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Sustainable Solutions Paper

Terry D. Long
DBA Strategy
Dr. Richard Snyder
August 28, 21!
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Sustainable Solutions Paper
The constant changing o" the paint industry cli#ate de#ands that so#e inno$ati$e
technologies to be de$eloped by participating co#panies. Sher%in&'illia#s (S)'* has been a
"ore&runner in the paint industry "or o$er a century. The de$elop#ent o" technology has helped
the co#pany e+ecute %ell in"or#ed decisions #ore than e$er be"ore. )o% %ill S)' use current
products and technologies to assist %ith their $arious business units beco#e #ore e""icient and
operate e""ecti$ely, The e+pansion o" S)' %ill depend on its custo#er ser$ice, product
de$elop#ent, and its e+ecuti$e #anage#ent tea#. The purpose o" this paper is to create a
sustainable solution in %hich the co#pany can in$estigate the strategies suggested to help the#
de$elop their present $alue added ser$ices %ithin their business units during the ne+t century.
The #a-or "ocal points o" this paper %ill include an e+ecuti$e su##ary, an analytical
loo. into the current strategies using di""erent tools such as a S'/T and Porter0s "i$e "orces
analysis. The "i$e "orce analysis %ill deter#ine e+ternal e$ents that can ha$e a direct i#pact on
ho% they conduct business. A general "orces analysis %ill e+a#ine the local en$iron#ent and
ho% it plays a signi"icant part o" their gro%th. The S'/T analysis %ill shed light on the
strengths, %ea.nesses, opportunities, and threats o" the organi1ation. This report %ill also
e+a#ine the current S)' strategy and its align#ent to the $ision o" the co#pany. A "itness
landscape analysis %ill be prepared to assess the $alue o" the co#pany, industry and opti#ality.
A Boids analysis e+a#ining business beha$ior %ill be co$ered in detail. The industry e$olution
#odeling %ill be "ollo%ed by a li"e cycle and sustainable $alue analysis. The paper %ill co#e to
a close %ith conclusions based on the #aterial presented throughout the paper.
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Executive Summary
Sher%in&'illia#s is in a uni2ue seg#ent o" the specialty che#icals #ar.et. The paint
#ar.et has e+isted "or centuries and has seen #any co#panies co#e and go. Sher%in&'illia#s
has been around "or o$er 1 years and has been an industry leader %hen it co#es to colors,
paints, adhesi$es, and coatings. The "ollo%ing sustainable solutions paper %ill "ocus on the
e+ternal "orces that %ill a""ect the en$iron#ent in %hich they operate. Their strengths and
%ea.nesses %ill be discussed in detail. The threats and opportunities %ill be care"ully e+a#ined.
Although a strategy should be e$ident throughout the paper, it %ill highlight the
e""ecti$eness o" their current strategy. 3t is a $ery e""ecti$e strategy, but could use #inor
ad-ust#ents as technology has changed the en$iron#ent in %hich they operate. Senior
#anage#ent %ill ha$e to charge #ore authority to "ront&line #anagers as they are dealing
directly %ith the custo#ers and identi"y i##ediate opportunities. During the closing o" this
paper, an action plan along %ith its re2uire#ents %ill be discussed in an e""orts to establish a
sustainable "uture "or the co#pany.
Summary Focus
The shareholders o" S)' are a $ery i#portant part o" the continued success that the
co#pany has had. Their culture has e+panded across all business units o" the co#pany and are
sti#ulating e#ployees to achie$e opti#al per"or#ance. The e+ecuti$e #anagers needs to
e#phasi1e the i#portance o" ta.ing ris.s %hen de$eloping products. 'hat strategy %ill S)'
need to get the industry leading reputation, They %ill achie$e pre"erred position through product
di""erentiation.
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Key Takeaways
S)' $isions are per"ectly aligned %ith the production and sales acti$ities o" the
co#pany. )o%e$er, there can be i#pro$e#ents in the recruiting process, product de$elop#ent,
and incenti$e structure. The co#pany currently holds an industry leading reputation because o"
their custo#er loyalty, products, and #anage#ent tea#. They ha$e al%ays placed their custo#er
"irst, but it is ti#e to get inno$ati$e through the in-ection o" ne% products to #ar.et.
Integration of Concepts
S)' strategy should be re$ie%ed annually to ensure that .ey ob-ecti$es are being #et by
the organi1ation. The achie$e#ent o" these #ain goals %ill ensure that the co#pany #aintains a
co#petiti$e ad$antage o$er its co#petition. The additional products that should be de$eloped
%ill not only separate the# "ro# co#petitors, but it %ill create a #uch needed change to the
paint industry.
Stakeholer Ientification an !alue "nalysis #Part I
A sta.eholder is a person, group or organi1ation that has an interest or concern in an
organi1ation (Business, 21!*. The S)' 5o#pany has nu#erous sta.eholders both internally
and e+ternally that ha$e a issue %ith the ongoing business o" the co#pany. The sta.eholders are
e#ployees, go$ern#ent agencies, and suppliers, co##unities in %hich there are operations,
custo#ers, creditors, trade unions, o%ners and in$estors (5arroll 6 Buccholt1, 27* see 8igure
1&1. The sta.eholders concerns $ary %ith each, but they also include a %ide $ariety o" topics.
The shareholder $alues can so#eti#es be the sa#e $alues "or other shareholders. As a group,
each sta.eholder0s $alue re#ains consistently addressed during the daily operations o" the
co#pany.
8igure 1&1. Sta.eholder 3denti"ication
9o$ern#ent
:#ployees
5usto#ers
;
Shareholder
3denti"ication
Suppliers
5o##unity
<nions
3n$estors
5reditors
=
The #ain sta.eholder "or the S)' 5o#pany is those %ho hold stoc. o%nership in the
co#pany. There are t%o categories o" stoc. o%nership> co##on stoc. and pre"erred stoc.. The
#ain di""erences in these t%o categories are that pre"erred stoc. o%ners recei$e pay#ent "irst
%hen there are di$idends. Pre"erred stoc. o%ners also ha$e greater clai#s to the co#pany0s
assets. The pre"erred stoc. o%ners also recei$e a higher di$idend than co##on stoc. o%ners do.
Their #ain concern is that the co#pany re#ains pro"itable %hile earning a return on their
in$est#ent (?lad-eno$ic, 21!*.
The custo#ers o" S)' are the ne+t crucial sta.eholders that ha$e an ongoing interest in
the co#pany. S)' has sho%n than.s to its custo#ers by creating $arious progra#s that are
custo#er "ocused. They ha$e been able to #a.e a co#petiti$e ad$antage by getting to .no%
their custo#ers ('oodru"" 6 9ardial, 177=*. The co#pany .no%s the basic principle that
%ithout custo#ers i" there is no tra""ic and the co#pany %ould go out o" business. 3t is e+tre#ely
necessary that they continue to e+pand their client understanding %hich %ill allo% the# continue
gro%ing.
The last .ey sta.eholder "or S)' is the e#ployees. A co#pany could not achie$e
success i" it did not properly in$est in the training and de$elop#ent o" its e#ployees (Schlent1,
212*. S)'0s e#ployees recei$e training that "ocuses on the satis"action o" custo#er needs. The
le$el o" satis"action ensures that the co#pany %ill include custo#er loyalty and repeat business.
The business 6 residential custo#er base ha$e sho%n signi"icant le$els o" co##it#ent to the
S)' brand. This arrange#ent has contributed to their success in recent years.
The $alue analysis identi"ies and selects the best alternati$es "or designs, processes,
#aterials and syste#s (Business, 21!*. The $alue adding chain o" S)' consists o" "our
co#ponents. Those co#ponents are color and design #ar.eting, design engineering, "ield
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technical support, and supply chain reliability (S)', 21!*. S)' has recogni1ed that it ta.es
#ore than creating an e+ceptional "inish "or products. They ha$e in$ested hea$ily in $alue&added
ser$ices that help other co#panies di""erentiate their brand "ro# their co#petitions. 3t %as their
co##it#ent to their custo#ers that ha$e helped this $alue added acti$ity beco#e the bac.bone
o" the co#pany.
The 9lobal 5olor 6 Design 5enter "ocuses on pro$iding better "inishes "or custo#ers.
They are able to pro$ide /:? and product "inishing that is unparalleled. The ser$ices o""ered at
the global color 6 design center range "ro# color consulting 6 "orecasting to architectural color
tools to color card design and construction. The center also has color e+perts that are able to
assist in the de$elop#ent o" specialty colors and "inishes. The design engineering tea# is a
e+traordinary unit in the le$el o" custo#er satis"action. They ha$e the ability to opti#i1e
#aterial, producti$ity, sa"ety and energy use. 3n addition to these ser$ices, S)' also "ocuses on
#a+i#i1ing e""iciency %hile .eeping cost and labor to a #ini#u# (S)', 21!*.
The 8ield Technical Support unit speciali1es in supporting operations by using a hands on
approach. 'hether it is co#pleting a "inishing line analysis, or pro$iding recognition o"
ine""iciencies, tech support is there e$ery step o" the %ay. The "inal $alue adding acti$ity is the
reliability o" the supply chain. S)' uses the Aust&3n&Ti#e (A3T* in$entory #anage#ent process.
This #ethod allo%s the# to reduce %aste, #ini#i1ing in$entory costs and continually satis"ying
custo#er needs as they change ('antuc., 1787*.
