Introduction
Fortis Inc., a company with interests in various North American electric utilities, is proposing to build the Chalillo dam on the Macal River in Belize, Central America. The dam would contribute to the economic development of the country by meeting the increasing demand from industry and consumers for electricity. The company believes that the dam is the most feasible, reliable, and cheap supply of electricity. Environmental non-governmental organizations (ENGOs) oppose the project because of the destruction of wild animal and plant life and the adverse downstream impact, and allege that there are more viable and cost-effective sources. Through a strategic analysis of the issues surrounding the case, we will analyze each alternative to present the best possible recommendation to Fortis Inc.

Issues
The most prominent issue faced by Fortis Inc. with respect to the Chalillo project is the potential environmental effects. A number of groups are opposed to the project due to the location, on a river where a rare ecosystem exists. The project would build a dam on the river, regulating the flow of the river, preventing flooding and providing a more consistent source of water. While this certainly is a benefit to the individuals residing downstream of the proposed site, it does cause a disruption in the natural environmental cycle. The area that would be impacted was host to a rare and discrete floral floodplain habitat. The system relied on the seasonal flooding and heavy rain in order to be sustained. The habitat is biologically rich and diverse, and is home to many different species of animals.
This environmental issue was worsened by the threat of negative publicity, which it had already fell a victim to. Many organizations, including Probe International (PI) and Natural Resources Defense Council (NRDC), among others, have aggressively targeted the Chalillo project. Common means of attacking Fortis Inc. were legal action, web publications, political lobbying, and celebrity spokespersons.
The project had been assessed twice for its feasibility and impacts. The first assessment, conducted by the Natural History Museum found that it would be too environmentally destructive to continue with the project. On the other hand, the project was assessed by the Belizean government’s National Environmental Appraisal Committee and found that the economic benefits that would be a result of the project far outweighed the environmental effects. The committee also felt that there were ways of mitigating the environmental effects and reducing them to a minimum.
While the project was approved by the Belizean government and its committee, the issue remained that Fortis Inc. would have to learn to deal with the negative publicity if it chose to proceed with the project, even if the effects were, in actuality, brought to a minimum.

Alternatives
Essentially, there are three options for Fortis to choose. The first option is to give up building the Chalillo dam on the Macal River. It is the best way to protect aquatic and terrestrial wildlife. The location of the dam contains rare and discrete floral flood habitat, which relied on the flow of oxygenated water and seasonal flooding. The Chalillo dam project would have negative impacts on biologically rich land and many animals inhabiting the area. As a result, stopping to build the Chalillo dam is the best option to avoid the effect on wildlife. By choosing this alternative, Fortis will reduce the amount of negativity that many ENGOs and other organizations are currently showing them. They could retain their good reputation if they decide to not build the Chalillo dam. On the contrary, there are some disadvantages for stopping the project. First, Belize will not solve their electric storage issue, which means that Belize still need to import electrical energy from Mexico. Fortis would also lose out on the massive economic boom it could bring to Belize and all the potential profit. There could potentially be other projects that would bring equal value to the company so Fortis needs to exercise their options.
Secondly, Fortis would select an alternative site for damming; for example, build the dam at tributaries. The dam at tributaries could potentially supply the same volume of water. It will have less detriment to the environment; nevertheless, building such dam requires technical, economic and environmental surveys, which will incur more funding and possible damage to the environment.
The third alternative is for the company to continue to build the dam and take mitigate measures to alleviate the impact of construction and operation on the environment. There are several advantages for building dam. After the Chalillo project is complete, Belize would have a more reliable and secure supply of electricity. Due to Mexican system experiencing difficulties to supply a stable source, it is important for Belize to raise energy self-sufficiency. The dam on the Macal River would increase electrical output and reduce reliance on petroleum generation as well. As a result, greenhouse gas emissions and oil spills would reduce. Furthermore, the project would control flooding and provide a steady supply of water for residents. It would promote economic, health and safety benefits to downstream residents. Additionally, the Belizean Government supports the Chalillo project. This will encourage Fortis to build the dam because the government believes the benefits of project outweigh the environmental outcomes. Obviously, there are still issues if Fortis should proceed. It would not be possible to mitigate against the long-term environment damage. Huge risks exist of the amount of investment; time and criticism building the dam will take on. The company’s reputation will be tarnished if they decide to proceed.

