Comprehensive SWOT Analysis of ENGIE – One Of The Best Energy Utility Company In France

Quick Stats on ENGIE

Founder	Ferdinand de Lesseps
Year Founded	2008
Origin	France
No. of Employees	171,100
Company Type	Public
Market Cap	€ 31.922 Billion (2021)
Annual Revenue	€ 60.1 Billion (2019)
Net Income/ Profit	€ 984 Million (2019)

 

Products by ENGIE

• Natural gas production
• Electricity generation
• Petroleum and distribution
• Hydroelectricity
• Nuclear power
• Wind power
• Energy trading
• Facilities management and business services

Competitors of ENGIE

• Mytilineos
• Veolia
• Vattenfall
• BP
• TotalEnergies
• Electricite de France

Now that we know everything we need to know about ENGIE, let’s start with the SWOT analysis of ENGIE.

SWOT Analysis of ENGIE

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 ENGIE, refer to the infographic below:

  

So let us first start by looking at the strengths of ENGIE from the SWOT analysis of ENGIE

Strengths of ENGIE

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 ENGIE’s strengths: 

• Brand Name & Reputation: ENGIE is a big company with 180+ years of experience and expertise. It has a stronghold over the market with operations in more than 27 countries in Europe and 48 countries worldwide and has maintained a high reputation over the years.
• Controlled Activities: ENGIE 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 strengthens of the company to maximize its value creation. 
• Customer Satisfaction: The company 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: ENGIE has successfully integrated its business operations vertically by engaging in the exploration and production of natural gas, electricity, etc. The upstream market, involving engineering, purchasing, operation and maintenance. In the downstream market, it is in the marketing of hydroelectricity. They enjoy quality control and cost benefits as competitive advantages by vertical integration.

(ENGIE Invests in H2 Technology, Source: ENGIE) 

• Research and Development: ENGIE is continuously trying to improve its technology to decrease its carbon footprint and greenhouse emission while trying to extract more electricity with fewer efforts. Such as, recently ENGIE is supporting regions and industries in the development of hydrogen transport by developing hydrogen mobility solutions. 

Weaknesses of ENGIE

Weaknesses are the areas where the company is lacking behind and needs improvement. Let’s have a look at the weaknesses of ENGIE:

• 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, ENGIE 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 which also means that it is missing out on new opportunities.
• Less Return On Equity (ROE): Return on equity is a measuring tool. It is considered as the return on net assets. A rising ROE conveys that the company is increasing its profit generation without needing capital and vice versa. ENGIE’s ROE as of now is considered low and it is something the company needs to pay attention to.

Opportunities for ENGIE

• Economic Development: Economic development and rising consumer spending, after years of economic decline and slow growth rate in the industry, is ENGIE’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 ENGIE products by the government and federal government contractors.
• New Acquisitions & Partnerships: ENGIE is always ahead in acquiring new opportunities and partnering with other nations for sustainable growth such as recently ENGIE partnered with Emirates renewable energy company Masdar to develop a hydrogen hub in the United Arab Emirates.
• Global Expansion: ENGIE 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. ENGIE’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 ENGIE

• International Instability: As the company operates in many countries it is facing financial instability especially given the volatile political situation in many markets around the world.
• High Competition: Energy and power is a sector that is gaining the market’s attention lately. ENGIE has enjoyed a time of monopoly in the market but as of now, several better competitors in the market will keep on increasing.
• The Rising Cost of Production: No company can completely avoid the rising costs of production. ENGIE, sustainably producing electricity and gas will have to face these costs at a higher and larger scale.

This ends our comprehensive SWOT analysis of ENGIE. Let us conclude our learning below.