The cautious monopolists—Strategies of Britain's privatized water companies

Abstract

This article reports the first results from what is intended to be a longitudinal study of the development of corporate strategy in the 10 recently privatized Water Authorities. All the new Water plcs faced pressures, as a consequence of their privatization, to develop corporate strategies that were distinctly different from those they had previously embraced as public sector Water Authorities. Prior to privatization the Water Authorities were preoccupied with meeting Government imposed financial targets and performance aims for reducing operating costs. The Government expected privatization to improve standards and efficiency levels, but also expected that privatization would encourage the Water plcs to compete in new business areas. Investors and shareholders also anticipated that the Water plcs would be able to take profitable advantage of market opportunities outside the regulated business of providing water services. This article maps the main contours of the new environment within which the Water plcs now have to operate and provides an initial analysis of their corporate strategies, the reasons which have prompted diversification and the steps they have taken so far. The research is based on documentary evidence, including company reports and accounts and interviews with managers.