ENGIE: Strategic Transformation of an Energy Conglomerate SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of ENGIE: Strategic Transformation of an Energy Conglomerate
In 2016, the a??75 billion French multinational energy conglomerate ENGIE was massively transforming its strategic and operational imperatives toward renewable energy. The 200-year old company owned Europe's biggest natural gas pipeline and was a major global producer and supplier of natural gas and other energy sources. ENGIE had announced the transformation in 2014-following a sharp drop in global fossil fuel prices-viewing it as the beginning of a new era in energy. ENGIE set goals to double renewable power capacity for Europe over the next decade, rapidly expand its renewable footprint in high growth regions such as India and China, slash its lines of businesses based on commodities, and reduce exploration of oil and gas. CEO Isabelle Kocher's vision followed her belief that "the name of the game was to take the lead in the new energy world." The case is set in mid-2015, when top management, convinced that ENGIE needed to build a strong global portfolio quickly, acquired nine-year old French energy company Solairedirect for a??200 million. The acquisition made ENGIE the number one solar company in France and gave it an international presence and product pipeline. Solairedirect had a profitable business model-different from ENGIE's-that enabled it to rapidly build utility scale solar photovoltaic installations at competitive prices. ENGIE believed that buying the smaller company would bring an entrepreneurial spirit and new way of thinking to the company. However, ENGIE had just reorganized along mostly geographical business units, and Solairedirect did not fit into that organizational structure. Also, when ENGIE acquired Solairedirect, the solar company had just experienced an unsuccessful IPO attempt. The questions arose as to whether a company in that situation was a good acquisition target; whether ENGIE paid the right price for it; and how, and to what extent, Solairedirect could or should be integrated into the larger organization.
Swot Analysis of "ENGIE: Strategic Transformation of an Energy Conglomerate" written by Stefan Reichelstein, Debra Schifrin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Engie Solairedirect facing as an external strategic factors. Some of the topics covered in ENGIE: Strategic Transformation of an Energy Conglomerate case study are - Strategic Management Strategies, Growth strategy, International business, Mergers & acquisitions and Strategy & Execution.
Some of the macro environment factors that can be used to understand the ENGIE: Strategic Transformation of an Energy Conglomerate casestudy better are - – talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings,
increasing transportation and logistics costs, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of ENGIE: Strategic Transformation of an Energy Conglomerate
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ENGIE: Strategic Transformation of an Energy Conglomerate case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Engie Solairedirect, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Engie Solairedirect 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 ENGIE: Strategic Transformation of an Energy Conglomerate can be done for the following purposes –
1. Strategic planning using facts provided in ENGIE: Strategic Transformation of an Energy Conglomerate case study
2. Improving business portfolio management of Engie Solairedirect
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Engie Solairedirect
Strengths ENGIE: Strategic Transformation of an Energy Conglomerate | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Engie Solairedirect in ENGIE: Strategic Transformation of an Energy Conglomerate Harvard Business Review case study are -
Diverse revenue streams
– Engie Solairedirect is present in almost all the verticals within the industry. This has provided firm in ENGIE: Strategic Transformation of an Energy Conglomerate case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Training and development
– Engie Solairedirect has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in ENGIE: Strategic Transformation of an Energy Conglomerate 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.
Strong track record of project management
– Engie Solairedirect is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Strategy & Execution industry
– ENGIE: Strategic Transformation of an Energy Conglomerate firm has clearly differentiated products in the market place. This has enabled Engie Solairedirect to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Engie Solairedirect to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Engie Solairedirect has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Engie Solairedirect 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.
Cross disciplinary teams
– Horizontal connected teams at the Engie Solairedirect 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.
Effective Research and Development (R&D)
– Engie Solairedirect 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 ENGIE: Strategic Transformation of an Energy Conglomerate - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Strategy & Execution field
– Engie Solairedirect is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Engie Solairedirect in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Engie Solairedirect in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Engie Solairedirect 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 Stefan Reichelstein, Debra Schifrin 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.
