<p align="justify">The National Grid is multinational electricity and gas utility company founded in 1990. It is based in London, United Kingdom, and it is listed on the London Stock Exchange. It operates in the United Kingdom and North-Eastern United States (National Grid, 2020). The company&#8217;s operation in the United Kingdom and the United States is of vital importance to the national distribution networks. Its main goal is to provide efficient service with innovation. The company has approximately 25,000 employees. According to the report by Thomson Reuters (2017), it is among the top 100 global energy leaders in 2017. The company has the vision to provide efficient and good service to the community. It is currently building undersea electricity connectors to access renewable energy sources from Norway. It is also working on solar energy generation in the United States. Porter&#8217;s five forces model is used to analyze the operational risks it faced and threats it is exposed too.</p>
<h2 align="justify">Competitive Rivalry in the Market</h2>
<p align="justify">The Utility distribution business assures good returns. Energy utilities fall under the category of commodities. The demands for commodities are usually steady, and it is something that is constantly required. Governmental and Non-Governmental companies compete for the global market share. National Grid is among the top companies across the globe. The competition for market share is stiff in Europe. The Entity is competing with Centrica and Exelon; they pose a major challenge. National Grid has earned the annual revenue of $ 22.7 billion and a profit of $3.9 billion (Fortune, 2020). In comparison, Centrica has earned annual revenue of $ 39.5 billion and a profit of $ 244 million (Fortune, 2020). Exelon has earned annual revenue of $ 35.9 billion and a profit of $ 2 billion (Fortune, 2020). Due to the presence of multinational companies that are performing strongly, there exists an intense competition.</p>
<h2 align="justify">Threat of Substitutes</h2>
<p align="justify">The utility energy industry has evolved, and revolutionary change is on the cards. That is due to the advancement of technology and ease of availability. The consumption has grown exponentially, due to growth in the global population. Fossil fuels are depleting at a higher rate than expected; at that rate, only coal will be available beyond 2042 (Shafiee, S., &; Topal, E. 2009). The alternatives to non-renewable energy sources are renewable energy sources such as solar energy and wind energy. The market leaders are investing huge cost in research and development. There are efforts in place to reduce costs and make renewable energy sustainable. Fossil fuel-based production is polluting the environment and aiding climate vows. The companies working on affordable renewable energy pose a real threat. There is a moderate threat in the short term. There is a high threat of substitutes in the long run if incumbents fail to adapt.</p>
<h2 align="justify">Threat of new Entrants</h2>
<p align="justify">The main barriers to entry in any industry are a capital requirement, product differentiation, regulatory requirements, and economies of scale (Grant, 2010). The capital required is the biggest impediment for the entrant, as the amount of required capital is high. In the utility industry, regulations are strict. The government has stringent oversight protocols because of the involvement of the general public. Private companies need to consider the return on investment. The distribution price of the utility is often decided by regulated bodies. The companies cannot set their desired profit margins. The competition is stiff, there are tight profit margins with stringent compliance requirements, and thus the threat of new entrant remains low.</p>
<h2 align="justify">Bargaining Power of Buyers</h2>
<p align="justify">There are two major buyers of the energy utility companies are commercial entities and domestic user. If there are available options, then buyers have higher buying powers. The buyers do not have any leverage to bargain as utility companies are providing commodity. Utilities are required by everyone, as it is a commodity. The available alternative is solar power, and it has a high initial installation cost. Buyers can get relief from the government in the form of subsidies. The government can pressurize private providers by offering them tax cuts, but they can&#8217;t have much leverage. There is usually one company providing utility service in a certain area, and considering the facts, buyers have no bargaining power.</p>
<h2 align="justify">Bargaining Power of Supplier</h2>
<p align="justify">The suppliers can exercise high bargaining power in case of few suppliers are there, and they are offering a specialized product. It has a complex supply chain. The output of the energy generation sector is input to the utility distribution sector. The suppliers can always hit the bottom line of the company by driving the cost up. There are two types of companies distributing utilities state-owned and non-governmental. If the distribution company has a vertically integrated supply chain, it will help them a great deal. The large companies avoid suppliers&#8217; risk by creating a vertically integrated supply chain. Usually, suppliers have high bargaining power due to their unique position, unless the companies have a vertically integrated supply chain.</p>
<h2 align="justify">References</h2>
<p align="justify">Fortune. (2020). Centrica. Available at: https://fortune.com/global500/2019/centrica/<br />
Fortune. (2020). Exelon. Available at: https://fortune.com/fortune500/2019/exelon/<br />
Fortune. (2020). National Grid. Available at: https://fortune.com/global500/2016/national-grid/<br />
Grant, R. M. (2010). Contemporary Strategy Analysis. 7th Edition.<br />
National Grid. (2020). About us. Available at: https://www.nationalgrid.com/group/about-us/what-we-do<br />
Thomson Reuters. (2017). Top 100 Global Energy Leaders. Available at: https://www.thomsonreuters.com/en/products-services/energy/top-100.html</p>