WestRock SWOT and PESTLE Analysis

Strength

1. Wide geographic presence makes the company truly global: WestRock is a global organization in a true sense. It has 320 facilities with different responsibilities like design, manufacturing, labs, offices, etc. with more than 50000 employees. The company is active in America, Europe, Australia, Asia-Pacific and South Africa. For manufacturing, there are currently 264 facilities in North America, 8 facilities in South America, 38 facilities in Europe, 4 in Asia Pacific and 2 in India. Forest resources are quite important for paper packaging as they serve as raw material. Due to high percentage of recycling, WestRock has only 19 forest reserves, one each in Brazil and China and rest in Eastern part of North America. The company has 36 locations for design and research and 85 locations for distribution, sales, marketing and related corporate affairs, spreading all over the world.

Weakness

Opportunity

1. Rising demand of paper based packaging in e-commerce: E-commerce is about to rise with a CAGR of 15% up to 2023. The value of E-commerce was $3.5 trillion in 2019 and it was expected that e-commerce used corrugated packaging worth $20 million in 2019 too. Inspite of the usage ratio remaining same, even then corrugated increases by the same CAGR of 15%. With increasing preference of consumers towards sustainability and flexibility and lightweight packaging, paper packaging only sees an up thrust in the e-commerce market. It can serve as a huge opportunity to WestRock. With large e-commerce platforms like Amazon, Flipkart, Ebay and even white and brown goods producers plunging into e-commerce, WestRock can keep its investors happy with its all-round innovation and supply capability.

Threats

Political

1. US withdrawal of Paris Agreement: USA had pledged to curtail emissions of harmful greenhouse gases (GHG) by 26% to 28% between 2005 and 2025 in the Paris Climate Agreement. The agreement was signed in 2016, but in late 2019, US government repealed from its obligation to Paris Agreement deeming it to be in direct conflict with the interest of the American businesses. The business community in the USA has actually downplayed with decision as by this time most of the companies invested heavily to reduce carbon footprint. The decision becomes vital for Westrock in two aspects. First, the paper mogul uses considerable amount of energy, which includes, non-renewable sources also. It is investing heavily to cut down its carbon footprint. Facilities at Quebec, belonging to WestRock, took substantial measures to reduce 20% below 1990 levels by 2020 and expect to accomplish 37.5% by 2030. These investments by Westrock, carries the message of sustainability of paper packaging as USP for marketing. In material terms, paper packaging helps its customers to reduce carbon footprint and also abide by the Paris Agreement norms. Many customers were increasing reliance on paper packaging due to the agreement. With the annulment of agreement, they would be less serious towards sustainability goals and the demand for the Westrock products may decline. Besides, it makes the situation more hostile and the business fraternity loses both trust and momentum if governments do not value the decisions of its predecessors, which involves considerable third-party investments.

Economic

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Social

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Technological

1. Subscribing to automation for product development: Over 65% of the American packaging giant’s revenue comes from packaging. The usage of corrugated packaging is not only limited to large corporate consignments these days. With increasing awareness on sustainability, mushrooming of supermarkets, rise in ecommerce and consumption of packaged food, the requirements of corrugated packaging have been diversified. This requirement has brought another challenge too. The challenge is making multiple sizes of packages for different requirements of customers. The increased customization increases the labor cost and delays the output. Westrock understands this threat and has worked substantially on the automation of its product development in its system. Keeping lines straight with technological requirements, Westrock acquired Linkx Packaging Systems (LPS). With LPS, Westrock also owns the Boxsizer technology of LPS, which allows producing corrugated boxes without changes in the configuration of the machine and without delaying the production in configuration. This technological advancement of Westrock makes its product portfolio more viable for customers with multiple requirements. This give Westrock advantage of reduced cost of product, high scalability and speed.

Legal

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Environmental

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