MANAGEMENT
The SWOT analysis is composed of factors present in the external environment which can either serve as an opportunity for the organization as well as those factors which can be classified as the strong and weak areas of the organization. The purpose of SWOT analysis is to ensure that the organization makes use of its strengths to make the most of its opportunities as well as minimize its weaknesses so as to overcome the threats posed by the unstable external environment as well as the competitors.
External Analysis and Internal Analysis
First of all, we will carry out the external analysis of Enbridge so as to get an idea about the opportunities available to it in the global environment within which it operates as well as the threats it has to face from competitors and changing global business trends. The internal analysis of Enbridge will focus on its strong and weak areas.
Porter’s Generic Strategy and Financial Perspective
Michael Porter came up with three generic strategies namely, differentiation, low-cost leadership, and focus strategies. In low cost leadership, the organization operates on a low cost structure and ensures that the products and services it offers to customers are also affordable without compromising on quality standards. In a differentiation strategy, the organization identifies a feature which distinguishes itself from its competitors in terms of its product, services or processes. Lastly, in focus strategy, the organization focuses on one aspect of its offering with a limited target market.
After going through the two assignments, we learned that Enbridge is pursuing the differentiation strategy. Enbridge is trying its best to be the leader in the oil and gas industry. It is focusing on measures to attain a strong position among competitors by ensuring that oil and gas are available to the residents in USA and Canada. In areas, where it becomes difficult to make the supply of gas and oil possible, train transportation has been brought into use. The quality of gas pipelines has been improved so that a satisfactory supply can be reached to the customers. The infrastructure of Enbridge is quite stable and advanced. Continuous improvements have been made in the areas of technology. New methods and techniques have been employed so that crude oil can be sent via low-cost mechanism to the refinery and then made available to the market at standard rates. Although the political and economical condition of USA and Canada is stable and the government provides full support to the gas and oil sector but sometimes, the price fluctuations in the international market can bring setbacks to the industry. Enbridge has set up a good client base and cherishes its relationships based on trust. The employees of Enbridge bring exceptional knowledge and skills to the organization and before any worse situation can arise, they put their collective skills and technology to use to maintain the strength of the organization. Processes, equipment, engineering systems etc all undergo up-gradation so that the reputation of Enbridge stays stable.
The financial performance has at points suffered but since the year 2010 although Enbridge has tried its best to maintain attractive financial statements. The poor financial performance exhibited by Enbridge in terms of its net profit margin, return on asset and return on equity is not due to any fault in the policies or strategic decisions of the organization. The oil and gas prices face quite a lot of instability in the international market due to which the supply and demand balance gets disturbed and brings financial losses for the organizations which fall in the category of the oil and gas industry. Liquidity of Enbridge has also undergone deterioration in the year 2015 as the company has not been able to make enough profits to pay off its liabilities.
Recommendations
The cost of funding to the company’s operations is critical in this industry. Investments in the industry require significant capital outlays. Besides, maintenance of pipelines is costly. Without adequate low-cost funding, a company cannot fund the improvement of its infrastructure as well as innovation. For having a bright future, Enbridge has decided to diversify its portfolio. Previously, it was just serving the oil and liquid pipeline sector but now it has decided to explore its capabilities in the area of electricity and gas supply too. It has decided to set up plants for the production and transmission of gas. As the concern for the green environment is rising, Enbridge has chosen to take up the responsibility of producing and transmitting the renewable energy to its customers so that the customer feel satisfied by playing their part in adopting environmentally friendly source of energy.
Reference
Falck, O., & Heblich, S. (2007). Corporate social responsibility: Doing well by doing good. Business Horizons, 50(3), 247-254.
