Sustainable Solutions Paper

Sustainable Solutions Paper The constant changing of the paint industry climate demands that some innovative technologies to be developed by participating companies. Sherwin-Williams (SHW) has been a fore-runner in the paint industry for over a century. The development of technology has helped the company execute well informed decisions more than ever before. How will SHW use current products and technologies to assist with their various business units become more efficient and operate effectively? The expansion of SHW will depend on its customer service, product development, and its executive management team. The purpose of this paper is to create a sustainable solution in which the company can investigate the strategies suggested to help them develop their present value added services within their business units during the next century. The major focal points of this paper will include an executive summary, an analytical look into the current strategies using different tools such as a SWOT and Porter’s five forces analysis. The five force analysis will determine external events that can have a direct impact on how they conduct business. A general forces analysis will examine the local environment and how it plays a significant part of their growth. The SWOT analysis will shed light on the strengths, weaknesses, opportunities, and threats of the organization. This report will also examine the current SHW strategy and its alignment to the vision of the company. A fitness landscape analysis will be prepared to assess the value of the company, industry and optimality. A Boids analysis examining business behavior will be covered in detail. The industry evolution modeling will be followed by a life cycle and sustainable value analysis. The paper will come to a close with conclusions based on the material presented throughout the paper.

Executive Summary

Sherwin-Williams is in a unique segment of the specialty chemicals market. The paint market has existed for centuries and has seen many companies come and go. Sherwin-Williams has been around for over 100 years and has been an industry leader when it comes to colors, paints, adhesives, and coatings. The following sustainable solutions paper will focus on the external forces that will affect the environment in which they operate. Their strengths and weaknesses will be discussed in detail. The threats and opportunities will be carefully examined. Although a strategy should be evident throughout the paper, it will highlight the effectiveness of their current strategy. It is a very effective strategy, but could use minor adjustments as technology has changed the environment in which they operate. Senior management will have to charge more authority to front-line managers as they are dealing directly with the customers and identify immediate opportunities. During the closing of this paper, an action plan along with its requirements will be discussed in an efforts to establish a sustainable future for the company.

Summary Focus

The shareholders of SHW are a very important part of the continued success that the company has had. Their culture has expanded across all business units of the company and are stimulating employees to achieve optimal performance. The executive managers needs to emphasize the importance of taking risks when developing products. What strategy will SHW need to get the industry leading reputation? They will achieve preferred position through product differentiation.

Key Takeaways

SHW visions are perfectly aligned with the production and sales activities of the company. However, there can be improvements in the recruiting process, product development, and incentive structure. The company currently holds an industry leading reputation because of their customer loyalty, products, and management team. They have always placed their customer first, but it is time to get innovative through the injection of new products to market.

Integration of Concepts

SHW strategy should be reviewed annually to ensure that key objectives are being met by the organization. The achievement of these main goals will ensure that the company maintains a competitive advantage over its competition. The additional products that should be developed will not only separate them from competitors, but it will create a much needed change to the paint industry.

Stakeholder Identification and Value Analysis -Part I

A stakeholder is a person, group or organization that has an interest or concern in an organization (Business, 2013). The SHW Company has numerous stakeholders both internally and externally that have a issue with the ongoing business of the company. The stakeholders are employees, government agencies, and suppliers, communities in which there are operations, customers, creditors, trade unions, owners and investors (Carroll & Buccholtz, 2009) see Figure 1-1. The stakeholders concerns vary with each, but they also include a wide variety of topics. The shareholder values can sometimes be the same values for other shareholders. As a group, each stakeholder’s value remains consistently addressed during the daily operations of the company.
Figure 1-1. Stakeholder Identification

The main stakeholder for the SHW Company is those who hold stock ownership in the company. There are two categories of stock ownership: common stock and preferred stock. The main differences in these two categories are that preferred stock owners receive payment first when there are dividends. Preferred stock owners also have greater claims to the company’s assets. The preferred stock owners also receive a higher dividend than common stock owners do. Their main concern is that the company remains profitable while earning a return on their investment (Mladjenovic, 2013). The customers of SHW are the next crucial stakeholders that have an ongoing interest in the company. SHW has shown thanks to its customers by creating various programs that are customer focused. They have been able to make a competitive advantage by getting to know their customers (Woodruff & Gardial, 1996). The company knows the basic principle that without customers if there is no traffic and the company would go out of business. It is extremely necessary that they continue to expand their client understanding which will allow them continue growing. The last key stakeholder for SHW is the employees. A company could not achieve success if it did not properly invest in the training and development of its employees (Schlentz, 2012). SHW’s employees receive training that focuses on the satisfaction of customer needs. The level of satisfaction ensures that the company will include customer loyalty and repeat business. The business & residential customer base have shown significant levels of commitment to the SHW brand. This arrangement has contributed to their success in recent years. The value analysis identifies and selects the best alternatives for designs, processes, materials and systems (Business, 2013). The value adding chain of SHW consists of four components. Those components are color and design marketing, design engineering, field technical support, and supply chain reliability (SHW, 2013). SHW has recognized that it takes more than creating an exceptional finish for products. They have invested heavily in value-added services that help other companies differentiate their brand from their competitions. It was their commitment to their customers that have helped this value added activity become the backbone of the company. The Global Color & Design Center focuses on providing better finishes for customers. They are able to provide OEM and product finishing that is unparalleled. The services offered at the global color & design center range from color consulting & forecasting to architectural color tools to color card design and construction. The center also has color experts that are able to assist in the development of specialty colors and finishes. The design engineering team is a extraordinary unit in the level of customer satisfaction. They have the ability to optimize material, productivity, safety and energy use. In addition to these services, SHW also focuses on maximizing efficiency while keeping cost and labor to a minimum (SHW, 2013). The Field Technical Support unit specializes in supporting operations by using a hands on approach. Whether it is completing a finishing line analysis, or providing recognition of inefficiencies, tech support is there every step of the way. The final value adding activity is the reliability of the supply chain. SHW uses the Just-In-Time (JIT) inventory management process. This method allows them to reduce waste, minimizing inventory costs and continually satisfying customer needs as they change (Wantuck, 1989).

