Startegic Analysis (Sherwin Williams)

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The Sherwin-Williams Company

Strategic Analysis

Strong financial performanceHigh debt to equity ratio
Wide product portfolioIncrease in current liabilities
Strong market presence
Global demand for coatings market Consolidation in chemical industry Opening new storesForeign exchange risks
Strategic acquisitionEnvironmental regulations

The Sherwin-Williams Company is viewed as one of the leading paint manufacturing and retailing companies in the US. Some of their key strengths are a strong market presence, wide product portfolio, and strong financial performance. Some major areas of concern are a high debt to equity ratio and increasing current liabilities. Going forward, the risks associated with foreign exchange risk, environmental regulations, and consolidation in chemical industry may impede its business growth. However, ample growth opportunities for the company are obtainable through strategic acquisition, opening new stores and increasing global market for coatings. Strengths:

Strong financial performance FY2010 reflected an impressive financial performance for the company. They registered total revenue of US$7,776.42 million in the FY2010, up 9.62% on an annual basis from US$7,094.25 million in the FY2009. The increase in revenue was principally due to the acquisition of two industrial wood finishes businesses(Sayerlack and Becker Acroma).These two acquisitions increased revenues for FY2010 by more than US$440 million. Also, their operating profit increased by 8.82% from US$622.82 million in the FY2009, to US$677.78 million in the FY2010. Simultaneously, the company net income increase by 6.11% to US$462.49 million in the FY2010 from US$435.85 million in the FY2009. Based on such strong financial performance, the company can aggressively pursue its growth and expansion plans. Wide product portfolio Having a broad business portfolio helps the company to serve the diverse needs of its customer base. Sherwin-Williams develops, produces, distributes and retails paints, coatings and related products. They also produce paints, stains, painting tools and equipments for a wide variety of customers such as residential and commercial builders, architectural and industrial painting contractors, property owners and managers. Their portfolio includes products for their Paint Stores group segment, Consumer Group segment, and the Global Finishes Group segment. In addition to its merchandise offerings, it also provides painting related services such as color sampling, wood finishing systems and services, inventory management and equipment repairs. This broad product portfolio has allowed them to obtain a higher market share and increase their revenues. Strong market presence A strong market position allows them to attract a huge customer base, ensuring strong top-line performance. Sherwin-Williams is one of leading manufacturers in the coating industry in the US. In Europe, their subsidiaries, Sayerlack and Becker Acroma are recognized as the leading coating companies. Another subsidiary, Pinturas Condor is the largest paint and coatings company in Ecuador. The company offers a wide portfolio of market leading brands such as Sherwin-Williams, ProMar, SuperPaint, A-100, Duron, PrepRite, Duration, Master Hide, ProClassic, Classic 99, MAB, Columbia and ExpressTech. Such a strong market presence of the company helps it to generate increased demand for its offerings, driving the revenue. Weaknesses:

High debt to equity ratio This ratio may place the company in a risky position in paying off its high interests. Their debt to equity ratio was 70.12 in the FY2010, which was much higher than Chemicals – Commodity industry’s average debt to equity ratio of 29.91. The increased debt to equity ratio was due to 27.79% annual increase in debt, from US$817.61...
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