Legrand’s patents cover approximately 1,670 different systems and technologies. In 2007, Legrand registered more than 80 new patents. The average life-span of Legrand’s utility patent portfolio is approximately eight years, which corresponds to the average life-span of patents held by the Group’s competitors in its accessible market. Legrand rarely licenses the use of its products to third parties, nor does it license use of technologies from third parties. Given the Group’s research and development efforts, Legrand does not believe that it is dependent on patents to conduct its business.
2. Competitive capabilities
The group has mobilized all its strengths to adapt to the challenges of a business environment rocked by the financial crisis since summer 2008, and it is continuing its self-financed development.
The fundamentals underlying the performance and solidity of its business model remain unchanged: leadership positions on many local markets ensure pricing power and make Legrand a benchmark. At the same time, a steady flow of orders from a large number of decision-makers limits the exposure to the financing risks that are inherent in large projects. Today 60% of the sales are on maintenance and renovation markets, where demand is by nature recurrent and capital requirements are limited, which makes for added resilience. Finally, some 55% of the costs are variable, while the balance sheet is strong and cash flow vigorous, which means cash flow, more than covers the investments.
Legrand have reworked its business structures in depth for added flexibility and to reap the benefits of innovation more quickly.The organization is thus now based on industrial divisions and global management of purchasing, production and logistics to optimize cost structures and capital employed. At the same time, a marketing strategy cantered on the power of leading brands has given the leverage to broaden the target market and extend its presence. In this, the group also benefit from the strength of a sales force that is close to customers, keeping in immediate touch with the latest market trends. Together, these moves make the group more flexible and responsive, reinforcing our resilience.
Against this backdrop Legrand is building on its multipolar business model, targeting a wide variety of national markets and promising segments that include power distribution, energy efficiency, multimedia networks (Voice- Data-Image), and wire mesh cable management.
Legrand is thus well prepared to deal with the economic downturn and pursue its strategy for innovation with products that are increasingly intelligent and environment friendly. This will enable them to emerge stronger than ever from a period that will be testing over the short term, but will also offer new opportunities over the long term.
In addition to the attractive profile of its market, Legrand considers its principal competitive strengths to be the following:
- A pure player with world wide coverage
- A leader with first rate market shares
- Recognized technological leadership
- Quality-brand portfolio with complete range of products and systems
- Recognized growth experience through targeted acquisitions
- Experienced and motivated management
- Efficient business model with profitable growth opportunities
3. Core Competencies
With its finger on the pulse of the world’s major developments, Legrand is strategically positioned at the heart of the markets of the future. The Legrand group makes close to 30% of its sales in emerging countries, a share that is bound to grow as these countries grow in strength. In 2009, Legrand made approximately 60% of its sales in the commercial and industrial business sectors. In mature countries, 60% of sales are in the maintenance and renovation markets. The Legrand Group operates globally, holding leading positions in at least one business area on key markets: including France, Italy, Spain, Poland, Great Britain, United States, Mexico, Brazil, China and Australia.
This powerful position on these markets gives Legrand major competitive advantages, such as:
- The ability to sell products that are suitable for the majority of national markets on which the professional work practices of the installers, like the tastes of the consumers, can vary a great deal, and where specific standards often govern the product itself as well as its operation and installation.
- The ability to offer its customers - in particular in the form of integrated systems - virtually all the products needed for an electrical installation, from the circuit protection panel through to the connection of the low current socket outlets, thus avoiding them the costs, risks and delays associated with buying products from different suppliers.
- The ability to benefit from consumers’, installers’ and distributors’ familiarity with and trust in the products for which Legrand is the market leader, in order to improve its position on products for which the Group is only a challenger, and thus promote its growth.
In response to growing demand, Legrand offers energy-efficient solutions that keep environmental impact to a minimum at every stage in the product life cycle, from design to recycling. To take just two examples, Céliane scenario switches and Watt Stopper presence detectors can achieve energy savings of up to 50% in living and working areas. We also offer a special range dedicated to the comfort and safety of the elderly and disabled, providing them with effective communication tools.
4. Mission Statement
The Group’s ambition is to move the markets upwards by offering them products with ever-increasing added value. Legrand is continually enhancing its offer and creating value for its entire economic sales channel.
