Comprehensive SWOT Analysis of Iberdrola – One of the Biggest Electricity Utilities

Quick Stats on Iberdrola

Founder	Juan de Urrutia
Year Founded	1840
Origin	Bilbao, Spain
No. of Employees	45,000
Company Type	Public
Market Cap	$66.52 Billion (2021)
Annual Revenue	€33.437 Billion (2020)
Net Income/ Profit	€3.611 Billion (2019)

 

Products By Iberdrola

Iberdrola has been within the Energy Industry for more than a century and deals in:

• Electricity Generation and Distribution
• Renewable Energy
• Natural Gas Production
• Sale and Distribution
• Telecommunications

Competitors of Iberdrola

Iberdrola competes on a worldwide level with numerous other mass gas producers. The best 5 competitors of Iberdrola are:

• Nordex
• Exelon
• Orsted
• KenGen
• Naturgy

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

SWOT Analysis Of Iberdrola

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 Iberdrola, refer to the infographic below:

  

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

Strengths of Iberdrola

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 Iberdrola’s strengths: 

• Strongest Producer of Wind Power: Iberdrola is the second-largest producer of wind power in the world which makes this one of the biggest strengths of Iberdrola.
• Brand Name & Reputation: Iberdrola is a big company with 114+ years of experience and expertise as Hidroeléctrica Española. It has a stronghold over the market with the distribution of electricity in more than 7+ countries around Spain, United Kingdom, USA, Brazil, Mexico, Germany, Portugal, Italy and France and has maintained a high reputation over the years.
• Exploring New Markets: Iberdrola 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, Iberdrola can be considered as an experienced player when it comes to entering new markets.
• Social Responsibility: Iberdrola is working on making a greener environment and sustainable development with its bold moves. Recently, Iberdrola tied up with NSW uni to go green under the wind-off deal and launched construction of solar in Portugal.
• Customer Satisfaction: Iberdrola employs around 457,000 people, has 32 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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• Research and Development: Iberdrola is continuously trying to improve its technology to decrease its carbon footprint and greenhouse emission while trying to extract more electricity with fewer efforts. Iberdrola has many patents registered in their name and Iberdrola has sustained investment in R&D. R&D helps in reducing expenditure and also gives competitive advantages.

Weaknesses of Iberdrola

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

• 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, Iberdrola 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.
• Worldwide Presence: Iberdrola worldwide presence is not up to the mark. It only provides its services in a few countries which makes its net revenue very low as compared to its competitors.

Opportunities for Iberdrola

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 Iberdrola’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 Iberdrola products by the government and federal government contractors.
• New Acquisitions & Partnerships: Iberdrola is always ahead in acquiring new opportunities and partnering with other nations for sustainable growth as recently Iberdrola launches construction of 86W of solar in Portugal and acquires more than 800MW of solar capacity in the UK.
• Global Expansion: Iberdrola 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. Iberdrola’s current mission and vision clearly state that it is working its way towards greener renewable energies and emerging sustainable technologies which, if pursued correctly can give the firm a huge advantage.

Threats to Iberdrola

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 Iberdrola in mind:

• The Rising Cost of Production: No company can completely avoid the rising costs of production. Iberdrola, 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 Iberdrola 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. Iberdrola 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 Iberdrola. Let us conclude our learning below.