Analyse of internal strengths
Because of its vast financial resources, the company can do extensive market research and product development. It has seen a steady increase in its revenue. PPG’s 2021 sales were $16.8billion, an increase of $13.4billion from 2020. (MarketLine, 2022). Because of its high income, the firm can cover operating expenses, credit obligations, and investment costs. Due to their solid financial position, the firm can hire qualified individuals that will guide it towards its strategic objectives. Strong sales are a key factor in the company’s strong working capital, equity ratio and debt-to cash ratio. Its strong brand equity allows it to draw clients from many geographies. Their strong brand equity, which includes facilities in every continent of the world, boosts their global reputation. The strong brand equity is also strengthened by the diversification of product lines. PPG is now able to diversify into a variety of industries, including paints and optical goods. This allows it to be attracted to manufacturers of vehicles, military ships, shippers and consumers. The company’s product diversification approach enables it to increase its market share, sales volume, and profit margins (Reilly & Williams, 2016).
Weaknesses
A company’s poor financial performance is a factor in its declining net profit margin. PPG’s net profit margin has declined over the last three year. PPG’s net income fell by 10.4% and 7.7%, respectively in 2020/2021 and 2019/2020 (MarketLine, 2022). Poor financial performance is responsible for corporations’ inability or inability to invest in large capital projects such as geographical expansion, product development and research, as well recruiting. To be able invest in large brand building programs, the corporation needs to increase its net profit and sales.
External Analysis: Prospects
Through strategic alliances with other businesses, the company can improve its market position. Strategic alliances allow the corporation to expand its product offerings and to better distribute its brands to customers. Strategic partnerships can minimize manufacturing costs by enabling specialized enterprises to sell specialized goods and services at a discount (Reilly & Williams, 2016). To offer its paint products in the market, the company formed strategic alliances with Six Flags Entertainment Corporation (November 2021) and Packaging Coats Innovation Centre (June 2021).
It has a significant market share which gives it an advantage. Its product range and quality of services are key to the company’s market leadership. The organization uses RFID technology and black chain technology to strengthen its market position. Drop shipping technology should be used by PPG to enhance its value chain and operation.
Bedrohungs
Inflation may increase manufacturing costs and impact corporate financial viability. Inflation causes an increase in input prices. This in turn leads to a decrease in revenue and margins. Between 70 and 80% of all manufacturing expenses are related to the cost of raw materials. Inflation can have a negative impact on the production balance and increase the risk of breakeven. A corporation cannot build a strategic financial strategy that is reliable and sustainable. This will be difficult if the prices of vital resources such as natural gas remain variable. This is made worse by the current Ukraine-Russian war.
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