Building a multi-utility business
A ScottishPower case study

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Page 1: Introduction

If you look in the dictionary for the word ‘utility’ you will find the following:

“the quality of practical use, usefulness: a public service such as the bus system.”

These definitions help us to arrive at a picture of what utilities are. Utilities are services which are of practical use to the community at large in this country including businesses, other organisations and individuals. More specifically the term is used today to include public services which supply water, sewerage, electricity, gas, telecommunications and waste disposal. All of us make use of these utilities every day - when we have a bath or a drink of water, speak on the phone to a friend, boil water for a cup of tea or coffee, turn on the light and so on. Without these utilities life would be very basic, but we all want to get the best possible service and value for money from these utilities. This case focuses on outlining ways in which ScottishPower has increased the benefits to consumers through utility provision.

Private sector/public sector

Scottish Power 2 Diagram 1The private sector of the economy is made up of firms and other organisations which are owned by shareholders, individuals and partners, all of whom have contributed to the setting up of the enterprise. These people are essentially risk takers who seek to satisfy customer needs and will earn a profit (or in some cases make a loss) for their involvement. In contrast, the public sector is made up of organisations and firms which are owned and, in many cases, controlled and directed by the government and its representatives on behalf of citizens.

In recent times there has been a wave of privatisation around the world, in which organisations previously owned by government have been sold off to private shareholders. This move to privatisation stemmed from a dissatisfaction with the way in which public sector organisations managed resources. Because there was no competition, when a public sector organisation managed an industry there was no “spur” to create efficiency. These organisations fitted very much into the pattern of the large bureaucracy. There were many levels of hierarchy. Decisions tended to be made in a top-down direction. Decision making was slow, resources were often allocated to meet social obligations (e.g. full employment) rather than service. From 1979 onwards, there was a wave of privatisation in this country, including the privatisation of water, electricity, gas, telecommunications, coal, steel, airways and railways.

ScottishPower | Building a multi-utility business