Enterprise $evel Strategy
The "our di$isions o" S)' are not only an ad$antage, but they are portions o" the $alue
added ser$ices (BAS*. These "our di$isions are the core co#ponents that e+e#pli"y the
organi1ation0s #ission and e+pression state#ents. S)'0s #ission> C8or o$er 14 years,
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#anu"acturers ha$e trusted Sher%in&'illia#s "or inno$ati$e coatings and e+ceptional ser$ice.
And you can count on us "or the e+pertise and the support you need to get better results, "ro#
start to "inish.D S)'0s $ision> C8or A Better 8inish. As. Sher%in&'illia#s. (S)', 21!*.
The S)'0s 2uality co##it#ent> CThe Sher%in&'illia#s 5o#pany has established a
$ision state#ent and 2uality co##it#ent (policy*, %hich states> C'e co##it to see. out the
e+pectations o" our custo#ers and to consistently #eet and e+ceed those e+pectations through
our ser$ice, products and attitudes.D The Sher%in&'illia#s 5o#panys0 5he#ical 5oatings
Di$ision ha$e sho%n dedication to sa#e $alues. /ur in$ol$e#ent and acco#plish#ents "or
earning Euality certi"ication is e$idence o" our ongoing co##it#ent to 2uality and continuous
i#pro$e#ent. This is e$ident in that the entire 5he#ical 5oatings Di$ision, including the
)ead2uarters site, the Supply 5hain, ?anu"acturing and Research 6 De$elop#ent, is certi"ied
3S/ 71>2 standardsD (S)', 21!*
Culture Type
5ulture is both a Chere and no%D dyna#ic pheno#enon and a coerci$e bac.ground
structure that in"luences us in nu#erous %ays (Schein, 21*. S)' has a culture that treats
e$ery e#ployee as "a#ily. The e#ployees ha$ing been e#po%ered typically thin. outside the
bo+ and share inno$ati$e strategies %ith #anage#ent. 3n #ost cases, e#ployees %ho share
in"or#ation that bene"its the organi1ation gain credit %hile their ideas are in the process o"
e+a#ination. 3" i#ple#ented the e#ployee recei$es a "inancial incenti$e.
Daleah 'illia#s, a "or#er e#ployee o" S)' recalls an en$iron#ent the e#braces
inno$ation a#ongst e#ployees at all le$els. 3n one instance, ?s. 'illia#s recalls sitting do%n
%ith 5:/ 5hristopher 5onnor to discuss %ays to sti#ulate unpaid in$oice ti#ing. Although
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there %as no syste# i#ple#ented because o" this discussion, the #ere "act that the 5:/ interacts
%ith accounts payable cler.s spea.s $olu#es "or the co#pany and its leadership.
The culture across the industry $aries as each business #issions and $alue state#ents
di""ers. /ne o" their #ain co#petitors, DuPont, has a re#ar.ably di""erent purpose than S)'.
CSustainable 9ro%th> 3ncrease shareholder and societal $alue %hile reducing our en$iron#ental
"ootprintD (DuPont, 21!*. 'hile their culture e#braces pro$iding shareholders pro"it, the
co#pany "ails to address the 2uality o" their product.
Integrate Concepts from %eaings
The strategy, #ission and 2uality state#ents are all in align#ent. S)' has had unusually
"e% distractions as they ha$e the ability to adapt to any un"oreseen circu#stances. Since they can
2uic.ly adapt to changes %ithin their industry, they are in a better position than #ost o" their
co#petitors. There ha$e been nu#erous discussions a#ongst #anagers to "ind ne% %ays to
attract and retain top talent. Talent and ac2uisitions ha$e been %or.ing hard i#ple#enting
inno$ati$e %ays to attract top talent. They ha$e targeted #anu"acturing, distribution, sales
pro"essionals, #anagers and dri$ers. Their ability to re$a#p their current syste# could brea.
ne% ground in their goal o" being the leading co#pany in their industry.
Evience an Implications
S)' has e+tre#ely s#all debt in %hich it is responsible. The co#pany o%ns all o" its
production "acilities, e2uip#ent, and #ethods o" transportation. The less the co#pany has to
"ocus on #eeting its "inancial obligationsF they are able to channel that energy into e#ployee
attraction, de$elop#ent and retention. The co#pany has e+perienced gro%th o$er the last "i$e
years, and retention o" top talent and per"or#ers %ould also set S)' "or "uture gro%th.
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&eneral Force "nalysis' External ( %emote Environment
&eneral Force )atrix "nalysis
The specialty che#ical industry has e+perienced nu#erous changes %ithin the last 1
years. The challenges "acing the industry are go$ern#ent %el"are 6 co#pliance regulations, cost
o" energy consu#ption, and the aging o" plants and e2uip#ent. 3n ?ay 22, 21!, legislation
ai#ed at re$a#ping the To+ic 5ontrol Act o" 17@=. <nder the ne%ly suggested legislation,
co#panies listed in the che#ical registry %ould be under close e+a#ination by state personal
in-ury clai#s and en$iron#ental litigation processes. The industry has also seen unusually
strenuous acti$ities placing its co#panies in un"a#iliar territory. This is due to increasing global
co#petition a#ongst co#petitors and the rapid depletion o" natural resources. .
Economics. The Board o" 9o$ernors o" the 8ederal Reser$e Syste# belie$es that the
econo#y %ill gro% at a rate o" appro+i#ately !.8G %ithin the co#ing ; years. The declining in
spending "or specialty che#icals and paint consu#er #ar.ets are due largely in part to the
current econo#ic conditions here in the <nited States. The <nited States 9o$ern#ent has
atte#pted to sti#ulate the econo#y through $arious initiati$es, %hich included sti#ulus "unding
and #aintaining lo%er than a$erage interest rates. The current econo#ic collapse not only a""ects
the specialty che#icals industry and the <nited States, it a""ects the %orld as a %hole.
The specialty che#icals industry, #ore speci"ically the paint industry, understands that
the #a-ority o" its business conducted is not a prere2uisite to consu#ers. 3" a consu#er plans to
decorate their house, chances are that and their decreased disposable inco#e %ill not let the# to
do so. The trend presents a threat to the industry because i" consu#ers are not buying, co#panies
cannot sell goods, and thus their ordering decreases and the cycle then repeats.
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Along %ith the reduced sales re$enue, another hindrance is the rising cost o" "uel.
According to the <.S. Bureau o" Labor Statistics, the price per gallon has risen "ro# an a$erage
o" H1.4 a gallon in 177= to an a$erage o" H4. in 21!. The <.S. Depart#ent o" :nergy
"orecasts gas prices to rise to an a$erage o" H4.; a gallon %ithin the ne+t ! years. S)' has
initiated a green energy progra# that %ill assist in their reduced "uel consu#ption. The progra#
includes a reduced "uel consu#ption plan that %ill help reduce its current en$iron#ental
"ootprint.
Technology* The technology currently used %ithin the specialty che#icals industry is
enterprise resources planning (:RP* syste#s. The :RP syste# design %as %ith nation%ide and
international corporations such as S)' in #ind. The #ain ad$antage o" ha$ing an :RP is that
the in"or#ation is readily a$ailable %ithin the %hole organi1ation, rather than ha$ing di""erent
$ersions o" data to #anipulate. The :RP also allo%s "or better "inancial reporting resulting "ro#
less duplication and %asting o" ti#e. The syste# allo%s "or better align#ent o" inter&
depart#ental transactions and processes.
The #ost ad$anced co#ponent o" the technology a$ailable in the industry is se$eral in&
house coloring $isuali1ing progra#s. Through this progra#, custo#ers can e+plore coloring
options on a #ultitude o" di""erence sur"aces "ro# ho#es to #achines to $ehicles. <sers can
si#ply upload a photo and change the# to o$er hundreds o" colors. The progra# %ill allo% users
to #atch colors and "ind those that are un#atched. The user can also create custo# colors
%ithout the "ear o" duplication.
The gro%ing #obile de$ice #ar.et has presented a ne% challenge "or the players in the
specialty che#ical industry. Tablets and other s#art de$ices allo% e#ployees to access business
in"or#ation re#otely. The ease o" access also increases the $ulnerability o" business in"or#ation
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to culprits %ho #ay contain #alicious intent. 5o#panies are no% %or.ing %ith securing data
%hile enabling e#ployees to operate re#otely to per"or# co#pany business.
+emographics , Social , Culture. The de#ographics "or the specialty che#ical industry
are re#ar.ably di$erse. The #a-ority o" specialty che#ical co#panies has a base o" operations in
se$eral countries. Although the custo#s and traditions $ary by culture, the co#panies %ill #ore
than li.ely support local custo#s. The "ollo%ing o" local traditions allo% the# to build strong
bonds %ith the e#ployees, local go$ern#ent and their i##ediate area. The resulting
relationships allo% the co#pany to be #ore pro#inent, attract local business and position itsel"
as a player in the local #ar.et.
The di""erent co#panies that speciali1e in color related products tend to conduct their
business independently o" its co#petitors. S)' has recently purchased se$eral s#aller paint
co#panies including leading ?e+ican e2ui$alent 5onsorcio 5o#e+. The pending ac2uisition o"
the ?e+ican co#pany has gi$en S)' an additional !,=18 stores in Iorth A#erica. The culture
in the industry has also undergone changes since the larger co#panies are buying the s#aller
ones at a rapid rate.
