General Cable Company (GCC) SWOT Analysis

world-wide teleph unity circuit Company (GCC) mill AnalysisOverviewThis section of the opus analyzed the potencys, weaknesses, opportunities, and threats faced by General Cable. The strengths, weaknesses, opportunities, and threats be identified and evaluated to figure the ways to take advantage, improve, or avoid these factors to strengthen General Cable as a alliance. Each of the categories is explained in details to see how it entrust tinct the bank line or kick the bucket it a competitive advantage. Below is the SWOT diagram.StrengthsGeographically change(may excessively scramble as a weakness) round-eyed product breadthLean efficient accomplishmentWeaknesses1. Geographically diversifiedPolitical dissymmetryVolatile foreign currency reciprocation2. uppity debt dep set asideency3. Over dependence on sensation notice generaterOpportunitiesExpansion into acclivitous securities attentionsStrong growth Government financial backing of choice capacityDemand for greater communication bandwidth and world(a) connectivityThreatsVolatile good marketStringent regulationsLitigationsStrengthsGeographically DiversifiedGCC operates in three geographic elements namely North America, Europe and North Africa, and the Rest of World (ROW). The biggest markets and contributors of income are the United States and Spain markets. With the focus of long term growth however, it is predicted that there go forth be change magnitude population and wealth emerge from the developing countries so GCC has been focusing on diversifying geographically.1 The recession in the United States and slow market in Spain proved that diversifying geographically has been an excellent move.Earlier this year, GCC acquired a study stake of Phoenix Power Cables, a cable system manufacturer in Durban, South Africa as one of the moves to merely diversify its market and append its business and charge in Sub-Saharan Africa. 2 GCC is to a fault increasing its heraldic bearin g in its Rest of World (ROW) market by strategic acquisition of local companies and/or building manufacturing plant. This wide global presence allows GCC to stick out several sources of revenue and globalize GCC as a punctuate in different move of the world. It also allows GCC to not depend on a certain geographic markets and helps reduce business risks advantageously by spreading its revenue sources.With a successful track record of abroad acquisition, combined with their technical kat once-how and expertise in the business, GCC is poised to leverage itself as a major global player amidst the ever changing business world. Even though geographic diversification is considered as a strength for GCC, this can also posed a weakness for the company. Detailed discussion of this is presented in the next section.Wide Product BreadthGCC has the broadest product offer in the persistence. It offers wide variety of bull, aluminum and fiber optic outfit and cable products which are so ld to different markets and industries. These products are used not only in the cable industry but in opposite industries as well, such as, communication, construction, transportation, and oil and gas companies.The wire and cable industry is highly competitive and by providing a wide variety of products is a competitive strength for GCC. This diversified product offering helps reducing the meet of market excitability in one particular product segment and provides economic stability.Lean Efficient OperationGCC is a one of the leading in the wire and cable industry and it strives very hard to be as lean and as productive as possible to give it a competitive edge. As an on divergence effort to reduce be adrift and exists, GCC spends considerable term and resources to educate its employees on how to reduce waste and hail and provide them with Lean Six Sigma manufacturing cost containment training. Talk about from the mo earningsary paper.Operating income and gross wage were u p in 2008 and GCC attributed about of these achievements to ameliorate efficiency as a result of continued Lean manufacturing initiatives. With a leaner and more efficient operation than the industry, GCC possesses a competitive edge. It allows them to profit more from the operation with its lower cost structure or look at the products at a lower price than the competitors but hush up reservation the same amount of profit.WeaknessesGeographically DiversifiedAs mentioned earlier in the section, geographic diversification is a competitive strength for GCC. However, it is also a weakness for GCC. Geographically diversified means GCC operates in various parts of the world and exposed to different organization rules and regulation, political instability in each country, as well as volatile foreign currency.GCC has a significant investment in Thailand and is therefore subject to the political instability there. In late 2006, Thailands elected government was overthrown which created a lot of excitement and instability in the nation. This inevitably posed as a difficulty for GCC to smoothly operate in Thailand and may negatively move the financial health of Thailands operation. Volatile foreign exchange rates can pose as an advantage or disadvantage. Favorable year-over-year foreign currency interpretation is a benefit while unfavorable translation means a loss that GCC has to bear and report in the financial statement. For example, Venezuelan government recently decided to devalue its currency for non-essential goods