Quality-led change management for market orientation in the electric utility industry


Student thesis: Master's Thesis

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  • Yuk Kwan Agnes TAM


Awarding Institution
Award date15 Oct 1999


There is a world-wide trend that the regulation protected environment of electric utilities has undergone massive changes to open market competition. The protection of the regulatory shield in the past has imposed obstacles and barriers for many electric utilities to change their business emphasis from internal focused to market orientation. However, a recent world-wide survey shows that power stations have incorporated a large variety of piece-meal change management programs to change their business emphasis. Many of them have come across a lot of difficulties to fundamentally transform themselves from their old ways of doing business. TQM philosophy and principles, targeting on the generation of holistic and systematic changes for customer satisfaction, were proposed to be used in guiding the change process in electric utilities towards market orientation through continuous quality improvement. The aim of this research is to investigate means to facilitate the transition of electric utilities from a regulatory-protected to a market oriented environment through change management for market orientation. The influence of external environments on the operations of electric utility and the feasibility and effectiveness of using TQM to guide the change for market orientation were analyzed through extensive literature review. An international-based questionnaire survey supplemented by a Hong Kong based field interview study were conducted. Correlation and regression analysis were used to examine the relationship between the extent of applications of TQM principles and concepts and the degree of market orientation of electric utilities. Field interviews on the two electric utilities in Hong Kong were carried out to supplement the survey findings. Information on the changes of external operating environments, the responses to these changes from electric utilities, their change strategies and experiences on the implementation of the change programs were collected. Results of the questionnaire survey analysis indicate that the extent of TQM applications is positively and moderately correlated to the degree of market orientation. The correlation between TQM applications and market orientation is higher when competitive intensity is higher or when the legal and regulatory condition is less favourable. However, the interactive effects of the two external environmental factors of competitive intensity and favourability of legal and regulatory conditions on the relationship are not significant. The field interviews illustrate that the increasing demand of customer expectations in recent years has imposed substantial pressure on the electric utilities for delivering better customer services. One of the electric utilities has used TQM approach as one of their important change management strategies to establish a market orientation operating environment. The TQM approach used in this company has been recognized as an effective means to generate fundamental changes in organization culture and climate for market orientation. However, the other electric utility decides not specifically to adopt a market orientation strategy under the current regulatory protected environment in Hong Kong. It incorporates a "wait-to-see" strategy and processes gradually towards market orientation. From the study, TQM is empirically found to be a potentially effective approach for electric utilities to change for market orientation. The influence of TQM applications on market orientation is positive and significant that the external business environment seems to have little interaction on the effectiveness of using TQM for change towards market orientation. The TQM philosophy and principles are good to generate a fundamental change for establishing a market oriented environment. Through the continuous performance improvement towards customer satisfaction, electric utilities can gradually change from being internal focused to market oriented. Based on the results of the questionnaire survey and field interviews, a quality-led change management approach could be recommended for electric utilities to establish coherent, continuous and integrated change systems for market orientation.

    Research areas

  • Hong Kong, Management, China, Electric utilities