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Sherwin Williams SWOT & PESTLE Analysis

ID : 52345753| Oct 2018

COMPANY PROFILE -Sherwin Williams

Business Sector :General Building Materials

Operating Geography :USA, North America

About Sherwin Williams :

Founded in 1866 and headquartered in Ohio, USA, Sherwin Williams is a Fortune 500 paints and coatings manufacturing company. It serves varied classes of customers, ranging from homeowners and property managers to architects and contractors. Its principal divisions are Paint Stores Group, Consumer Group, Global Finishes Group and the Latin America Coatings Group. The multinational company has its presence in America, Asia- Pacific, Europe, Middle East and Australia. It concluded its acquisition deal of The Valspar Corporation on June 1,2017, thereby making it one the global leaders in paints and coatings. It has around 42,500 employees as of early 2018.

Sherwin Williams Revenue :

$11 Billion (FY Dec 2017)

Ownership / Major shareholders :


As of 2018, the ownership distribution for the top 5 shareholders of Sherwin Williams are as follows: –
1) Vangaurd Group Inc (9.599%)
2) Blackrock Inc. (7.425%)
3) Massachusetts Financial Services Co (5.406)
4) State Street Corp (4.684)
5) FMR LLC. (4.335)

Competitive Analysis of Sherwin Williams

SWOT
PESTLE

The SWOT analysis report of Sherwin Williams presents the internal analysis and external analysis of the company with insightful details. The SWOT analysis essays the detailed business case of this American paints and coatings manufacturing company covering its strengths, weaknesses, opportunities and threats. Sherwin Williams’ competitive advantage is also highlighted as the report dwells upon the market expansions and distribution system that the company maintains. The increased focus on the target segment of customers who prefer hiring contractors will go a long way in increasing Sherwin Williams’ market share:

Strengths
Weaknesses
1. Pool of skilled manpower
2. Proven efficiency in market expansion
3. Well networked distribution system
4. Strong financial profile
1. Heavy dependence on the health of US economy
2. Flawed Demand Forecasting leading to poor inventory management
Opportunities
Threats
1. Expansion into new markets
2. Supply chain rationalization
3. Product development
4. Diversification of the customer base
1. Competition from other home improvement retailers
2. Changes in consumers' buying behavior
3. Unfavorable environmental regulations
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Detailed SWOT Analysis of Sherwin Williams

 

Strength

1. Pool of skilled manpower: Sherwin Williams boasts of a great pool of skills and talent, which it takes care through its professional work environment, excellent benefits and committed training and development programs. It has several awards to its credit, such as the Forbes' America's Best Large Employers 2016 and Northeast Ohio Top 100 Workplaces 2010-16, which only re-emphasize the dedication and commitment of the organization towards enriching its human assets. The company management is stalwart on providing training and requisite tools its employees need for excelling today and tomorrow.

2. Proven efficiency in market expansion: the company is a master at the art of market expansion. It has proved its mettle in every market it has forayed into with its existing product lines. It has successfully carved out for itself, a good chunk of revenue in architectural paints across North America, China, Australia and the UK. The company focuses on growth through acquisitions and expansion of operations in newer markets that facilitate economies of scale as well as diversification of economic cycle risks in the markets it operates in. The Valspar acquisition is a proof of this rewarding strategy.

3. Well networked distribution system: year 2016 saw a record growth of 11.6% in profit, majorly due to the volume driven supply chain productivity in North America. The business leverages its excellent networks to have a commanding hold on selling, general and administrative expenses, which helped improve the operating profit by 10.82% in the year 2016. Not less than 90% of the US population lives within a 50 mile radius of a Sherwin Williams store. All its principal business divisions are endowed with the best distribution chains. While the Consumers Group manages a highly efficient network constituting of 65 manufacturing plants and 33 distribution centres, the Global Finishes Group has 288 company operated automotive, protective and marine and product finish branches. On the other hand, the Latin America Coatings Group operates 600 dedicated dealer outlets, placed in prime locations.

