Case Study Description of Legrand: Lightening Their (Electricity) Load
This case illustrates the key factors that Tim Travis, the maintenance lead for Legrand North American, must consider in a capital investment decision that involves the implementation of a new lighting system. Legrand, a France-based multi-national company that sells electrical wiring accessories worldwide, is considering whether it should implement its own internal energy efficiency program at its Fort Mills, South Carolina, warehouse location to achieve cost and environmental savings on electrical usage and to meet the new standards established under U.S. Department of Energy's Better Buildings Challenge . The case examines the key components of the capital investment decision, how tax policies promoting energy efficiency can influence the decision, and how to measure the return on capital investment through three different methodologies: the payback method, internal rate of return, and net present value. A breakdown of a cost/savings analysis on energy usage is also examined.
Authors :: Omar Romero-Hernandez, David Hirsch, Sergio Romero
Swot Analysis of "Legrand: Lightening Their (Electricity) Load" written by Omar Romero-Hernandez, David Hirsch, Sergio Romero includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Legrand Electrical facing as an external strategic factors. Some of the topics covered in Legrand: Lightening Their (Electricity) Load case study are - Strategic Management Strategies, Financial management, Manufacturing, Sustainability and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Legrand: Lightening Their (Electricity) Load casestudy better are - – cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , increasing commodity prices,
geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Legrand: Lightening Their (Electricity) Load
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Legrand: Lightening Their (Electricity) Load case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Legrand Electrical, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Legrand Electrical operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Legrand: Lightening Their (Electricity) Load can be done for the following purposes –
1. Strategic planning using facts provided in Legrand: Lightening Their (Electricity) Load case study
2. Improving business portfolio management of Legrand Electrical
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Legrand Electrical
Strengths Legrand: Lightening Their (Electricity) Load | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Legrand Electrical in Legrand: Lightening Their (Electricity) Load Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Legrand Electrical are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Highly skilled collaborators
– Legrand Electrical has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Legrand: Lightening Their (Electricity) Load HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Legrand Electrical has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Legrand: Lightening Their (Electricity) Load Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Legrand Electrical digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Legrand Electrical has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Sustainable margins compare to other players in Finance & Accounting industry
– Legrand: Lightening Their (Electricity) Load firm has clearly differentiated products in the market place. This has enabled Legrand Electrical to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Legrand Electrical to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Legrand Electrical has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Legrand: Lightening Their (Electricity) Load - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Legrand Electrical in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the Legrand: Lightening Their (Electricity) Load Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Low bargaining power of suppliers
– Suppliers of Legrand Electrical in the sector have low bargaining power. Legrand: Lightening Their (Electricity) Load has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Legrand Electrical to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Legrand Electrical is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Omar Romero-Hernandez, David Hirsch, Sergio Romero can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Successful track record of launching new products
– Legrand Electrical has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Legrand Electrical has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High switching costs
– The high switching costs that Legrand Electrical has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Weaknesses Legrand: Lightening Their (Electricity) Load | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Legrand: Lightening Their (Electricity) Load are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Legrand: Lightening Their (Electricity) Load, it seems that the employees of Legrand Electrical don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Legrand Electrical is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Legrand: Lightening Their (Electricity) Load can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Legrand Electrical supply chain. Even after few cautionary changes mentioned in the HBR case study - Legrand: Lightening Their (Electricity) Load, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Legrand Electrical vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Legrand Electrical has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Legrand: Lightening Their (Electricity) Load, is just above the industry average. Legrand Electrical needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Omar Romero-Hernandez, David Hirsch, Sergio Romero suggests that, Legrand Electrical is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Lack of clear differentiation of Legrand Electrical products
– To increase the profitability and margins on the products, Legrand Electrical needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Legrand Electrical has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Legrand Electrical has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow to strategic competitive environment developments
– As Legrand: Lightening Their (Electricity) Load HBR case study mentions - Legrand Electrical takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow decision making process
– As mentioned earlier in the report, Legrand Electrical has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Legrand Electrical even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Opportunities Legrand: Lightening Their (Electricity) Load | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Legrand: Lightening Their (Electricity) Load are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Legrand Electrical can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Legrand: Lightening Their (Electricity) Load, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Legrand Electrical has opened avenues for new revenue streams for the organization in the industry. This can help Legrand Electrical to build a more holistic ecosystem as suggested in the Legrand: Lightening Their (Electricity) Load case study. Legrand Electrical can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Legrand Electrical can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Legrand Electrical can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Better consumer reach
– The expansion of the 5G network will help Legrand Electrical to increase its market reach. Legrand Electrical will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Legrand Electrical can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Legrand Electrical to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Legrand Electrical can use these opportunities to build new business models that can help the communities that Legrand Electrical operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Leveraging digital technologies
– Legrand Electrical can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Using analytics as competitive advantage
– Legrand Electrical has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Legrand: Lightening Their (Electricity) Load - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Legrand Electrical to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Legrand Electrical can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Legrand Electrical can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Legrand Electrical can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Legrand: Lightening Their (Electricity) Load External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Legrand: Lightening Their (Electricity) Load are -
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Legrand Electrical will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Legrand Electrical in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Legrand Electrical.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Regulatory challenges
– Legrand Electrical needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Legrand: Lightening Their (Electricity) Load, Legrand Electrical may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Legrand Electrical business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Legrand Electrical is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Legrand Electrical in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Legrand Electrical can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Legrand: Lightening Their (Electricity) Load .
Technology acceleration in Forth Industrial Revolution
– Legrand Electrical has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Legrand Electrical needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Legrand Electrical with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Legrand Electrical demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Weighted SWOT Analysis of Legrand: Lightening Their (Electricity) Load Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Legrand: Lightening Their (Electricity) Load needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Legrand: Lightening Their (Electricity) Load is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Legrand: Lightening Their (Electricity) Load is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Legrand: Lightening Their (Electricity) Load is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Legrand Electrical needs to make to build a sustainable competitive advantage.