Enterprise Level Strategy

The four divisions of SHW are not only an advantage, but they are portions of the value added services (VAS). These four divisions are the core components that exemplify the organization’s mission and expression statements. SHW’s mission: “For over 140 years, manufacturers have trusted Sherwin-Williams for innovative coatings and exceptional service. And you can count on us for the expertise and the support you need to get better results, from start to finish.” SHW’s vision: “For A Better Finish. Ask Sherwin-Williams. (SHW, 2013). The SHW’s quality commitment: “The Sherwin-Williams Company has established a vision statement and quality commitment (policy), which states: “We commit to seek out the expectations of our customers and to consistently meet and exceed those expectations through our service, products and attitudes.” The Sherwin-Williams Companys’ Chemical Coatings Division have shown dedication to same values. Our involvement and accomplishments for earning Quality certification is evidence of our ongoing commitment to quality and continuous improvement. This is evident in that the entire Chemical Coatings Division, including the Headquarters site, the Supply Chain, Manufacturing and Research & Development, is certified ISO 9001:2000 standards” (SHW, 2013)

Culture Type

Culture is both a “here and now” dynamic phenomenon and a coercive background structure that influences us in numerous ways (Schein, 2010). SHW has a culture that treats every employee as family. The employees having been empowered typically think outside the box and share innovative strategies with management. In most cases, employees who share information that benefits the organization gain credit while their ideas are in the process of examination. If implemented the employee receives a financial incentive. Daleah Williams, a former employee of SHW recalls an environment the embraces innovation amongst employees at all levels. In one instance, Ms. Williams recalls sitting down with CEO Christopher Connor to discuss ways to stimulate unpaid invoice timing. Although there was no system implemented because of this discussion, the mere fact that the CEO interacts with accounts payable clerks speaks volumes for the company and its leadership. The culture across the industry varies as each business missions and value statements differs. One of their main competitors, DuPont, has a remarkably different purpose than SHW. “Sustainable Growth: Increase shareholder and societal value while reducing our environmental footprint” (DuPont, 2013). While their culture embraces providing shareholders profit, the company fails to address the quality of their product.

Integrated Concepts from Readings

The strategy, mission and quality statements are all in alignment. SHW has had unusually few distractions as they have the ability to adapt to any unforeseen circumstances. Since they can quickly adapt to changes within their industry, they are in a better position than most of their competitors. There have been numerous discussions amongst managers to find new ways to attract and retain top talent. Talent and acquisitions have been working hard implementing innovative ways to attract top talent. They have targeted manufacturing, distribution, sales professionals, managers and drivers. Their ability to revamp their current system could break new ground in their goal of being the leading company in their industry.

Evidence and Implications

SHW has extremely small debt in which it is responsible. The company owns all of its production facilities, equipment, and methods of transportation. The less the company has to focus on meeting its financial obligations; they are able to channel that energy into employee attraction, development and retention. The company has experienced growth over the last five years, and retention of top talent and performers would also set SHW for future growth.

General Force Analysis: External – Remote Environment

General Force Matrix Analysis

The specialty chemical industry has experienced numerous changes within the last 10 years. The challenges facing the industry are government welfare & compliance regulations, cost of energy consumption, and the aging of plants and equipment. In May 22, 2013, legislation aimed at revamping the Toxic Control Act of 1976. Under the newly suggested legislation, companies listed in the chemical registry would be under close examination by state personal injury claims and environmental litigation processes. The industry has also seen unusually strenuous activities placing its companies in unfamiliar territory. This is due to increasing global competition amongst competitors and the rapid depletion of natural resources. . Economics. The Board of Governors of the Federal Reserve System believes that the economy will grow at a rate of approximately 3.8% within the coming 5 years. The declining in spending for specialty chemicals and paint consumer markets are due largely in part to the current economic conditions here in the United States. The United States Government has attempted to stimulate the economy through various initiatives, which included stimulus funding and maintaining lower than average interest rates. The current economic collapse not only affects the specialty chemicals industry and the United States, it affects the world as a whole. The specialty chemicals industry, more specifically the paint industry, understands that the majority of its business conducted is not a prerequisite to consumers. If a consumer plans to decorate their house, chances are that and their decreased disposable income will not let them to do so. The trend presents a threat to the industry because if consumers are not buying, companies cannot sell goods, and thus their ordering decreases and the cycle then repeats. Along with the reduced sales revenue, another hindrance is the rising cost of fuel. According to the U.S. Bureau of Labor Statistics, the price per gallon has risen from an average of $1.40 a gallon in 1996 to an average of $4.00 in 2013. The U.S. Department of Energy forecasts gas prices to rise to an average of $4.50 a gallon within the next 3 years. SHW has initiated a green energy program that will assist in their reduced fuel consumption. The program includes a reduced fuel consumption plan that will help reduce its current environmental footprint. Technology. The technology currently used within the specialty chemicals industry is enterprise resources planning (ERP) systems. The ERP system design was with nationwide and international corporations such as SHW in mind. The main advantage of having an ERP is that the information is readily available within the whole organization, rather than having different versions of data to manipulate. The ERP also allows for better financial reporting resulting from less duplication and wasting of time. The system allows for better alignment of inter-departmental transactions and processes. The most advanced component of the technology available in the industry is several in-house coloring visualizing programs. Through this program, customers can explore coloring options on a multitude of difference surfaces from homes to machines to vehicles. Users can simply upload a photo and change them to over hundreds of colors. The program will allow users to match colors and find those that are unmatched. The user can also create custom colors without the fear of duplication. The growing mobile device market has presented a new challenge for the players in the specialty chemical industry. Tablets and other smart devices allow employees to access business information remotely. The ease of access also increases the vulnerability of business information to culprits who may contain malicious intent. Companies are now working with securing data while enabling employees to operate remotely to perform company business. Demographics / Social / Culture. The demographics for the specialty chemical industry are remarkably diverse. The majority of specialty chemical companies has a base of operations in several countries. Although the customs and traditions vary by culture, the companies will more than likely support local customs. The following of local traditions allow them to build strong bonds with the employees, local government and their immediate area. The resulting relationships allow the company to be more prominent, attract local business and position itself as a player in the local market. The different companies that specialize in color related products tend to conduct their business independently of its competitors. SHW has recently purchased several smaller paint companies including leading Mexican equivalent Consorcio Comex. The pending acquisition of the Mexican company has given SHW an additional 3,618 stores in North America. The culture in the industry has also undergone changes since the larger companies are buying the smaller ones at a rapid rate. Government / Legal / Military. The Specialty chemical industry has experienced recent regulations propositions. The U.S. Senate has recently introduced Senate Bill 1009. The proposed legislation’s objectives are to improve the safety of consumers in the United States. They also need to diminish that risks from chemical substances by modernizing title I of the Toxic Substances Control Act of 1976. The Environmental Protection Agency would use science & technology to assess risks before making plans and regulatory decisions. The legal aspect of proposed legislation will potentially preempt lawsuits from consumers. If the EPA fails to recognize, classify and communicate relevant information on chemicals, consumers would look to hold companies accountable in case of mishaps. The legal system will then be flooded with frivolous lawsuits that waste taxpayer money and the time of the justice system. The impact of this bill could drive cost up for consumers. Physical Environment. The industry conducts operations in all climates around the world. However, weather will play a vital role in the transportation of chemicals. Inclement weather could delay or even postpone operations at critical facilities. In 2003, there was a blackout in the Northeast part of the United States. During this time, it would have been trying for companies to resume their normal production schedule with no power. The blackout lasted for almost 3 days in which most company’s performance was then behind schedule.

