Sempra Energy SWOT and PESTLE Analysis

Strength

1. Largest natural gas utility in the United States: Sempra Energy is the largest natural gas utility in terms of number of people served and the area under their service in the United States. This also makes it a major force in international natural gas markets. With revenue as high as US$ 10 Billion, it gives a clear idea about the size of the company.

2. Balanced portfolio of growth businesses: They invest and develop contracted energy infrastructure with a long-term focus. They have a very balanced portfolio which they also call their strength. Their business can broadly be seen in two categories - regulated utilities and energy infrastructure. Due to this diversification they continue to do well in a varying market conditions as well.

3. Strong financials with good shareholder value enhancement: The company has managed to have a good financial performance. As per their annual report, their dividend has gone up by 140% from 2008-17. And the total shareholder return has gone up by 112% from 2011-16. Hence, the shareholders have benefitted very well from the investment. This makes it a good choice for investments which will further improve the financials.

4. Recognized by Forbes for creating a healthy workplace: It featured on Forbes List of World’s Best Employers on the 83rd position. The company also received several awards for supporting LGBT equality in their workplace. These indicate a healthy workplace which always results in a stronger workforce focused towards better results for the organisation.

Weakness

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Opportunity

1. Scope for capitalizing on new opportunities in Competitive Energy Markets: There is a scope for increasing the global reach by tapping the potential in new, competitive energy markets. Sempra Energy states this as one of their strategies in increasing their profits. It is true that in today’s world, it is very difficult to stay profitable in a single region for a long time. Hence, their strategy involves looking out of their current region.

2. Growing Awareness for Sustainable Energy Sources: The company focuses and invests in sustainable energy sources. Nowadays, more and more countries and companies are becoming aware of and demanding sustainable energy. Hence, this provides longevity and goodwill to their business.

3. Increased tax incentives for energy-efficient sources: Along with increased awareness there is also increased support from the government for energy-efficient sources in the form of tax incentives. This is because sustainable energy resources are the need of the hour. It is not always possible for the government to invest in such resources beyond a certain point. Hence, they provide extended benefits to such organisations to burgeon as much as possible.

Threat

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References

1. Sempra EnergyAnnual Report 2016: https://www.sempra.com/2016_annualreport/

2. Company website: https://www.sempra.com/

Political

1. Strong government regulations: Government regulation compliance is strictly monitored. The regulations cover a wide range starting from environment regulations, emission regulations, operating procedures, worker and community safety and many more. This makes the process very tedious for them given that there is added pressure for maintaining these norms. Also, going against these norms willingly or unknowingly has a huge cost which no company would be willing to pay.

Economic

1. An aging infrastructure: The infrastructure already established keeps aging year on year. Renovation of the infrastructure is very important to stop energy loss or energy decay. This aspect comes particularly with this industry and it causes extra efforts to be in this industry. Some ethical issues also crop up regarding this factor. In reality, the company should cautiously invest in this aspect at regular intervals and shouldn’t try to cut costs through this route as it could cause further damage in the form of economic losses and hampering the reputation if any untoward incident occurs.

Social

1. Rising customer awareness and hence creation of goodwill: People are now more and more conscious of environmental pollution and issues like global warming. Hence, a company following sustainable development definitely creates goodwill for itself in the eyes of the people. Also, it is definitely the need of the hour that such companies grow more in volume and numbers. Hence, the subject of the company’s objective itself gives the company an added advantage.

Technological

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Legal

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Environmental

This section is available only in the 'Complete Report' on purchase.

References

1. Sempra Energy Annual Report 2016: https://www.sempra.com/2016_annualreport/

2. Company website: https://www.sempra.com/