Recommendation To give Fortis a well-researched strategic recommendation our team compared the three alternatives through economic, social, environmental, and legal impacts. Also, with the help of the analytical tools in the appendix we can determine the best possible outcome to proceed with. Economically, a financial analysis for Fortis shows that resources and financial backing are readily available to support the costs of the whole operation. By constructing the dam, Belize will enjoy a massive economic growth. Reliability on energy will increase as well as the labour force. As for social impacts, a steady supply of water for Belize and flood control benefits both for Fortis and Belize should be discussed. In terms of environmental sections, the highlight should be focused on natural habitat, greenhouse emissions, air and noise pollutions for Belize. Constructing the damn may cause irreversible damages to the eco-system surrounding the dam. The last part is legal influences. We ought to mainly compare the advantages and disadvantages of seeking stoppage or injunctions. Once we integrate the four factors together, we can easily conclude that the advantages of building Chalillo dam outweigh the disadvantages it may cause. Besides, continuing this Chalillo project can maximize the benefits. Belize could potentially see a missive economic boom because of the increase of jobs available. The construction of the dam will bring reliability to a country that was not always stable. In conclusion, proceeding as planned is the best choice. Even though we have recommended that Fortis should go ahead with the construction of the dam, there are still a lot of things we need to pay attention to. First of all, the government and Fortis should work together to do their utmost to decrease the harms to terrestrial wildlife. Additionally, this project should always be transparent. Even if the message is negative, the government still ought to update issues publically. Publically issue a third-party environmental analysis is also necessary. Last but not least, implementing a community committee ad developing a social contract can also contribute to attract good wise ideas.

Implementation
According to the analysis above, our final decision is to build the Chalillo Dam. The most irreversible environmental risk involved in the Chalillo project is that posed to wildlife and their ecosystems in the upper Macal and its tributaries.
Firstly, compensation for the loss of natural habitat is necessary. Fortis would have to comply with the necessary demands shown on the environmental compensation plan. When impacts on the ecosystem cannot be avoided, the next best option is to compensate for them with offsetting conservation investments elsewhere. In choosing a protected area to relocate some of the wildlife, there are some important considerations such as the offsetting protected area should be of a similar size to the dam’s area. Another value adding process is to provide funds for legally established protected areas at risk because they have lacked fund for on-the-ground implementation. If a new area is purchased for protection purpose, funds should be provided at least for the establishment and operation over the short-term. At last, funds provided for the purpose of offsetting protection should be placed in a special trust funds separate from other government accounts, even if such accounts are also used for nature protection purposes.
Once Fortis has taken care of the corporate social responsibility side of things, it time to allocate all the necessary materials and funding for this immense facility. Employees will need to be hired to operate the facility. In addition, developing strategic partnerships is also an implementation plan for Chalillo project. Some other NGOs are needed for this project, such as Canadian non-environmental NGOs (Development and Human Rights NGOs) and the Belizean NGOs and ENGOs.
As mentioned in the recommendation above, it is necessary to move forward with transparency. This project can issue public-facing quarterly updates and implement a community committee to improve transparency. Developing a social contract and publically issue a third-party environmental analysis can be an effective supervision.
In short, the implementation plan should ensure that the damage to the environment is minimized and obtain the biggest benefit to the economy and government of Belize. Also, to maximize the efficiency and profitability of Fortis Inc.

APPENDIX

PEST analysis

Political factors

* Government is highly involved and is a sponsor of the project. * Government promoted the project. * Fortis is dependent on the government’s support. * Government needs to have stability and reliability.

Economic factors

* BEL reduced electricity rates and contribution to stimulate economic activities. * The reliable supply of electricity is likely to reduce prices * Chalillo will make Mollejon more productive, and it probably generates an additional $4 million for Fortis * Increase the productivity and reliability of Mollejon * Reduce reliance on petroleum generation * Cost-savings from improved river management * Increase employment * Better services to customers

Technologic factors * New facility will include the best technology to produce electricity as effectiently as possible

Social factors * Flood control benefits * Convenient the citizens of the country * Implement safety programs to increase employee and public safety * Improving jobs for local workers * More constant source of power than Mexico

Stakeholder analysis

Owners: Fortis, Shareholders of Fortis . The owners have the responsibility for growing the value of the company and increase share value for stakeholders.