Implications of General Forces

The executive team at SHW have all been in their field for a number of years and have experienced a number of industry changes. There are new challenges that must be faced in the future, and development is required. In the face of these new adverse challenges, they will be able to implement new solutions. Threats. The first threat that will continue to move SHW is the state of the global economy. Since there is so much uncertainty, many consumers are reluctant to spend money on paint. If placed in a place where they have to choose between painting their home and feeding their children, the average consumer will chose to feed their children. The economic collapse has affected more industries than ever before. If it gets any worse, the company could be forced to cut staff and reduce production. The second threat that they are facing are the strict government rules and regulations. The government implements these rules to keep pace with the changing technology, chemical mixtures and waste requirements. There is typically new government rules that occur every twenty to twenty-five years. SHW will have to arrange their products to meet and or exceed the regulations. If they cannot stay abreast with the regulations, they face serious penalties that will be quite expensive. The final threat that they are facing is the absence of the raw materials that fall into their products. As with any supply and demand model, the less of it that is available, the higher demand and the price will follow. Resource depletion globally at a rapid rate. The population is growing at an even faster pace. There will be industry wide opposition to utilize the resources that remain available. Opportunities. The first opportunity for the industry is emerging markets such as India. If the companies can get a foothold in these markets, they can make a strong relationship with the indigenous population. The company that is able to get a strong enough market share in emerging markets will install itself to be the leader of tomorrow. The emerging markets offer more than new customers; they offer potential market longevity. The second opportunity for the industry is the creation of eco-friendly products that will be the products in demand on tomorrow’s economy. Companies can capitalize on the consumer trend of using products that do not abuse the environment. The possibility also exists to reduce the cost of raw materials since companies will be using less of them. If SHW invests heavily in eco-friendly products, income generated will increase. The final opportunity for the industry is for research and development department to create new and innovative products for introduction to the market. Company executives would need to intervene and provide incentives for products that could make niche markets. The products could range from OEM fabricated life extending coatings, reinforcement coatings, heat reducing powder coatings, and self-bonding adhesives. These products could lead the way for future development of other innovative products

Porter’s Five Forces Industry Analysis: External – Industry Environment

Five Forces Matrix Analysis

While some companies may consider entering the specialty chemicals and paint industry, they should be aware of what affects the industry. The five forces by Porter should be considered by a business looking to gain a foothold in the industry. They should consider is there are any substitutes that can change the pricing structures that could reduce future revenue. They should also be able to determine the bargaining power of the industry suppliers and consumers. Another consideration would be their ranking in the marketplace, are they low, medium or high? Competitors should also be understood as they are the ones who can influence the market. They should also know how to differentiate themselves in an attempt to create a competitive advantage. Barriers to Entry. New companies should know that there are numerous barriers to enter this market. Companies would need to register with the United States as a producer of specialty chemicals and products. The government rules and regulations are extremely tough, and companies can be shut down if they do not understand the established guidelines. If they produce a chemical spill, they would be fined heavily by the government. As a new company, a massive government penalty will destroy its reputation and inhibit progress. The second barrier to entry is the cost of raw materials. The rapid depletion of natural resources has increased the cost of raw materials. Companies looking to enter the market should be able to cover all expenses for at least two to three years. This will give them time to establish relationships with suppliers and build a reputation with consumers. The chances that they are able to do this is highly unlikely, and therefore they will not be able to obtain a stake in the industry. Substitutes. There are substitutes that can change the market place. However, substitutes are not particularly favored by consumers when it comes to painting their homes, businesses and other items. Substitutes are typically cheap products that do not have the same qualities as the brand names that currently exist in the market place. The companies that have a controlling interest in the industry have all invested heavily in new technology, patents and resources to deliver better products. While these products tend to move rapidly, there is clearly no substitute and thus favored. Bargaining power of Suppliers. The bargaining power of suppliers is the focal point of the paint industry. There are no brokers to balance the power and adjust costs for raw materials. The companies in the industry use some of the same suppliers and products in their production process. However, suppliers have recognized that companies may be looking to go green and use products that not harmful to the environment. This has led to suppliers keeping prices at a steadily increasing rate that mirrors the inflation rate in the United States. Bargaining power of Buyers. The buyers in the marketplace have the capacity to transform the production processes of the companies. Companies tend to establish their production processes based on calculations performed on sales, forecasts’ and historical events. The markets that have recurring cycles are easier to predict that those in which numerous factors can change the business landscape. However, in order for buyers to leverage their influence, they will have to have no alternatives. They will then be forced to relinquish purchases that might have otherwise been considered a necessity. Competitive Rivalry. The competition in the specialty chemical paint industry is keen. There are a few companies that have made an impact and continue to set industry trends. The companies in this industry will sometimes try to use one smaller rivals to expand their business income. SHW is a prime example of a larger business that used smaller companies to its advantage. Since SHW did not have a strong foothold on the west coast of the United States, they purchased the already established company Columbia Paint & Coatings. The top four companies in which SHW has a rivalry are Valspar, PPG industries, DuPont and Akzo Nobel. Valspar has more than 9,500 employees, operates in more than 25 countries and has an annual sales of over 2 billion dollars. PPG Industries has over 38,000 employees, operates in Canada, United States of America, and Mexico, and has annual sales of over 9 billion dollars. DuPont has more than 70,000 employees, operates in more than 60 countries and has annual sales of over 20 billion dollars. Akzo Nobel has over 50,000 employees, operates in more than 10 countries and has annual sales of over 10 billion dollars. In comparison, the SHW Company has over 30,000 employees, operates in 57 countries and has annual sales of over 7 billion dollars. The competitors’ business has been steady over the last 5 years. Each has maintained a steady rate of growth of about 3%. In comparison to SHW, DuPont and PPG Industries are the only ones that are outperforming them. The key to their performance is that each competitor has a distinct stream of revenue. An example of the diverse businesses of DuPont is their explosives manufacturing subsidiary. Since that is a small industry, they are the greatest player and therefore are the trendsetters. The DuPont Company is the premier supplier to most companies in the specialty chemicals industry. Their operations, sales and advertising arms are extraordinarily difficult since they are operating in more than 60 countries around the world. The sheer size of their operations would call for customized advertising and sales plans for different locations. The strengths of the company are that they lead the market, have strong R&D capabilities and a diversified revenue stream. DuPont’s weaknesses are their regulatory actions and legal proceedings. While neither processes are favorable, they have the potential to become large liabilities. In this industry, there are usually little to no new entrants. If there are new entrants who have the ability to take a considerable amount of the market share, the larger companies will get them. If competitors lowered their prices, they would be damaging their brands and create a issue with their quality. If another business conquering product become available, companies would then end up with new and innovative products. Although there is a normal competition, each have the ability to adjust the industry's perspective.