&overnment , $egal , )ilitary* The Specialty che#ical industry has e+perienced recent
regulations propositions. The <.S. Senate has recently introduced Senate Bill 17. The
proposed legislation0s ob-ecti$es are to i#pro$e the sa"ety o" consu#ers in the <nited States.
They also need to di#inish that ris.s "ro# che#ical substances by #oderni1ing title 3 o" the
To+ic Substances 5ontrol Act o" 17@=. The :n$iron#ental Protection Agency %ould use science
6 technology to assess ris.s be"ore #a.ing plans and regulatory decisions.
The legal aspect o" proposed legislation %ill potentially pree#pt la%suits "ro#
consu#ers. 3" the :PA "ails to recogni1e, classi"y and co##unicate rele$ant in"or#ation on
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che#icals, consu#ers %ould loo. to hold co#panies accountable in case o" #ishaps. The legal
syste# %ill then be "looded %ith "ri$olous la%suits that %aste ta+payer #oney and the ti#e o"
the -ustice syste#. The i#pact o" this bill could dri$e cost up "or consu#ers.
Physical Environment* The industry conducts operations in all cli#ates around the
%orld. )o%e$er, %eather %ill play a $ital role in the transportation o" che#icals. 3ncle#ent
%eather could delay or e$en postpone operations at critical "acilities. 3n 2!, there %as a
blac.out in the Iortheast part o" the <nited States. During this ti#e, it %ould ha$e been trying
"or co#panies to resu#e their nor#al production schedule %ith no po%er. The blac.out lasted
"or al#ost ! days in %hich #ost co#pany0s per"or#ance %as then behind schedule.
Implications of &eneral Forces
The e+ecuti$e tea# at S)' ha$e all been in their "ield "or a nu#ber o" years and ha$e
e+perienced a nu#ber o" industry changes. There are ne% challenges that #ust be "aced in the
"uture, and de$elop#ent is re2uired. 3n the "ace o" these ne% ad$erse challenges, they %ill be
able to i#ple#ent ne% solutions.
Threats* The "irst threat that %ill continue to #o$e S)' is the state o" the global
econo#y. Since there is so #uch uncertainty, #any consu#ers are reluctant to spend #oney on
paint. 3" placed in a place %here they ha$e to choose bet%een painting their ho#e and "eeding
their children, the a$erage consu#er %ill chose to "eed their children. The econo#ic collapse has
a""ected #ore industries than e$er be"ore. 3" it gets any %orse, the co#pany could be "orced to
cut sta"" and reduce production.
The second threat that they are "acing are the strict go$ern#ent rules and regulations. The
go$ern#ent i#ple#ents these rules to .eep pace %ith the changing technology, che#ical
#i+tures and %aste re2uire#ents. There is typically ne% go$ern#ent rules that occur e$ery
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t%enty to t%enty&"i$e years. S)' %ill ha$e to arrange their products to #eet and or e+ceed the
regulations. 3" they cannot stay abreast %ith the regulations, they "ace serious penalties that %ill
be 2uite e+pensi$e.
The "inal threat that they are "acing is the absence o" the ra% #aterials that "all into their
products. As %ith any supply and de#and #odel, the less o" it that is a$ailable, the higher
de#and and the price %ill "ollo%. Resource depletion globally at a rapid rate. The population is
gro%ing at an e$en "aster pace. There %ill be industry %ide opposition to utili1e the resources
that re#ain a$ailable.
-pportunities. The "irst opportunity "or the industry is e#erging #ar.ets such as 3ndia.
3" the co#panies can get a "oothold in these #ar.ets, they can #a.e a strong relationship %ith
the indigenous population. The co#pany that is able to get a strong enough #ar.et share in
e#erging #ar.ets %ill install itsel" to be the leader o" to#orro%. The e#erging #ar.ets o""er
#ore than ne% custo#ersF they o""er potential #ar.et longe$ity.
The second opportunity "or the industry is the creation o" eco&"riendly products that %ill
be the products in de#and on to#orro%0s econo#y. 5o#panies can capitali1e on the consu#er
trend o" using products that do not abuse the en$iron#ent. The possibility also e+ists to reduce
the cost o" ra% #aterials since co#panies %ill be using less o" the#. 3" S)' in$ests hea$ily in
eco&"riendly products, inco#e generated %ill increase.
The "inal opportunity "or the industry is "or research and de$elop#ent depart#ent to
create ne% and inno$ati$e products "or introduction to the #ar.et. 5o#pany e+ecuti$es %ould
need to inter$ene and pro$ide incenti$es "or products that could #a.e niche #ar.ets. The
products could range "ro# /:? "abricated li"e e+tending coatings, rein"orce#ent coatings, heat
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reducing po%der coatings, and sel"&bonding adhesi$es. These products could lead the %ay "or
"uture de$elop#ent o" other inno$ati$e products
Porter.s Five Forces Inustry "nalysis' External ( Inustry Environment
Five Forces )atrix "nalysis
'hile so#e co#panies #ay consider entering the specialty che#icals and paint industry,
they should be a%are o" %hat a""ects the industry. The "i$e "orces by Porter should be considered
by a business loo.ing to gain a "oothold in the industry. They should consider is there are any
substitutes that can change the pricing structures that could reduce "uture re$enue. They should
also be able to deter#ine the bargaining po%er o" the industry suppliers and consu#ers. Another
consideration %ould be their ran.ing in the #ar.etplace, are they lo%, #ediu# or high,
5o#petitors should also be understood as they are the ones %ho can in"luence the #ar.et. They
should also .no% ho% to di""erentiate the#sel$es in an atte#pt to create a co#petiti$e
ad$antage.
/arriers to Entry. Ie% co#panies should .no% that there are nu#erous barriers to enter
this #ar.et. 5o#panies %ould need to register %ith the <nited States as a producer o" specialty
che#icals and products. The go$ern#ent rules and regulations are e+tre#ely tough, and
co#panies can be shut do%n i" they do not understand the established guidelines. 3" they produce
a che#ical spill, they %ould be "ined hea$ily by the go$ern#ent. As a ne% co#pany, a #assi$e
go$ern#ent penalty %ill destroy its reputation and inhibit progress.
The second barrier to entry is the cost o" ra% #aterials. The rapid depletion o" natural
resources has increased the cost o" ra% #aterials. 5o#panies loo.ing to enter the #ar.et should
be able to co$er all e+penses "or at least t%o to three years. This %ill gi$e the# ti#e to establish
relationships %ith suppliers and build a reputation %ith consu#ers. The chances that they are
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able to do this is highly unli.ely, and there"ore they %ill not be able to obtain a sta.e in the
industry.
Substitutes. There are substitutes that can change the #ar.et place. )o%e$er, substitutes
are not particularly "a$ored by consu#ers %hen it co#es to painting their ho#es, businesses and
other ite#s. Substitutes are typically cheap products that do not ha$e the sa#e 2ualities as the
brand na#es that currently e+ist in the #ar.et place. The co#panies that ha$e a controlling
interest in the industry ha$e all in$ested hea$ily in ne% technology, patents and resources to
deli$er better products. 'hile these products tend to #o$e rapidly, there is clearly no substitute
and thus "a$ored.
/argaining power of Suppliers. The bargaining po%er o" suppliers is the "ocal point o"
the paint industry. There are no bro.ers to balance the po%er and ad-ust costs "or ra% #aterials.
The co#panies in the industry use so#e o" the sa#e suppliers and products in their production
process. )o%e$er, suppliers ha$e recogni1ed that co#panies #ay be loo.ing to go green and use
products that not har#"ul to the en$iron#ent. This has led to suppliers .eeping prices at a
steadily increasing rate that #irrors the in"lation rate in the <nited States.
/argaining power of /uyers* The buyers in the #ar.etplace ha$e the capacity to
trans"or# the production processes o" the co#panies. 5o#panies tend to establish their
production processes based on calculations per"or#ed on sales, "orecasts0 and historical e$ents.
The #ar.ets that ha$e recurring cycles are easier to predict that those in %hich nu#erous "actors
can change the business landscape. )o%e$er, in order "or buyers to le$erage their in"luence, they
%ill ha$e to ha$e no alternati$es. They %ill then be "orced to relin2uish purchases that #ight
ha$e other%ise been considered a necessity.
1@
Competitive %ivalry* The co#petition in the specialty che#ical paint industry is .een.
There are a "e% co#panies that ha$e #ade an i#pact and continue to set industry trends. The
co#panies in this industry %ill so#eti#es try to use one s#aller ri$als to e+pand their business
inco#e. S)' is a pri#e e+a#ple o" a larger business that used s#aller co#panies to its
ad$antage. Since S)' did not ha$e a strong "oothold on the %est coast o" the <nited States, they
purchased the already established co#pany 5olu#bia Paint 6 5oatings.
The top "our co#panies in %hich S)' has a ri$alry are Balspar, PP9 industries, DuPont
and A.1o Iobel. Balspar has #ore than 7,; e#ployees, operates in #ore than 2; countries and
has an annual sales o" o$er 2 billion dollars. PP9 3ndustries has o$er !8, e#ployees, operates
in 5anada, <nited States o" A#erica, and ?e+ico, and has annual sales o" o$er 7 billion dollars.
DuPont has #ore than @, e#ployees, operates in #ore than = countries and has annual
sales o" o$er 2 billion dollars. A.1o Iobel has o$er ;, e#ployees, operates in #ore than 1
countries and has annual sales o" o$er 1 billion dollars. 3n co#parison, the S)' 5o#pany has
o$er !, e#ployees, operates in ;@ countries and has annual sales o" o$er @ billion dollars.
