Vattenfall is the fourth largest generator of electricity and the largest generator of heat in Europe. The company has more than 32 000 employees and is active in all stages of the electricity value chain: generation, transmission, distribution and sales. Operations are carried out in Sweden, Finland, Denmark, Germany and Poland. The parent company, Vattenfall AB, is owned by the Swedish state. The main objective for companies owned by the state is to create value. Companies exposed to competition, like Vattenfall, shall operate under the same requirement and terms as other market players. We will start with describing Vattenfall's vision, mission and strategic ambitions. The fol-lowing part will focus on how the strategies are implemented in Vattenfall Nordic Heat, a business unit of the organization. We will in the end analyze the implementation and make qualitative conclusions.
[...] These goals aim to extend the competitive advantage and durability of its generation facilities, by developing for example renewable energies, but they aim to strengthen the quality of the transmission and distribution networks, to consolidate its Nordic and European positions by focusing on its presence in foreign and develop in regions with strong potential where the Group is already present (Scandinavia, Germany, Poland) and to improve the Group's operational and financial performance, by stabilising indebtedness and by increasing the operational profitability Transformation Map To be able to communicate the strategy to the lower levels of the business unit the management has developed a transformation map. [...]
[...] As all of the goals are classified according with the dimensions this implementation of the strategy helps the upper management by adding a proactive scope to their main tool, i.e. their version of the balanced scorecard Conclusions Since Vattenfall Nordic Heat controls all the decisions concerning production, marketing and procurement, there is no difficulty in assigning profit responsibility and measuring performance. However, friction between different business units may occur and optimizing the profits of each individual profit center is not the same thing as optimizing the profits of the company as a whole. Their balanced scorecard is currently only supporting reactive actions, but the transformation [...]
[...] As stated before the strategic ambitions are for the whole of Vattenfall and not for the business unit itself. Even if one would interpreter the five dimensions as a redefined strategy for the business unit they still lack performance drivers among the things they measure. This means that they will be left with only the outcome when they try to evaluate how well their strategy worked. This brings us to another flaw in their scorecard, the long lag of their measured outcomes. [...]
[...] Anthony and Govindarajan describe one way to think of managing a profit center is in terms of control three different decisions: 1. What goods or services are to be made and sold? 2. How, where and for how much are these goods and services to be sold? 3. How are we going to obtain or manufacture the goods or services? If these decisions production, marketing and procurement are split among two or more business units with a great degree of integration, it becomes difficult to assign responsibility to a single profit center. [...]
[...] In other word, there is no difficulty in assigning profit responsibility and measuring performance. However, even if the business unit control all three decisions, friction between different business units may occur. For example, VNH lower its emissions and wants to sell emission allowances on the market. In order to optimizing the profits, VNH would like to sell the allowances at a high price. At the same time, the business unit responsible for mining and generation in business group Europe wants to buy some allowances. [...]
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