Directors: President and CEO H, Stanley Marshal and chief engineer John Evans. The directors have the responsibility for company reputation, increasing value and job security.

Employees: Responsible for work safety, job creation and economic benefits. It is important to pay attention on equal treatment.

Customers or consumers: They focus on fair price. Company should provide quality product at a lowest cost to earn reliability from customers.

Supplier: Belize Sugar Industries (BSI). BEL is generating energy from sugar cane residue from BSI.

Charities: Belize Red Cross to be profitable and contribute to their cause. Earn good reputation and community relations.

Environmental organization: ENGOs, Probe International (PI); Natural Resources Defense Council (NRDC); Sierra Club; the Sierra Club of Canada; the Belize Alliance of Conservation Non-Governmental Organizations (BACONGO); Humber Environmental Action Group; Humber Natural History Society; Action Environment, Defenders of wildlife; environment Coalition of Prince Edward Island and Falls Brook Centre. Responsible for protecting the environment, most organization mission is to safeguard the earth. It is a vital to build good relationship with environmental organization.

Media: Canadian print, newspaper, websites. Spread out news about both organization and company. It is important to promote good reputation.

Government: Belizean Government. They are responsible for promoting the economy and protecting the environment. The project needs government support. It is important to meet legislative requirements for environment and safely.

SWOT analysis

Strengths

* Expertise in the field * Good corporate social responsibility reputation * Financial backing, lots of resources * Good relationship with Belize government. * BEL had a monopoly and could recover costs from captive customers * BEL is the main supplier of electricity in the country

Weakness

* This project is faced criticism by environmentalists * The project was uneconomical and not the cheapest option * There was insufficient information on the impact of the project

Opportunity

* This industry has the opportunity to produce surplus electrical energy and export it to other countries like Mexico, Caribbean and U.S. * This industry also has the opportunity to expand its generation portfolio * High demand for power * Significant economic, health and safety benefits for downstream residents. * The output from the two plants would reduce reliance on petroleum generation. * The project would increase electrical output and raise energy self-sufficiency * The completion of the Chalillo project meant that Belize would have a more reliable and secure supply of electricity, thus stabilizing and possibly reducing prices. * There would be a steadier supply of water for residents, especially during the dry seasons.

Threats

* This industry is under threat from government regulation. * This industry is also characterized by the threat of negative media coverage around the environmental impact of power generation and distribution. * Building water dams interrupts the natural environment and eco-system. * The dam would exacerbate the water quality problems down stream

Porter’s Five Forces

Threat of Entry (Potential Entrants)

Economies of Scale: Moderate because the service would be produced in a large enough quantity, to fuel an entire country, economies of scale are probable. However, Fortis would be a producer of electricity which means that the nature of their production is not reliant on other suppliers, but on the environment instead. Therefore, economies of scale, though possible, would not be a factor driving a company to enter this industry.

Product differentiation: While there are a few different types of energy sources, each source is highly uniform and although it can be replicated, it would be quite costly to do so.

Capital requirements: Fortis has the expertise and equipment already for this new project. While it will be a fairly large capital outlay to construct the new plant (approximately $27.3 million), only a few companies would be able to do it at such a low cost as Fortis is highly specialized in this area. For a new company to attempt to penetrate this market, it would be very expensive, as they would need to establish themselves from scratch in the country.

Cost disadvantages independent of size: As this industry is one that is geared toward widespread distribution, it would be expensive regardless of the size of the company.

Access to distribution channels: As Fortis has acquired 95% of the shares in Belize’s main electricity producer/distributor; it would be extremely difficult for a new entrant to enter this market.

Government Policies: The government is highly involved in this area as electricity is more often than not, a regulated product. In addition to it being a regulated industry, electricity producers must comply with legislation protecting the environment.

Suppliers (Bargaining Power of Suppliers)

There are very few direct suppliers to Fortis in the energy-producing industry. To manufacture their product, energy, they are most heavily dependent on natural resources they obtain directly from the environment. In distributing their product through the use of wires, lines, and poles, there is insufficient information to determine if the suppliers of the metals and wood, etc. have any major bargaining power.

Buyers (Bargaining Power of Buyers)

The buyers of energy have very little bargaining power. Electricity is usually heavily regulated by the government to ensure a fair price to consumers. With that being said, buyers usually have no control over the price.

