Origin Company: Introduction and SWOT Analysis Essay Example

Origin Company: Introduction and SWOT Analysis

Introduction

Origin Energy was established in February 2000 because of a demerger from the parent company, Boral Limited: the original Boral Limited dealt with energy related activities, building, and construction. Origin Energy is a public company, and it operates in the energy industry. Specifically, Origin Company deals in electricity, solar panels, heating and cooling, hot water, liquid petroleum gas, and electric vehicle charging. In fulfilling these activities, Origin Energy is involved in production and exploration of oil and natural gas, energy trading and retailing, and power generation. Origin Energy has its headquarters in Sydney, and it employs more than 6,000 employees. The company operates in Australia and has international presences in Pacific region and New Zealand. In 2015, the company recorded revenues of A$13,804 million; the operating profit was A$682 million. During the period, Origin Energy reported a loss of A$ 658 million compared with the net profit made in Financial Year 2014, which was A$530 million.

SWOT Analysis

The SWOT Analysis is a tool used to analyses the internal and external environment of an organization resulting in the formulation and implementation of strategies relation to the environmental audit. SWOT stands for strengths, weaknesses, opportunities and threats. The following table summarizes the Origin Energy’s SWOT Analysis.

Strengths

  • Effective leadership in energy markets in Australia

  • It has a diversified customer base

  • Has a strategic position in the LNG and natural gas production

Weaknesses

  • The company faces an increase in debt level

  • The energy market is concentrated

Opportunities

  • Demand for renewal energy is growing

  • Implement strategic and effective credit facilities e.g. strategic debenture

  • The Asian Pacific region is fertile for renewable energy

  • Analyze internal market to determine viable markets

  • The market is becoming more competitive

  • The prices of products and services are not stable

  • Social and environmental concerns affect the business operations

Strengths

Origin Energy has an effective team because it has historical backgrounds with Boral Limited. It contributed in diversifying the customer bases such as the electricity customer, renewable energy, and LPG customers. These strategic positions including the effective leadership ensure the company continues to operate effectively.

Weaknesses

The financial statements are weak because of huge debt level. The increase in debt is because of strategic expansion such as funding the Australia Pacific LNG, Poseidon acquisition, cash dividends and special dividends, and foreign currency translation. Market concentration is another issue because most of Origin Energy business are located in Australian region where it generates more than 80% of its revenues. It is a major risk if the Australian economy is faced with recession and other financial related problems.

Opportunities

Origin Energy should focus on alternative investment options such as utilizing appropriate credit instruments. Origin Energy has to capitalize on the renewable energy and pursue the Pacific market to market the renewable energy. It provides the company with long-term strategic benefits to continue its operational position.

The energy market is becoming more competitive because of new entrants and mergers. The prices of the products keep fluctuating in response to international dynamics such as terrorism activities and oil glut. The consumers including other stakeholders such as government agencies continue to advocate and embrace sustainable environmental measures meaning Origin Energy has to adhere to these legislations and policies, which may affect the business.

Reference

Origin Energy. (2016). Home. Retrieved from https://www.originenergy.com.au/about.html