioning that Ministry of Energy - in coordination with The Electricity & CoGeneration Regulatory Authority - prepares policies and strategies for the electricity sector, supervising
their implementation in a way that protects consumer rights while nurturing economic growth and
maintaining community well-being.
As a regulator and central planner, the Ministry of Energy determines the Kingdom's energy mix. This is
particularly relevant as Saudi Arabia displaces liquid fuel for energy generation in favor of natural gas and
renewable energy sources. At the same time, the Kingdom is increasing the use of automation applications
and smart networks. Combined, the steps being taken by the ministry are ensuring electrical service
reliability, lowering costs, strengthening the Kingdom's power grid, encouraging fair and active private
sector development, and providing power supplies to reach previously under-served areas. The ministry
is also working to maximize the supply of local electrical goods and services, all while localizing jobs and
supporting research and development activities related to the electricity sector.
Q2: why does this actor have to change? Provide three reasons why business as usual not viable option
for your actor?
Under the Saudi Vision 2030, Energy contributes significantly to the strategic objectives to enable effective
implementation through a vision realization program. Precisely, under a thriving economy, Energy will
contribute massively to growing and diversifying the economy. Thus, we can highlight the main reasons
that SEC must change to catch up with the Government's direction as follow:
1- Investment in Renewable Energy. Saudi Arabia depends massively on oil & gas to generate
electricity, whilst there is impressive natural potential for solar and wind power. Therefore, SEC
should invest in developing electricity by renewable Energy to cover the increase in energy
consumption by 2030.
2- Privatization of the electricity sector by breaking the manipulation of electricity distribution with
SEC. However, the privatization of SEC and freeing the market prices depend on the regulation
formation by the Ministry of Energy and other regulators to shape Saudi Arabia's electricity
market.
3- Commitments toward SEC's customers to secure reliable electrical power. One of SEC's strategic
goals is to focus on customers by providing innovative services on a global level to its individuals
and other businesses. Thus, SEC should seek the Excellency on its operation and customer
services.
Q3: as it tries to transform and adapt to change, what challenges will it face in this complex and
turbulent business environment? Please list three challenges your actor will need to address?
1- Organizational Challenges, where SEC is considered a massive company with more than 40,000
employees scattered across the Kingdom. Moreover, SEC is an expanded hierarchy with several
unjustified positions for level 1 (c-suit).
2- Dependency on the Government's support, since the Government is subsiding the cost of
generating the electricity to cover the sold price of electricity to the customer burden by SEC.
3- Customer Service Challenges, SEC should maintain the reliability and delivery of electricity to its
customers and improve the associated services either before or after sales.
Now I have to solve the Assignment 2. In assignment 2 we have to answer the following questions.
Question 1: How are your actor’s markets, opportunities and environment evolving?
Question 2: How is your actor’s policy environment changing? What can it expect from the state and
regulators?
Question 3: Provide three ways in which your actor could reinvent accordingly. Make a comment about how it
could use the lessons of the OPEQ simulation and our subsequent discussion on complex negotiations in this
reinvention effort.
Your description of your actor’s evolving environment; The quality of your conclusions on the implication this
has for your actor; The presentation of the complex negotiations it will need to go through. (Please be concise
and document your answer with clear numbers and facts.
Key elements to Question 1:
The market is dominated by SEC. No other competitions.
Opportunities in renewable energy, green energy, freeing the market prices, which open the market for
new players to compete in Saudi power market. Localization the material and decoupling from global
market or reducing the dependency on buying material from external markets. Allow the residence to
install solar systems to supply power to their houses, however if there are surplus in the power SEC
could buy that extra power.
Key elements to Question 2:
The regulators mentioned in assignment 1 have direct impact on SEC strategy and evolvement. They are
facilitating the budget and regulating the market, and contributing on implementing the Kingdom vision
in transforming to increase the segment of renewable energy.
Key elements to Question 3:
Investing heavily in the supply chain
Integrating the power grid system of Saudi Arabia with neighbor countries such as Jordan, Egypt, and
gulf countries to sell and buy deficit or surplus amount of electricity.
Diversify the source of revenue by selling its technical capabilities, training, acquiring other companies in
energy sector.
So based on the above presented information and key elements provide me the answer of the question 1 which
is: How are your actor’s markets, opportunities and environment evolving?