The co#petitors0 business has been steady o$er the last ; years. :ach has #aintained a
steady rate o" gro%th o" about !G. 3n co#parison to S)', DuPont and PP9 3ndustries are the
only ones that are outper"or#ing the#. The .ey to their per"or#ance is that each co#petitor has
a distinct strea# o" re$enue. An e+a#ple o" the di$erse businesses o" DuPont is their e+plosi$es
#anu"acturing subsidiary. Since that is a s#all industry, they are the greatest player and there"ore
are the trendsetters.
The DuPont 5o#pany is the pre#ier supplier to #ost co#panies in the specialty
che#icals industry. Their operations, sales and ad$ertising ar#s are e+traordinarily di""icult since
they are operating in #ore than = countries around the %orld. The sheer si1e o" their operations
18
%ould call "or custo#i1ed ad$ertising and sales plans "or di""erent locations. The strengths o" the
co#pany are that they lead the #ar.et, ha$e strong R6D capabilities and a di$ersi"ied re$enue
strea#. DuPont0s %ea.nesses are their regulatory actions and legal proceedings. 'hile neither
processes are "a$orable, they ha$e the potential to beco#e large liabilities.
3n this industry, there are usually little to no ne% entrants. 3" there are ne% entrants %ho
ha$e the ability to ta.e a considerable a#ount o" the #ar.et share, the larger co#panies %ill get
the#. 3" co#petitors lo%ered their prices, they %ould be da#aging their brands and create a issue
%ith their 2uality. 3" another business con2uering product beco#e a$ailable, co#panies %ould
then end up %ith ne% and inno$ati$e products. Although there is a nor#al co#petition, each
ha$e the ability to ad-ust the industryJs perspecti$e.
Implications of Five Forces
Threats* The top three threats "or S)' are the current state o" the econo#y, go$ern#ent
regulations and scarcity o" ra% #aterials. The econo#y plays a signi"icant role in the potential
re$enue to be #ade. The go$ern#ent regulations are a constant ris. as they can decide ho%
co#panies process and du#p che#icals. 3n con-unction %ith the pre$ious #entioned, the
scarcity o" ra% #aterials contributes to "uture price "luctuation.
-pportunities* The opportunities a$ailable "or S)' are gro%ing potential, creating
eco&"riendly products and e+panding research 6 de$elop#ent capabilities. The co#pany has an
outstanding opportunity in ne% and e#erging #ar.ets such as 3ndia. 5reating products that are
not har#"ul to the en$iron#ent %ill play an enor#ous role in the success o" co#panies in the
"uture. S)' also could e+plore ne% adhesi$es, paints, and product li"e e+tending coatings.
17
+etaile !alue Chain "nalysis' Internal Environment
Customi0e !alue Chain of "ctivities in Table Form
A co#pany0s $alue categori1ed in 7 ele#ents> general ad#inistration, hu#an resources,
R6D, procure#ent, inbound logistics, operations, outbound logistics, sales and #ar.eting, and
ser$ice (Porter 6 ?illar, 178;*. 9i$en this set o" ele#ents, each co#pany #ust understand and
reali1e their potential in order to e$ol$e %ith the #ar.et. 3n the table illustrated belo%, S)' is
rich in #any o" the sa#e areas as its co#petition. The R6D "action o" S)' has roo# "or
i#pro$e#ent as they are lac.ing in co#parison to DuPont and PP9. Since S)' is a signi"icant
player in their #ar.et, they ha$e the "inancial resources to in$est hea$ily in research and
de$elop#ent.
The hu#an resources depart#ent has a #ediu# rating because o" their lac. o" attracting
top talent in the industry. 'hile the co#pany $alues its e#ployees, they ha$e not created any
progra#s to attract e#ployees o" other co#panies to -oin their ran.s. The a$erage engineer has
been %ith S)' "or 1 years %hile the a$erage at its co#petitors is 1;&2 years. S)' %ill need
to in$est hea$ily in attracting top talent, %hich include those "ro# co#petitors. 3n cases %here
they #ay ha$e signed non&co#peting clauses, they could be hired in a consulting capacity.
Table 1&1
Value Chain Analysis
Business Process S)' DuPont PP9 3ndustries
?anage#ent Strong Strong Strong
R6D ?ediu# Strong ?ediu#
)R ?ediu# Strong Strong
Procure#ent Strong ?ediu# Strong
3nbound Logistics Strong Strong ?ediu#
/perations Strong Strong Strong
/utbound Logistics Strong Strong Strong
Sales Strong Strong Strong
2
Ser$ice Strong ?ediu# ?ediu#
Company Skills , Capabilities
S)' has e+ceptional talent %ho ha$e the ability to #a.e the# a 1 billion dollar
co#pany. The #e#bers o" their R6D tea# ha$e a co#bined a$erage o" 1 years0 e+perience
%ith the co#pany in those positions. ?any o" the e#ployees co#e "ro# other areas %ithin the
organi1ation recei$e pro#otions, re&trained, or certi"ied in their ne% positions. Their s.ills and
e+pertise beco#e apparent %ith the 2uality o" products that S)' has in the #ar.etplace. 3" they
can increase the #ar.eting and sales depart#ent0s e""ecti$eness, they ha$e the ability to
outper"or# PP9 3ndustries to obtain the second place in their industry.
The sales tea# typically spend the #a-ority o" its ti#e selling paint and household
products to cos#etically enhance the beauty o" one0s ho#e. The custo#er ser$ice tea# recei$es
recognition as an e+cellent asset to the co#pany. Their e+pertise has yielded a high le$el o"
custo#er satis"action. 3n order to increase re$enue, they %ill ha$e to be #ore aggressi$e %hen it
co#es to satis"ying custo#ers0 needs. The operations side o" S)' has done a #ar$elous -ob
because they ha$e recogni1ed areas o" %ea.ness and i#ple#ented i#pro$e#ents. They ha$e
also been the dri$ing "orce behind ac2uisitions o$er the last couple o" years.
Implications of Competitive "nalysis
The de"ining o" strengths, %ea.nesses, s.ills and capabilities %ill help deter#ine the
e""ecti$eness %ithin the co#pany. S)' %ould bene"it by i#ple#enting ne% products that could
be de$eloped by R6D. The strengths, %ea.ness, s.ills and capabilities highlight S)'0s
co#petiti$eness.
Strengths* The strengths o" S)' e+ist in their #anage#ent, sales and custo#er ser$ice.
The e+ecuti$es ha$e #ade %ise decisions that ha$e increased business re$enue o$er the last ;
21
years. The possibility o" increasing sales in e#erging #ar.ets is a encouraging #o$e "or the
co#pany. 5usto#er ser$ice %ould #aintain a high le$el o" satis"action and thus guarantee the
return o" custo#ers.
1eaknesses* The %ea.ness as identi"ied in the $alue chain analysis is the lac. o" action
by the hu#an resources depart#ent and R6D. 'hile the co#pany has sho%n tre#endous
interest in its e#ployees, it has yet to i#ple#ent strategies to retain top talent. Progra#s that
%ould help attract top talent %ould be a sign on bonuses and product inno$ation pro"it sharing.
The sign on bonus %ould attract talent, but the product inno$ation pro"it sharing %ould increase
inno$ation a#ongst R6D sta"".
Skills* The top three s.ills that S)' ha$e are custo#er ser$ice, #anage#ent tea#, and
operations. 3n co#parison to their co#petitors, their custo#er ser$ice tea# pro$ides outstanding
ser$ice. 'hile their co#petitors also ha$e strong #anage#ent tea#s, S)'0s #anagers are
e+cellent at noticing capacity in s#aller co#panies and ac2uiring the# to use their strengths. The
"unctional loo. "ar e+ceeds that o" its co#petition. 'hile the co#petitors ha$e di$ersi"ied
re$enue strea#s, S)' #aintains a $ariety o" business that allo%s the# to #aintain o$er 1,;
stores "or custo#ers to $isit and ha$e one on one ti#e %ith color e+perts. The sa#e could not be
said "or the li.es o" DuPont and PP9 3ndustries.
Capabilities* The capabilities %here S)' #aintains a co#petiti$e ad$antage can be
"ound %ithin inbound logistics, procure#ent, and outbound logistics. The co#pany has pro$ed
e+ceptional in #aintaining its in$entory using the A3T in$entory syste#. This sa#e #ethod "or
outbound logistics and typically reduce in$entory costs and #aintain in$entory le$els consistent.
The procure#ent process is uni2ue. They procure ra% #aterials, ser$ices, e2uip#ent, and e$en
22
other co#panies. <nder the direction o" the 5hie" procure#ent o""icer, they ha$e "ound an
e+cellent #odel in %hich their co#petitors can i#itate.
+etaile S1-T "nalysis
S1-T Factor )atrix
S- Strategies* The #anage#ent tea# o" S)' can %or. closely %ith the hu#an
resources depart#ent and R6D. 'or.ing closely %ith hu#an resourcesF they can gi$e the# the
authority they need to i#ple#ent ne% practices in attracting top talents. The #anage#ent tea#
could use its in"luence to i#pro$e hu#an resources ability to "or#ulate policies o" attraction and
retention. The co#bined e""ort can be used to e+ploit the industry and enlist the #issing talent.
