ENGIE Group was formed as a result of a merger among several companies. Such companies include Compagnie Universelle de Belgique, Gaz de France and international and some other companies. ENGIE is a French multinational company dealing in electric utilities. Headquarter of the company is in La Defense, France. The company is doing business in energy generation, and distribution of such energy resources. Resources such as renewable energy, nuclear energy, natural gas, and petroleum.
The company is listed in the Euronext stock exchange in Paris and Brussels. It’s stock value is 14.50 EUR as per 05-Dec-2019. The company is founded in July-2008. The CEO of the company is Isabelle Kocher. This company owns total assets of EUR 153.7 billion. Total revenue of almost EUR 60.06 billion according to the annual report of 2018. This company is doing operations in almost 70 countries of 5 different continents, across the world. The government of France has a 24% share in its ownership. The total number of employees in an organization is 160,000. Its main subsidiaries are ENGIE Axima, ENGIE Ineo, ENGIE Endel, ENGIE Fabricom, ENGIE Home Services, ENGIE Global Markets, and some others. [1]
Threats of New Entrant
The energy industry is one of the worst sectors for new entrants. Due to its nature and scale of production. There are several entry and exit barriers that exist in the industry. These barriers include high starting cost due to large scale production and distribution channels. A monopoly of existing groups in a market is also a barrier.
Another barrier is long procedures because the company has to follow rules and regulations, different approvals have to be taken from the government. Therefore, it is a time consuming and complex process.
Similarly, current corporations are innovating themselves to create a competitive advantage. Engie is more focused on generating energy from other substitutes of carbon. The company generates 89% of low carbon dioxide sources. The government is regulating the industry so companies have to be environmentally friendly. Current companies created barriers for new entrants by using economies of scale. Therefore threats of new entrant in this industry is very low. [2]
Threats of Substitute
Engie is generating energy through low CO2 sources. Similarly, companies are using different strategies to create a competitive edge over others. As the product is the same due to which every company is willing to be a buyer’s priority. So, strategy can be cost reduction to offer fewer prices in the market. Strategy can be vertical integration etc. Therefore, threats of substitutes exist in the market. In the case of Engie, it is low because the company is using various methods of generating energy that gives a competitive edge to the company. [2]
Bargaining Power of Buyers
When we talk about Engie, the bargaining power of the buyer is low because there are large number of buyers across the borders. Similarly, the bargaining power of buyers in this industry is low because there are a large number of buyers in the market. Different substitutes are offered, but the demand for this industry is not disturbed because it is one of the basic needs in today’s world. Buyer as an individual cannot bargain with different large groups such as Engie.
Bargaining Power of Suppliers
In the current scenario, the bargaining power of the supplier exists in the market due to which every company is trying to reduce its expenses by reducing the cost of transportation and automation in operations. Similarly, companies are doing vertical integration to save resources. Different companies are using several other methods to generate energy such as,wind energy, nuclear energy, etc. Therefore all of these factors are reducing the current bargaining power of suppliers gradually.
Competitive Rivalry
Every company is targeting the same type of customers in the market. There is no such diverse segments in the market. There are a few numbers of sellers and a large number of buyers. Price change by any company affects other companies. The product of the company is almost the same due to which every company is trying to increase its customers by creating a competitive edge over others. Different companies are going towards mergers to become more influential and increase market share. Therefore in this industry, there is high competitive rivalry.
References
1 ENGIE, 2018, Annual Report 2018, [online], Available at: https://www.engie.com/en/investors/results/2018-results/
2 Engie global, 2019, Engie Global, [online], Available at: https://www.engie.com.au/home/about-engie/engie-global/