Last time we had a look at the detailed SWOT analysis of Shell, an Anglo Dutch-based multinational oil and gas company. This time we will dive deep into the SWOT analysis of Enel and its work.
The main provider of Electricity & Gas in Italy – Enel is a company that manufactures and distributes natural gas and electricity. Enel was established in 1962 with an ambition to enable Italy to play a key role in the manufacturing of great gas and sustainable electricity.
Enel’s efforts in marketing have helped them a lot. Marketing helps in achieving the desires and preferences of the target audience. Today every other company is using digital marketing, hence it has become a very important and essential skill to learn. You can check our Free MasterClass on Digital Marketing 101 by Karan Shah, the founder and CEO of IIDE.
Before we begin further with the SWOT analysis of Enel, let us discuss the company, what products it has to offer, its financials and its competitors.
Enel is an Italian multinational integrated natural gas and electricity company headquartered in Rome, Italy. The foundation of the company was laid back in 1962 when the government of Italy decided to establish a national electricity board so that the country didn’t have to depend upon the electricity produced by other neighbouring regional private companies such as France and the United Kingdom who were continuously exploiting the hydrogeological resources of the territory before 1962.
The aim of making electricity a means for the development of the country made Enel achieve the position of being the second-largest power company in the world by revenue in 2018. Gas and electricity will play an important part in our lives for several decades as the technologies are not much developed as of now. As a major player in the energy industry, Enel is aware of all the environmental risks of its operations. Their motive is to avoid or minimize these risks.
|No. of Employees||66,000+|
|Market Cap||$79.89 Billion (2021)|
|Annual Revenue||€65.0 Billion (2020)|
|Net Income/ Profit||€2.6 Billion (2020)|
Products By Enel
- Electricity generation and distribution
- Natural gas distribution
Competitors of Enel
Now that we know everything we need to know about Enel, let’s start with the SWOT analysis of Enel.
SWOT Analysis Of Enel
SWOT analysis is like a formula for identifying Strengths, Weaknesses, Opportunities, and Threats (SWOT) that a market possesses for a company. The main objective of this analysis is to help us, as investors and the company, to make business decisions wisely.
By using this method, we analyze where the company is falling short, where it is excelling, and what needs to be worked upon.
To better understand the SWOT analysis of Enel, refer to the infographic below:
So let us first start by looking at the strengths of Enel from the SWOT analysis of Enel.
Strengths of Enel
The strengths of a firm can be positive qualities that help the company to maintain goodwill in the market or give it a competitive advantage. Mentioned below are some of Enel’s strengths:
- Brand Name & Reputation: Enel is a big company with 60+ years of experience and expertise. It has a stronghold over the market with the distribution of electricity in more than 30 countries around Europe, North America, South America, Asia, and Africa. and has maintained a high reputation over the years.
- Exploring New Markets: Enel has a record of exploring and conquering new markets while having the advantage of consumer satisfaction. The worldwide expansion of the company has helped build a new revenue stream. Therefore, Enel can be considered as an experienced player when it comes to entering new markets.
- Positioning: Enel is the largest energy company in Europe by the number of customers and the second-largest by capacity, after EDF which itself works as the strength of Enel.
- Controlled Activities: Enel places corporate responsibility including social and environmental concerns at the top priority by promoting and adopting the best possible practices to control the impact of its activities on the environment. This is one of the biggest strengths of the company to maximize its value creation.
- Customer Satisfaction: Enel employs around 67,000 people, has 70 million customers worldwide and has a dedicated customer care team 24/7 to ensure a high level of customer satisfaction. The customer relationship management team has successfully established goodwill in the market by attending to the needs of existing and potential customers.
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- Vertical Integration: In the upstream market, Enel has successfully integrated its business operations vertically by engaging in the exploration and production of natural gas & electricity. In the downstream market, it is in the mission of sustainable development. They enjoy quality control and cost benefits as competitive advantages by vertical integration.