The R6D %ould %ant to %or. closely %ith hu#an resources 6 #anage#ent. To
i#ple#ent progra#s that %ould re%ard initiati$e %ould re2uire #anage#ent appro$al, and
contractual co##unication on behal" o" hu#an resources. The de$elop#ent o" inno$ati$e eco&
"riendly products that consu#ers %ill "ind use"ul %ould be trend setting. As an incenti$e,
engineers %ill recei$e a ;G co##ission on all "irst year sales o" all ne% products and 2.;G
e$ery year therea"ter.
The S)' sales sta"" is in a league o" their o%n. Their pro"essionalis# and dedication to
their custo#er satis"action has been a "ocal point in the co#pany0s success. :+panding on their
dedication, the co#pany could i#ple#ent ne% #easures that include on&site $isits "ro#
pro"essional color e+perts. 'hile there %ould be a surcharge, it %ould allo% S)' to bond and
understand its custo#er. As an added ser$ice, painters and "abricators %ould be a$ailable in #ost
cases. 3n an e""ort to ensure custo#er "ul"il#ent, on&site %or.ers %ill al%ays ensure custo#er
satis"action.
2!
ST Strategies* The #anage#ent tea# can help "ight the poor state o" the global
econo#y. ?anagers can loo. "or non&$alue adding ser$ices and reduce e+penses pertaining to
the#. 3" a ser$ice o""ered does not increase re$enue strea#, it could be ti#e to in$estigate
alternati$es. The sa$ings by the reduction o" these ser$ices are used in cost reductions $ia
coupons and repeat custo#er use progra#s. 3" a custo#er or entity #a.es S)' their paint store
o" choice, the loyalty progra# %ill re%ard the#. They can also per"or# an annual ra""le that
%ould #a.eo$er ; housesKentities in each country.
R6D %ill signi"icantly help the co#pany a$oid the threats o" go$ern#ent rules and
regulations. The R6D business could i#ple#ent a progra# that %ould see. to use products that
do not har# hu#ans, the en$iron#ent, or tested on ani#als. As the #ar.et shi"ts to consu#ers
%ho are #ore conscience about their purchases, #ar.eting the social responsibility o" the
co#pany %ould increase re$enues. Their re$olution %ould allo% the# to tout the#sel$es at the
%orld0s "irst "ull eco&"riendly paint co#pany.
The operations o" S)' can play a signi"icant role in the e$olution o" the co#pany. 'hile
they ha$e "orged relationships %ith nu#erous suppliers, they ha$e the ability to change the
producers. As they are a .ey #ar.et participant, their eco&"riendly approach could increase
production o" en$iron#entally "riendly products. As %ith nor#al S)' practices, their patented
process %ould deter#ine the usage o" ne% products in production. The #anage#ent tea# could
loo. to share patented in"or#ation %ith co#petitors "or a portion o" their pro"its.
1- Strategies* The identi"ied %ea.nesses o" S)' are the R6D sector and hu#an
resources. The R6D de"iciency can be #itigated #anage#ent tea# %ith the help o" the
operations tea#. Both areas can help increase re$enue and reduce operational e+penses. A
co#bined e""ort could generate re$enue "ro# areas that %ere pre$iously non&$alue adding. An
24
e+a#ple %ould be #anage#ent conducting sur$eys %ith "irst ti#e ho#eo%ners. To e+tend that
concept, ha$ing updated real estate sales listings %ould help "ocus that #ar.et.
The %ea.ness in hu#an resources and operations sector can easily co#ple#ent one
another. Since hu#an resources %ould loo. to attract ne% talent, the current operations could
highlight their talents. The di""erent depart#ents %ould encourage e#ployees to see. re$enue
generating inno$ati$e solutions. 3nitiating a tas. "orce to can$as and solicit business a#ongst
ne% ho#ebuyers %ould be bene"icial.
1T Strategies* The %ea.ness o" the R6D depart#ent and danger o" the econo#y only
intensi"ies the need to increase producti$ity in other areas. 3nbound 6 outbound logistics are t%o
areas that could lend its re$enue sa$ings to "altering progra#s. The logistical reduction strategy
%ould sa$e the co#pany #illions o" dollars annually on gas. Logistics are a necessity to #eet
custo#er needs through in$entory replenish#ent, it could also be the $alue chain co#ponent that
reduce costs %hile increasing re$enue.
The hu#an resources %ea.ness in con-unction %ith the threat o" go$ern#ent rules and
regulations could be tre#endously bene"icial "or the co#pany. Since the go$ern#ent regulations
are not "re2uent, they could hire e#ployees %ho ha$e e+cellent records o" acco#plish#ent
#eeting andKor e+ceeding go$ern#ent standards. :#ployee hiring0s should encourage ne%ly
hired e#ployees to introduce ne% 6 #odern production ideas to the co#pany.
SC-T Factor )atrix
S- Strategies* The business acu#en o" the #anage#ent tea# %ill allo% sales, ser$ice,
and operations to e+pand its capacity. )a$ing such di$ersity stri$ing "or the sa#e goal %ill
pro$ide custo#er ser$ice representati$es to build rapport %ith each custo#er. The industry built
2;
on relationships %ith suppliers and custo#ers ali.e. The stronger relationship %ith both, S)'
can see their di$erse needs.
ST Strategies* The operations tea# needs to e+ercise their ability to control their
suppliers. A strong e""ort to increase bul. purchases should lo%er prices too as #ost suppliers
o""er discounts "or bul. purchases. An e+a#ple %ould be buying paint pig#ents at H1, per
ton. 3" buying in bul., let0s say ; tons, H!;,&H4, should be the a#ount o" the purchase.
C- Strategies* The #anage#ent tea# and procure#ent ha$e done e+cellent ser$ice
together in the past. 3" there are ne% entrants to the paint #ar.et, they ha$e routinely bought the
co#pany i" they had a product that could change the #ar.et. Leeping that #entality and attitude,
purchasing pro#ising paint co#panies %ill gi$e the# the tools needed to re#ain co#petiti$e.
The co#pany can also in$est in other co#panies that speciali1e in the sa#e areas in %hich they
are specialist. The in$est#ent should be a controlling interest in the co#pany. The strategy
behind that is i" the co#pany does e+ceptionally %ell, S)' %ill still bene"it.
CT Strategies* The sales tea# is an e+traordinary "orce behind the S)' brand. 'hether
it is a co#pany or custo#er, the sales tea# .no%s ho% to identi"y products that best ser$e each.
'hile the sales tea# "ocuses on selling, they %ould no% need to "ocus on selling products %ith a
#arginal #ar.up on the price. 3" it costs a co#pany H=, to "il# e2uip#ent, the sales tea#
should guide the# to buy %arranties and such. The sale should be in the neighborhood o"
H@;,&H8,. Although the econo#y is in ruins, the sales tea# can tac.le the pending
recession.
Key Success Factor )atrix "nalysis
The #ost critical co#ponent o" the success o" S)' is the senior e+ecuti$e #anage#ent,
operations and sales and #ar.eting tea#s. The #ost signi"icant o" the three co#ponents is the
2=
#anage#ent tea#. The e+ecuti$e #anage#ent tea# has the po%er to in"luence and change the
%ay in %hich the co#pany heads by i#ple#enting a ne% policy. The #anagers ha$e a solid
understanding o" the changes in the #ar.et, operational needs and the ability to sell #erchandise.
3t is %ith this .no%ledge that #anagers can predict and #a.e ad-ust#ents based on the $arious
"orecasting "actors.
The sales and #ar.eting tea# ha$e to %or. closely %ith the operations depart#ent. 3n
con-unction and support "ro# #anage#ent, they ha$e the ability to i#ple#ent change as
directed by #anage#ent. Along %ith change i#ple#entation, they are the t%o depart#ents that
%ould e$entually deter#ine the standard "or the rest o" the co#pany. )a$ing set the standard and
raised the bar on business operations and product sales, the industry %ill ta.e notice.
Implications of "nalysis
The i#plications as highlighted in the pre$ious analysis are the chances o" #ar.et
changes. The #ar.et "or ite#s constantly change o$er ti#e and are e+tre#ely di""icult to predict
since there are nu#erous e+ternal "actors that a""ect the #ar.et. The analysis contributes to
S)'0 understanding o" changes needed in order to stay ahead o" the #ar.ets cur$e o" change. 3t
#a.es a lot o" sense "or the co#pany to continue building upon their strong points, but it #a.es
e$en #ore sense to #ini#i1e %ea.nesses. The S'/T ser$es as a great tool to the co#pany as it
relates to the co#petition. The S5/T also helps analy1e and utili1e strengths in an e""ort to
co#ple#ent %ea.nesses. The co#bination o" the .ey "actors helps the co#pany #a.e the
decision on ho% and %here to #o$e talent %ithin the organi1ation.
2@
"naly0ing the Company Strategy Type #Part II
Strategy Type
To be e""ecti$e, it is i#perati$e that the strategy is in align#ent %ith the $alues, #ission,
and culture o" the co#pany. 3t is up to the e+ecuti$e tea# to see %hat the needs o" the co#pany
are and ho% they #ust be achie$ed. The best approach "or the co#pany is to "ocus on
i#ple#enting a custo#er relationships strategy. Although the co#pany has strong relationships
%ith its custo#ers, they should go a step "urther to let their custo#ers .no% they are $aluable.
