SWOT analysis of British Gas

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SWOT analysis of British Gas

This SWOT analysis of British Gas aims to provide the readers with a comprehensive insight into the strengths and the weaknesses of British Gas. It also aims to examine the opportunities the company should explore and the threats it needs to keep an eye on.

Strengths of British Gas

British Gas is the largest energy supplier in the UK. It dominates the gas and electricity market in the country with 20% market share in the domestic electricity supply market and 31% market share in the domestic gas supply market (Ofgem, 2018). It is a subsidiary of Centrica plc which is a British multinational energy and services company.

British Gas serves over 11 million homes and businesses in the UK. It offers a good number of services e.g. gas and electricity, boiler installation, servicing of electrical systems, appliances, plumbing and drains, and others. It also offers businesses consultation services (Business Energy Insight) to help them take better control of their energy expenditure (Centrica Plc, 2018).

Many companies have used technology in different ways to provide customers with convenience that they deserve. In connection to this, it is clear that British Gas has earned good reputation for technological innovations. It has developed an app (Hive) which allows people to control their heating and hot water from their mobile, resulting in a greater convenience and control for them. It also has plans to provide all the customers smart meters by 2020.

British Gas has only two types of simplified tariffs i.e. Variable and Fixed. The simplified tariff system makes it easier for customers to compare tariffs and find the one that best suits them. British Gas also has an award winning online customer management system. It won Best Online Services award at the uSwitch Energy Awards 2011.

Weaknesses of British Gas

British gas has been criticised for its regular price hikes. Price hikes have caused the company a slump in customer base. British Gas lost 823,000 customers between June and October 2017 because of a 12.5% increase in prices in September (Little, 2017). This exodus has also cased the share prices of the company to fall.

British Gas became No.7 out of 15 energy companies in a league table of complaints for small business customers in 2017 by Citizen Advice. According to the ranking, British Gas had 93.2 complaints per 10,000 customers compared to the No.1 in the list (E.ON Energy) which had only 21.1 complaints per 10,000 customers (Vaughan, 2017).

Opportunities for British Gas

British Gas has opportunities to grow further in the UK in the residential and commercial markets for both gas and electricity. Likewise, there is a huge demand for smart app such as Hive. British Gas has potentials to offer it to millions of customers across Europe and beyond.

Threats to British Gas

Threat is the last element to address in the SWOT analysis of British Gas. British Gas faces a stiff competition from a good number of gas and electricity suppliers in the UK. The main competitors are EDF Energy, EON, npower, Scottishpower, and SSE.

Legal challenges may also turn out to be a threat to British Gas. For example, Ofgem ordered British Gas in 2017 to pay £9.5 million in compensation for late and incorrect bills caused by IT failures in 2014. British Gas agreed to repay customers and donate to charity in addition to apologising to the affected customers.

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Last update: 24 May 2018

References:

Centrica Plc (2018) British Gas, available at: https://www.centrica.com/about-us/our-brands/british-gas (Accessed 18 May 2018)

Little, S. (2017) British Gas owner Centrica loses 823,000 customers since June, available at: https://www.independent.co.uk/news/business/news/british-gas-centrica-lose-customers-june-2017-since-energy-provider-a8071116.html (Accessed 18 May 2018)

Ofgem (2018) Electricity supply market shares by company: Domestic (GB) https://www.ofgem.gov.uk/data-portal/electricity-supply-market-shares-company-domestic-gb (Accessed 08 May 2018)

Vaughan, A. (2017) British Gas told to pay £9.5m in compensation for late and incorrect bills, available at: https://www.theguardian.com/business/2017/jan/24/british-gas-compensate-9m-pounds-late-incorrect-bills-ofgem (Accessed 20 May 2018)

Photo credit: Centrica.com

Author: M Rahman

M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He is a graduate of both Leeds Metropolitan University and London South Bank University.