Schneider Electric

Schneider Electric operates in many countries from industrialized large cities to rural
villages all to provide sustainable energy, electrical products, and electrical services to
those regions and its people. Global corporations such as Schneider Electric have many divisions
that fall under their umbrella. Each of these divisions runs as a separate company each having
its own leadership team that includes a vice president who reports to Schneider Electric’s
CEO. Their solar and renewable energy business unit is no exception and as an independent unit,
must strategically position themselves to compete on a global stage. Renewable energy
companies that succeed on a global level need to be conscious of all the general environmental
segments that can and will affect the business. Renewable energy companies must analyze all
aspects of the environment in which they plan to install a system. The two environmental
segments that would rank highest for the business would be the political segment and the
technological segment. Identifying, analyzing, and ensuring these two segments are addressed
before entering into a contract is imperative.
Understanding the political climate and laws of the country in which a company plans to do
business is required for success. Each country and state has many and widely different laws and
regulations regarding construction and safety that are expected to be followed to do business.
The political climate of a region is also a notable area of concern for a renewable energy
company as costs can vary to do business. In the United States, during a republican presidency,
renewable energy does not get the market push, resources, or tax breaks it does during a
democratic presidency. In a 2020 Forbes article, at the time candidate and former Vice President
of the United States Joe Biden said “We’re not just going to tinker around the edges. We’re going
to make historic investments that will seize this moment in history.” When discussing his plans

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for a green energy spending plan. (Garret.1) Joe Biden now President has begun to enact his
campaign promises and create plans of action for sustainable energy including rejoining the Paris
Climate Accord. These types of actions by a political leader create new opportunities for
renewable energy companies and their ability to lobby the government for opportunities to do
business in the country.
Technology and innovation advance daily and to quote from the motion picture Talladega
Nights: The Ballad of Ricky Bobby, “If you’re not first, you’re last.” This is the mindset
companies in the technology sector must have to compete in a highly competitive market.
Understanding and analyzing the technological segment is required due to the rapid advancement
of technology. “The importance of these efforts is shown by the fact that early adopters of new
technology often achieve higher market shares and earn higher returns.” (Hitt.2) Having the
latest and greatest technology in an industry allows a company to blaze the trail forward with
other companies trying to play catch up. In Schneider Electric’s case, they are playing catch up as
they have recently decided to jump into the smart home software technology where homeowners
can manage their energy decisions. “Schneider Electric’s Insight helps homeowners make
decisions on their energy footprint. Homeowners see their energy production and consumption
from mobile or web apps and control their solar and storage systems.” (SE.com.3) This is a
fantastic stride however other companies in the industry have been doing this for a few years
now putting the company at a disadvantage when marketing their product to customers who have
already had access to similar technology.
In addition to environmental factors, a company must also analyze and understand the
forces of competition in their market to succeed. The five forces of competition are the
bargaining powers of buyers and suppliers, new competitors in the market, the current

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competition and the possibility of comparative products that can come to market. Of these five the
two I estimate that are the most significant to Schneider Electric are the current competition and
the threat of comparative products that can come to market. In the solar world, it is a race to the
bottom dollar. “The cost of solar energy has plunged 90% over the past decade. And the price of
residential solar power is projected to fall another 17% over the next five years.” (Garret.1) This
decline is due to many reasons including lower manufacturing costs as most products are
produced in China and the advances in technology have created more efficient solar panels and
batteries. This creates very stiff competition between companies forcing each side to slash
prices and take minimal returns. Substitute products are also a real concern for tech companies as
China does not have laws that prevent them from duplicating a product design and reproducing
it with less expensive materials. This gives buyers a lower cost option that will perform similarly
to what the company offers and caps what the company can sell their product for.
There is no real way to stop these two forces of competition however there are ways to
mitigate the risks associated with them. The price of solar will only continue to fall in the coming
years and a way to keep margins the same is to renegotiate contracts with suppliers or cut them
out entirely. Schneider Electric has done this by purchasing companies they believe will add to
every division under their umbrella. In 2014 Schneider Electric purchased Invensys for $5 billion
dollars allowing them to cut out the products they used to purchase from them. (Control
Engineering.4) While the initial cost is high the long-term costs will reduce. Substitute products
will always be a major force of competition for non-luxury brands. China can
manufacture and deliver products very quickly to market and has a long history of disregarding
patents and producing a similar product for less cost. There is no way to prevent this as a product
can be purchased by anyone and torn down to see what is in it and how it works. Schneider

