Abstract
The German energy industry faces revolutionary changes due to the endeavour of the European Union to establish a highly competitive single European energy market under uniform conditions. In this respect the electricity industry is of special interest because it serves as pilot industry for market liberalisation. The transitions of the respective EU directives into national regulations affect substantially the traditional market conditions, the industry structure as well as business operations. The former regional/ local monopolies of electricity supply by vertically integrated multi utilities have been abolished since 1998, and a corresponding non-discriminatory and standardised third party access has been mandatory since 2007. With regard to the creation of non-discriminatory market conditions special operational and organisational requirements have been imposed as well, e.g. accounting, informational and legal unbundling. Next to those substantial changes of market and organisational conditions also a cost-oriented price control of grid tariffs has been installed which replaced the former official approval of retail prices. This has been transferred to a more challenging incentive regulation concept in 2009. In order to speed up and facilitate competition official process specifications concerning all relevant aspects of customer supply have been implemented which changed the work-flows completely. Due to those topical revolutionary changes the local energy suppliers/Stadtwerke are forced to realign their traditional strategic and competitive positioning. In relation to this the special conditions of electricity have to be considered which differ substantially from other commodities, e.g. electricity is grid-bound and cannot be stored. Moreover, there are no managerial experiences concerning liberalisation and competition which can be drawn upon. Consequently managerial strategising is highly challenged by business specifics and uncertainties. Therefore, the purpose of this study is to examine the implications of the liberalisation effects on strategy and to identify strategy options for local electricity supply companies/Stadtwerke, and corresponding (success) factors. Considering the reported uncertainties for strategising and the importance for sustaining competitive advantage this study aims to provide a better understanding of the contextual surroundings and strategy influencing factors based on a well established theoretical foundation. The present research framework integrates the prominent strategy learning schools and concepts as well as relevant research studies and consists of confirmative and explorative research objectives. The study was conducted as a cross-sectional study using a mixed method approach which includes quantitative and qualitative techniques. As part of primary data gathering an online survey was utilised. This was targeted at strategising managers and board members of ca. 800 local electricity companies/Stadtwerke. In addition to the questionnaire also expert interviews were conducted. The analysis based on a sample of 105 companies. The results of the quantitative data analysis show that strategising is a multi dimensional approach. However, of paramount meaning are the specific market conditions of the single business segments. In relation to this the respective competitive market conditions differ substantially throughout the business segments of the electricity value chain. In this context strong evidence was found that official subsidies for renewable energies corrupt a competition driven market and foil the objectives of a harmonised European electricity market. The basic strategy direction should be focussed on diversification in form of vertical integration along the electricity value chain. In addition special emphasis should be put upon the extension or build-up of generation capacities. As a further success factor customer orientation was identified as an important variable. These findings are complemented by the findings of the qualitative data analysis. Five strategy typologies could be elicited which differ along three strategy dimensions: growth, covering value chain and related business segments, and market positioning (local/ regional). The specific requirements of each dimension might serve as a guideline for strategising managers to evaluate their own competitive and strategic positioning and to shift their strategic positioning to the next competition level. The findings of this study provide managers of electricity supply companies/ Stadtwerke with an increased understanding of the market specifics and strategic recommendations so that they can implement improved strategic, marketing and operational changes.