As %ith any business, custo#ers and their satis"action play a $ital part in the "ailure or
success o" the co#pany. 5o#panies that are able to build strong custo#er relationships are those
that are %hales in their industry. Although it is easier to continue to "ocus on the current custo#er
base, the challenge %ould be to e+pand that base and target other consu#ers. Their e+pertise in
custo#er satis"action and custo#er loyalty base %ill instantly #a.e the# a "a$orite.
Suppliers are al%ays see.ing %ays to increase their producti$ity. S)' %ill also bene"it
"ro# strong supplier relationships. 3" the co#pany can create a strong #eans o" co##unication,
dedication, and loyalty, then the suppliers %ill go the e+tra #ile to .eep the business o" S)'. As
%ith any relationship, the .ey "actor is co##unication. 3t %ill ta.e both co#panies %or.ing
together to achie$e the goal o" attracting ne% custo#ers and increasing re$enue.
The "inal ans%er to i#ple#enting a custo#er relationship strategy is co##it#ent. There
are #any suppliers in the #ar.etplace in %hich S)' could buy ra% #aterials. The leading
suppliers and $endors understand the i#pact loyalty has on a co#pany0s botto# line.
Supporting "rgument
S)' should see. the custo#er relationship strategy and re%ard custo#er loyalty. They
are currently doing an e+cellent -ob %ith custo#ers but %ant to e+pand their client base %ith an
28
e#phasis on custo#er satis"action %ill balance the co#pany "or longe$ity. The #anage#ent
tea# %ill need to ta.e a #ore hands on approach and #a.e sure they re#ain a$ailable to
custo#ers and suppliers "or 2uestions or in"or#al interactions. 3t is also tre#endously necessary
to e#phasi1e custo#er appreciation through dedication and incenti$e progra#s.
"naly0ing the Company Strategy )oves
%elevant Strategy )oves
The strategy that S)' applies during its business approach is the -udo strategy. The
co#pany has been e#ploying this strategy "or a nu#ber o" years. They ha$e #astered the -udo
techni2ues o" #o$e#ent, balance, and le$erage. The co#pany0s #o$e#ent has "ollo%ed the -udo
#o$e#ent theory. As the co#pany prepares to #a.e #o$es or ac2uisitions, they "ollo% through
2uic.ly and .eep under the radar during the process. The ac2uisitions are typically o" paint
co#panies.
The -udo strategy also calls "or the co#pany to #aintain balance. The techni2ue indicates
that stability is gripping opponents, not co#peting head on, and pushing %hen pulled. S)'
e+hibits this balance by gripping their opponents %ith the #ar.et introduction o" inno$ati$e
products. They also do not co#pete head on since their pri#ary co#petitors ha$e re#ar.ably
di$erse sources o" re$enue. The #o#entu#s o" their co#petitors ha$e ser$ed as a source o"
energy "or the co#pany.
The "inal -udo strategy is le$erage, or creating an ad$antage based on your opponents0
assets, partners, and ri$als. S)' has sho%n e+ceptional strength through its nu#erous
ac2uisitions, strong relationships %ith suppliers, and its large share o" the paint industry.
27
Supporting "rgument
S)' has seen tre#endous gro%th o$er the last 4 years. Although they #ay not ha$e
achie$ed business goals, they ha$e surpassed those set by the industry. They ha$e e+perienced
gro%th that has surpassed double digits. 3n 212 alone, re$enue generated "ro# operating
acti$ities surpassed 1.!G and pro"it gro%th o" 8G. 'hile the co#pany has had no proble#s
di""erentiating itsel" "ro# ri$als, e+ecuti$e #anage#ent has "ound inno$ati$e %ays to sustain
their business. The -udo strategy has gi$en S)' a %ay to di""erentiate their products in the
#ar.et. Their current custo#er and supplier relationships also play a signi"icant role in their
success.
"lignment an &oals "nalysis
"lignment Checklist an 2nit &oals
The goals set by the S)' e+ecuti$es include e#ployee in"or#ation "ro# e$ery le$el
%ithin the organi1ation. The e#ployees #a.e a di""erence and create change and inno$ation to
the co#pany. S)' has been the ideal agency %hen it co#es to reali1ing that one o" their #ost
$aluable assets is its e#ployees. There are di""erent incenti$es a$ailable %ithin di""erent areas o"
the co#pany. 'hile the e#ployees en-oy recognition "or their contributions, "inancial
co#pensation has been the #ost co$eted incenti$e.
The di""erent units %ithin S)'0s organi1ation support the strategy o" the co#pany. :ach
unit has its o%n supporting acti$ities and speciali1ation training so that e#ployees are
per"or#ing at opti#al le$els. The culture in the co#pany is one that encourages producti$ity and
inno$ation. See 8igure 2 "or unit goals.
8igure 2&1 <nit 9oals
S)' 9oals
!
Pricing
Distribution
?ar.et Share
?ar.eting
Recruit#ent
Training
Retention
)u#an Resources R6D
3nno$ation
:""iciency
3#pro$e#ent
!1
Supporting "rgument
S)' has an tre#endous incenti$e pac.age "or its e#ployees, a#ong the best in the paint
industry. :ach e#ployee co#pensation pac.age is at a rate that is higher than the industry
a$erage. The co#pany "urther increases e#ployee #orale through incenti$e plans and 2uarterly
bonuses depending on earnings "or the period. The e""ecti$eness o" the e+ecuti$e #anage#ent
tea# is #ar.ed by the 8G pro"it gro%th during the 212 "iscal year. 3n order "or pro"its to
increase, the co#pany has to re#ain co#petiti$e %hile see.ing ne% gro%th opportunities.
"ction Plan "nalysis
%elevant "ction Plan
The S)' e+ecuti$e #anage#ent tea# should continue to set goals in %hich the
co#pany stri$es to achie$e. :ach separate unit o" the business should align their depart#ental
goals %ith those o" the co#pany. 3t is especially critical that the goals set by #anagers are bothF
attainable and achie$able. They should also ensure that each goal is consistent and appreciati$e
o" the goals set by the e+ecuti$e tea#. The goals "or#ulated #ust be "ully supported by the
co#pany as they %ill be a co#panion to the co#pany0s strategy.
The e+ecuti$e #anage#ent #e#bers %ill need to i#pro$e the #easures that #easure
per"or#ance. The criteria "or the #easure#ent o" per"or#ance %ill $ary by indi$idual areas
because each per"or#s di""erent duties. This si#ply #eans that the standards "or the paint line
%ill be di""erent "ro# those o" hu#an resources. The e#ployees o" each business unit %ill need
to .no% the #etrics in %hich they #eet. The dissection o" the action plans into s#aller seg#ents
%ill ensure that co#pletion o" e$ery #etric.
The resources needed to achie$e the goals o" di""erent plans #ust be deter#ined in
ad$ance by e+ecuti$e #anage#ent. ?anagers #ust be able to #eet each to ensure the success o"
!2
the ne%ly i#ple#ented strategy. 3s there any e+ercises that %ill need to be co#pleted by
e#ployees, Do they need ne% tools, 3s the co#pany ade2uately sta""ed, )o% %ill progress be
handled, 'hile there are se$eral other 2uestions, these are -ust a "e% that #ust be ans%ered.
Supporting "rgument
The e+ecuti$e #anagers o" S)' currently #eets 2uarterly to discuss the goals and ho%
they are per"or#ing in relation to the#. The #eetings allo% each business unit #anager to
discuss their intentions to either #eet their goals, or beat the#. Although each business unit
di""ers, the #ain assets that they all ha$e that are si#ilarly are its people. The goals and plans are
highly e""ecti$e %hen they in$ol$e the e#ployees. A clear understanding o" the o$erall process
enables the e#ployee to see the large picture and see ho% their -ob contributes to the co#pany as
a %hole.
Fitness $anscape "nalysis
+escription of Fitness $anscape an "nalysis
The paint seg#ent o" the specialty che#icals business has undergone nu#erous changes
during the last 2; years. The current econo#y ri""s ha$e encouraged S)' to rethin. its pricing
strategy in order to #ain its high le$el o" custo#er loyalty. According to Peter )ill, co#panies
need to .eep their pricing strategies in line %ith their pro"it ob-ecti$es ()ill, 21!*. Since paint
co#panies are a part o" the specialty che#icals #ar.et, their pro"it #oti$es are "ar #ore
e+tensi$e than those %ho ha$e di$ersi"ied re$enue strea#s.
The "itness landscape has t%o corresponding areas> reproducti$e and sur$i$al.
Reproducti$e "itness ta.es place %hen a di$ision or co#pany endures circu#stances resulting in
the creation o" ne% and si#ilar syste#s. The sur$i$al "itness ta.es place %hen adaptability and
e+isting are the only "ocuses. Since the "inancial crisis in 27, the entire specialty che#icals
!!
industry has e+perienced a decline in sales as %ell as ne%ly i#ple#ented go$ern#ent
regulations. The paint industry has adapted nothing short o" a sur$i$al o" the "ittest #entality.
S)' has been able to adapt to the rapidly changing en$iron#ent. They ha$e been able to stri$e
"or%ard due to their Balue Added Ser$ices.
The %ea.ness that plagues S)' but has unli#ited potential is their #oti$ation progra#
"or ne% products. The "itness landscape o" the specialty che#icals industry has changed due to
DuPont spending #illions on the attraction and retaining o" top talent. S)' has the option to run
in the sa#e direction by in$esting in product ingenuity through di""erent pro"it sharing
incenti$es.
