Business Update from John Birchall
Operating profits at British Gas jumped by 58% in 2009 to a record high, so someone is making money, even in a recession (which only ended in December 2009). So, whilst we all freeze in the coldest winter since 1979 those who provide us with one of our main sources of warmth are enjoying a bonanza time. But is this the real cause of such high profits?
The share price of our largest energy provider
The businesses gained over 140,000 new customers during 2009, so regardless of price (or were they cheaper than alternative providers?) the business has continued to expand and deepen its market share.
It now serves 15.7 million customers and hopes to create 1400 new jobs in 2010. It is now thinking of cutting its prices but this will not be until the summer, so the main income earning part of the year will have past.
However, campaign group Consumer Focus called for "immediate and significant price cuts across the market". It remains to be seen if Centrica react positively to this adverse criticism.
OFGem has noted that the average profit margin per customer has risen from £75 to £105 during 2009, so it might be that a good public relations exercise would be to offer discounts in price of a little larger than is currently forecast
It’s all to play for and it will be interesting to see just how Centrica reacts to any criticisms that in the coldest winter for many years they are making rather large profits.
Why not look at Friday Afternoon Business Studies – by Mark Mitchell, which has some nice games to play when lessons are proving a little ‘testing’. And don’t forget our National Teacher Conference in June, it too will focus on managing change and reacting to market conditions – the majority of speakers will be young entrepreneurs.
John
Two extras – one on people in organisation, the other on emerging markets – both might be of interest to your students. Click the links below:
Peope in Organisations
How Emerging Markets are Shaping the World