Masco Corporation SWOT and PESTLE Analysis

Strength

1. Strong leader in plumbing products in North America: Masco plumbing brands are the most favored products across large retailers like The Home Depot and Lowe’s. It holds a wide range of products which include faucets, showerheads, valves, bath hardware and accessories, bathing units, shower bases, enclosures, and toilets. Masco holds a strong market share of 42.19% globally across its plumbing products segment. The third quarter of 2020 has witnessed a phenomenal rise in operating profits amounting to $ 271 million and total revenue of $ 1141 million in the plumbing segment. The lion's share of its sales, of nearly 65% is from North America, 12% is from Europe. Masco is optimistic about its performance with sales to shoot by 8-10% in the fourth quarter of 2020. As per 2019 financial reports, out of the total revenue of $ 6.7 billion, plumbing products earned $ 4.0 billion of revenue for Masco. Masco’s commitment to product innovation is one of the strong driving factors that makes Masco a market leader in the plumbing segment.

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Weakness

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Opportunity

1. Business penetration on e-commerce platforms: The COVID-19 pandemic has created a negative impact on most of the sectors but the housing market has witnessed growth in the year 2020. With people spending more time in their homes, the availability of high-speed internet service and the need for comfort due to work hours added to time spent at home, has resulted in increased spending on repair and remodeling of homes. With changing consumer preferences e-commerce is growing as a convenient platform for shopping. E-commerce is gaining great traction in emerging markets like India and other Asian countries. The key favorable factors for Masco could be the young demographic profile, rising internet penetration, and scaling economic performance in the Asian countries for it to venture. 100 percent FDI in B2B e-commerce and 100 percent FDI under automatic route under the marketplace of B2C e-commerce sites could be a point to consider entering the Indian markets. Online shoppers are expected to reach 220 million by 2025 and the potential for e-commerce to grow by 1200 percent by 2026. Developed economies like the UK has also witnessed a growth in sales of plumbing products by 17% through online platforms due to a steady rise in internet users and a growth of around 43% is expected by 2022.

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Threat

1. Intense market competition: Over the years with the growth of the housing market, particularly after the 2008 global crisis, has been very significant. This marked growth has led to a rise in demand for plumbing products. This has created significant competition in this sector, with foreign manufacturers from Europe and China selling their products at significantly low prices, which has made this competition intense. Factors such as fluctuation in prices of Titanium dioxide and acrylic resins which varies based on the global demand can create an undue advantage for a few manufacturers. Petroleum by-products which form a part of the manufacturing cycle, influence the prices to a large extent; highly volatile nature of the petroleum products pricing due to trade disputes, taxation’s has given an advantage to foreign players to venture into this segment which thereby resulted in the competitive pricing structure.

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Political

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Economic

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Social

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Technological

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Legal

1. Reduction in the US Federal tax rates from 35 percent to 21 percent: Before the Tax Cuts and Jobs Act, the United States high statutory corporate tax stood at one of the highest among the OECD countries. The tax cuts and jobs act has permanently lowered the corporate tax rate from 35 percent to 21 percent. Lowered corporate tax rate will increase the capital investments and increase the wages of the employees. For corporates, a lowered tax rate will promote increased investments in machinery, equipment and warehouse, which eventually boosts worker productivity leading to increased output and higher wages for workers. The revised tax rates have significantly benefited Masco Corporation with tax benefits to the tune of $17 million. The effective tax rate was 25 percent, 24 percent in 2019, 2018 and 34 percent in 2017.

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Environmental

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