The following is a Corporate Strategy Analysis of Meralco, the major player in the Philippine electric industry. It was performed as a part of the “Introduction to Organizations and Corporate Strategy” course under Prof. Carlos Rodriguez Monroy, Ph.D. in Universidad Politécnica de Madrid, Fall Semester of 2016.
Meralco is a Filipino electricity distribution utility (DU), operating mainly in Metro Manila. It was founded 116 years ago by Americans, but was subsequently sold to the biggest Filipino conglomerates. Its first entrant advantage made it the largest DU in the country, in the richest part of the Philippines. Its size gives it strong bargaining power with its suppliers. Its ownership gives it working capital to invest in and improve its infrastructure and services. Being the oldest and one of the most valuable companies in the Philippines give Meralco implicit alliances across the industry. These factors allow Meralco to thrive in the changing business environment. The power industry is being restructured by the Electric Power Industry Reform Act (EPIRA), the Philippines’ economy is growing rapidly, and distributed generation technologies are improving. From being just a DU, Meralco has vertically integrated across the power sector and has diversified to complementary and even unrelated businesses. The company dominates both the distribution and retail sectors, and is also entering the generation sector with three coal power plants in the pipeline. It also uses its subsidiaries to address changing users’ needs and customize its services.