Operational resilience
– The operational resilience strategy in the ENGIE: Strategic Transformation of an Energy Conglomerate 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 Engie Solairedirect in the sector have low bargaining power. ENGIE: Strategic Transformation of an Energy Conglomerate has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Engie Solairedirect to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses ENGIE: Strategic Transformation of an Energy Conglomerate | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ENGIE: Strategic Transformation of an Energy Conglomerate are -
Aligning sales with marketing
– It come across in the case study ENGIE: Strategic Transformation of an Energy Conglomerate that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case ENGIE: Strategic Transformation of an Energy Conglomerate can leverage the sales team experience to cultivate customer relationships as Engie Solairedirect is planning to shift buying processes online.
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 Engie Solairedirect supply chain. Even after few cautionary changes mentioned in the HBR case study - ENGIE: Strategic Transformation of an Energy Conglomerate, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Engie Solairedirect vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Engie Solairedirect has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow decision making process
– As mentioned earlier in the report, Engie Solairedirect 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. Engie Solairedirect 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Engie Solairedirect is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study ENGIE: Strategic Transformation of an Energy Conglomerate can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Engie Solairedirect needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Capital Spending Reduction
– Even during the low interest decade, Engie Solairedirect 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the ENGIE: Strategic Transformation of an Energy Conglomerate HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Engie Solairedirect has relatively successful track record of launching new products.
Need for greater diversity
– Engie Solairedirect has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study ENGIE: Strategic Transformation of an Energy Conglomerate, is just above the industry average. Engie Solairedirect 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 cash cycle compare to competitors
Engie Solairedirect 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.
Opportunities ENGIE: Strategic Transformation of an Energy Conglomerate | 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 ENGIE: Strategic Transformation of an Energy Conglomerate are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Engie Solairedirect to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Engie Solairedirect to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Engie Solairedirect can develop new processes and procedures in Strategy & Execution 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Engie Solairedirect can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Engie Solairedirect can use these opportunities to build new business models that can help the communities that Engie Solairedirect operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Engie Solairedirect in the consumer business. Now Engie Solairedirect can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Engie Solairedirect can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Engie Solairedirect can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Engie Solairedirect to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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. Engie Solairedirect can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Engie Solairedirect 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, ENGIE: Strategic Transformation of an Energy Conglomerate, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Engie Solairedirect has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Building a culture of innovation
– managers at Engie Solairedirect 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 Strategy & Execution segment.
Leveraging digital technologies
– Engie Solairedirect 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.
Creating value in data economy
– The success of analytics program of Engie Solairedirect has opened avenues for new revenue streams for the organization in the industry. This can help Engie Solairedirect to build a more holistic ecosystem as suggested in the ENGIE: Strategic Transformation of an Energy Conglomerate case study. Engie Solairedirect can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats ENGIE: Strategic Transformation of an Energy Conglomerate External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ENGIE: Strategic Transformation of an Energy Conglomerate are -
Stagnating economy with rate increase
– Engie Solairedirect can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
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 Engie Solairedirect in the Strategy & Execution sector and impact the bottomline of the organization.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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 Engie Solairedirect.
Environmental challenges
– Engie Solairedirect needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Engie Solairedirect can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Engie Solairedirect needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study ENGIE: Strategic Transformation of an Energy Conglomerate, Engie Solairedirect may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Regulatory challenges
– Engie Solairedirect 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 Strategy & Execution industry regulations.
Consumer confidence and its impact on Engie Solairedirect 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Engie Solairedirect with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Engie Solairedirect in the Strategy & Execution industry. The Strategy & Execution 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Engie Solairedirect 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 ENGIE: Strategic Transformation of an Energy Conglomerate .
Shortening product life cycle
– it is one of the major threat that Engie Solairedirect is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of ENGIE: Strategic Transformation of an Energy Conglomerate 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 ENGIE: Strategic Transformation of an Energy Conglomerate 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 ENGIE: Strategic Transformation of an Energy Conglomerate 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 ENGIE: Strategic Transformation of an Energy Conglomerate 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 ENGIE: Strategic Transformation of an Energy Conglomerate 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 Engie Solairedirect needs to make to build a sustainable competitive advantage.