APC 2012 Annual Report Download - page 18

2012 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC16
OVERVIEW OF THEGROUP’S STRATEGY, MARKETS AND BUSINESSES
1OUR STRATEGY AND MARKET OPPORTUNITIES
Products allow us to continue to achieve scale and pricing
power in our end-markets, while providing differentiation through
technologies that can be combined and integrated. The distinctive
and ergonomic design attributes of our products also create new
competitive advantages.
Solutions will allow us to generate additional growth and profi ts,
lower capital intensity and help reduce cyclicality. They also provide
signifi cant opportunities for dialogue with our customers, which
helps inform our quest for continuous innovation.
Leverage the opportunity arising from the
accelerated expansion of certain economies
Certain countries in Asia (excluding Japan), Latin America (including
Mexico), the Middle East, Africa and Eastern Europe (including
Russia), which we refer to collectively as “new economies” have
entered a prolonged period of accelerated development. As a result
of the industrialization, urbanization, digitization and development
processes that these countries are experiencing, we expect the
markets of their economies to continue to have a pressing need for
the products and solutions that we provide. Our goal is to leverage
this opportunity by expanding our geographical coverage in these
markets, by increasing our presence in new cities, and further
penetrating these markets, with mid-market segment offerings
that are supported by strong brands with wide local coverage. We
have made a meaningful long-term commitment to, and investment
in, these economies. As of December 31, 2012, we had over
70,000employees in new economies and, during2012, our new
economies-based purchasing and manufacturing costs accounted
for a signifi cant percentage of our consolidated costs of sales. We
believe the strength of our brands, our competitive local supply
chains and our commitment to integrating into, and contributing
to, the local markets are our competitive advantages in these
economies.
Invest in profitable and responsible growth
while driving efficiency
We believe in the high long-term growth potential of our business
and we continuously invest to drive that growth. This investment is
focused on sustained spending in research and development, as
well as on growing our commercial presence and skills, especially in
the fi elds of high value-added technologies and services.
In addition to generating strong organic growth, we have also
continuously looked for and evaluated possible opportunistic
acquisitions and intend to continue our strategy of selectively
considering the acquisition of, and investment in, companies, joint
ventures, strategic alliances and mergers that reinforce our global
leadership, provide skills and services geared towards energy
management, or relate to local businesses in new economies.
Certain of our recent acquisitions have been of signifi cant size
and scope, such as our purchase of Telvent in2011 and ArevaD
in2010, while other acquisition targets have been more modest.
We will continue to seek external growth opportunities by
considering a range of prospects across geographies, segments,
and target sizes.
In addition to the investments we make to foster growth, driving
effi ciency at all levels of our Company is an equally important focus
of the Group. We continuously seek to generate savings from
purchasing and manufacturing and through improving operational
effi ciency by reducing selling, general and administrative expenses,
while maintaining best-in-class standards in environmental
sustainability and social responsibility.
1.4 Our competitive strengths
Technological leadership in energy
management
We believe we have best-in-class technology in energy management
to meet growing customer needs and challenges. We estimate that
nearly 90% of our revenue is derived from sales in businesses where
we enjoy a number one or two market position. We design products
and solutions that we believe offer the best levels of safety, reliability
and effi ciency in our markets. This is achieved through consistently
high investment in research and development, which supports our
innovative product offerings and our ability to offer our customers
market leading solutions that seamlessly integrate the different
technologies in our portfolio. As a result, our products and solutions
meet the needs of our customers for simplicity, connectivity,
fl exibility, productivity and effi ciency. Additionally, through an
ongoing dialogue with our customers, we are able to maintain our
very high standards of quality and to anticipate the innovation that
will help drive our future growth. Thanks to technological leadership,
our major brands are among the most recognised in our industry.
Multiple channels of access to a broad and
diffuse user base
We work with many types of partners, such as distributors, system
integrators, contractors, panel builders, electricians, machine
manufacturers and others, as well as with our end customers.
Schneider Electric has developed the widest network of distribution
and direct partners in its industry. This provides us with many
channels of access to a market comprised of a broad and diffuse