Akzo Nobel N.V. SWOT and PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Reduce Carbon Emissions: Chemical companies have an adverse effect on the environment with its greenhouse gas emissions. With more and more governments enforcing laws to reduce carbon footprint, AkzoNobel should look for opportunities to do the same by promoting water borne paints wherever possible and offer products with additional sustainability benefits. AkzoNobel is the first organization to be recertified for all three carbon trust standards for reduction in greenhouse gas emission, waste and water usage and for this its decorative paints business in UK has been coronated with Carbon Trust Triple Standard. Its landmark carbon credits methodology for the shipping industry has won the Best Offsetting Project award in the 2015 Voluntary Carbon Market Rankings.
Akzo is on track for achieving its target of reducing Cradle-to-grave carbon footprint by 25-30 %t per ton of sales between 2012 and 2020 as they work closely with vendors and clients to deliver improvements across the entire value chain. The Company uses stringent measures for its eco-premium solutions that avoid GHG emissions and estimate that 50% of sales are covered by the main drivers for carbon footprint reduction. Some of these eco premium products include Interpon ReFlex, which meets lighting manufacturers’ continuous demand for coatings with a higher reflectance as less is absorbed by the coating, Dulux Weathershield Keep Cool, that reflects infrared heat, cooling exterior walls by up to 5°C , bringing assured savings of 15% and Aquasilk, an innovative water-based wood coating with improved hardness and commendable clarity, specially custom tailored to for the Chinese furniture industry to make a shift to more sustainable water-based coatings. There is ample scope for more innovation in this space as demand is surging by which Akzo can gain a greater competitive advantage over its rivals.

2. Tap the mass paints segment to accelerate growth: AkzoNobel is working its way into mass paint offerings to accelerate growth in emerging economies like India and South Asia. A well-researched study by World Paints & Coatings, predicts growth in paints and coatings across emerging markets. Surging working and middle classes in India and China are creating ballooning demand for housing, manufacturing and infrastructure and in turn fostering growth of architectural and industrial paints. Its top selling Dulux brand will foray into new niches, including water proofing and specialty offerings under the Dulux Promise brand. Apart from covering the top 15-20 prime cities in India, it will dig into secondary and tertiary markets which are very competitive and the fastest growing sectors in the paints industry. Asia Pacific contributes to only about 27% of its revenue currently and there is ample scope for growth here.

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Threat

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Political

1. Impact from fallout of Brexit: The United Kingdom’s decision to leave the European Union will have long term consequences for businesses and organizations. Akzo Nobel is well established in UK's industrial sector and was mulling a potential expansions. The immediate implications of Brexit include availability and movement of skilled workers, potential changes in tax laws and regulations and free movement of goods and capital. Till the final terms of Brexit are agreed, uncertainty prevails and this would prevent Akzo Nobel from making any major investments or business decisions in the U.K. market.

Economic

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Social

1. Robust demand for paint in new residential Construction and residential Repaint segments: According to industry experts, demand for paints and coatings in the domestic market continues to look positive, owing to the growing trend of expanded services. Faux finishing, staining decks, sealing walkways, waterproofing driveways and coatings concrete are all those possibilities that professional painting contractors are looking forward to as new sources of revenue which can be potentially tapped. Also, the global demand is expected to rise owing to emergence of new markets. Asia Pacific (excluding China) and China have an expected CAGR GDP growth of 4.5% and 6.5%, respectively in the 2017-2020 period. This further triggers an expected 4-6% sales CAGR through FY20. While relaxation in legal regulations is expected to raise demand for new residential construction, the residential repaint segment is also expected today to pick up on account of need for renovation and positive trends in construction industry such as the collaborative project delivery. This will open up several market opportunities for companies such as Akzo Nobel.

2. Raised health and safety standards for paints: Numerous countries are establishing stringent health and safety standards for the paints industry which challenge this sector to perform with renewed levels of invention and social responsibility. Millennial consumers are blending design and aesthetic needs with pragmatic health and wellness demands. Akzo's Dulux Forest Breath range is an interior paints with an anti-formaldehyde formulation which improves the indoor air quality and was launched for the Chinese market to address the nation's need for air purification

Technological

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Legal

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Environmental

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