Alstom SWOT & PESTLE Analysis

Strength

1. Strategic and successful mergers & acquisitions: Alstom signed an agreement to acquire 25% stake in the Kazakh national railway company (KTZ) EKZ Joint Venture (JV) for €21 million. As at 25 February 2019, all the suspension conditions have been met and now Alstom owns 75% of the shares, giving them control over the Kazakh company, which is specialized in the manufacturing and the maintenance of electric locomotives especially for the Eurasian Economic Union and CIS markets. Alstom also bought the remaining 49% of NTL Holding. This holding was created in 2012 jointly with Bpifrance to acquire the “Translohr” tramway on tires. Henceforth, Alstom owns 100% of the company and the consolidation method has been changed accordingly from equity to full consolidation. The price allocation is now fully completed and generated no significant impact. Even the company’s decision to acquire Bombardier Transportationin 2020 is expected to create a significant concentration of sales in the European rolling-stock market. These strategic mergers & acquisitions will be helpful in creating long term benefits.

2. Strong research and development capabilities: Alstom supports its R&D efforts by fostering a strong culture of innovation within the company, and encouraging in-house creativity. It invested almost 3.7% of its sales in research and development, for fiscal year 2019-20. Alstom promotes open innovation by partnering with various universities, start-ups and research centers. It organizes an annual competition to let innovative ideas flourish, which is open to all employees across all business lines and site. The competition rewards creativity in every shape and form, spanning products, systems, processes, sustainable development, Open Innovation and more. Alstom has structured an innovation process designed to identify and nurture the most promising ideas in line with the Group’s innovation strategy. The present strategy of R&D investment and partnerships has helped the company reveal ground breaking innovations such as the zero-emission regional train () , the electric bus (Aptis), the multimodal management system for urban transport( Mastria or the first online marketplace for the mobility sector(StationOne).

3. Excellent working environment and HR policies: Alstom has bagged the certificate for being Top Employer Europe 2020 from the Top Employer Institute in six countries France, Spain, Italy, Poland, Belgium and UK and has thus joined a prestigious group of companies that are committed to the highest European standards regarding the working environment and a great dedication to HR excellence. The international independent audit, Top Employer Institute, provides this certification based on nine different aspects: Talent Strategy, Workforce Planning, On-boarding, Learning and Development, Performance Management, Compensation and Benefits, Career and Succession Management, Leadership Development and Culture. The company management has said that its decision to pursue Top Employers certification was driven by the will to challenge itself in terms of HR practices and to have an external view on the internal processes to continuously improve the Employee Experience.

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Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Inclination of the transportation industry towards greener mobility: The increased concern for sustainable ways of operations and development in the transportation industry has compelled the companies to look for greener and smarter mobility solutions. Alstom has been trying to strengthen its position as a leading actor in providing comprehensive alternative solutions to diesel pushing towards carbon neutrality. Alstom is actively involved in research and development of green mobility solutions and has now been offering all types of traction systems on the market, as well as the full range of emission-free drives, from efficient electric motors to hydrogen fuel-cells and advanced battery traction. Alstom’s eco-design policy focuses on monitoring and reducing environmental impact of its solutions throughout their entire lifecycles to improve their sustainability performance. The policy also focuses on energy efficiency of rail transport systems; use of clean, recyclable, and natural materials; reduction of noise and vibrations; reduction of air emissions; and end-of-life management of products, particularly in maintenance activities. To identify significant environmental aspects and improvement areas and assist in the making of technical choices, Alstom has implemented lifecycle assessments on the production side. While, the environmental product declarations (EPDs) provide a detailed picture of the impact of various Alstom solutions on the customer side, Alstom even aims at decarburization of mobility by complete range of green traction solution and has further plans of sourcing entire electricity from renewable sources by 2025.

2. Pioneering efforts to curb climate change: Alstom has maintained a score of “A- “in the list of 2019 CDP climate change. They have been able to achieve this consistency with the help of sustainable mobility and this also exhibits the company’s policy and strategic structure which aims to reduce negative impacts in terms of climate change. Their new strategy sets ambitious objectives for the year of 2025. This includes a 25 % reduction in the energy consumption compared to 2014, sourcing of 100 % of the company’s electricity supply from renewable sources, and for 100 % of newly-developed solutions to be eco-designed. In the September of 2019, they were also selected for the ninth consecutive year as part of Dow Jones Sustainability Index (DJSI), World and Europe. All these demonstrate the social responsibility borne by the company and are a constant source of goodwill.