Implications of Five Forces

Threats. The top three threats for SHW are the current state of the economy, government regulations and scarcity of raw materials. The economy plays a significant role in the potential revenue to be made. The government regulations are a constant risk as they can decide how companies process and dump chemicals. In conjunction with the previous mentioned, the scarcity of raw materials contributes to future price fluctuation. Opportunities. The opportunities available for SHW are growing potential, creating eco-friendly products and expanding research & development capabilities. The company has an outstanding opportunity in new and emerging markets such as India. Creating products that are not harmful to the environment will play an enormous role in the success of companies in the future. SHW also could explore new adhesives, paints, and product life extending coatings.

Detailed Value Chain Analysis: Internal Environment

Customized Value Chain of Activities in Table Form

A company’s value categorized in 9 elements: general administration, human resources, R&D, procurement, inbound logistics, operations, outbound logistics, sales and marketing, and service (Porter & Millar, 1985). Given this set of elements, each company must understand and realize their potential in order to evolve with the market. In the table illustrated below, SHW is rich in many of the same areas as its competition. The R&D faction of SHW has room for improvement as they are lacking in comparison to DuPont and PPG. Since SHW is a significant player in their market, they have the financial resources to invest heavily in research and development. The human resources department has a medium rating because of their lack of attracting top talent in the industry. While the company values its employees, they have not created any programs to attract employees of other companies to join their ranks. The average engineer has been with SHW for 10 years while the average at its competitors is 15-20 years. SHW will need to invest heavily in attracting top talent, which include those from competitors. In cases where they may have signed non-competing clauses, they could be hired in a consulting capacity.
Table 1-1
Value Chain Analysis
|Business Process |SHW |DuPont |PPG Industries |
|Management |Strong |Strong |Strong |
|R&D |Medium |Strong |Medium |
|HR |Medium |Strong |Strong |
|Procurement |Strong |Medium |Strong |
|Inbound Logistics |Strong |Strong |Medium |
|Operations |Strong |Strong |Strong |
|Outbound Logistics |Strong |Strong |Strong |
|Sales |Strong |Strong |Strong |
|Service |Strong |Medium |Medium |

Company Skills / Capabilities

SHW has exceptional talent who have the ability to make them a 10 billion dollar company. The members of their R&D team have a combined average of 10 years’ experience with the company in those positions. Many of the employees come from other areas within the organization receive promotions, re-trained, or certified in their new positions. Their skills and expertise become apparent with the quality of products that SHW has in the marketplace. If they can increase the marketing and sales department’s effectiveness, they have the ability to outperform PPG Industries to obtain the second place in their industry. The sales team typically spend the majority of its time selling paint and household products to cosmetically enhance the beauty of one’s home. The customer service team receives recognition as an excellent asset to the company. Their expertise has yielded a high level of customer satisfaction. In order to increase revenue, they will have to be more aggressive when it comes to satisfying customers’ needs. The operations side of SHW has done a marvelous job because they have recognized areas of weakness and implemented improvements. They have also been the driving force behind acquisitions over the last couple of years.

Implications of Competitive Analysis

The defining of strengths, weaknesses, skills and capabilities will help determine the effectiveness within the company. SHW would benefit by implementing new products that could be developed by R&D. The strengths, weakness, skills and capabilities highlight SHW’s competitiveness. Strengths. The strengths of SHW exist in their management, sales and customer service. The executives have made wise decisions that have increased business revenue over the last 5 years. The possibility of increasing sales in emerging markets is a encouraging move for the company. Customer service would maintain a high level of satisfaction and thus guarantee the return of customers. Weaknesses. The weakness as identified in the value chain analysis is the lack of action by the human resources department and R&D. While the company has shown tremendous interest in its employees, it has yet to implement strategies to retain top talent. Programs that would help attract top talent would be a sign on bonuses and product innovation profit sharing. The sign on bonus would attract talent, but the product innovation profit sharing would increase innovation amongst R&D staff. Skills. The top three skills that SHW have are customer service, management team, and operations. In comparison to their competitors, their customer service team provides outstanding service. While their competitors also have strong management teams, SHW’s managers are excellent at noticing capacity in smaller companies and acquiring them to use their strengths. The functional look far exceeds that of its competition. While the competitors have diversified revenue streams, SHW maintains a variety of business that allows them to maintain over 1,500 stores for customers to visit and have one on one time with color experts. The same could not be said for the likes of DuPont and PPG Industries. Capabilities. The capabilities where SHW maintains a competitive advantage can be found within inbound logistics, procurement, and outbound logistics. The company has proved exceptional in maintaining its inventory using the JIT inventory system. This same method for outbound logistics and typically reduce inventory costs and maintain inventory levels consistent. The procurement process is unique. They procure raw materials, services, equipment, and even other companies. Under the direction of the Chief procurement officer, they have found an excellent model in which their competitors can imitate.

