Iberdrola Strategy and Analysis

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Date Submitted: 12/08/2010 05:53 PM

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Iberdrola SA is a Spanish-based international energy generation and distribution company with activities in 40 countries and a market cap of over $35B. In 2009, Iberdrola produced over 142 GWh of electricity with an industry-leading 15% share of renewable energy. In 2005, they produced less than half this total with a dramatically smaller global presence. In the span of 5 years, they grew dramatically and effectively moved themselves into a different industry; this paper will explore why they were motivated to change and how this was possible. We will use the Porterian models of industry analysis (5 Forces), positioning analysis and sustainability analysis to measure and grade Iberdrola and its industry in 2005 and 2010.

Looking forward, Iberdrola has positioned itself to enhance its position in the renewable energy markets, but its success will largely depend on whether or not the regulatory environment will shift to be more conducive to growth. In addition, as renewable energy adoption proliferates, dominant design in generation emerges, and the successful differentiators cut costs, Iberdrola will benefit with technological improvements that improve profits through better power generation at lower costs. Our conclusion contains recommendations for Iberdrola to sustain their competitive advantage in this unique industry.

Analysis of the Spanish Utility Industry in 2005

In 2005, Iberdrola’s industry can be defined as energy generation and distribution in Spain. Iberdrola’s presence in this industry had been rooted in its commitment to combined cycle electricity generation (output of 31,963 GWh), although in 2005 it saw unprecedented growth in renewable energy generation at 7,058 GWh, a 30.4% increase over 2004. The Spanish utilities industry in 2005 achieved extraordinary profitability, with an industry average of 13.0% amidst an average Fortune 500 profitability of 7.1%.

5 Forces Analysis:

Power of Suppliers: Medium. Coal, oil, natural...