AECL Costs A Lot

The Atomic Energy of Canada Limited (AECL), Candu energy, signed a contract with Argentina which worth $400 million brought AECL into people’s sight.

AECL has been a financial problem for federal government for a long time.About $1.2 billion money form taxpayers’ pocket has spent on it. It was sold to Crown Company in 2007, and then the Crown Company was bought by engineering giant SNC-Lavalin Group of Montreal.However, after this contract AECL may gains some profits but since it no longer belongs federal government the profits seems not go into governments’ pocket.

Analysis of AECL from Porter’s 5 Forces:

Rivalry:Less

Few competitive companies.

Specialization in goods: environmental friendly, high technology, renewable and so on.

Supported by government.

 

Threat of Substitutes: High

Hydrogen electricity products.

Cheap resources: fossil fuels, wind, solar energy.

Costs a lot to purchase.

Buyers Power: Strong

Buyers are concentrated.

Certain buyers purchase a significant amount of outputs.

Buyers pose a threat to the company.

 

Supplier power: Medium

There are few competitive suppliers in this field.

Weak Customers

Supported by government.

 

Threat of New Entrants and Entry Barriers: Low

The technology required to enter is way too high.

The inputs cost a huge amount of money.

Have to be supported by government.

High inputs with low income.

 

For details about Poter’s Five Forces: http://www.quickmba.com/strategy/porter.shtml

Resources:

http://www.cbc.ca/news/business/story/2011/10/08/candu-reactor-argentina.html

http://en.wikipedia.org/wiki/Atomic_Energy_of_Canada_Limited

http://www.cbc.ca/news/business/story/2011/06/29/aecl-sale.html

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