Detailed SWOT Analysis

SWOT Factor Matrix

SO Strategies. The management team of SHW can work closely with the human resources department and R&D. Working closely with human resources; they can give them the authority they need to implement new practices in attracting top talents. The management team could use its influence to improve human resources ability to formulate policies of attraction and retention. The combined effort can be used to exploit the industry and enlist the missing talent. The R&D would want to work closely with human resources & management. To implement programs that would reward initiative would require management approval, and contractual communication on behalf of human resources. The development of innovative eco-friendly products that consumers will find useful would be trend setting. As an incentive, engineers will receive a 5% commission on all first year sales of all new products and 2.5% every year thereafter. The SHW sales staff is in a league of their own. Their professionalism and dedication to their customer satisfaction has been a focal point in the company’s success. Expanding on their dedication, the company could implement new measures that include on-site visits from professional color experts. While there would be a surcharge, it would allow SHW to bond and understand its customer. As an added service, painters and fabricators would be available in most cases. In an effort to ensure customer fulfilment, on-site workers will always ensure customer satisfaction. ST Strategies. The management team can help fight the poor state of the global economy. Managers can look for non-value adding services and reduce expenses pertaining to them. If a service offered does not increase revenue stream, it could be time to investigate alternatives. The savings by the reduction of these services are used in cost reductions via coupons and repeat customer use programs. If a customer or entity makes SHW their paint store of choice, the loyalty program will reward them. They can also perform an annual raffle that would makeover 5 houses/entities in each country. R&D will significantly help the company avoid the threats of government rules and regulations. The R&D business could implement a program that would seek to use products that do not harm humans, the environment, or tested on animals. As the market shifts to consumers who are more conscience about their purchases, marketing the social responsibility of the company would increase revenues. Their revolution would allow them to tout themselves at the world’s first full eco-friendly paint company. The operations of SHW can play a significant role in the evolution of the company. While they have forged relationships with numerous suppliers, they have the ability to change the producers. As they are a key market participant, their eco-friendly approach could increase production of environmentally friendly products. As with normal SHW practices, their patented process would determine the usage of new products in production. The management team could look to share patented information with competitors for a portion of their profits. WO Strategies. The identified weaknesses of SHW are the R&D sector and human resources. The R&D deficiency can be mitigated management team with the help of the operations team. Both areas can help increase revenue and reduce operational expenses. A combined effort could generate revenue from areas that were previously non-value adding. An example would be management conducting surveys with first time homeowners. To extend that concept, having updated real estate sales listings would help focus that market. The weakness in human resources and operations sector can easily complement one another. Since human resources would look to attract new talent, the current operations could highlight their talents. The different departments would encourage employees to seek revenue generating innovative solutions. Initiating a task force to canvas and solicit business amongst new homebuyers would be beneficial. WT Strategies. The weakness of the R&D department and danger of the economy only intensifies the need to increase productivity in other areas. Inbound & outbound logistics are two areas that could lend its revenue savings to faltering programs. The logistical reduction strategy would save the company millions of dollars annually on gas. Logistics are a necessity to meet customer needs through inventory replenishment, it could also be the value chain component that reduce costs while increasing revenue. The human resources weakness in conjunction with the threat of government rules and regulations could be tremendously beneficial for the company. Since the government regulations are not frequent, they could hire employees who have excellent records of accomplishment meeting and/or exceeding government standards. Employee hiring’s should encourage newly hired employees to introduce new & modern production ideas to the company.

SCOT Factor Matrix

SO Strategies. The business acumen of the management team will allow sales, service, and operations to expand its capacity. Having such diversity striving for the same goal will provide customer service representatives to build rapport with each customer. The industry built on relationships with suppliers and customers alike. The stronger relationship with both, SHW can see their diverse needs. ST Strategies. The operations team needs to exercise their ability to control their suppliers. A strong effort to increase bulk purchases should lower prices too as most suppliers offer discounts for bulk purchases. An example would be buying paint pigments at $10,000 per ton. If buying in bulk, let’s say 5 tons, $35,000-$40,000 should be the amount of the purchase. CO Strategies. The management team and procurement have done excellent service together in the past. If there are new entrants to the paint market, they have routinely bought the company if they had a product that could change the market. Keeping that mentality and attitude, purchasing promising paint companies will give them the tools needed to remain competitive. The company can also invest in other companies that specialize in the same areas in which they are specialist. The investment should be a controlling interest in the company. The strategy behind that is if the company does exceptionally well, SHW will still benefit. CT Strategies. The sales team is an extraordinary force behind the SHW brand. Whether it is a company or customer, the sales team knows how to identify products that best serve each. While the sales team focuses on selling, they would now need to focus on selling products with a marginal markup on the price. If it costs a company $60,000 to film equipment, the sales team should guide them to buy warranties and such. The sale should be in the neighborhood of $75,000-$80,000. Although the economy is in ruins, the sales team can tackle the pending recession.

Key Success Factor Matrix Analysis

The most critical component of the success of SHW is the senior executive management, operations and sales and marketing teams. The most significant of the three components is the management team. The executive management team has the power to influence and change the way in which the company heads by implementing a new policy. The managers have a solid understanding of the changes in the market, operational needs and the ability to sell merchandise. It is with this knowledge that managers can predict and make adjustments based on the various forecasting factors. The sales and marketing team have to work closely with the operations department. In conjunction and support from management, they have the ability to implement change as directed by management. Along with change implementation, they are the two departments that would eventually determine the standard for the rest of the company. Having set the standard and raised the bar on business operations and product sales, the industry will take notice.

Implications of Analysis

The implications as highlighted in the previous analysis are the chances of market changes. The market for items constantly change over time and are extremely difficult to predict since there are numerous external factors that affect the market. The analysis contributes to SHW’ understanding of changes needed in order to stay ahead of the markets curve of change. It makes a lot of sense for the company to continue building upon their strong points, but it makes even more sense to minimize weaknesses. The SWOT serves as a great tool to the company as it relates to the competition. The SCOT also helps analyze and utilize strengths in an effort to complement weaknesses. The combination of the key factors helps the company make the decision on how and where to move talent within the organization.

