Sandvik AB SWOT and PESTLE Analysis

Strength

1. Robust Investment in R&D: Sandvik has approximately 60 R&D centres across the world with an approx. of 3.5 billion SEK investment in R&D. This has helped the firm to get 8000 active patents which are continuously reviewed to optimize its business. The company plans to focus on additive manufacturing so as to understand its potential in its manufacturing process. In order to tap the potential in the emerging markets the company has focused to open its investment centres in India and China.

2. Sustainable approach in its investments: Sandvik is amongst the top 10% companies in its category on the sustainability index. The company believes in focusing on the recycling of material which in turn has helped the company to save on costs. For example, the company has a program for used cement carbide tools so as to convert its waste to raw material for reuse which in turn contributes to the efficiency. Out of the 17 Sustainable Development Goals (SDGs) defined by UN, Sandvik aligns its products to 10 of them. For e.g., its alignment to goal 9, i.e., Industry, Innovation and Infrastructure has helped the company to build Sandvik Hiflex designed for compressor valves which helps to increase the life span of compressors and also reduce noise levels. Also, the company aims to reduce its carbon emissions by 20% by 2020, it helps them to ensure affordable and clean energy.

3. Increased operating margin, growth rate and order intake: For Sandvik Rock and Mining Technology the order size improved by 18% and for the overall business, the order size increased by 13% for Q3 of 2017 overall with Australia promising largest order intake growth at 37%. Year-on-year orders improved by 9% in Europe, 12% in North America and 14%in Asia hiking group revenue FY16 by 40% in Europe and 20% each in Asia and North America. Over the past 4 years if we compare the 3rd quarter results, the order size has improved for all its divisions. With Asia being one of the growing market, the company reported highest growth in the Asian region at 14% rate. Also, the firm reported an increase in its operating margins (EBIT %) which is also reflected in its past 4 years quarterly results. Quarter 1 for year 2017 reported the maximum margin of 16.1% in past 15 quarter results (Q1 2014 – Q3 2017).

Weakness

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Opportunity

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Threat

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Political

1. Impact of Brexit: Britain was the fastest growing economies among the EU members and for the Swedish companies it has been the most important foreign market. There has been a high demand of the products and services provided by the Swedish companies in UK. In the short run there hasn’t been any major impact of Brexit on the Swedish companies, but yes, the future prospects completely depend on the new trade agreements that will designed between Britain and EU. Even the British companies will try to invest in the existing industries in the Swedish market to access the internal market, so this would attract direct investment.

Economic

1. Trade relations with US: Sweden is an open economy. Trade is very important for the nation as the total value of the imports plus exports accounts for 86% of the country’s GDP. The total expenditure of the Swedish government accounts to 51.1% of the total output(GDP). Companies like Sandvik have sailed away well during the economic crisis of 2008 in Sweden. On the trade front, Sweden is the 12th largest direct investor in US. It creates lakhs of jobs in almost all the 50 states of the USA. The Transatlantic Trade and Investment Partnership, which is currently under negotiation between USA and EU will help to generate more business for both the sides as it is expected to create around 2 lakhs new job for both the parties.

Social

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Technological

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Legal

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Environmental

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