ARB Corporation: Overview, Porter Five Force Analysis, Research and Development, Ratio Analysis, DuPont Analysis, Share Price and Growth Rate, Recommendations and Conclusions

Running Head: ARB CORPORATION 1
ARB CORPORATION

Running Head: ARB CORPORATION
Overview
ARB CORPORATION is one of the most renowned companies in the industry of the motor
vehicles. ARB Corporation Limited structures, produces, convey, and sell engine vehicle
embellishments and light metal designing works in Australia, the United States, Thailand,
and Europe. The major feature of this organization is that it gives security hardware,
including bull bars and frontal assurance, side rails and insurance steps, back insurance gear,
under vehicle security items. The items like summit side insurance items, frontal insurance
frameworks; recuperation hardware, for example, winches, ties, and jacks all are produced
and manufactured along with the recovery essentials (ARB CORPORATION B, 2018).
Porter Five force Analysis of ARB Corporation
Threat of New Entrant
The threat of new entrant in the market highlight how new players raise the threat for the
existing players in the market. Considering the case of ARB Corporation which deals in the
equipment of vehicles will face a low level of threat from the new entrants in the Australian
market because taking entry in the industry require huge resource and capital investment.
Even, if the product differentiation is high then the new entrant in the market losses strength
(Fern Fort University, 2019).
Threat of Substitute
The presence of a substitute product in the market results in making the environment
challenging for the business. However, in the case of ARB Corporation, the threat of
substitute is low because switching cost of utilizing the substitute product is very high and the
customer could not gain the similar value from the substitute products that they receive from
the products of ARB Corporation (Easton and Sommers, 2018).

Running Head: ARB CORPORATION
Competition among existing players
The competition among existing players highlights the intensity of competition for ARB
Corporation. The competitive rivalry in this industry is low because there are a very limited
number of strong players in the market. In addition to this, the products offered in this
industry are differentiated and every business target diverse segment.
Power of Buyer
The bargaining power of the customers indicates the pressure on the business to get quality
products at high prices. The buyer's power for the ARB Corporation is low because there is a
very limited number of players present in the market which offer quality products, hence it
comes with a high switching cost.
Power of Supplier
The bargaining power of the suppliers in the industry highlights the pressure applied by
suppliers on the business. The power of supplier is high for ARB Corporation because
supplier switching cost is higher for the business due to contractual relationships. In addition
to this, there are a limited number of suppliers in the market and demand for their products is
higher, which strengthens their position against ARB Corporation (IBIS World, 2018).
Research and Development of ARB Corporation
Clearly articulated growth strategy- The growth strategy of ARB Corporation is comprised of
product development and new stores roll out in the Australian market. Product development
has allowed ARB Corporation to gain more scale and increase share in the market. The
number of newly introduced products of the company is Tailgate Assist, Jack, and LINK.
These products have also contributed to making strong sales of the company. In addition to
this, ARB Corporation also conducts deep research and development for which it spends a

Running Head: ARB CORPORATION
sufficient amount of investment. This result in confirming the healthy pipeline of the new
products in newly introduced vehicles as well as existing vehicles (Gable, 2018).
The strategy of the company for opening new stores is to target more sites in Australia where
the company is presently underrepresented. There are around 63 ARB Corporation stores in
the market of Australia. Present and future store rollouts have comprised a new format of the
stores which has been well accepted by the patrons (ARB Corporation, 2016).
Ratio Analysis
Ratio analysis is the technique which is used by the corporates lie ARB CORPOARTION in
order to find out the performance of the company on the various frontiers. There are several
categories which are being analysed under the ratio analysis category namely the
profitability, operating efficiency, the liquidity as well as the solvency of the company
(Fernandes, Leal, Figueiredo and dos Reis, 2018).
Profitability
Form the below analysis it can be stated that that the profitability of the company has not
fluctuated majorly. In fact there is a set range in each of the category as the net profit margin
has been 13% and it reduced to 12% in the year 2018 majorly due to the low sales growth and
the increase in the sales and the administrative expenses immediately (Altman, Iwanicz‐
Drozdowska, Laitinen and Suvas, 2017). The return on equity on the other hand remained at
17% only. The investors will be unhappy with this situation as the company is not making
enough value for the funds unvested by the investors. Further the operating efficiency is
again stuck at 17% due to the surge in the other operating expense by 3%. Over all the
company has the good margin it can be increased by avoiding unnecessary expenses on sales