Analyzing the Company Strategy Type -Part II

Strategy Type

To be effective, it is imperative that the strategy is in alignment with the values, mission, and culture of the company. It is up to the executive team to see what the needs of the company are and how they must be achieved. The best approach for the company is to focus on implementing a customer relationships strategy. Although the company has strong relationships with its customers, they should go a step further to let their customers know they are valuable. As with any business, customers and their satisfaction play a vital part in the failure or success of the company. Companies that are able to build strong customer relationships are those that are whales in their industry. Although it is easier to continue to focus on the current customer base, the challenge would be to expand that base and target other consumers. Their expertise in customer satisfaction and customer loyalty base will instantly make them a favorite. Suppliers are always seeking ways to increase their productivity. SHW will also benefit from strong supplier relationships. If the company can create a strong means of communication, dedication, and loyalty, then the suppliers will go the extra mile to keep the business of SHW. As with any relationship, the key factor is communication. It will take both companies working together to achieve the goal of attracting new customers and increasing revenue. The final answer to implementing a customer relationship strategy is commitment. There are many suppliers in the marketplace in which SHW could buy raw materials. The leading suppliers and vendors understand the impact loyalty has on a company’s bottom line.

Supporting Argument

SHW should seek the customer relationship strategy and reward customer loyalty. They are currently doing an excellent job with customers but want to expand their client base with an emphasis on customer satisfaction will balance the company for longevity. The management team will need to take a more hands on approach and make sure they remain available to customers and suppliers for questions or informal interactions. It is also tremendously necessary to emphasize customer appreciation through dedication and incentive programs.

Analyzing the Company Strategy Moves

Relevant Strategy Moves

The strategy that SHW applies during its business approach is the judo strategy. The company has been employing this strategy for a number of years. They have mastered the judo techniques of movement, balance, and leverage. The company’s movement has followed the judo movement theory. As the company prepares to make moves or acquisitions, they follow through quickly and keep under the radar during the process. The acquisitions are typically of paint companies. The judo strategy also calls for the company to maintain balance. The technique indicates that stability is gripping opponents, not competing head on, and pushing when pulled. SHW exhibits this balance by gripping their opponents with the market introduction of innovative products. They also do not compete head on since their primary competitors have remarkably diverse sources of revenue. The momentums of their competitors have served as a source of energy for the company. The final judo strategy is leverage, or creating an advantage based on your opponents’ assets, partners, and rivals. SHW has shown exceptional strength through its numerous acquisitions, strong relationships with suppliers, and its large share of the paint industry.

Supporting Argument

SHW has seen tremendous growth over the last 4 years. Although they may not have achieved business goals, they have surpassed those set by the industry. They have experienced growth that has surpassed double digits. In 2012 alone, revenue generated from operating activities surpassed 10.3% and profit growth of 8%. While the company has had no problems differentiating itself from rivals, executive management has found innovative ways to sustain their business. The judo strategy has given SHW a way to differentiate their products in the market. Their current customer and supplier relationships also play a significant role in their success.

Alignment and Goals Analysis

Alignment Checklist and Unit Goals

The goals set by the SHW executives include employee information from every level within the organization. The employees make a difference and create change and innovation to the company. SHW has been the ideal agency when it comes to realizing that one of their most valuable assets is its employees. There are different incentives available within different areas of the company. While the employees enjoy recognition for their contributions, financial compensation has been the most coveted incentive. The different units within SHW’s organization support the strategy of the company. Each unit has its own supporting activities and specialization training so that employees are performing at optimal levels. The culture in the company is one that encourages productivity and innovation. See Figure 2 for unit goals.

Figure 2-1 Unit Goals

Supporting Argument

SHW has an tremendous incentive package for its employees, among the best in the paint industry. Each employee compensation package is at a rate that is higher than the industry average. The company further increases employee morale through incentive plans and quarterly bonuses depending on earnings for the period. The effectiveness of the executive management team is marked by the 8% profit growth during the 2012 fiscal year. In order for profits to increase, the company has to remain competitive while seeking new growth opportunities.

Action Plan Analysis

Relevant Action Plan

The SHW executive management team should continue to set goals in which the company strives to achieve. Each separate unit of the business should align their departmental goals with those of the company. It is especially critical that the goals set by managers are both; attainable and achievable. They should also ensure that each goal is consistent and appreciative of the goals set by the executive team. The goals formulated must be fully supported by the company as they will be a companion to the company’s strategy. The executive management members will need to improve the measures that measure performance. The criteria for the measurement of performance will vary by individual areas because each performs different duties. This simply means that the standards for the paint line will be different from those of human resources. The employees of each business unit will need to know the metrics in which they meet. The dissection of the action plans into smaller segments will ensure that completion of every metric. The resources needed to achieve the goals of different plans must be determined in advance by executive management. Managers must be able to meet each to ensure the success of the newly implemented strategy. Is there any exercises that will need to be completed by employees? Do they need new tools? Is the company adequately staffed? How will progress be handled? While there are several other questions, these are just a few that must be answered.

Supporting Argument

The executive managers of SHW currently meets quarterly to discuss the goals and how they are performing in relation to them. The meetings allow each business unit manager to discuss their intentions to either meet their goals, or beat them. Although each business unit differs, the main assets that they all have that are similarly are its people. The goals and plans are highly effective when they involve the employees. A clear understanding of the overall process enables the employee to see the large picture and see how their job contributes to the company as a whole.

Fitness Landscape Analysis

Description of Fitness Landscape and Analysis

The paint segment of the specialty chemicals business has undergone numerous changes during the last 25 years. The current economy riffs have encouraged SHW to rethink its pricing strategy in order to main its high level of customer loyalty. According to Peter Hill, companies need to keep their pricing strategies in line with their profit objectives (Hill, 2013). Since paint companies are a part of the specialty chemicals market, their profit motives are far more extensive than those who have diversified revenue streams. The fitness landscape has two corresponding areas: reproductive and survival. Reproductive fitness takes place when a division or company endures circumstances resulting in the creation of new and similar systems. The survival fitness takes place when adaptability and existing are the only focuses. Since the financial crisis in 2009, the entire specialty chemicals industry has experienced a decline in sales as well as newly implemented government regulations. The paint industry has adapted nothing short of a survival of the fittest mentality. SHW has been able to adapt to the rapidly changing environment. They have been able to strive forward due to their Value Added Services. The weakness that plagues SHW but has unlimited potential is their motivation program for new products. The fitness landscape of the specialty chemicals industry has changed due to DuPont spending millions on the attraction and retaining of top talent. SHW has the option to run in the same direction by investing in product ingenuity through different profit sharing incentives. According to Stacey, the dominant discourse theory definition is “the idea of a person not talking in the terms of the visions, missions, strategic plans, targets, policy, rules, performance, efficiency, and improvement they will not be able to sustain their membership of the more powerful grouping in organizations today” (Stacey, 2013). The description holds true regardless of the rank and title an employee holds. The dominant discourse theory would then create a plethora of sycophants instead of divergent thinkers. In extreme cases, those divergent thinkers would need to be very crafty to encourage cultural change. It is not uncommon to see corporations recruit talent who feel that passion and dedication to effectuate change.