The group is also focusing its development on solutions for the great majority. In 2009, within the framework of a partnership with the “Helen Hamlyn Centre”, Legrand carried out a study on the habits and requirements of populations in India with regard to access to electricity. The aim of this study, based on work carried out in the field, is to develop solutions specifically adapted to local needs. For example: an affordable socket providing secure and efficient access to electricity and lighting, or more sophisticated systems for dealing with problems of shortage of electricity, particularly in rural areas. These solutions should come into being in the near future and improve the life of less favoured populations.
5. Vision Statement
‘’Access to electricity for all’’
As a world specialist in electrical and digital infrastructures for buildings, Legrand believes it also has a mission to ensure that the greatest possible number of people have access to electricity, throughout the world. Its partnership with Electriciens sans frontières and its donations of equipment are concrete examples of the Group's geographical and community involvement.A commitment that can be seen in a dozen or so projects in Africa, Asia and Latin America.
Electriciens sans frontières (Electricians without borders), an international social NGO mainly focusing on development work, is a standard in the field of energy.The Legrand Group is one of the leading partners in the association. It supports Electriciens sans Frontières's actions to provide access to energy services, thus contributing to local economic development and the improvement of health and educational infrastructures.
Electriciens sans frontières is actively involved in supporting those involved in local electricity systems. Electriciens sans Frontières favours projects providing environmentally-friendly access to energy and water and those which incorporate energy efficiency, demand-side management and the use of local resources to meet growing needs.
6. Strategy
- Accelerate growth: -expand market coverage and improve its commercial efficiency
-focus on markets with high growth potential
-expand geographic presence
-drive innovation by increasing the number of research and development projects designed o renew and enhance Legrand’s product range
- accelerate growth through targeted and recurring acquisitions
- Increase cash flow and optimize capital employment
- Optimize cost structure to improve productivity and flexibility
7. Company’s structure
External Environment
1. The broad environment
Forces in the broad environment can have a tremendous impact on a firm and its task environment; however, individual firms typically have only a marginal ability to influence these forces. In rare cases, individual firms can influence trends in the broad environment, as when innovations at Intel influence technological trends in the microprocessor, microcomputer, and software industries. In general, however, it is virtually impossible for one independent firm to dramatically influence societal views on abortion, policies on free trade with China, migration to the Sun Belt, the number of school-age children, or even the desirability of particular clothing styles. Consequently, although firms may be able to influence the broad environment to some degree, the emphasis in this book generally will be on analyzing and responding to this segment of the environment. The most important elements in the broad environment, as it relates to a business organization and its task environment, are global socio-cultural, economic, technological, and political/legal forces.
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socio-cultural forces : issues related system of values, customs, traditions and norms that govern people's status in society.
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global technological forces: technological innovation is very important for Legrand
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global economic forces: due to the economic environment in Romania, not all people can buy the firms products
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political/legal forces: it influences the company very little in Romania
2. Task environment
The task environment consists of stakeholders with whom organizations interact on a fairly regular basis. These stakeholders include domestic and international customers, suppliers, competitors, government agencies and administrators.
Competitors
Legrand has established market positions in France, Italy and numerous other European countries, as well as in North and South America and in Asia. Its principal direct competitors include:
- specialized companies which mainly operate at a national or regional level, such as Deltadore in France, Hager Tehalit in Germany and France, Gewiss and Vimar in Italy, Niko in Belgium, Jung in Germany, Simon in Spain and Leviton, Panduit, Thomas & Betts, Hubbell and Cooper Industries in the United States and Canada;
- divisions of large multinational companies that compete with Legrand in a number of national markets, although not with respect to the full range of its products, such as Schneider Electric, ABB, Siemens, General Electric, Matsushita Group, Eaton and Honeywell International.
Customers
Legrand’s relationships with its customers are generally governed by the relevant standard terms and conditions for sales in each local market.
Suppliers and raw materials
Legrand does not depend upon any single supplier for raw materials or components used in the manufacture of its products. Legrand believes that raw materials and components essential to its operations will remain available in all of its principal markets.
3. SWOT Analysis
Ethics and Social Responsibility
Legrand aims for exemplary environmental standards in product design, the choice of materials used, and related industrial processes.
In 2005, Legrand set out its commitments in an Environment Charter, providing a framework for the deployment of responsible environmental management at all its industrial sites. This proactive approach has led to a steady rise in the number of sites with ISO 14001 certification —in 2008, 81% of all sites were certifed, with the total up 11% from the previous year, and in Europe alone the proportion reached 92%.