from 4.30 Bolivars to each US vaulting horse to 2.15 which means that $40-$45 gazillion USD forget need to be written off from the balance sheet.3All of these factors may name negative impact on General Cables financial numbers as it influences gross revenue, growth and net profit. Unfavorable foreign currency and political instability are some of the factors associated with having a global presence. GCC has to find ways to overcome these weaknesses by incessantly monitoring current and prospective rules and regulations in each country and pass judgment the likelihood and impact of them on GCC. Foreign exchange futures can also be used to lessen the impact of volatile foreign exchange rates.Excessive Debt DependencyAs mentioned in the earlier portion of the paper, GCC is highly leveraged by debt and this may potentially have an obstinate centre on GCCs financial position. Talk about paper.GCC competitive edge may be bound as it may be harder for GCC to obtain advertize finance due to the significant amount of debt it possesses. Net income may also be adversely affected when business is bad and cash flow is limited and there is a significant amount of debt repayments to be made.Over dependency On iodine Key SupplierMore than 90% of General Cable 2008 copper rod purchase was supplied by one secernate provider. This posed as a high risk for General Cable if this discover supplier fails or for any reason, fail to cut GCC with suitable material. GCC did not have any long term purchase agreements with this key supplier and it is highly hard to find another key supplier that can supply nude materials in such a get around notice.Any unanticipated problems and interruptions with this supplier could have a material adverse effect on GCC. Be it natural catastrophes such as hurricanes and earthquakes or the suppliers own financial and company problem, all of this will have a negative impact on GCCs operation and financial performance.To shield itself from this weakness, GCC has to cite new prospective supplier. GCC needs a supplier who is reliable, reputable, and has the ability to supply wide amount of raw material at the right time and price. However it seems that GCC is reluctant to do so, based on the statement in the 2008 annual report that identifying and accessing election suppliers may increase their costs. The likelihood that this key supplier will be problematic should be minima l considering that GCC has outweighed the benefits and cost of identifying new supplier.OpportunitiesExpansion Into The Emerging MarketsAs there are massive growth and wealth coming from the acclivitous markets, GCC has been trying to expand further into these appear markets and leverage their 150 years of technical expertise and One Company approach.China and India are one the largest emerging markets right now and GCC has considerable investment and presence in both of these countries. Its expansion strategies let in acquisition and building manufacturing facilities. GCC recently acquired a local specialty cable manufacturer as it plans to reach out to the Chinese automotive and industrial markets.4In 2007, GCC started its expansion in India by entering a joint hypothesis with a local firm to leverage itself in the construction cables industry for the Indian market.5 GCC is vigorously expanding worldwide by leveraging opportunities in the emerging markets from building new worl d cup stadium in southwestern Africa for the world cup to reaching into the local markets in China and India.These projects, along with the recent acquisition and expansion in other emerging markets, further GCCs strategy to expand globally into economies that are building their cleverness infrastructure. This creates an opportunity for the company to increase its sales and brand presence by providing aught and electrical infrastructure cables in these emerging markets. The opportunity in the emerging markets will also help strengthen GCC as a company as it presents more revenue sources and also helps reduce business risks considerably by spreading its revenue sources.Strong Growth Government indorse In Alternative EnergyWith the ever increasing desire for efficacy independence and environmental concern, alternative zip fastener such as wind, solar and hydroelectric power is poised to grow rapidly. General Cable is one of the leading cable companies that support alternative energy by creating products that provide solutions in the alternative energy sectors. In 2008, more than $400 million of industrial and energy cable is sold to the terrestrial wind arise market globally and this number will continue to climb in the future.1 Alternative energy such as biofuels, biomass, geothermal, hydroelectric, solar, and wind provided 11.37% of domestic U.S. energy production in June 2009. This is a gain from the half of 2007 where alternative energy represents only 9.89% of the domestic energy production.6The government support in the alternative energy movement is also an excellent opportunities for GCC. The economic stimulus tract passed by congress supports renewable alternative energy and this will deepen investments and thus increase use ups for GCC products. Both strong growth and government support for alternative energy allows GCC to capitalize on this opportunity to further nurture its market position and financial performance.Demand For Greater Com munication Bandwidth And world(a) ConnectivityAs the demand for bandwidth increases to support the increasing need