2 pages
2020 Strategic Analysis and Firm Recommendations
Agenda
Brief Introduction to Comfort Systems USA
External Analysis
Macro Environmental Analysis
Five Forces Analysis
Industry Driving Forces
Competitive Analysis
Key Success Factors
Internal Analysis
Financial Analysis
Value Chain Analysis
SWOT Analysis
Firm Recommendations
About Comfort Systems USA
Building and Service Provider
Mechanical, electrical, and plumbing building systems
Went Public in 1997
12 companies
Now over 35 operating companies
140 locations across the USA
$2.6 Billion Revenue in 2019
45.9% from new construction
54.1% from renovations, maintenance, repair/replacement of existing systems
HVAC: FIVE FORCES OF ANALYSIS
LOW
HIGH
MODERATE
HIGH
HIGH
Five Forces Analysis And industry Attractiveness
Threats of new Entrants:
-Smaller firms and company have few threats
- Barriers
-Networking and trying to compete with local business
- Lack a technological and energy advancement
Power of Suppliers: ( moderate)
-Purchases in the industry are variable amongst an array of items
-Large manufacturers eliminate marks-up “middle-man”
- Several substitute options and new ones consistently emerging, and continued high volume purchases are needed
Power from Buyers: ( high)
-Large Volume purchases are made by buyers
-Housing raise, HVAC industry have benefit as well.
- HVAC business is that of per capita “disposable income”
Power of Substitutes:
Hydronic System
Fire water tanks
Intensity of Rivalry: high
- Internal Competitiveness
-Small companies
-Bigger company or high-end HVAC
Five Forces Analysis And Industry Attractiveness (cont)
Industry Competitors Analysis and Anticipated strategic moves
The main difference between the other competitors and Comfort Systems is the type of niche markets each of them target.
Two industries competitor: A.O Smith Corporation and ABM Industries.
A.O Smith Corporation:
It was founded in 1874 by Charles Jeremiah Smith
Biggest focus is water purifier.
ABM Industries:
It was founded in 1909 by Morris Rosenburg in San Francisco.
Most focus are the energy sector, heating solutions, facilities management.
Comfort System:
leading the smaller group such as Watts Water Technologies, Viessmann and Gentherm
It is a rising star and with its focus on industrial markets and cutting-edge technologies, it will be a force to be contended with.
Improve skill labor
KEY SUCCESS FACTORS
Key Success factors
-(KSFs) are the strategy elements, product attributes, competitive capabilities, or intangible assets with the greatest impact on future success in the marketplace.
The skill labor:
- Lack of knowledgeable labor,
Do not having enough young trades apple
to replace older tradepeople in workforces.
- Employee retention.
Technology:
-The growth of the Internet of Things (IoT) has allowed the HVAC industry to control, monitor, and interact with these systems and appliances. It designed to improve efficiency and save money.
Low cost:
- Extremely competition among companies. Offer exceptional services or develop and improve customer relationship by provide most beneficial plan and smooth s
Internal Analysis: Financials
Comfort Systems USA Recommendation
Comfort Systems USA expand their company services:
To include offering to install a Water Purification System to complement their already established HVAC services.
To include decontaminating a home of the potential spread of the COVID-19 virus.
