Strategic Management Report: Evaluating Sika AG's Business Strategies

This report provides a comprehensive strategic analysis of Sika AG, a Switzerland-based specialty chemical company. The analysis includes an overview of the company, its mission, and its financial performance. The internal environment is assessed using a SWOT analysis, highlighting Sika AG's strengths (strong brand recognition, vast workforce, and financial position) and weaknesses (over-dependence on the construction sector, fluctuating market share). The external environment is evaluated using PESTEL and Porter's Five Forces analyses, examining political, economic, social, technological, environmental, and legal factors, as well as competitive rivalry, bargaining power of buyers and suppliers, and threats of new entrants and substitutes. The report concludes by emphasizing the importance of both internal and external analyses for strategic planning and identifying Sika AG's competitive position.

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Name of Student
Name of the University
Author Note

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Table of Contents
Political factors....................................................................................................................6
Economic factors.................................................................................................................6
Social factors.......................................................................................................................6
Technological factors...........................................................................................................7
Environmental factors..........................................................................................................7
Legal factors........................................................................................................................7
Competitive rivalry within the organization........................................................................7
Bargaining power of Buyer.................................................................................................8
Bargaining power of supplier..............................................................................................8
Threat of new entrants.........................................................................................................8
Threat of substitutes.............................................................................................................8

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Introduction
Strategic management refers to process of setting organizational objectives, analysing the
external and the internal environment of an organization, evaluating the existing organizational
strategies and ensuring that top management formulates and implements strategies across the
organization for achieving its overall objectives (Rothaermel, 2016). Therefore it includes the
formulation and implementation of the organizational goals and objectives by the top
management of the organization (Lasserre, 2017). The company selected for the purpose of this
study is Sika AG (NBB: SXYA Y). The main aim of the paper is to carry out external and
external analysis of the selected organization (www.youtube.com., 2020). The paper will
therefore discuss about an overview of the selected company, the internal analysis of the
company using SWOT, carry out the external analysis of the organization with the help of the
PORTERS analysis and PPESTEL analysis (www.youtube.com., 2020).
Company Overview
Sika AG is a Switzerland based Company that is a speciality chemical company and it
supplies to vehicle industry and building sector. The company is engaged in developing and
producing products and services for sealing, bonding, damping and protecting purposes. The
company belongs to the construction and chemical industry. The company was founded in the
year 1910 in Switzerland by Kasper Winkler. The company has got about 101 subsidiaries. The
company has a mission of pursuing its strategies through dedication and trust of the employees.
The journey of the Sika group to become a global leader is based on the Sika Spirit and
Entrepreneurial philosophy. The spirit of the Sika group is based on its strong set of principles
and values. The values of the company determine the culture of the company and its includes-
propriety to the customers, support innovation and creativity, integrity and sustainability, respect

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and empowerment and managing for the results. According to the 2019 financial report of the
company, company had earned a revenue of CHF 8.1 billion. The number of employees of the
company includes- 25000. The company was formed in order to provide agents for protecting
and cleaning the granite and the company also developed waterproofing agent called the SIKA.
Internal Environmental Analysis
Internal environmental analysis is done in order to explore the competencies of the
organization, identify the cots position and the competitive viability in marketplace (aschalidou
et al., 2018). Through conducting internal analysis the strengths, weaknesses, opportunities and
threats of an organization can be understood. Some of the major benefits enjoyed by the Sika AG
company includes- the company enjoys a strong brand recognition and trust of the public
because it has a long history that can be dated back to 1910 and that can also be understood from
their tagline that “innovation and consistency since1910”. Another major strength of the
company includes its vast workforce that is operating in about 101 countries. The company has
earned its strong and loyal customer base through its cost-effective and energy efficient practices
(Bolland, 2017). The company also enjoys strong financial position because according to the
annual report of 2018, the company maintains its strong record of growth through positive
business performance in all the regions that it operates, through investments, and through its
focus on large cities (Gürel & Tat, 2017). All the above mentioned factors have contributed top
the strong financial performance of the company. The net sales of the company has gone up from
6248.3 in the year 2017 to 7085.4 in the year 2018. Similarly the gross results of the company
has also enhanced from 3399.1 in the year 2017 to 3751.7 in the year 2018, the operating profit
before depreciation was 1068.5 in the year 2016 that rose to 1149.9 in the year 2018, the
operating profits rose from 896.3 in the year 2017 to 945.9 in the year 2018. Similarly the net

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profit of the company, the operating cash flow of the company has also increased. The same can
be understood from the statistical data’s given below:
Figure 1: Net sales of SIKA AG Company
Source: (Sika.com., 2020 )

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Figure 2: Operating Profit of Sika AG Company
Source: (Sika.com., 2020 )
The company also enjoys strong distribution channels for ensuring the presence of the
highest quality products in all the regions that are served by the company. Some of the
weaknesses of the company includes- the company’s over dependence only in the construction
sector that has limited its ability to expand into other business sectors. Its market shares have
undergone a lot of ups and downs. The opportunities for the company the company includes-
fusing on some new regions such as Eastern Europe, South Asia and Middle East and the
company can also go for acquisition to overcome the unnecessary competition in the market. The
threats of the company includes- fierce competition in the market and some of the major
competitors of the company includes- BASF SE, Rockwood Holdings incorporation and Lyndoll
basell Industries. Moreover it also faces issues related to fluctuation in the exchange rate.
Strengths
Strong financial position
Effective distribution channel
Strong brand presence
Cost effective and energy efficient approach
Weakness
Over dependence on only its construction
sector
Fluctuating market share
Opportunity
Focusing on some new markets
Acquisition
Threats
Fierce competition in the market
Fluctuation in the exchange rate

