Strategy and core values
The Group’s overall strategy was reviewed in 2016 and resulted in a strategy for profitable growth that largely follows the previously established successful path. The structure of the strategy has been refined to better match the macro environment and Fagerhult’s business model.
A compiled view of developments over the last five years in the European lighting market shows that Fagerhult stands out as one of the more successful lighting companies. During this five year period the Group’s growth has averaged 6–7 per cent per year and the operating margin has increased to 11.7 per cent in 2016. Naturally, the acquisitions made during the period have contributed to growth and earnings, however other success factors have also contributed. The lighting market is often described as local, where strong local roots and detailed customer knowledge are viewed as a requirement for success. What sets Fagerhult’s business model apart is its strongly decentralised structure that provides the respective companies extensive decision-making power and flexibility based on local market conditions. In parallel, it is a structure that allows the possibility of gathering and realising the economies of scale that the Group’s size generates in terms of expertise, product development, sourcing and manufacturing.
Strategy for 2020
The review of the Group’s overall strategy during the year resulted in a version that largely follows the previously established successful path. Organic growth and acquisitions will continue to drive profitable growth. The structure of the strategy has been refined to better match the macro environment and Fagerhult’s business model. The strategy for 2020 is based on three business pillars complemented by one technology area with relevance for all brands.
Group-wide strategy for 2020
The four strategic pillars: Indoor, Retail, Outdoor and Controls & Connectivity comprise the areas where the Group has identified excellent possibilities for profitable growth. Technology developments in Controls & Connectivity are assessed as becoming increasingly important for all product areas and, accordingly, important for each company in the Group. The next step for the ten brands is to formulate a business and product strategy that contributes to the overall aims of the Fagerhult Group.
Preconditions for the group
The strong positions of the ten brands in their respective local markets, with close, long-term relations with customers and specifiers comprise some of Fagerhult’s strengths for realising this strategy. Often, relations have been built through solid expertise and the company’s broad product portfolio, which provides excellent capacity to meet customers’ varied prerequisites and needs with standard products and tailored lighting solutions. The decentralised business model is another factor that furnishes the company with flexible decision-making based on local conditions and changed customer needs. The business model also helps strengthen delivery capacity as local manufacturing enables short delivery times to customers. In addition, irrespective of economic conditions, the Group has continuously invested in product development and innovation.
The strategy of reducing business risks primarily pertains to achieving an enhanced spread between the dominant sales markets and other markets, and striving toward a higher degree of equally sized product areas in terms of sales. A central aspect is also the attraction, development and retention of key expertise to thereby remain at the cutting edge of technology