Energy efficiency is now an essential part of every Legrand project. It has even become a major factor for the success of projects. As the global specialist in electrical and digital building infrastructures, Legrand is offering more and more solutions for improved control of electricity, to reduce consumption and contribute towards supplying high quality energy.
Since 2001, the group has placed special emphasis on factoring environmental concerns into product design, using 11 parameters that include total energy consumption, greenhouse impacts and the choice of materials. Designed in accordance with these principles, the new Altis range of electrical cabinets thus achieves significant improvements in environmental performance with reductions of 60% in the use of natural resources, 32% in energy consumption, and 25% in greenhouse gas emissions. Legrand also remains committed to its target of at least
80% of waste reclaimed by 2010, and in 2008 the proportion reached 84%.
Legrand aims for ergonomic design in products suited to people in all situations, including the ill, the elderly and the disabled, focusing on comfort, autonomy and the means to maintain links to family and others. One example is the Céliane switch, which responds to the lightest touch.
The partnership with CREE ,the French center for ergotherapy and ergonomics, illustrates their commitment to helping people with disabilities, as does our support for Partenaires Handicap, a nationwide network of electricians with special expertise in adapting and installing products to take users’ disabilities into account.
The Functions of Management
- Planning
Planning is an important managerial function. It provides the design of a desired future state and the means of bringing about that future state to accomplish the organization's objectives. In other words, planning is the process of thinking before doing. To solve the problems and take the advantages of the opportunities created by rapid change, managers must develop formal long- and short-range plans so that organizations can move toward their objectives.
It is the foundation area of management. It is the base upon which the all the areas of management should be built. Planning requires administration to assess; where the company is presently set, and where it would be in the upcoming. From there an appropriate course of action is determined and implemented to attain the company's goals and objectives
Planning is unending course of action. There may be sudden strategies where companies have to face. Sometimes they are uncontrollable. You can say that they are external factors that constantly affect a company both optimistically and pessimistically. Depending on the conditions, a company may have to alter its course of action in accomplishing certain goals. This kind of preparation, arrangement is known as strategic planning. In strategic planning, management analyzes inside and outside factors that may affect the company and so objectives and goals. Here they should have a study of strengths and weaknesses, opportunities and threats. For management to do this efficiently, it has to be very practical and ample.
Characteristics of planning.
Goal oriented
Primacy
Pervasive.
Flexible.
Continuous.
Involves choice.
Futuristic
Mental exercise.
Planning premises
Importance of planning.
* Make objectives clear and specific.
* Make activities meaningful.
* Reduce the risk of uncertainty.
* Facilitators coordination.
* Facilitators decision making.
* Promotes creativity.
* Provides basis of control.
* Leads to economy and efficiency.
* Improves adoptive behavior.
* Facilitates integration.
- Organizing
Organizing plays a central role in the management process. Once plans are created the manager's task is to see that they are carried out. Given a clear mission, core values, objectives, and strategy, the role of organizing is to begin the process of implementation by clarifying jobs and working relationships. It identifies who is to do what, who is in charge of whom, and how different people and parts of the organization relate to and work with one another. Within the process, the manager has to:
-begin the task management
-segregate the duties between the employees, but also between the departments
-order the resources that are needed in order to achieve the goals
- make the changes in strategy if it’s necessary
-form the teams
-assure the training of the human resources
- Leading
Leading people means motivate them and influence them to try to achieve the goals. The methods through which this manager try to do so are:
-be a role model by himself and act as you would like other to act
-get close but still cross a line between himself and other employees
-teambuilding organized with the HR Manager in order to bond the team and build stronger connections
-meetings one-on-one where each employee is called to talk with the manager for a half of hour and told him his thoughts, his problems and his opinions related to anything
- Controlling
It implies measurement of accomplishment against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in conformities with the standards. An efficient system of control helps to predict deviations before they actually occur. According to Theo Haimann, “Controlling is the process of checking whether or not proper progress is being made towards the objectives and goals and acting if necessary, to correct any deviation”. According to Koontz & O’Donell “Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished”. Therefore controlling has following steps:
- Establishment of standard performance.
- Measurement of actual performance.
- Comparison of actual performance with the standards and finding out deviation if any.
- Corrective action.
Questions to the people behind the business
Olivier Bazil,
Vice Chairman and Chief Operating Officer
What are the basic principles of Legrand’s strategy for business development?