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External Environmental Analysis
PESTEL Analysis
Political factors
The political factors includes the governments intervention in the operations of an
economy. The political system of Switzerland is highly decentralized, there has been a coalition
of 4 major political parties and Switzerland has hot its own national council for looking after the
activities. Due to decentralization there is a reduction in the national government authority.
Therefore these decentralized conditions are expected to provide better opportunities for the
SIKA AG company.
Economic factors
The economic factors includes- the exchange rate, the growth rate, interest rate,
disposable income of the consumers and others that have an impact over the operation of the
company. Switzerland has got one of the most stable economies across the globe. There is low
corporate tax, skilled workforce and good infrastructure. Since the country has got a much stable
economy therefore the same may have a positive impact over the operations of the SIKA AG
company.
Social factors
The social factors includes- the socio-cultural factors affecting an economy because of
the attitudes and beliefs of the customers. The cost of living of people is high and there is well
developed social security for the citizens of the country and they also enjoy high wages. The
social factors may also have a positive impact over the company because of high wage levels of
the citizens.

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Technological factors
The technological factors includes- the technological development of a country (Rahman,
2019). Country is technologically developed and in fact the technological sector of the company
is growing. The technological factors can be taken advantage of by the SIAK AG company for
meeting the needs of its customers in a better way.
Environmental factors
The environmental factors includes the increasing awareness of the customers about the
impact of organizations over the society and the environment as whole. The country had various
federal offices for looking after the natural diversity, and the health and safety in the country.
The country also has a polluter pays principle that was established in 1990. The environmental
factors may pose threat to the operation of the company because of increased customers
awareness.
Legal factors
The legal factors include- the various legal legislation that may affect the operations of a
particular industry. Switzerland does not have to face strict regulations in its economy and there I
a judiciary system for maintaining law and order in the country. The trade regulations comprises
of strict packaging requirements and also significant tariff. The legal factors may have a negative
impact over the operations of the company because of the trade and tariff barriers.
Porters Analysis
Competitive rivalry within the organization
If the competitive rivalry within the industry is high then the company may become weak
due to fierce competition (B2U - Business-to-you.com., 2020). The company SIKA AG faces

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fierce competition in the market from Rockwood holdings and various others. Therefore the
competitive rivalry may have an impact over the operation of the company (PESTLE Analysis.
2020).
Bargaining power of Buyer
The bargaining power of the buyers includes ability of the customers to affect the product
prices. It depends upon the number of customers a company has. The greater the number of
customers the lesser will be their power for influencing the process of the company’s products
and services and vice versa. There are large number of customers of the SIKA AG company and
therefore their power in controlling the prices of the company is lesser.
Bargaining power of supplier
The bargaining power of the supplier includes the ability of the suppliers to affect the
cost of the goods and services if a company. It depends upon the number of suppliers that a
company has. SIKA AG Company enjoys good relationship with its suppliers and therefore
bargaining power of supplier is lower.
Threat of new entrants
The threat of new entrants includes the existence of any barriers to entry. The lesser
money and time is required by a competitor to enter the market, the weaker a company becomes.
The company SIKA AG enjoys good brand recognition and loyalty among customers that can
help the company in placing barriers to entry.

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Threat of substitutes
Threat of substitutes includes the all those hoods and services that can be used in place of
the company’s goods and services. The company SIKA AG is free from threats of substitute
because of its cost effectiveness (Mukherjee, 2018).
Conclusion
Therefore from the above discussion, it can be concluded that it is necessary to carry out
the internal and the external analysis of the organization as it can help in identification of the
company’s competitive position in the market, organizations competency and on the basis of this
information an organization can plan its strategic objectives that can help the company to grow
and develop. Moreover through external analysis of a business all those factors affecting isr
business can be understood. Moreover from the paper, the two main tools that are used for the
purpose of carrying out external analysis has been understood that is porters analysis and
PESTEL analysis.

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References
B2U - Business-to-you.com. (2020). Porter's Five Forces EXPLAINED with EXAMPLES |
B2U. Retrieved 28 March 2020, from https://www.business-to-you.com/porters-five-forces/
Bolland, E. J. (2017). Internal and External Analysis', Comprehensive Strategic Management.
Gürel, E., & Tat, M. (2017). SWOT analysis: a theoretical review. Journal of International
Social Research, 10(51).
Lasserre, P. (2017). Global strategic management. Macmillan International Higher Education.
Mukherjee, I. (2018). Applying Porter’s Five Force Framework in Emerging Markets—Issues
and Recommendations. In Strategic Marketing Issues in Emerging Markets (pp. 307-
316). Springer, Singapore.
Paschalidou, A., Tsatiris, M., Kitikidou, K., & Papadopoulou, C. (2018). Methods (SWOT
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Springer, Cham.
PESTLE Analysis. (2020). PESTLE Analysis - Business and SWOT Analysis. Retrieved 28
March 2020, from https://pestleanalysis.com/
Rahman, M. (2019). PESTEL analysis of Germany.
Rothaermel, F. T. (2016). Strategic management: concepts (Vol. 2). McGraw-Hill Education.
Sika.com. (2020). Key Figures. Retrieved 28 March 2020, from
https://www.sika.com/en/annual-report/annual-report-2018/group-review-and-financial-
statements/key-figures.html

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www.youtube.com. (2020). Retrieved 28 March 2020, from https://www.youtube.com/watch?
v=TD7WSLeQtVw
www.youtube.com. (2020). Retrieved 28 March 2020, from https://www.youtube.com/watch?
v=GNXYI10Po6A