Name of the Company: Robert Bosch
Business Sector: Engineering and Capital Goods
Operating Geography: Europe, Germany, Global
About the Company: Robert Bosch GmbH or Bosch is a global supplier of technology and services supplying Mobility Solutions, Consumer Goods, Industrial Technology, and Energy and Building Technology products. The company is headquartered in Gerlingen, Germany and employees roughly 375,000 associates worldwide.
Revenue: 70,607 Million Euros – FY 2015-2016
SWOT & PESTLE Analysis
|1. Diverse portfolio of products|
2. Geographic diversification
3. Consolidated ownership
|1. Frequent product recalls
2. Overdependence on a single product segment (mobility solutions)
|1. Growth in the global automotive industry|
2. Strong presence in Newly Emerging Markets (NEMs)
|1. Intense competition
2. Impact of global economic scenarios (BREXIT and slowdown of Chinese economy growth) on global automotive industry
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1) Diverse portfolio of products: The strategic objective of Bosch is to deliver solutions for a connected life. In their words, Bosch creates technology that is “Invented for Life”. They intend to deliver this through a portfolio of products divided into four major business sectors: Mobility Solutions, Consumer Goods, Industrial Technology, and Energy and Building Technology. This diversification in the product portfolio provides them with a dual advantage, firstly shield them against unfavourable forces in a specific market and secondly enables them to identify opportunities across various industries.
2) Geographic diversification: Bosch Group comprises of Robert Bosch GmbH and its 440 subsidiaries and regional companies in 60 countries. With the help of its sales and service partners, it operates in around 150 countries across the world. Europe is its biggest market accounting for 53% of its revenue in FY15. This geographic diversification helps them in reducing the business risks and also take advantages of the opportunities in the emerging markets.
3) Consolidated Ownership: 92% of the shares of Robert Bosch GmbH are owned by a charitable foundation named Robert Bosch Stiftung GmbH whereas the majority of voting rights are held by an industrial trust Robert Bosch Industrietreuhand KG, and the remaining shares are owned by the Bosch family and by Robert Bosch GmbH. This consolidation in the share capital provides Bosch group with the entrepreneurial freedom to plan over long term and also to take up significant upfront investments, if needed, without any major corporate hassle.
1) Frequent product recalls: Bosch has faced frequent product recalls in the recent past. There have been four major instances in the past eight years where Bosch had to recall its product on a large scale. The most recent one being when Bosch had to recall 63,000 dishwashers sold in Australia because of a potential fire risk.
2) Overdependence on a single segment: For FY15, 59% of the group’s revenue was contributed by the Mobility Solutions segment. Consumer goods accounted for 25% revenue, but the Industrial Technology and the Energy and Building Technology segment lacked behind contributing only 9% and 7% respectively. The changing dynamics of the automotive industry along with the overdependence of Bosch group on the segment might amplify the associated business risks.
1) Growth in the global automotive industry: Autonomous cars and internet-connected car technologies seem to be the next revolution in the automotive sector. The global market for autonomous car hardware components is expected to grow from $400 million in 2015 to $40 billion in 2030. Bosch’s stronghold in the automotive sector along with its increased focus on Internet of Things provides them with future growth opportunities in this sector.
2) Strong presence in Newly Emerging Markets (NEMs): Asia Pacific is the second biggest market of Bosch after Europe contributing to 27% of the sales in FY15 and has seen a 17% YoY growth in FY15.Rapid growth and development in India, China and Asia Pacific provides Bosch with opportunities for growth in Consumer goods and Mobility solutions sector mainly. For example, India’s smartphone market is expected to grow at a CAGR of 23% through 2018, and 75% of global smartphones contain Bosch MEMS sensor. So, its strong presence in the newly emerging markets provides them with opportunities to boost their top-line revenue.
1) Intense competition: The automotive components industry is highly competitive in nature with intense competition posed not only by international players but also by domestic players. The major competitors for Bosch include Federal-Mogul, Johnson Controls, Delphi, Denso, etc. While the international players pose a competition by technology and quality, the domestic players tend to pose some serious competition based primarily on price and supply chain reach.
2) Impact of global economic scenarios (BREXIT and slowdown of Chinese economic growth) on global automotive industry: Europe is the largest market for Bosch group. Last year, Brexit impacted the Europe automotive industry thereby posing a threat to automotive components industry. Similar case can be observed in China also where there has been a decline in the growth rate of the automotive industry. Global outreach of the company makes it susceptible to such changes in the global economy as it can pose a threat to their top-line growth by impacting one or more of their markets.Robert Bosch SWOT analysis has been conducted by Mahakpreet Singh Bhatia and reviewed by senior analysts from Barakaat Consulting.
1) Annual Report: http://annual-report.bosch.com/home/
2) Annualreport 2015: http://annual-report.bosch.com/fileadmin/user_upload/2015/eckdaten/en/Bosch_Key_data_Slides.pdf
3) Bosch Business sector divisions: http://www.bosch.com/en/com/bosch_group/business_sectors_divisions/business_sectors_divisions_2.php
4) Bosch Support: http://www.bosch-home.com/us/support/safety-notices.html
5) Herald Sun: http://www.heraldsun.com.au/leader/news/up-to-63000-dishwashers-affected-as-bosch-issues-recall-over-fire-fault/news-story/64f14b3d34b8075484d9935b58d7c6b4
6) Statista: https://www.statista.com/topics/1487/automotive-industry/
7) Indian Express: http://indianexpress.com/article/technology/tech-news-technology/india-second-largest-smartphone-market-2017/
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