Raj Bhatt, Business Development Manager for GE Canada had recently met with executives from GE Supply, a U.S.-based distribution arm of GE Industrial, to discuss new business opportunities in Energy Efficiency. The Energy Efficiency industry focused on the reduction of energy usage through the installation of energy-efficient technologies. Bhatt had recently gained pre-qualification for GE Canada to bid on a $1 billion program to install energy-efficient technologies in all Federal Government buildings.
He was confident that GE's expertise in lighting, motors, appliances and financing was sufficient to win at least some of the contracts. Furthermore, he saw the program as a stepping stone to building a GE business to service the Energy Efficiency needs of a range of clients.
The GE Supply executives informed Bhatt that they had already established a position in the U.S. Energy Efficiency industry, through a joint venture with a new Energy Service Company (ESCo), and had retained the services of a full-time consultant to develop the business. An ESCo, or Energy Service Company, developed, installed, and financed projects designed to improve the energy efficiency and maintenance costs for facilities over a long time period, typically seven to 10 years. ESCos generally acted as project developers for a wide range of tasks and assumed the technical and performance risks associated with the project.
The GE Supply executives were interested in the Federal Buildings program that Bhatt had been working on, but felt that it would be more efficiently run as a division of GE Supply, rather than as a locally managed Canadian venture. The meeting posed a dilemma for Bhatt. He was encouraged by the level of interest that already existed for Energy Efficiency within GE, but at the same time held certain misgivings about folding the Federal Buildings program into GE Supply's nascent business. Specifically, he was concerned that a lot of interesting Energy Efficiency opportunities existed in Canada, which a U.S.-focused business would not be in a position to exploit. Bhatt left the meeting uncertain how to proceed.
Take the position of Raj Bhatt:
1. Review your assessment of the attractiveness of the energy management industry and the key success factors for operating in it. Are you comfortable and confident with your conclusions that this is an attractive industry and business opportunity?
2. How does the GE management system (organizational structure) work? How does GE
Canada fit into this picture? What are the implications of these observations for the development of the energy management practice?
3. As of the end of the meeting with GE supply executives, what are your options for proceeding, and what do you intend to do?