- Research and Development: Enel is continuously trying to improve its technology to decrease its carbon footprint and greenhouse emission while trying to extract more electricity with fewer efforts. Enel has many patents registered in their name and Enel has sustained investment in R&D. R&D helps in reducing expenditure and also gives competitive advantages.
Weaknesses of Enel
Weaknesses are the areas where the company is lacking behind and needs improvement. Let’s have a look at the weaknesses of Enel:
- Strong Government Regulations and Policies: There are strong government rules and regulations that make operational efficiency low and create a hindrance in the working of a company.
- Need for Investment: Compared to the other firms already present in the industry, Enel spends less than average on R&D. The company has created a mature image in the market which means that it will not be able to compete with other players in the market in terms of innovation until the investment budget is increased by the central government which also means that it is missing out on new opportunities.
- Financial Instability: Enel’s 2020 net sales and revenue are decreased by 19% compared to 2019. Till 2019 the company was progressing by 5% each year but after that, the company is facing challenges. The reason could be consumers switching towards cheaper offerings due to the previous year income stream getting a downfall.
- Shortage of Technical & Financial Resources: The business has experienced a shortage of technical and financial resources, which has reduced its ability to grow its service locally and globally.
Opportunities for Enel
Opportunities are uncontrollable external events a person can potentially leverage. These are favourable external factors that could give an organisation a competitive advantage.
- Economic Development: Economic development and rising consumer spending, after years of economic decline and slow growth rate in the industry, is Enel’s opportunity to capture new customers and expand its market share.
- Increasing Greener Demand: The accelerated demand for cleaner and greener energy drives also opens up the possibility of purchasing Enel products by the government and federal government contractors.
- New Acquisitions & Partnerships: Enel is always ahead in acquiring new opportunities and partnering with other nations for sustainable growth as recently Enel installed its 1st module of 187-MW solar plant in Colombia and initiated operations of 321MW of solar at wind parks in the US.
- Global Expansion: Enel is known for entering new markets and conquering them and hence, expansion to new locations and countries is always an opportunity for the firm.
- Need for Sustainable Development: The world has started to prefer brands that support environmental health. Enel’s current mission and vision clearly state that it is working its way towards greener energies and emerging sustainable technologies which, if pursued correctly can give the firm a huge advantage.
Threats to Enel
Threats are the external factors that may cause loss to the firm over time or all at once. Some of these are stated below keeping Enel in mind:
- The Rising Cost of Production: No company can completely avoid the rising costs of production. Enel, sustainably producing electricity and gas will have to face these costs at a higher and larger scale.
- Changing Environment Regulations: Italy has been updating its laws because of the increasing pressure by the public to save the environment. The updated laws may hinder the production process.
- Increasing Labor Prices: Changing labour laws and inflation will eventually lead to a labour price that is hard to afford as per the current performance of the company. Considering the number of employees that Enel has, labour prices are a threat to the firm.
- Political Volatility: Electricity and gas have been a very important subject of discussion between many countries for the last century. Energy demands and production are always surrounded by politics. Enel has the disadvantage of becoming a victim of political development in the future.
- Intense Competition: Increased competitors’ technologies and profit stability have increased the competition in the industry over the last two years which has put downward pressure on not only profit but also sales.
This ends our comprehensive SWOT analysis of Enel. Let us conclude our learning below.
Enel is a world-renowned energy player in Italy. Enel is a company that operates as a power and services team. In the SWOT analysis of Enel, we know that Enel faces the challenge of energy transformation through its three industries: electricity, natural gas and energy services.
With the growing competition in the Enel-like market, companies are left to struggle to win over their customers with better marketing efforts. In an ever-changing world where digital marketing is very important, a good knowledge of the industry is essential for all marketers. If you would like to learn more and develop skills, check out IIDE’s 3 Month Advanced Online Digital Marketing Course to learn more.
We hope this blog on the SWOT analysis of Enel has given you a good insight into the company’s strengths, weaknesses, opportunities and threats.
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