United Technologies SWOT and PESTLE Analysis

Strength

1. Breakthrough R&D: Research and Development have been UTC’s major point of differentiation when compared to its competitors. The Pratt and Whitney made pure power geared turbofan engine revolutionized the aerospace industry. It reduces the environmental emissions by about 50 per cent and fuel consumption by around 16 per cent. In the building systems segment, the company has concentrated in automation. With a research spending of over US $3.9 billionand two dedicated R&D centers in the US, UTC stands apart from its competitors.

2. One of the strongest and largest players in the industry: With net sales of US $56.5 billion, a workforce of about 200000 and an R&D spending of about US $3.9 billion, UTC is one of the strongest and largest players in the industry. It has its presence all over the globe. A major chunk of its sales come from the USA, Europe, and Asia-Pacific. It is the 95th largest company in the world according to FORBES. It is the 3rd “most admired” Aerospace and Defense Company according to Fortune magazine.

3. Strong International presence, with facilities and customers all around the globe: UTC, which is based out of the USA has facilities in countries like Belgium, Canada, China, Israel, New Zealand, Poland, Singapore, Taiwan, Turkey, and UK. The US only contributes to 38 per cent of its net sales, while a major part of the net sales come in from Europe and Asia-Pacific as well.

4. Management supported by visionary leadership: UTC is headed by Gregory J Hayes, who has come to UTC through a merger with Sunstrand Corporation. He has held various positions in UTC since then and played a major role in mergers and acquisitions of companies like the Goodrich Corporation. The leadership of UTC also includes domain experts like Elizabeth B Amato, Vince Campisi, Michael R Dumais, AkhilJohri, etc.

5. Good acquisition strategies: UTC has acquired GST Holdings, a Chinese fire alarm company in 2009, Clipper Windpower, a California-based company in 2010 along with GE securities. Later on, in 2011, it has acquired Goodrich Corporation which is a supplier of systems and services to aerospace and defense clients. An elevator manufacturer GrupoAscensoresEnor was also acquired in 2013. All of these ventures have created a positive impact to UTC. The CEO Hayes once said, ‘I wouldn’t be afraid to do a big deal.

Weakness

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Opportunity

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Threat

1. Fluctuations in currency exchange rates may impact exports: United Technologies is exposed to exchange rate fluctuations with major global exports. Strengthening of USD in comparison with other currencies will hamper the exports of UTC making its products expensive in international markets.

2. Import and defense regulation policies by governments of various nations: Import regulations in other countries will limit the exports that UTC can make to other countries. Defense regulations in other countries will affect the aerospace wing of UTC.

Political

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Economic

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Social

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Technological

1. Continued investment in technological innovation: Spending in research and development is a key factor for achieving technology innovation. United Technologies has launched initiatives in each of its businesses to capitalize on the potential future trends and execute its digital strategies. UTC has effectively used digital tools and data analytics to derive business insights for improving productivity and efficiency. Pratt & Whitney’s GTF engine has increased number of sensors which can generate up to 4 million data points per engine per flight, allowing it to proactively monitor engine performance, minimize disruption andpredict future maintenance needs.The company spent U.S. $3.7 billion in R&D in FY 2016-17.

Legal

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Environmental

1. Development of environmentally responsible products, services and operations: Focusing on environmental sustainability in its products, services and operations is a key business principle of United Technologies Corporation. UTC’s, Pratt & Whitney introduced the Green Engine Program to focus on developing engines which are in compliance with European REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) standards and also have minimal environmental impact. United Technologies has also collaborated with industry leadersand leading institutes from Harvard University to Dodge Data & Analytics to work green building movement based on data insights. UTC’s Carrier division has helped reducefood loss and greenhouse gas emissions by implementing innovative cold storage solutions.

2. Strong emphasis on sustainability: UTC sets itself sustainability targets every year. It is the founding member of the Green Building Council in the US. In 2015, UTC signed a Climate Pledge as a part of the American Business Act. As a part of this UTC has a target of reducing its environmental emissions by 80 per cent by the year 2050.