Implications of Analysis

The SHW brand name has a reputation that far exceeds that of its direct competitors. The company has a bright and skillful group of individuals that contribute to the overall success of the company. I believe that the company does not have the talent roster that will take it into that $10 billion dollar threshold. However, resources a plenty, they have the ability to invest in the recruitment of divergent thinkers that will create a new level of creativity and a well-balanced culture. Investing in more capacity would be the most significant development of action needed to produce results. Although the economy has initiated policy reevaluations amongst industry titans, each are ultimately responsible for their own future. Given the overall status of their financial situation, they are in a great place to exercise their financial strength.

Boid Analysis

“Boid Analysis” Systems Description and Analysis

As far back as record keeping took place, the paint industry existed and would go through some transformation. The simplicity of the rules then could not meet the complexity requirements of the industry in its current state. Over the course of time, each industry participant found a need to set their product apart from its competitors. Product differentiation would go on to become the staple for paint companies looking to stand out. The competition has invested heavily in research & development, emerging markets, attracting creative employees. Companies like DuPont, PPG, Valspar and Behr have mastered the art of leveraging prices so their customers will become loyal. The industry began to take its shape when the main competitors begin to address the standards that customers would expect from new entrants. The DuPont chemical company has been the driving force behind the paint business for well over a century. The business acumen of the company has intrigued competitors and small startups to emulate their success. While the industry has morphed several times, it is still driven by customers who rely on customer service in which SHW excels. The company maintains a great pricing structure, loyal customers, and state of the art tools available for use. Although the recession has forced customers to request cheap alternatives, the majority of SHW’s customers have remained faithful. The paint industry has different characteristics that are in alignment with the rules contained within the Boid Analysis. The industry has exhibited alignment, attraction, and avoidance. The leading pigment producing companies are in alignment with one another as they are customers of the DuPont chemical company. Their alignment reduces energy expenditures with one primary source for raw materials. The alignment also reduces the cost of materials across the table for major competitors who purchase bulk quantities of materials. The attraction with each group is derived from their ability to distinguish the product that has been brought to market. The different lifespans of different products are what make it unique. The last characteristic is the avoidance of new entrants making much of an impact on the market. The avoidance factor also allows the addition of smaller potential rivals. The rivals are initially attracted to the possibility of making large sums of money, but their visions are overshadowed by industry heavyweights.

Implications of Analysis

Those companies that are looking for a better understanding of their decision to join a market segment would benefit greatly from the Boid Analysis. The management team of SHW could use the analysis to see if they could develop their product offerings into other markets. Are their products extending the useful life on products that have an expected short lifespan such as a car or computer? Are the products grabbing the attention of consumers? Are they affordable? These are just a few of the many questions in which the Boid Analysis would provide clarification. The initial appeal for new entrants to the paint market is the possibility of unlimited revenue growth. Unfortunately, the major players in the market have capitalized on their ideas and will purchase any new and innovative ideas by new entrants. While most new entrants strive to become an industry leading paint manufacturer, their ultimately responsible for making profits for its shareholders through sales, mergers, or acquisitions.

Industry Evolution Modeling

Industry Evolution Modeling Description and Analysis

In its current state, the paint industry is currently in the second-order thinking systems methodology. The industry has taken technological advancements and used them as a tool to expand their offerings to customers. There are only a handful of industry participants who have the technology and financial assistance to pursue such options. According to Ralph Stacey, the second order thinking system moves away from a realist belief in systems, regards systems as hypothesis, and so as ways of thinking rather than as existing things. The attention is focused on the observer of the system as also a participant in the system (Stacey, 2013). The second order thinking system calls for executive management members and research and development to be aware of the framework in which the company operates. SHW has used this to their advantage as managers have given research and development the ability to operate within the framework while being collaborative with other business units. The company realized that their strongest contribution was their human capital. The assets are realized through high quality products, dedication to the company, its goals and missions. The employees are very understanding of the industry needs, technology available and how to integrate the two. There are different phases contained within the second order thinking methodology. In the first phase companies discover and employee behavior remains consistent, as jumping to conclusions too quickly could be disastrous. The second phase calls for a number of smaller systems to be developed from the big picture. In this phase managers are looking for elements that enhance and address problematic situations. The third phase involves the creation of systems developed in stage two. While these systems are not blueprints, they do send conceptual ideas regarding change implementation.

Implications of Analysis

The implications of the second order thinking system is that developers and companies can be reluctant to think outside of their comfort zone. In many scenarios, goals are set but the best ways to achieve the goals are not taken into consideration when systems are being developed. If a developer is a member of the process in which a product is being developed in, how will the system maintain its objectivity? “It has presented models of organisational interconnections so as to promote greater understanding of organisational dynamics and useful analyses of workflows” (Stacey, 2013). As the global economic practices change with each advance in technology, developing new systems has become detrimental to companies seeking sustainability. The paint industry have undergone a lot of changes to its processes and procedures within the last 25 years. The larger companies in the industry have maintained their position as being industry titans while smaller ones have been absorbed or gone out of business. The smaller companies tend to not want to participate in the global market with the industry titans. The main reason for this stance is that smaller companies do not have the financial resources to fight the shifts in the market. The industry’s growth implicates that large companies will be able to provide better services that the smaller mom and pop operations. SHW has taken full advantage of this fact by pursuing smaller companies and giving them access to the global marketplace through rebranding. Acquiring the companies allow SHW to slowly and steadily build assets while continuing to expanding its customer base. The ultimate goal is customer satisfaction and as long as they can continue to provide this service, SHW will be around for a long time.