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Electric relies on its level of service and commitment to its customers. I believe this is the best
course of action as consumers will usually pay more if they trust the brand.
The two greatest external threats to a solar company will always be an unstable political
climate in the area of operation and advancing technology. While the political climate during a
conservative leadership will always be a threat to renewable energy companies, the time when a
liberal leadership is in place becomes their greatest strength. It is at these times companies like
Schneider Electric can lobby and obtain huge government contracts that can go for years beyond
the current leadership. It is not possible to know what the next breakthrough into the world of solar
will be, however, if I were in charge I would focus on the efficiency of solar panels as the
greatest opportunity as they are currently only 22.8% at their highest, (Aggarwal.5) The
company that creates a panel with a 50% or higher efficiency will take over as the market leader
for years to come.
Schneider Electrics’ greatest strengths are its balanced product portfolio and its global
presence. Its greatest weakness is its increasing liabilities. (SE SWOT.6) I believe the
company needs to remain focused on its global presence and continue to add locations and assets
to its expansion. I believe growth in a brand is made or broken by the saturation of a market.
Companies like Coca-Cola and McDonalds are identified by most of the world by just their
logo or slogan, all due to market saturation. To fix their greatest weakness Schneider must reduce
their liabilities to pull in new investors. High liabilities create issues when it comes to
borrowing and credit which investors see as derogatory debt. There is no easy way to settle
short-term debt with such a large company, however liquidating and trimming divisions that are
struggling would be the right direction in my opinion. Removing dead weight and focusing on
profitable divisions can help free up income to lower the debt.

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Schneider Electric has many resources and capabilities to offer. From design,
manufacturing, end-to-end solutions, and energy distribution. The renewable energy division
offers the possibility of clean renewable energy to take the stress off of planetary finite resources
and the promise of world-class service and engineering solutions. “As an industry leader, the
Solar Business of Schneider Electric is focused on designing and developing products and
solutions for the solar power conversion chain and providing best-in-class global customer
services and technical support.” (SE.com.7) This core competency and promise is backed by the
employees in its hundreds of locations across the globe. While not yet a household name in the
United States, the brand is huge in Europe and Asia and continues to gain traction here at home.

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Sources

1. Garret, Olivier. 8/12/2020. If Biden Wins, Solar Stocks Could Go Ballistic. Retrieved
   from: https://www.forbes.com/sites/oliviergarret/2020/08/12/if-biden-wins-solar-stocks-
   could-go-ballistic/?sh=67ca02de7c63
2. Hitt, M.A. Ireland, R.D. & Hoskisson, R.E. 2019. Strategic Management: Concepts and
   Cases (13th Edition). Cengage Learning EMEA. (Page 49)
   https://strayer.vitalsource.com/books/9780357125854
3. SE.com. 10/20/2020. Schneider Electric Solar Expands Its Energy Management
   Ecosystem with New Smart Edge Devices. Retrieved from: https://solar.schneider-
   electric.com/schneider-electric-solar-expands-its-energy-management-ecosystem-with-
   new-smart-edge-devices/
4. Control Engineering. 2014. Schneider Electric completes Invensys acquisition, poised to
   “change the industrial landscape. Retrieved from: https://search-ebscohost-
   com.libdatab.strayer.edu/login.aspx?direct=true&db=bth&AN=94867904&site=eds-
   live&scope=site
5. Aggarwal, Vikram. 2/5/2021. Most efficient solar panels: solar panel cell efficiency
   explained. Retrieved from: https://news.energysage.com/what-are-the-most-efficient-
   solar-panels-on-the-market/
6. SE SWOT. 2021. Schneider Electric SE SWOT Analysis, 1–7. Retrieved from:
   https://search-ebscohost-
   com.libdatab.strayer.edu/login.aspx?direct=true&db=bth&AN=151600001&site=eds-
   live&scope=site.

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7. SE.com. 2021. Schneider Electric Solar. About. Retrieved from: https://solar.schneider-
   electric.com/company/about-us/