4. Strong financial profile: Sherwin Williams has an enviable financial profile to boast of. The third quarter, ending September 2017, saw a consolidated net sales increase of 37.4% to a whopping $4.51 billion. Earnings before interest, taxes, depreciation and amortization (EBITDA) saw a 9.6% in nine months to $1.70 billion, including impact of the Valspar acquisition. The company has a balanced revenue mix, comprising of all its four divisions, namely, the Paint Stores Group, the Consumer Group, the Global Finishes Group and the Latin America Coatings Group, that provide an impetus for growth. The company is focusing on achieving business synergies to be realized by 2020. Beginning 2009, working capital has increased in absolute terms, except for a dip during the 2014-15 periods, which saw a global slowdown. On other hand, the company targets an EBITDA of 18.8-21.0% by 2020 against 16.6% in 2016, with 220 to 440 bps of margin expansion over this period of 4 years.

Weakness

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Opportunity

This section is available only in the Complete report on purchase.

Threat

1. Competition from other home improvement retailers:Sherwin Williams major competitors are PPG industries, DOW chemical and Eastmen Chemical. Company's net income in the 3rd quarter of 2017 declined year on year by 18.13%, whereas most of its competitors witnessed an income growth. During the same period, international coatings segment of the Company lost market share of approximate 4.61%. Sherwin Williams failed to increase sales with same pace vis-a-vis its competitors during Q3-2017.

2. Changes in Consumer's buying behavior: from 'do-it- yourself' to 'do-it-for-me', the consumers' buying behavior is getting dynamic each passing day. Consumers taste and preferences are also changing as they are demanding more specialized and quality products at the most competitive prices. Also, with the advent of online channel, Sherwin Williams' existing physical infrastructure driven supply chain model might face a threat.

3. Unfavorable environment regulations: Paints and Coatings industry is highly vulnerable to environmental regulations. Recently a law suit was filed against the company whereby it was held liable for its actions under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), as well as applicable state laws, including the New Jersey Spill Compensation and Control Act. Such environmental regulations and violations not only affect the product decisions of the company but also significantly impact its image as well.

Major Competitors :

  • PPG
  • Bengamin Moore
  • RPM International Inc.
  • Behr
  • Kelly-Moore Paints
  • Cloverdale Paint
  • Jotun
  • Dunn-Edwards
  • Axalta
  • Aspen Aerogels
  • Beacon Roofing Supply Inc.
  • BMC Stock Holdings
  • Boise Cascade, LLC
  • Builders FirstSource, Inc.
  • Fastenal Company
  • Floor & Décor Holdings, Inc.
  • Foundation Building Materials, Inc
  • .

Major Brands :

  • SkyScapes
  • ATX
  • Valspar

Key Business Segments / Diversification :

Sherwin Williams
Paints- manufacture and distribution and sale
stains coatings

Recent Acquisition / Mergers / Alliance / Joint Ventures / Divestitures :

Open Table Preview
Name
Business Segment
Year
Type
Objective/Synergy Achieved
The Valspar CorporationPaint and coatings manufacturer2016AcquisitionThe deal is worth US $9 billion. The acquisition of Valspar accelerated Sherwin-Williams' global growth strategy and established them as the global leader in paints and coatings. The combination of these two companies created a world class brand portfolio, expanded product range, premier technology and innovation platforms and an extensive global footprint. These enhanced capabilities will benefit the customers and create sustainable long-term value for Sherwin Williams’ shareholders.
Geocel HoldingsInnovative caulks, sealants and adhesives manufacturer2012AcquisitionThe acquisition of Geocel was a great integration for the company and it added some product lines that Sherwin Williams did not have in their portfolio. The deal amount remains undisclosed.
Leighs PaintsPassive Fire Protection products manufacturer2011AcquisitionThe acquisition significantly enhanced the product portfolio of the Sherwin-Williams’ Protective & Marine business.
Source: Company website and other reliable sources. The detailed table is available in the Complete Report.
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SWOT & PESTLE.com (2020). Sherwin Williams SWOT & PESTLE Analysis - SWOT & PESTLE.com. [online] Available at: https://www.swotandpestle.com/sherwin-williams/ [Accessed 08 Jul, 2020].

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Sherwin Williams SWOT and PESTLE analysis has been conducted by Avneet Kaur and reviewed by senior analysts from Barakaat Consulting - an Ezzi IT and Business Consulting venture.

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