V. Analysis of Strategic Factors
A. Situational Analysis (SWOT)
1. Strengths
a. experienced company management
b. product quality and reliability
c. focus on employee and community welfare
d. long-term partnership with customers
2. Weaknesses
a. use of multi-channel distribution
b. seasonality of product sales
c. high production backlog with a slow product turnaround
d. problems with integration of new subsidiaries
3. Opportunities
a. expansion into the international market
b. extensive use of proprietary technology
c. increased focus on water and energy conservation
d. expansion of demographics and their consequent requirements
4. Threats
a. deterioration of the oil and gas industry due to lower gas prices
b. similarity of products offered by numerous competitors
c. certification requirements of other industries such as nuclear power plants
d. potential problems with patent protection
e. higher incentives given by the government to local businesses
B. Review of Current Mission and Objectives
1. Current mission still appears appropriate
2. Need the modification of some objectives such as the creation of products to minimize environmental damage
3. Some of the objectives are perceived as goals
4. These goals must be quantified and given time limitations
VI. Strategic Alternatives and Recommended Strategy
Strategic Alternatives
Concentric diversification growth: acquisition of companies in the downstream supply chain
[Pros]: Minimize supply component problems due to the acquisition
[Cons]: Non-sustainability in the long run due to the poor growth forecast of the main revenue segment, Valve and Controls
Diversification growth into international markets
[Pros]: Higher revenue growth from previously untapped markets
[Cons]: Difficulty in entering countries due to local business requirements and certifications
Pause Strategy: consolidation of operations to minimize costs while improving innovative strategies
[Pros]: cost management to improve profitability during difficult economic conditions
[Cons]: difficulty in maximizing cost controls due to an increased need to market other more profitable segments such as Flow and Filtration Solutions
Retrenchment: disposal of some business operations that are not in-line with the core products of the company such as the Water Transport business in Australia
[Pros]: improvement in the company profitability while focusing on manufacturing related products
[Cons]: decreased market recall of the company brand with regards to the Australian market
Recommended Strategy
Recommendation of the pause strategy, the purpose of which is to maximize cost management especially with the recent acquisition of Erico Global Company
Improvement/expansion of the production facilities in order to minimize product order backlogs
Expansion in other markets due to the continuing economic condition of the US market with regards to the Valve and Controls segment
Improved focus on product quality and reliability in order to maintain superiority over other brands/products
Development of other products using the company’s proprietary technology
References
Pentair. (2016). 2015 annual report. Pentair. Retrieved from http://www.pentair.com/en/investors/annual-and-other-reports
Wheelen, T. L., and Hunger, J. D. (2012). Strategic management and business policy toward global sustainability (13th ed.). Boston: Pearson.
Appendix A. SFAS Matrix
Appendix B. TOWS Matrix
