Porter’s Five Forces Analysis of NextEra Energy 

NextEra Energy is an energy-producing American multinational company. The energy company started its business in 1925 under the name of Florida Power & Light. Today, we’ll discuss Porter’s five forces analysis of NextEra Energy; bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.

Key Differentiating Factors of NextEra Energy

• Environmental sustainability awards and recognition 
• Grid modernization of smart and efficient infrastructure
• Higher financial performance 
• Strategic acquisition of renewable energy companies 
• Innovative energy storage initiatives 
• Expanding renewable energy sources like wind and solar power 

Substitutes and Competitors of NextEra Energy

• EDP Renewable 
• First Energy 
• NextEra Energy 
• Ameren Illinois Transmission 
• AEP 
• Xcel Energy 
• ACCIONA Energy
• Southern 
• Duke Energy

Porter’s five forces analysis of NextEra Energy would analyze the bargaining power of suppliers and buyers; the threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management. Here’s NextEra Energy Porter’s five forces analysis of energy and electric power business as follows;

Porter’s Five Forces Analysis of NextEra Energy

Let’s discuss Porter’s five forces analysis of NextEra Energy as a competitive forces in strategic management and they’re as follows; 

Bargaining Power of Suppliers in NextEra Energy

The bargaining of suppliers is Moderate and higher in the energy and electric power business as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in the NextEra Energy Porter’s 5 forces analysis of energy and electric power business are as follows;

I-Limited Natural Suppliers 

Coal, natural gas, and fossil fuels are some of the main supplies for the production of fuel and natural sources of energy. The thing about natural sources of energy is that they’re rare and scarcely available. However, the limited availability of natural supplies increases the bargaining power of suppliers. 

II-Renewable Equipment Manufacturers 

Renewable energy sources like wind turbines and solar panels are a great alternative to fossil fuel energy. The production and manufacturing suppliers of solar panels and wind turbine technology are very few because they require highly complicated and advanced technology. However, it further increases the bargaining power of suppliers. 

III-Tech Skilled Professionals 

Technical staff and engineers working in the oil rigs, solar panels, and wind turbine manufacturing companies are also suppliers to energy companies like NextEra Energy. Skilled professionals aren’t readily available and it takes a lot of time and resources to train a newcomer. 

Bargaining Power of Buyers in NextEra Energy

The bargaining of Buyers is lower in the energy and electric power business as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in NextEra Energy’s five forces analysis of the energy and electric power business are as follows;

I-Limited or No Option 

Ordinary customers have either limited or expensive energy options available to them. There is no doubt that the consumer market is very big, but they have limited energy options available to them. It decreases their bargaining power. 

II-Basic Necessity 

Electricity power energy has become the basic need of our lives. We need electricity and energy for performing various functions in our daily lives ranging from ironing, cooking, cleaning, and washing. However, it further makes the customers vulnerable and increases the bargaining power of energy companies. 

III-Long Term Contracts

NextEra Energy and other electricity-providing companies build a long-term relationships with customers. Often, there is only one energy and electricity-providing company available in various regions, and customers have no other choice but to comply with their needs and requirements. 

Threat of New Entrants in NextEra Energy

The threat of new entrants is Moderate in energy and electric power business as competitive forces in strategic management. Some of the main factors impacting the threat of new entrants in energy and electric power business five forces analysis of NextEra Energy are as follows;

I-Mass Scale & Investment 

NextEra Energy has invested a significant amount of capital resources and investment for the mass production of solar panels and wind turbines. The new entering energy company can’t become successful without producing and manufacturing the energy equipment at a mass scale. These factors would decrease the threat of new entrants. 

II-Regulatory compliance & Licensing 

Along with heavy capital investment, the energy company needs a license from the country and state of the targeted market where it plans to offer energy services. The government regulations for energy companies are highly strict, and compliance with legal requirements would further increase the initial cost. Sometimes, it takes years to receive government permission and license from the relevant departments. 

Threat of Substitutes to NextEra Energy

The threat of substitute products and brands is moderate and lower in the energy and electric power business as competitive forces in strategic management. Some of the main factors impacting the threat of new substitutes in the NextEra Energy five forces analysis of the energy and electric power business are as follows;

I-Heavy Infrastructure 

In order to gain access to energy and renewable energy; customers need to invest a significant amount of resources for tech infrastructure. It is a highly expensive venture, and it decreases the threat of substitution rate. a

Competitive Rivalry in NextEra Energy

The competitive rivalry among energy and electric power companies is very high as competitive forces in strategic management. Some of the main factors impacting competitive rivalry in NextEra Energy Porter’s five forces analysis of energy and electric power business are as follows;

I-Tough Competition 

NextEra Energy is facing tough competition from competitors like AEP, Southern, Xcel Energy, and Duke Energy. They all have earned a significant market share and a great strength of a loyal database of energy users and customers. Their growth rate poses a great challenge to the company and it amplifies the competitive rivalry among energy companies. 

II-Tech Advancement 

NextEra Energy needs to invest a significant amount of capital resources in research for the development of efficient and advanced technology for energy production. Cutting-edge technology for energy production would give the renewable energy company to gain a competitive edge over competitors. 

Conclusion: NextEra Energy Porter’s Five Forces Analysis |5 Forces Analysis of NextEra Energy

After an in-depth study of Porter’s five forces analysis of NextEra Energy; we have realized that NextEra Energy is the world’s leading energy-producing company. If you are learning about the NextEra Energy 5 forces analysis of energy and electric power business; then you should keep in mind the abovementioned bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.