Power is a coal-fired power plant located in central China. This company is a subsidiary of China Hua Tong Power (HT Power).
The main activity of this company is to generate electricity. Luotang Power operates using a 600 MW coal-fired power plant and sells the generated power to their primary customer, the Hubei Provincial Power Company (HPPC).
HPPC was the only company in Hubei Province that owned all the power transmission and distribution facilities and independently owned power plants operating in the province.
The coal is supply by Pingdingshan and according to the contract, it is required to supply low sulfur bituminous coal that met certain quality specifications. main issue and Problems Based on this case, the main issue is regarding to the company performance that not shows the positive performance of the company in the financial results. The issue is related on how Mr. Tan have to do in order to show that the company is still in a good performance. There is also an issue regarding to their supplier, Pingdingshan that supply a low quality coal but in a higher price than the prior year.
The Research paper on Organizing The Power Company
Organizing the Power Company “ I do not believe in organization charts or position descriptions of any kind inthis company” declared Johnny Ramos, president and founder of PowerCompany, manufacturer of men’s ready to wear suits and jackets. “We are asuccessful and fast rising company where I want all managers and labor towork as a team. Organization charts and job descriptions make people ...
Therefore, in our case study, we conclude that we need to do a variance analysis to better understand the plant performance compared to the previous year. The main problem in related to this case is about the falling in revenues, the performance of coal-plant, the price of coal and the quality of coal. All of this problem will be answered in the next sections in the qualitative analysis of Luotang Power.
While in year 2010 the fuel cost variance showed favorable 2,595,913RMB due from year 2009 to 2010. Conclusion As conclusion, Tan Min Yi as the general manager of the Luotang Power Company has satisfied with the presentation prepared for the second time to make a presentation to the Board of Directors of his parent company, China Hua Tong Power (HT Power).
The last time financial report doesn’t show the best of his company’s current year performance. From the main issue, we have found out that Luotang Power is in a good performance but it does not shown in their financial results.
This case study is helpful enough to Mr. Tan to improve what is needed. With a few way of solution like the variance analysis might show the way to Mr. Tan to take a step to correct the problem arised. The variance analysis show the variance calculation applied by the company to measure the current performance. Quantity variance, price variance, fuel efficiency variance, and fuel cost variance are among the important variance needed to be view and measure for the performance purpose.
