Ingersoll Rand SWOT & PESTLE Analysis

Strength

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Weakness

1. Products subject to seasonality: HVAC business is subject to seasonal conditions. Hence there may be demand uncertainty. Even Oil and gas commodities suffer a cyclical seasonality in demand. So in every offseason period the inventory for these products increase which results in higher inventory costs. Apart from the increase in costs, there is an adverse impact on operations and cash flows. Any uncertainty in either or both of these markets would negatively impact the demand for our products and services.

2. No online presence in distribution: Ingersoll Rand main distribution is along the lines of physical infrastructure model, that is through direct selling, through dealers,and in company managed facilities. However, the market trends and competition is moving towards online channels as customer buying behaviors are evolving. This is the area where Ingersoll Rand lacks the infrastructure and facilities.

Opportunity

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Threat

1. Regulatory risks and policies: Environmental policies, climatic changes and other national, regional and international regulations and policies curtail the demand and sales of the products of Ingersoll Rand. For example, products like Refrigerants are an important concern when it comes to global warming.Factors likeClimate change influences, weather patterns could also disrupt the operations by causing business interruptions or by impacting the availability and cost of materials needed for manufacturing and could increase insurance and other operating costs.

2. Exchange rate and otherrisks: The markets of Ingersoll Rand are diversified across different geographies. The operations are spread throughout the world which manufactures and sells products in various international markets. As a result, they are exposed to exchange rate fluctuations and there will be resulting increase or decrease in reported profits with respect to the currency strength of US dollar. Other risks include currency devaluation and exchange controls which affects the diminished value of funds.

3. Fluctuating costs and increasing supplier power: Ingersoll Randprocures commodities like steel and nonferrous metals are directly from the suppliers. So there is a high dependency on the supplier for procurement of raw materials. In case there is fluctuation in delivery there will be increased backlogs for Ingersoll Rand leading to lowering of customer loyalty and increased operating costs. Cost fluctuation and inflations will have an adverse impact on cash flows and operational efficiencies for Ingersoll Rand.

Political

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Economic

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Social

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Technological

1. Focus on creating sustainable technology developments: Growing concern of environmental issues and energy efficient technology has disrupted industrial machinery manufacturing industries. Moreover to a position in the strong rival driven market, companies need to continuously focus on product innovations and technologies. Ingersoll Rand has been one of the major companies which have been a forerunner in innovations and technology. Recent development in products by them have shown a reduction in their energy costs by up to 35 percent

2. Increasing focus on digitization: Consumer buying behaviors across various industries are continuously evolving. Consumers are switching to more convenient ways of product accessibility and availability. So companies are shifting to multi-channel product positioning. Ingersoll Rand has been primarily distributing products by direct sales, dealers and company-owned facilities however online channels are not. Ingersoll Rand should try to venture into online channels to increase its reach to its target consumers.

Legal

1. Change in tax laws and regulations: Changes to tax laws and regulations can have a major impact on Ingersoll Rand’s business. This area is particularly in focus after major political and administrative changes globally. Raw materials imports and exports are subject to trade protections and events like Brexit and changes in US laws after Trump Administration has had an effect on organizations. For instance, change in US law to be eligible for tax benefits will increase or decrease the tax burden and thus affect the operations for Ingersoll Rand.

Environmental

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