Answered: Evaluate the three stages of the…

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

ChapterC: Cases

Section: Chapter Questions

Problem 3.8A

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Question

Case study : Eskom Holding company a south african state owned company produces 95% of all electricity utilized in South Africa and 45% of electricity utilized on the African continent. Since November 2007 and due to an ever increasing deficit in electricity supply versus electricity demand, the power utility introduced various stages of forced power interruptions, referred to as loadshedding, to prevent a total crash in the electricity supply grid. Various adversities have been attributed to these power interruptions including slow or negative national economic growth, employee layoffs, and general discomfort experienced by communities due to frequent power outages. Yet, since 2007 to 2018, Eskom introduced electricity tarrif increases at an annual average rate of 14%, higher than average annual consumer inflation rate of 5.5%. Moody's, one of the main international credit rating agencies regards eskom as a main source of contingent liability risk for the SA Government. The aforementioned has bearing to notable amounts of guarantees provided by the SA Government relating expressly to large projects undertaken by eskom to build new coal fired power stations.

Question 1

Evaluate the three stages of the strategic management for eskom to be sustainable business in SA

Question 2

Strategically, Eskom did not account for the direction and scope of an organisation over _______ and therefore the resources and competencies are not used to fulfill the expectations of the public.

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

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