We are continuing to build market share with the support of strong brands, and with targeted, self-fi nanced investments in promising national markets and new segments. Market leadership is essential to pricing management and profitability. And when the economy is slowing, it is really decisive, since customers turn more readily to the leader.
How is Legrand responding to current economic conditions?
Legrand’s management has already had to deal with a good number of economic downturns, and our group has always been able to adapt and come through testing times stronger than ever. Now, following a period of very sustained growth, our priorities are dynamic cost management and rapid adjustment to adapt to new conditions with highly flexible business structures. The current environment is an opportunity to once again demonstrate the effectiveness of our business model and sharpen up our organization even further.
Jean-Charles Thuard,
Group Executive Vice President, Marketing & Communications
What do you see as the main trends in demand on your markets?
The defining trends run deep; the most significant are linked to new technologies, calling for sophisticated connection and digital transmission systems. Alongside that, customers are demanding new standards of comfort and style. On mature markets, they are also increasingly attentive to safety and respect for the environment, while aging populations mean growing demand for ergonomic design. At the same time, rising standards of living mean that demand is far from confined to basics on emerging markets.
Nelly Navarro,
Sustainable Development Coordinator
How is Legrand taking up its responsibilities as an industrial operator?
We focus on all three aspects of development: environmental, social and economic. In each area, we aim to go beyond the bare bones of regulatory compliance and promote innovation, which can really mobilize people at Legrand. As regards our special responsibilities within our sector, we not only design our products for environmental quality but also work alongside our suppliers, the users of our products and professional associations to.
Xavier Couturier,
Vice President, Human Resources
How has Legrand faced up to the challenges of rapid expansion over recent years?
For our Human Resource unit, the main challenge is to identify and develop the talent we need to win new markets and at the same time integrate acquisitions effectively. Which means building the profiles we need with targeted training and career management. It also means defining made-to-measure career paths to make the most of the diversity that is such a precious asset. But of course we cannot do without common processes and shared resources to ensure the needed convergence towards a group identity defined in terms of our values. It is a special sort of alchemy that we have managed to bring off.
What would you say are the main characteristics of Legrand teams?
Simplicity, to begin with. And pragmatism at all times. You can see that in the way we are able to work cross functionally, in a relatively fl at management structure, and respond quickly and effectively. Then there is our enthusiasm, our will to win and our commitment to innovation; this enables us to seize opportunities as they arise and turn them into commercial successes.
Antoine Burel,
Group Chief Financial Officer
What is Legrand’s culture of performance based on?
In the Finance Department, responsive structures and high levels of personal responsibility within our teams are a given. Over the years, these have enabled us to build up what have become very precise methods to oversee operating units using frequent, detailed reporting to exacting standards —a key asset in the current environment. As a result, our cultural focus on economic performance has become widely shared and structures the way managers go about their jobs. Annual assessments of these managers are also partly based on the operating income generated by their business, less the cost of the capital they decide to employ—in other words, on their capacity to generate free cash flow.
How does financial management allow for the specifics of different business areas?
There is a lot of to-and-fro between staffing at operating units and headquarters. To take my own example, I held several positions in the financial management of subsidiaries before I moved on to the Wiring Devices Division, then Finance Department.That smoothes the way for dialog with local managers, since our department is in touch with operating issues and in a position to make proposals.
Conclusion
Legrand is the world specialist in products and systems for electrical installations and information networks wherever people live and work. They serve global markets through distributors offering innovative solutions to meet the needs of electricians, specifiers and households. In close touch with customers, they develop and produce a range that holds close to 170,000 catalog items distributed in nearly 180 countries. As world leader in wiring devices and cable management, the company draws on the resources of a global supply chain that combines flexibility and responsiveness.
No. 1 positions on a large number of local markets give the business a solid base.
With 4.4% of sales allocated to R&D in 2000, they make innovation the main lever for growth on markets undergoing constant change. Innovation drives the ambition to combine simplicity with high value added, and innovation is behind new functions with stylish design in solutions that enhance energy efficiency and comfort, by the same token favouring responsible consumption of electricity.
Bibliography
- Bateman, T. S. & Snell, S. (2007). Management: Leading and Collaborating in a Competitive World (7th ed., pp. 16 -18). McGraw - Hill.
- Patrick E. Connor, William G. Scott, Theo Haimann. Management - Houghton Mifflin Company,
- Harold Koontz, Cyril O'Donnell. Essentials of Management.