Life Cycle Assessment

LCA Modeling Description and Analysis

The paint market has undergone numerous changes during the last 10-15 years. The market was doing exceptionally well before the great financial crisis of 2008. SHW, having been around for over 100 years, has been able to survive rough times through customer loyalty and process innovation. Since the majority of consumers were driven by price, it has led to some companies not being as successful in comparison to earlier times. The paint industry’s life cycle is operating in a continuous circular motion. The raw materials being used are moved from company A to company B. Company B used the raw materials to make paint materials in which an end user will buy for their unique painting needs. Industry leading companies are better equipped to purchase enough materials to keep the life cycle running. The endless cycle enables the business to conserve and remain competitive. Government regulations and the rising cost of petroleum have a major impact on the industry and how it continues to do business. Companies are all making sure that they are in compliance with government regulations as they are producing their products. If they do not meet the standards by the United States government, they could face severe penalties including large fines. Ultimately, penalties levied against companies will have an adverse effect on its stock price. The rising cost of petroleum has made a huge impact on how companies order, process, and ship their products. The cost of fuel has spiked during the last 10 years due to civil unrest and political inadequacies. Companies have reduced the number of shipments that it takes to move their goods. They now ship enough in one truck that would have been shipped on two trucks. They are becoming more efficient in the way that they are utilizing shipping space. The extra space used have saved on millions on the shipping of tons of freight. The life cycle diagram for SHW’s activities is as follow:
Figure 2
SHW life cycle
[pic]

Implications of Analysis

The paint industry has a continuously evolving life cycle compared to other industries. As long as consumers have different tastes, paint will always be an option for them looking to change the appearance of their car, home, or other individual product. The paint industry will continue to maintain its position and progress. They will continue to come up with innovative ways to extend life of everyday products while reducing their carbon foot print. The industry will continue to develop modern technology as it relates to color development. There will be increased savings on shipping materials as SHW has exemplified with its shipment of products using full cargo loads.

Compliance to Innovation Analysis

Compliance to Innovation Description and Analysis

While the possibilities do exist for new entrants to enter the market, larger corporations maintain a monopoly on the industry and its trajectory. There are currently programs in place that are assisting customers in choosing paint colors, product life extending enamels, and the transportation of their products. The main competitors have reevaluated their drivers to align them with those of DuPont, since they are the industry suppliers. These actions have lead consumers to become more loyal to their brands of choice. Since smaller companies have hard times purchasing and implementing new technologies, it leaves the titans room for unchallenged conquering of the industry. SHW has spent several million dollars to upgrade their systems, relationships with customers, and increase supplier relations. SHW has sought innovative ways to increase process quality, while exceeding previous levels of income & customer service. The executive management team of SHW has approved numerous upgrades to their in-house software packages to remain competitive. The decisions and goals of the company ultimately lie in the decisions that managers make. SHW has become a pioneer in the paint industry based on their ability to introduce innovative products to the market.

Implications of Analysis

The innovative practices of a company can be the deciding factor in their future success in a given market. The fact that markets fluctuate calls for companies to be flexible and remain competitive by introducing new and innovative products. SHW has been able to make adjustments in the marketplace due to their financial stability and product quality. Their position allows them to explore areas of the market that have not been tapped for revenue purposes. Their unique ability to find that niche product enables them to remain one of the top three driving forces in the paint industry.

Sustainable Value Framework Analysis

Detailed Analysis of All Four Quadrants

To become sustainable company, the managers of SHW have to understand the importance and significance of the challenges contained within the first quadrant. The rewards of the industry are remaining constant as the threat is becoming more difficult. Managers should learn to navigate through difficult sectors of the paint industry while maintaining awareness. SHW will need to create value within their operating structure while encompassing the global environmental needs. The actions conducted by management will create value for its shareholders while expanding its business activities. The company can reduce waste by consuming fewer raw materials. The consumption of fewer raw materials will reduce their overall pollution and carbon footprint. Innovative ways to product quality products while consuming fewer materials would be a great investment. The different construction methods will lay the groundwork for the sustainable framework. The following quadrant if today’s business practice addresses the external environment. The company needs to establish a closer relationship with its shareholders through transparency programs. Through these programs, shareholders will be able to get a glimpse of the company’s activities at any moment in time. Transparency also solidifies their reputation as producing quality products while maintaining their core ethics values. The third quadrant addresses the external environment for tomorrow. SHW has to take into consideration the population, poverty, and inequity amongst the world’s inhabitants. A thorough understanding will allow SHW to address the needs of various classes of society. The affordability of products for every class will set SHW apart from their competitors. A global company providing affordable products guarantees their involvement in the global economy of tomorrow. The fourth and final quadrant is the internal operations of tomorrow. SHW has to improve internal processes that use green computing technology, reduces their carbon footprint, and prevents disruption of their services. Achieving these milestones by using information from shareholders will ensure the achievement of the sustainable solution circle of life. Although the products are great, there is always room for improvement. Since the market is volatile, SHW needs to take a proactive approach to achieving sustainability. .

Table 2
Sustainable Value Framework
| |Tomorrow |Today |
|External |Strategy: Green Technology |Strategy: Base of Pyramid |
| |Payoff: Repositioning |Payoff: Growth |
|Internal |Strategy: Minimize Waste |Strategy: Product Stewardship |
| |Payoff: Cost Reduction |Payoff: Innovation |

Argument in Support of Conclusions

SHW has taken advantage when it comes to implementing sustainable solutions and progress. The company has been one of the top five paint providers over the last century. Their growth and trajectory can continue with the development of new innovative processes and products. The competition will have to follow the lead of SHW as they pave the way into the next century with their arsenal of products for every sector of society. The combined leadership within the company and their product reputation.

Implications of Analysis

The implications for SHW is that at some point in the future, they will be in a head to head competition with The DuPont Company. Their competitors are also looking to expand and hire top talent. It is in the best interest of the company that management improve sustainable solutions to maintain the SHW legacy. They will have to verify that the right people are put into the right positions to stimulate growth. Their success can be attained by internal as well as external factors as outlines in the sustainable solutions framework.

Conclusions

The paint industry has several companies that have different strategies, and varied life cycles all striving to become the number one global paint supplier. SHW has all the right instruments in place to stimulate growth and achieve long term sustainability. The managers at SHW have goals set in which will help them achieve the visions of the company. Their ability to maintain and grow would be greatly improved using some of the recommendations presented in this paper. The customer service team needs to further engage their customers while research and development brings an variety of new products to the market. The product engineers need to be enticed through various financial incentives based on product creativity. They need to be allowed time each week to devote to their own product development. Though they have a viable business model, there is always room for improvement to encourage growth.

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Customers

Government

Employees

Creditors

Suppliers

Shareholder
Identification

Community

Unions

Investors

SHW Goals

Distribution

Pricing

Recruitment

Improvement

Market Share

Retention

Innovation

Marketing

Human Resources

R&D

Training

Efficiency