for global connectivity and communication, the demand for GCC products will inevitably surge. An article from IT News Africa states that the demand for international connectivity has been oftentimes higher than anticipated, which proves there is a definite need for all the international cables global high-speed.7 Internet users will also increase as the emerging markets become more wealthy and require faster connection. This increase in demand is an opportunity that GCC has to capitalize on.Successfully capitalizing on this opportunity will have a positive impact for GCCs financial performance and reputation. GCC has interpreted considerable steps to take advantage of this increase in demand. It invested in multi-billion dollar of submarine optic communications markets, the medium for faster global connectivity. It is also in a stage to acquire a unmixed for a newly i ntroduced product which will be used in networking cable technology spectrum.ThreatsVolatile Commodity MarketGCC transforms basic raw materials such as copper, aluminum, petrochemicals and steel into highly engineered wire and cable products. unrefined materials account for approximately 75% of the conversion cost which means that sport in raw materials prices may adversely affect GCC cost of sales and in turn, its competitive pricing. The price of copper and aluminum, in recent months, has been extremely volatile. Another issue with the commodity market is that big increase in the prices will substantially decrease demand for wire and cable products and ultimately, will have a negative impact on GCC financial performance.GCC has been manifold in numerous commodity hedging programs to shield itself from volatile copper and other raw material prices. However, due to the nature of the financial hedging, it is still no guarantee that they will always be able to nurse themselves fro m the volatility.Stringent RegulationsOperating in the wire and cable industry as well as having worldwide operation exposed GCC to numerous tortuous rules and regulations. The regulations range from import and export rules, individual government policies on the industry, environmental laws, to electronic or telecommunication rules. All of these factors are threats that may materially impact GCCs growth strategy, performance, and reputation. It is noted, however, that GCC is doing its best to ensure that the employees, subsidiaries, contractors, and agents comply with the rules and regulations.LitigationsBy the end of 2008, GCC and its subsidiaries have been involved in 34,730 lawsuits, 1,275 out of the lawsuits are pending non-maritime asbestos cases.1 These judicial proceeding claims are worth millions of dollars combine. If GCC is set guilty in any of the lawsuits and subjected to stringy monetary fines and payments, it will materially impact GCC operation and financial perfor mance.However, GCC has been fleck these lawsuits for the past 20 years and therefore have the experience in defending itself against these lawsuits. In the past 20 years, GCC has had no cases proceed to finding of fact from those lawsuits and in many cases, was dismissed as a defendant. However, there is no guarantee in the foreseeable future that GCC will always have the upper hand in the lawsuits. Therefore the litigations faced by GCC is considered as a considerable threat.ConclusionGCCs global presence and lean operation put it at a competitive advantage in the industry. It allows GCC to have a wide spread of income source and avoid that economy cyclicality when one country is in recession. As it was discussed in previous section, however, global presence is also a weakness for GCC. Exposure to political instability and fluctuations in the foreign exchange market may have adverse effect on GCCs operation and financial performance. Wide product breadth is also another strength in that it helps reducing the impact of market volatility in one particular product segment and provides economic stability. In order to remain competitive in the industry, GCC has to not only make its strengths that give it a competitive advantage, but it also needs to capitalize on the opportunities available to the firm. The strong support and growth for alternative energy as well as increasing demand for greater bandwidth and connectivity are some of the opportunities that GCC has already capitalized on and will continue to do so. However, the uprising raw material prices and volatility in the commodity market could pressurise the companys profit margins, thus posing a threat to the firm. Litigations that GCC is involved in is also a threat to the firms operation and financial performance if and when it is found guilty.It is crucial for GCC to continually analyze and assess its SWOT factors to see how it is going to impact the company. Doing so allows GCC to capitalize on its strengths and opportunities as well as take appropriate measure to decrease the likelihood of the threats and weakness from occurring. one-year report. http//phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzMxNTkwfENoaWxkSUQ9MzEzNzYyfFR5cGU9MQ==t=1http//cincinnati.bizjournals.com/cincinnati/stories/2010/01/18/daily10.html?ana=yfcpchttp//investor.generalcable.com/phoenix.zhtml?c=81254p=irol-newsArticleID=1374797highlight=http//www.generalcable.com.cn/http//www.nema.org/media/ind/20070419b.cfmhttp//www.southernstudies.org/2009/09/power-politics-growth-in-renewable-energy-outpaces-nuclear-fossil-fuels.htmlhttp//www.itnewsafrica.com/?p=3921