According to Stacey, the do#inant discourse theory de"inition is Cthe idea o" a person not
tal.ing in the ter#s o" the $isions, #issions, strategic plans, targets, policy, rules, per"or#ance,
e""iciency, and i#pro$e#ent they %ill not be able to sustain their #e#bership o" the #ore
po%er"ul grouping in organi1ations todayD (Stacey, 21!*. The description holds true regardless
o" the ran. and title an e#ployee holds. The do#inant discourse theory %ould then create a
plethora o" sycophants instead o" di$ergent thin.ers. 3n e+tre#e cases, those di$ergent thin.ers
%ould need to be $ery cra"ty to encourage cultural change. 3t is not unco##on to see
corporations recruit talent %ho "eel that passion and dedication to e""ectuate change.
Implications of "nalysis
The S)' brand na#e has a reputation that "ar e+ceeds that o" its direct co#petitors. The
co#pany has a bright and s.ill"ul group o" indi$iduals that contribute to the o$erall success o"
the co#pany. 3 belie$e that the co#pany does not ha$e the talent roster that %ill ta.e it into that
H1 billion dollar threshold. )o%e$er, resources a plenty, they ha$e the ability to in$est in the
recruit#ent o" di$ergent thin.ers that %ill create a ne% le$el o" creati$ity and a %ell&balanced
!4
culture. 3n$esting in #ore capacity %ould be the #ost signi"icant de$elop#ent o" action needed
to produce results.
Although the econo#y has initiated policy ree$aluations a#ongst industry titans, each are
ulti#ately responsible "or their o%n "uture. 9i$en the o$erall status o" their "inancial situation,
they are in a great place to e+ercise their "inancial strength.
/oi "nalysis
3/oi "nalysis4 Systems +escription an "nalysis
As "ar bac. as record .eeping too. place, the paint industry e+isted and %ould go through
so#e trans"or#ation. The si#plicity o" the rules then could not #eet the co#ple+ity
re2uire#ents o" the industry in its current state. /$er the course o" ti#e, each industry
participant "ound a need to set their product apart "ro# its co#petitors. Product di""erentiation
%ould go on to beco#e the staple "or paint co#panies loo.ing to stand out. The co#petition has
in$ested hea$ily in research 6 de$elop#ent, e#erging #ar.ets, attracting creati$e e#ployees.
5o#panies li.e DuPont, PP9, Balspar and Behr ha$e #astered the art o" le$eraging prices so
their custo#ers %ill beco#e loyal.
The industry began to ta.e its shape %hen the #ain co#petitors begin to address the
standards that custo#ers %ould e+pect "ro# ne% entrants. The DuPont che#ical co#pany has
been the dri$ing "orce behind the paint business "or %ell o$er a century. The business acu#en o"
the co#pany has intrigued co#petitors and s#all startups to e#ulate their success. 'hile the
industry has #orphed se$eral ti#es, it is still dri$en by custo#ers %ho rely on custo#er ser$ice
in %hich S)' e+cels. The co#pany #aintains a great pricing structure, loyal custo#ers, and
state o" the art tools a$ailable "or use. Although the recession has "orced custo#ers to re2uest
cheap alternati$es, the #a-ority o" S)'0s custo#ers ha$e re#ained "aith"ul.
!;
The paint industry has di""erent characteristics that are in align#ent %ith the rules
contained %ithin the Boid Analysis. The industry has e+hibited align#ent, attraction, and
a$oidance. The leading pig#ent producing co#panies are in align#ent %ith one another as they
are custo#ers o" the DuPont che#ical co#pany. Their align#ent reduces energy e+penditures
%ith one pri#ary source "or ra% #aterials. The align#ent also reduces the cost o" #aterials
across the table "or #a-or co#petitors %ho purchase bul. 2uantities o" #aterials.
The attraction %ith each group is deri$ed "ro# their ability to distinguish the product that
has been brought to #ar.et. The di""erent li"espans o" di""erent products are %hat #a.e it uni2ue.
The last characteristic is the a$oidance o" ne% entrants #a.ing #uch o" an i#pact on the #ar.et.
The a$oidance "actor also allo%s the addition o" s#aller potential ri$als. The ri$als are initially
attracted to the possibility o" #a.ing large su#s o" #oney, but their $isions are o$ershado%ed by
industry hea$y%eights.
Implications of "nalysis
Those co#panies that are loo.ing "or a better understanding o" their decision to -oin a
#ar.et seg#ent %ould bene"it greatly "ro# the Boid Analysis. The #anage#ent tea# o" S)'
could use the analysis to see i" they could de$elop their product o""erings into other #ar.ets. Are
their products e+tending the use"ul li"e on products that ha$e an e+pected short li"espan such as a
car or co#puter, Are the products grabbing the attention o" consu#ers, Are they a""ordable,
These are -ust a "e% o" the #any 2uestions in %hich the Boid Analysis %ould pro$ide
clari"ication.
The initial appeal "or ne% entrants to the paint #ar.et is the possibility o" unli#ited
re$enue gro%th. <n"ortunately, the #a-or players in the #ar.et ha$e capitali1ed on their ideas
and %ill purchase any ne% and inno$ati$e ideas by ne% entrants. 'hile #ost ne% entrants stri$e
!=
to beco#e an industry leading paint #anu"acturer, their ulti#ately responsible "or #a.ing pro"its
"or its shareholders through sales, #ergers, or ac2uisitions.
Inustry Evolution )oeling
Inustry Evolution )oeling +escription an "nalysis
3n its current state, the paint industry is currently in the second&order thin.ing syste#s
#ethodology. The industry has ta.en technological ad$ance#ents and used the# as a tool to
e+pand their o""erings to custo#ers. There are only a hand"ul o" industry participants %ho ha$e
the technology and "inancial assistance to pursue such options. According to Ralph Stacey, the
second order thin.ing syste# #o$es a%ay "ro# a realist belie" in syste#s, regards syste#s as
hypothesis, and so as %ays o" thin.ing rather than as e+isting things. The attention is "ocused on
the obser$er o" the syste# as also a participant in the syste# (Stacey, 21!*.
The second order thin.ing syste# calls "or e+ecuti$e #anage#ent #e#bers and research
and de$elop#ent to be a%are o" the "ra#e%or. in %hich the co#pany operates. S)' has used
this to their ad$antage as #anagers ha$e gi$en research and de$elop#ent the ability to operate
%ithin the "ra#e%or. %hile being collaborati$e %ith other business units. The co#pany reali1ed
that their strongest contribution %as their hu#an capital. The assets are reali1ed through high
2uality products, dedication to the co#pany, its goals and #issions. The e#ployees are $ery
understanding o" the industry needs, technology a$ailable and ho% to integrate the t%o.
There are di""erent phases contained %ithin the second order thin.ing #ethodology. 3n
the "irst phase co#panies disco$er and e#ployee beha$ior re#ains consistent, as -u#ping to
conclusions too 2uic.ly could be disastrous. The second phase calls "or a nu#ber o" s#aller
syste#s to be de$eloped "ro# the big picture. 3n this phase #anagers are loo.ing "or ele#ents
that enhance and address proble#atic situations. The third phase in$ol$es the creation o" syste#s
!@
de$eloped in stage t%o. 'hile these syste#s are not blueprints, they do send conceptual ideas
regarding change i#ple#entation.
Implications of "nalysis
The i#plications o" the second order thin.ing syste# is that de$elopers and co#panies
can be reluctant to thin. outside o" their co#"ort 1one. 3n #any scenarios, goals are set but the
best %ays to achie$e the goals are not ta.en into consideration %hen syste#s are being
de$eloped. 3" a de$eloper is a #e#ber o" the process in %hich a product is being de$eloped in,
ho% %ill the syste# #aintain its ob-ecti$ity, C3t has presented #odels o" organisational
interconnections so as to pro#ote greater understanding o" organisational dyna#ics and use"ul
analyses o" %or."lo%sD (Stacey, 21!*. As the global econo#ic practices change %ith each
ad$ance in technology, de$eloping ne% syste#s has beco#e detri#ental to co#panies see.ing
sustainability.
The paint industry ha$e undergone a lot o" changes to its processes and procedures %ithin
the last 2; years. The larger co#panies in the industry ha$e #aintained their position as being
industry titans %hile s#aller ones ha$e been absorbed or gone out o" business. The s#aller
co#panies tend to not %ant to participate in the global #ar.et %ith the industry titans. The #ain
reason "or this stance is that s#aller co#panies do not ha$e the "inancial resources to "ight the
shi"ts in the #ar.et. The industry0s gro%th i#plicates that large co#panies %ill be able to
pro$ide better ser$ices that the s#aller #o# and pop operations. S)' has ta.en "ull ad$antage
o" this "act by pursuing s#aller co#panies and gi$ing the# access to the global #ar.etplace
through rebranding. Ac2uiring the co#panies allo% S)' to slo%ly and steadily build assets
%hile continuing to e+panding its custo#er base. The ulti#ate goal is custo#er satis"action and
as long as they can continue to pro$ide this ser$ice, S)' %ill be around "or a long ti#e.
!8
$ife Cycle "ssessment
$C" )oeling +escription an "nalysis
The paint #ar.et has undergone nu#erous changes during the last 1&1; years. The
#ar.et %as doing e+ceptionally %ell be"ore the great "inancial crisis o" 28. S)', ha$ing been
around "or o$er 1 years, has been able to sur$i$e rough ti#es through custo#er loyalty and
process inno$ation. Since the #a-ority o" consu#ers %ere dri$en by price, it has led to so#e
co#panies not being as success"ul in co#parison to earlier ti#es.
