Aes Case Analysis

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1-- What Scholey’s strategy in Geogeia.

Scholey developed and deployed three strategies.

I.Made investments and empowerment in the plant in order to raise local equipment and working environment meet the world-class standards. By doing so, Scholey wanted the AES-Telasi could have the same standard of other AES distribution operations. One of the key investments was meter household to link consumption. Consistent with the AES model of empowerment, line-level employees would be allowed to decide which investments were appropriate.

II.Combating corruption. Started negotiating with a state-owned company that had a legal monopoly on the import of electricity from Russia. He knew the AES needed reliable supplies in order to get consumers to pay.

III.Public Relations. He thought changing the cultural among residential, commercial, industrial and government users. Scholey began to develop a media strategy to impress upon the Georgian people the necessary link between payment and supply. Using “If you didn’t pay you didn’t eat.” as mantra, and made advertisements to let local people know their goal was to made them live a better life.

2-- How effective do you think this is going to be?

New investments helped him not only to meet explicit financial commitments in the purchase agreement, but also to generate revenue, improve electricity supply and, perhaps most importantly, create goodwill. While Michael Scholey was proud of what he and AES Corporation had accomplished so far in the Republic of Georgia, AES-Telasi had still incurred operating losses of $40m during its first year of operation, had already exceeded its ten-year investment target, and the company faced several important challenges going into its second year.
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