Substitutes (Threat of Substitute products or services)

The only other plausible source of electricity in Belize is to have it imported from Mexico, which is more expensive, less reliable, and the contract expires in 2008 and will leave many consumers without power. Other sources of power could potentially be used such as solar power (expensive to start up), gasoline power (expensive to use and damaging to the environment), wind power (expensive to start up), or power generated from sugar cane residue (which is not currently in the country but has the potential to be). As of now, substation threats are not major.

Industry competitors (Rivalry Among Existing Firms)

Low. There are few to no other firms that would compete directly with Fortis. In this type of industry, a monopolistic competitive environment is common. While it is not explicitly stated that Fortis will have a monopoly, it appears to be of this nature.

CAGE analysis

One would think that constructing a dam in Belize would be tall task For Fortis Inc. They are located over 4500 kilometers away in Newfoundland. But after a closer look, they are not far at all. This project is simply an addition to the BECOL operation that they have been running for several years in partnership with the Belizean government in Belize. Fortis Inc. controls 95 percent of BECOL, the other 5 belonging to the government. BECOL’s entire output was sold to BEL in a 50-year purchase agreement. This case is dealing with the construction, distribution and trade of the staple good of electricity. In Belize, The two companies BEL and BECOL are essentially running a monopoly because no one else produces electricity in this region. They look to Mexico for a second source but it is not very reliable. When conducting a CAGE analysis, one must look into the distance of the two countries between several factors. Fortis Inc. has already entered into the market achieved customer satisfaction, producing a rating of 82.5 with their company BEL. They have achieved this by supporting the Belizean population by trying to decrease electrical costs, donate to the Red Cross and help out their employees. Fortis Inc. also tries to be as environmentally friendly as possible and promoted good corporate social responsibility.

When analyzing the cultural aspects of Belize, even though there are many different religions, languages and cultures, the spoken language is mainly English. Sharing the same primary language is a huge plus when conducting business. The population of Belize and the Belizean government understand how important the construction of this new dam could be to their quality of life moving forward in a country that is still not completely developed. This could ensure safety, stability and employment for many residents of the country. Taking this into account, the cultural distance in low because Fortis Inc. understands how to operate in Belize.

From an administrative point of view, the Belizean electricity trade is a monopoly. The Public Utilities Commission determined the company’s rates and minimum quality service standards. Also, the company had a license to generate, transmit, distribute, and supply electricity until 2015. BEL also initiated a program to meet compliance with the ISO 14001 environmental standard improve their company. The Belizean Government draws many similarities to how we operate in Canada. Belize operates on the principles of parliamentary governance based on the Westminster parliamentary system. The distance between government systems is very low which could lead to easy processes when determining rules and regulations when constructing the dam. In order for this project to work, government support and involvement needs to be high. Belize is not completely finished developing as a country and the dam could produce great economic outcomes.

Geographically, Belize has the lowest population densities in Central America. Which means lots of land that is not developed. Belize is 22,800 square kilometers in size and a population of just over 340,000. As mentioned above, Belize is over 4500 milometers away from the Fortis Inc. headquarters in Canada and does not share a common border. The tropical Belizean climate is completely different from a typical frigid Canadian climate. Transportation isn’t a factor in the electricity industry because Fortis will produce for Belize alone. From a glance, the geographical distance seems like it could be a problem. It has embroiled the company as a social responsibility issue because Fortis Inc.’s Belize operations have consumed lots of costs time and energy. Considering The Company is doing well financially and pleasing the customers over therewith their current operations, it could have great potential to be profitable.

The economic distance for Fortis is not portrayed as a big issue in terms of going ahead with the Chalillo project. The project will cost a total of 27.3 million dollars. The fact that the only issues raised in the case were the negative environmental effects present that the budget and resources to go ahead with the project are accounted for. Because of the nature of the product, one cannot take consumer incomes into account. Electricity will be purchase in some extent no matter how much money one has because it is a necessity for daily life. Economically, this project is extremely attractive for Fortis and the country of Belize. The construction of the dam with increase the labour force, increase the productivity of the hydro-electric plant downstream, create more and reliable energy while potentially decreasing cost. It is essential for the growth of the country that the dam gets built.