The paint industry0s li"e cycle is operating in a continuous circular #otion. The ra%
#aterials being used are #o$ed "ro# co#pany A to co#pany B. 5o#pany B used the ra%
#aterials to #a.e paint #aterials in %hich an end user %ill buy "or their uni2ue painting needs.
3ndustry leading co#panies are better e2uipped to purchase enough #aterials to .eep the li"e
cycle running. The endless cycle enables the business to conser$e and re#ain co#petiti$e.
9o$ern#ent regulations and the rising cost o" petroleu# ha$e a #a-or i#pact on the
industry and ho% it continues to do business. 5o#panies are all #a.ing sure that they are in
co#pliance %ith go$ern#ent regulations as they are producing their products. 3" they do not
#eet the standards by the <nited States go$ern#ent, they could "ace se$ere penalties including
large "ines. <lti#ately, penalties le$ied against co#panies %ill ha$e an ad$erse e""ect on its stoc.
price.
The rising cost o" petroleu# has #ade a huge i#pact on ho% co#panies order, process,
and ship their products. The cost o" "uel has spi.ed during the last 1 years due to ci$il unrest
and political inade2uacies. 5o#panies ha$e reduced the nu#ber o" ship#ents that it ta.es to
#o$e their goods. They no% ship enough in one truc. that %ould ha$e been shipped on t%o
truc.s. They are beco#ing #ore e""icient in the %ay that they are utili1ing shipping space. The
!7
e+tra space used ha$e sa$ed on #illions on the shipping o" tons o" "reight. The li"e cycle diagra#
"or S)'0s acti$ities is as "ollo%>
8igure 2
S)' li"e cycle
Implications of "nalysis
The paint industry has a continuously e$ol$ing li"e cycle co#pared to other industries. As
long as consu#ers ha$e di""erent tastes, paint %ill al%ays be an option "or the# loo.ing to
change the appearance o" their car, ho#e, or other indi$idual product. The paint industry %ill
continue to #aintain its position and progress. They %ill continue to co#e up %ith inno$ati$e
%ays to e+tend li"e o" e$eryday products %hile reducing their carbon "oot print. The industry %ill
continue to de$elop #odern technology as it relates to color de$elop#ent. There %ill be
4
increased sa$ings on shipping #aterials as S)' has e+e#pli"ied %ith its ship#ent o" products
using "ull cargo loads.
Compliance to Innovation "nalysis
Compliance to Innovation +escription an "nalysis
'hile the possibilities do e+ist "or ne% entrants to enter the #ar.et, larger corporations
#aintain a #onopoly on the industry and its tra-ectory. There are currently progra#s in place that
are assisting custo#ers in choosing paint colors, product li"e e+tending ena#els, and the
transportation o" their products. The #ain co#petitors ha$e ree$aluated their dri$ers to align
the# %ith those o" DuPont, since they are the industry suppliers. These actions ha$e lead
consu#ers to beco#e #ore loyal to their brands o" choice. Since s#aller co#panies ha$e hard
ti#es purchasing and i#ple#enting ne% technologies, it lea$es the titans roo# "or unchallenged
con2uering o" the industry. S)' has spent se$eral #illion dollars to upgrade their syste#s,
relationships %ith custo#ers, and increase supplier relations.
S)' has sought inno$ati$e %ays to increase process 2uality, %hile e+ceeding pre$ious
le$els o" inco#e 6 custo#er ser$ice. The e+ecuti$e #anage#ent tea# o" S)' has appro$ed
nu#erous upgrades to their in&house so"t%are pac.ages to re#ain co#petiti$e. The decisions and
goals o" the co#pany ulti#ately lie in the decisions that #anagers #a.e. S)' has beco#e a
pioneer in the paint industry based on their ability to introduce inno$ati$e products to the #ar.et.
Implications of "nalysis
The inno$ati$e practices o" a co#pany can be the deciding "actor in their "uture success
in a gi$en #ar.et. The "act that #ar.ets "luctuate calls "or co#panies to be "le+ible and re#ain
co#petiti$e by introducing ne% and inno$ati$e products. S)' has been able to #a.e
ad-ust#ents in the #ar.etplace due to their "inancial stability and product 2uality. Their position
41
allo%s the# to e+plore areas o" the #ar.et that ha$e not been tapped "or re$enue purposes. Their
uni2ue ability to "ind that niche product enables the# to re#ain one o" the top three dri$ing
"orces in the paint industry.
Sustainable !alue Framework "nalysis
+etaile "nalysis of "ll Four 5uarants
To beco#e sustainable co#pany, the #anagers o" S)' ha$e to understand the
i#portance and signi"icance o" the challenges contained %ithin the "irst 2uadrant. The re%ards o"
the industry are re#aining constant as the threat is beco#ing #ore di""icult. ?anagers should
learn to na$igate through di""icult sectors o" the paint industry %hile #aintaining a%areness.
S)' %ill need to create $alue %ithin their operating structure %hile enco#passing the global
en$iron#ental needs. The actions conducted by #anage#ent %ill create $alue "or its
shareholders %hile e+panding its business acti$ities.
The co#pany can reduce %aste by consu#ing "e%er ra% #aterials. The consu#ption o"
"e%er ra% #aterials %ill reduce their o$erall pollution and carbon "ootprint. 3nno$ati$e %ays to
product 2uality products %hile consu#ing "e%er #aterials %ould be a great in$est#ent. The
di""erent construction #ethods %ill lay the ground%or. "or the sustainable "ra#e%or..
The "ollo%ing 2uadrant i" today0s business practice addresses the e+ternal en$iron#ent.
The co#pany needs to establish a closer relationship %ith its shareholders through transparency
progra#s. Through these progra#s, shareholders %ill be able to get a gli#pse o" the co#pany0s
acti$ities at any #o#ent in ti#e. Transparency also solidi"ies their reputation as producing
2uality products %hile #aintaining their core ethics $alues.
The third 2uadrant addresses the e+ternal en$iron#ent "or to#orro%. S)' has to ta.e
into consideration the population, po$erty, and ine2uity a#ongst the %orld0s inhabitants. A
42
thorough understanding %ill allo% S)' to address the needs o" $arious classes o" society. The
a""ordability o" products "or e$ery class %ill set S)' apart "ro# their co#petitors. A global
co#pany pro$iding a""ordable products guarantees their in$ol$e#ent in the global econo#y o"
to#orro%.
The "ourth and "inal 2uadrant is the internal operations o" to#orro%. S)' has to i#pro$e
internal processes that use green co#puting technology, reduces their carbon "ootprint, and
pre$ents disruption o" their ser$ices. Achie$ing these #ilestones by using in"or#ation "ro#
shareholders %ill ensure the achie$e#ent o" the sustainable solution circle o" li"e. Although the
products are great, there is al%ays roo# "or i#pro$e#ent. Since the #ar.et is $olatile, S)'
needs to ta.e a proacti$e approach to achie$ing sustainability. .

Table 2
Sustainable Value Framework
To#orro% Today
:+ternal Strategy> 9reen Technology
Payo""> Repositioning
Strategy> Base o" Pyra#id
Payo""> 9ro%th
3nternal Strategy> ?ini#i1e 'aste
Payo""> 5ost Reduction
Strategy> Product Ste%ardship
Payo""> 3nno$ation
"rgument in Support of Conclusions
S)' has ta.en ad$antage %hen it co#es to i#ple#enting sustainable solutions and
progress. The co#pany has been one o" the top "i$e paint pro$iders o$er the last century. Their
gro%th and tra-ectory can continue %ith the de$elop#ent o" ne% inno$ati$e processes and
products. The co#petition %ill ha$e to "ollo% the lead o" S)' as they pa$e the %ay into the
4!
ne+t century %ith their arsenal o" products "or e$ery sector o" society. The co#bined leadership
%ithin the co#pany and their product reputation.
Implications of "nalysis
The i#plications "or S)' is that at so#e point in the "uture, they %ill be in a head to
head co#petition %ith The DuPont 5o#pany. Their co#petitors are also loo.ing to e+pand and
hire top talent. 3t is in the best interest o" the co#pany that #anage#ent i#pro$e sustainable
solutions to #aintain the S)' legacy. They %ill ha$e to $eri"y that the right people are put into
the right positions to sti#ulate gro%th. Their success can be attained by internal as %ell as
e+ternal "actors as outlines in the sustainable solutions "ra#e%or..
Conclusions
The paint industry has se$eral co#panies that ha$e di""erent strategies, and $aried li"e
cycles all stri$ing to beco#e the nu#ber one global paint supplier. S)' has all the right
instru#ents in place to sti#ulate gro%th and achie$e long ter# sustainability. The #anagers at
S)' ha$e goals set in %hich %ill help the# achie$e the $isions o" the co#pany. Their ability to
#aintain and gro% %ould be greatly i#pro$ed using so#e o" the reco##endations presented in
this paper.
The custo#er ser$ice tea# needs to "urther engage their custo#ers %hile research and
de$elop#ent brings an $ariety o" ne% products to the #ar.et. The product engineers need to be
enticed through $arious "inancial incenti$es based on product creati$ity. They need to be allo%ed
ti#e each %ee. to de$ote to their o%n product de$elop#ent. Though they ha$e a $iable business
#odel, there is al%ays roo# "or i#pro$e#ent to encourage gro%th.
44
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