Recommendation 1
Water purification will be a little subdivision of business
Small cost to Comfort Systems USA
Existing Customers
Company revenue increase if 10% of existing customer purchase water filtration systems
Customer wins
• Add advertisement on every brochure
• Free installation
• Financing
• Senior and military discount
Implementation
• Calendar year 2021
• Coincide with ad blitz
• A/C check up
• Duct cleaning services
• Summertime preparation
Recommendation 2
COVID-19 is a worldwide pandemic
Comfort USA help sanitize home
Alleviate fear
Safe haven
Virus Free environment
Reasonable price
Decontamination services
Add advertisement on every brochure
HVAC Sales increase
Customer is thinking of COVID
Efficient HVAC protect from COVID
Service will be offered to schools, offices, daycare facilities, and workplaces
Little cleaning supply inventory
Start immediately upon completion of training
Immediate implementation to service because of peak demand
Retail stores are low on disinfectant
Implementation
Opportunities
Develop a niche market tailored to customer preferences
Offer client services at lower prices in order to grow their customer base
Improve supply chain by expanding the supplier list (can offer flexibility in price)
Threats
Dollar dependency for trade and export can be more expensive
Highly used products based on Hydrochlorofluorocarbons (common in HVAC industry)
Unforeseen events such as Covid-19 have a changing effect on socio-demographics
Strengths
Strong cash flow positions Comfort Systems for future success
In 2019 acquired Walker Tx Holding
Increased yearly revenue by 432.4 millions
Strong marketing that allows for profit revenue creation via new customers (e.g., niche marketing)
Alignment of mission and values with business objectives by putting customers first
Weaknesses
Lack of international presence (limits the market size and reach)
Slow to upgrade existing product lines with needs of customer (industry upgrade take times and money)
Niche markets in commercial industry eludes Comfort System (overspecialization of industrial products)
Recommendations
Water Purification System
What is it?
An integrated service line that complements already existing services and products (HVAC, plumbing, etc..)
Why is it needed?
Extends that reach of Comfort Systems (allows for growth and diversification)
Package deals helps build loyalty between customer and organization (offers, specials)
Limited resources (clean water, high level purification)
What is it? – Mention that it is for both Industry and Commercial
Why it is needed – We already take care of air for customer, why not ensure they drink healthy and clean water as well?
- For high level purification mention its use in Laboratories, and facilities that treat water for general population, research, and industrial needs
23
Water Purification Continued
How will it integrate?
Offer the service to industry
Academic institutions
Water treatment plants (machinery, pumps)
Included service (steam degassing)
Offer service packages to commercial consumers
Home water purification (fridge, stand-alone)
Integrate as part of home improvement
When will it begin?
Beginning of 2021
Pandemic is helping the demand of clean and purified resources
Existing backbone gives an advantage in developing new lines of business
Decontamination Services
What is it?
Newly acquired service line via acquisition of Cleans’ Management sanitation service
Why is it needed?
Provides new market expansion within Industrial sector
Comfort Systems is specialized for industry
Expanding this horizon will solidify its position and gain market share
Compliments current services
COVID-19 is not going away soon
Decontamination services is a vast market
Chemical spills
Sanitation (offices, schools, government building, and more)
Radiation spills (very specialized)
25
Decontamination Services Continued
How will it integrate?
Offer the service exclusively to industry
Government contracts
Specialized industrial sector (power plants, chemical plants)
Education institutions (high schools, colleges, and universities)
Acquire sanitation line from Clean Management
When will it begin?
Quarter two of 2021
Organizations require time to draw contracts of acquisition
Implementation of Water Purification
Top choice recommendation is the Water Purification service line
Why?
Plays to the strengths and market orientation
Has the industrial backbone and supply chain and experience
Long term planning
Five-year plan to implement and ensure success
Year One (2021)
Research the market and possible entry points at home and abroad (1-5 months)
Establish budget ( new entrant cost is around $80-100 million in markets like India)
Analyze current fit into operation and business vision (1-3 months)
Begin performance indicator development for new service (3-4 months)
Year Two (2022)
Expand suppliers and vendors (4-6 months, ongoing)
Integrate the KPI into the normal business of service line (1-5 months, ongoing)
Year Four (2024)
Established performance on a constant basis based on improvements in Year 2 (1-3 months)
Begin plans for growth expansion based on results of Year 2 (3-4 months)
Test new market ideas based on research, need, and current financial strength (1-5 months)
Long Term Planning Continued
Year Three (2023)
Build new customer and consumer relationship (4-6 months, ongoing)
Begin reporting success of new KPI of business unit to senior managers (3-5 months)
Offer ongoing continuous improvement solutions
Long Term Planning Continued
Year Five (2025)
Offer current product and solution improvements (1-5 months)
Enter new markets with better product-line up (3-4 months)
Analyze financial strength, success, via established KPI’s in Year 2 (ongoing)
Milestones
Occurring years allow for strong management and vision to be established
Product improvement for new market expansion and entry is most important
QA Session