Avnet SWOT and PESTLE Analysis

Strength

1. Strong Brand Perception: Avnet has invested in building a strong portfolio of brands over the years. The company is ranked #128 on the fortune 500 (U.S) in 2018. It also ranked in the top 10 for 2018 Gartner supply chain top 25 – High-Tech industry category. The company was named as World’s most ethical company by Ethisphere Institute in 2014, 2015, 2016, 2017, and 2018. Avnet ships on average 122B units annually. Since 1991 the company had 100 Acquisitions and the company has more than 1 million community members. In 2019 Fortune magazine named Avnet among the World’s Most Admired Companies. This was the 14th time that Avnet the global technology solutions provider has been recognized by Fortune for its strong brand reputation. This strong reputation of Avnet is due to its core values which inspire to evolve, transform and deliver innovative technology solutions that enable the companies around the world to succeed.
The company brings new innovation to market faster, easier and at an economic cost. It’s because of their commitment to customers, suppliers, shareholders, and employees that they are admired so much. Avnet is named top 10 international branded distributors for the 17th year. Avnet Singapore won 2017 Best Distributor Xilinx Dedicated FAE Award for Xilinx Channel Taiwan and ASEAN Region FAE Award. Avnet was honored in a row with 13 IP&E Supplier Awards. Avnet receives the year's award for semiconductor distribution from Vishay. From TDK-Lambda America, Avnet receives team and individual accolades.

2. Large distribution network and wide reach of Avnet: Over the years Avnet has built a reliable distribution network that can reach a majority of the potential market. The technology giant works with over 1,400 technology suppliers to serve 2.1 million customers in more than 140 countries. The company is headquartered at Phoenix, Arizona but their sales locations are distributed in 301 locations around the world for example in the United States, Australia, Brazil, Canada etc. The company’s Non-US portion locations represent a significant portion of its sales. During Fiscal year 2018, 2017 and 2016 approximately 76%, 72% and 73% respectively of the company’s sales came from its operation outside U.S. One million members joined online communities’ element14.com and Hackster.io to learn and exchange product ideas of each other in Avnet in order to create the world’s largest network of engineers, entrepreneurs and developers. Element14 and Hackster help developers of products around the world get their work done faster and more efficiently. Instead of searching for answers from multiple sources, members turn to Avnet communities for consolidated information on new technologies and access to experts. Element14 (as part of Premier Farnell) and Hackster.io were acquired by Avnet in 2016. Since then, the two online communities have continued to grow rapidly as advances in technology such as IoT introduce more learning opportunities and complexity into the process of product development. Combined membership grew by about 48% year-on-year.

3. Product and Technology Innovation: Avnet will bring the Internet of Things (IoT) technology to life during CES 2019 by combining unique hardware, software and cloud connectivity solutions. The leading global provider of technology solutions will introduce enhanced end - to - end IoT capabilities that accelerate customer prototyping and development of IoT solutions, deliver artificial intelligence (AI) at the edge and provide a customized Raspberry Pi-powered device for applications requiring strong end - to - end security. Avnet is offering innovative music that is not-an-impossible device for deaf and hearing fans. This is a wearable device developed with not impossible labs at Avnet to experience live music in a new way. The company is offering IoT technology solutions in a market through products, services, and expertise, and will demonstrate the technology like Avnet Azure Sphere MT3620 Starter Kit, Avnet SmartEdge Agile, Avnet SmartEdge Industrial IoT Gateway, and Music: Not Impossible, Developer Communities, and Educational Resource at CES 2019.
Back in 2016, Avnet launched an innovation laboratory with Arizona State University. The innovation laboratory was designed to stimulate economic growth in the technology sector and enable aspiring entrepreneurs to advance their innovations. The laboratory provides critical business advice and support to entrepreneurs developing new technology, particularly inventions that make the world a better place.

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Weakness

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Opportunity

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Threat

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Political

1. Change in tax rules and regulation: As a multinational corporation, the Company is subject to the tax laws and regulations of the United States and many foreign jurisdictions. From time to time, regulations may be enacted that could adversely affect the Company’s tax positions. No assurance can be given that the cash flow of the Company, and in some cases the effective tax rate, will not be adversely affected by these potential regulatory changes or changes in the interpretation of existing tax laws and regulations. On 22 December 2017, the U.S. federal government enacted tax legislation (the "Tax Cuts and Jobs Act" or the "Act") which includes provisions to lower the corporate income tax rate, impose new taxes on certain foreign earnings, limit the deductibility of certain U.S. costs and levy, among other things, a onetime repatriation tax on accumulated offshore earnings. The Act is subject to federal and state tax authorities ' interpretation and implementation guidance, as well as amendments and technical corrections. Any or all of these could impact the Company unfavorably. The tax laws and regulations of the various countries where the Company has operations are extremely complex and subject to varying interpretations. While the Company believes that its historical tax positions are sound and consistent with applicable laws, regulations and existing precedents, there can be no assurance that these tax positions will not be challenged by the tax authorities concerned or that the Company will be successful in defending against any such challenge. The Company’s future income tax expense could also be favorably or adversely affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation and changes in the operating structure of deferred tax assets and liabilities.

2. Antitrust laws related to Electronic Commerce: As the company is headquartered in the U.S, so U.S antitrust law is applicable to this company. U.S antitrust law is a collection of federal and state government laws that regulates the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers. The main statutes are the 1890 Sherman Act, the 1914 Clayton Act, and the 1914 Federal Commercial Commission Act. First of all, these acts restrict the formation of cartels and prohibit other collusive practices that are considered to be commercially restricted. Secondly, they limit the fusions and acquisitions of organizations that could significantly reduce competition. Third, the creation of a monopoly and the abuse of monopoly power are prohibited. This law will affect the Avnet as a whole in every sector because this law in the U.S does not allow a company to have a complete monopoly in the electronics and technology sector.

3. Repatriation tax liability eroding profits: On December 22, 2017 the U.S. federal government enacted tax legislation (the “Act”) which includes provisions to lower the corporate income tax rate from 35% to 21%, impose new taxes on certain foreign earnings, limit deductibility of certain U.S. costs and levy a one-time deemed repatriation tax on accumulated offshore earnings, among other provisions. The Company recorded a provisional amount of $ 230.0 million in the third quarter of fiscal 2018 for the one time deemed repatriation tax liability (the "transition tax"), of which $ 22.0 million is classified as the current income tax liability. This was a huge expense for the company which had to scoop it out from its profits.

Economic

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Social

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Technological

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Legal

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Environmental

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