Acuity Brands SWOT & PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Undertaking of Europe 2020 Strategy: Acuity Brands has Europe as one its important markets outside North America. Acuity Brands focuses on Energy Efficient Lighting Solutions and Building Management Solutions. The company provides fixtures along with software that track energy wastage as well as controls to automatically reduce the wastage. Europe 2020 Strategy is an agenda of European Union taken up as a successor of Lisbon Agenda for growth and jobs. It aims at reducing greenhouse emissions by 20% of what it was in 1990, and also aims at increasing energy efficiency by 20% before 2020. The pillars are Smart, Sustainable and Inclusive growth. The important aspect to look at is “Smart growth” which is defined as developing knowledge and innovation based economy. “Sustainable growth” aims to promote a resource efficient and greener economy. This is exactly in line with the strategies of Acuity Brands and thus is an opportunity for the company in its European Market.

2. Changing Consumer Preferences: In USA, 25% of the population that would enter the workforce would be Gen Z, almost 70 million. They are called digital natives, born and brought up amongst smart phones. According to Goldman Sacs, a huge fraction of this group connects online for a minimum of one hour a day and it’s surprising that almost 50% of them are connected for more than 10 hours. But along with this, Gen Z is also concerned with what they do and how they are perceived online, much more than their previous generation. This generation is more prone to online purchases and has a very alert and conservative mindset when it comes to purchases. As such word of mouth online matters greatly. Under such a scenario it gives a company like Acuity Brands a set of potential future customers who are more than ready to get hold of smart cities and devices and the concept of being able to control the lighting, temperature and conditioning of their homes sitting miles far away with a smart handheld phone.

3. Stable Free Cash Flows: Free cash flow (FCF) refers to net cash inflow from operations less capital expenditures. It is the amount left with a company, generated by operations, after adjusting for amount that is to be reinvested in non-current capital assets. Acuity Brands showed a stable Free Cash Flow over the last 5 years, in 2014 the Free Cash Flow was $197.8 million, in 2015 it was $232.4 million, in 2016 it was $262 million, in 2017 it was $248.9 million, and it was 2018 it was $309.6 million. With these stable free cash flow figures, the company can venture into new product lines, invest in R&D and reinforce their hold in their operating geography through extensive market research. Even with unplanned roller-coasters in the industry, the company has paid out a cash amount of 0.13 as dividends. Most importantly, free cash flows enable a company to enhance shareholder’s value and pay off debts and even go on with all the acquisitions.

Threat

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Political

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Economic

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Social

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Technological

1. Trends towards Human Centric Lighting Solutions: Human Circadian cycle is heavily disrupted by long exposures to artificial lights. This ultimately can affect both physical and mental fitness. It is beyond correlated color temperature. Brain processes visual images but at the same time photoreceptors in retina are affected by the blue wavelength. These ultimately set our biological clock and coordinate levels of alertness and concentration. HCL (Human Centric Lighting Solutions) can increase productivity along with quality. HCL can help in healthcare sector. For example, with the right HCL and light therapy treatment the body clock can be reset which is the major issue in cases of Dementia. Sleep disruption which is one of the causes for obesity, low concentration levels, increased cases of dyslexia, autism and depression can also be helped by HCL. HCL can help in reducing Jet lags. If an aircraft is travelling east and the cabin is lit up with blue light at dawn, while the same lighting is provided at late nights for passengers in planes moving west, it can reduce Jet lags.
Acuity has a good number of offerings in this domain like its LightFlex Led, which uses sensors to monitor the external day light entering a room and then supplements it with Led to maintain the body clock. Sunoptics Signature Series are open ceiling mountable glare free, full spectrum natural light having HCL capabilities. Acuity Brands has also collaborated with Jim H. McClung Lighting Research Foundation to fund research on Humanistic Lighting. The testimonials by teachers and principal of Davis Elementary school, Texas where the company installed tunable white lights is an example of how humanistic lighting by the company increases productivity.

2. Development of LiFi: Light Fidelity offers connectivity where radio waves can create interference like in airplanes. LiFi allows greater security because connectivity is only possible under a light source. With the WiFi networks becoming increasingly congested, the next leap in technology seems to be LiFi. According to Market Research Future, the LiFi market is expected at 70% of CAGR from 2017 to 2023. Atrius Retail IoT solutions have already been working in this field enabling retailers to visualize current locations of customers, store traffic, and understand consumer patterns.

3. Growth of IoT: According to Gartner Forecasts, IOT would comprise of 14.2 billion devices and 25 billion by 2021.Currently, we are already seeing the advent of marvels like Digital Twins, and IIOT. Caterpillar for example used augmented reality and IoT to measure parameters of the heavy equipment. Smart mirrors and smart locks are on the rise. The best way to understand this is to look at the capabilities of Google Glass.
Atrius IoT Solutions utilizes the power of that location-based sensory data – permitting businesses and developers to come up with a broad spectrum of mobile and web-based applications. From indoor positioning and spatial analytics to space utilization, Atrius IoT Solutions are helping transform IoT data into a world of infinite possibilities.
Atrius, under Acuity Brands has already developed technologies to collect data from lighting systems, like room occupancy levels, the lumen requirements and feed the data in to clouds which could then be further used to send a notification to your cell phones if you are planning to hold a meeting in a particular office cabin. Atrius Spaces translates occupancy data into precise insights into one’s space utilization to efficiently allocate and plan for spatial needs - optimizing facility operations, budgeting and life cycle management - across entire building or campus portfolio. Atrius Insights enables comprehension of how visitors interact with retail or office premises to aid businesses optimize customer journeys, analyze traffic and behavioral patterns, and enhance conversions. These systems can also for instance lead shoppers the way to reach their item of interest. Being in this domain for a long time, definitely gives Acuity Brands an edge. Atrius Assets combines asset tracking services with Bluetooth® low energy technology tags to control critical equipment and resources for easy, real-time location and status monitoring.

Legal

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Environmental

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