Market Share and Competitor Analysis SABIHA AFRIN
Aug 22, 2015
Market Share and Competitor AnalysisSABIHA AFRIN
Company Background
• Founded in Hartsville, South Carolina, on May 10, 1899
• Diversified provider of consumer packaging, industrial products, protective solutions, display and other packaging services
• Products sold in 85 countries
• Aims to be the global leader in providing Innovative Packaging Solutions (IPS)
• Promises to bring more to packaging than just the package
Market Definition
Paper : Most-used material in packaging
Plastic: A much newer packaging material than
paper, metal, or glass
Metal: Lost some share of packaging to plastics
Glass: This also lost some share of packaging to
plastics
Flexible: An innovative packaging solution
Potential Substitute Packaging
Value Added Packaging: Innovating packaging
solutions (IPS)
True Blue(TM) line of sustainable packaging
solutions
Sonoco Recycling
SONOCO
Packaging Market Definition
0 1 2 3 4 5 60
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Paper
Plastic
Metal
Glass
Flexible
Sustainable
Uns
usta
inab
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Growth Potential and Sonoco
Packaging is a Mature Market (Hopkins, 2009)
Specific trends and drivers for the growth of this market includes world economy, technology, government regulation, consumer behavior, etc. (Hopkins,2009)
Global packaging market to reach $975 billion by 2018 (Smitters Pira)
Global packaging sales are projected to rise by 3% in real terms to $797 billion in 2013
Sonoco streamlined the organization to focus on global growth.
Introduced Innovative Packaging Solutions (IPS) and Sonoco Recycling to embrace sustainability in business and environment.
Sonoco Crown Industry Ratio Performance Gap with Competitor
Performance Gap with the Industry Comments
Key figure Annual Sales (in millions) 2.9 8.6 -7.69 -5.7 10.59 Better than the industry. Worse than competitor.Profit Margins Gross Profit Margin 18.18 15.14 24.52 3.04 -6.34 Worse off than the industry. Better off than competitor.Pre-tax Profit Margin 6.81 6.19 3.85 0.62 2.96 Better off than both the industry and the competitor.Net Profit Margin 4.88 4.68 4.26 0.2 0.62 Better off than both the industry and the competitor.Investment Returns
Return on Equity 14.51 515.85 15.99 -501.34 -1.48 Investment is not paying off as well as the industry or the competitor.
Return on Assets 5.91 4.74 3.91 1.17 2 Assets are being used more effectively than the industry and the competitor.
Management Efficiency Receivables Turnover 0.005 0.007 -0.002 Not collecting receivables as well as the competitor.Inventory Turnover 9.67 6.03 3.64 Moving industry more frequently than the competitor.Effective Tax Rate 0.44 0.46 -0.02 Better tax management practices than the competitor.
Revenue per Employee 12.03 19.86 16.26 -7.83 -4.23 Not staffed properly or as efficient as the industry and the competitor.
Financial Condition Current Ratio 1.58 1.3 1.57 0.28 0.01 Better than the industry and the competitor.Debt-to-Equity 0.55 19.26 1.42 -18.71 -0.87 Worse off than the industry and the competitor.
Interest Coverage 7.07 3.29 4.02 3.78 3.05 Possibly has more debt than the industry and the competitor, however, has the ability to pay obligations.
Growth Rates
5-year Revenue growth 3.3 0.83 15.93 2.47 -12.63 Growth is not as good compared to the industry, but better than the competitor.
Competitor Ratio AnalysisAnnual Sales: Depending on the size, Sonoco's sales revenue is better than the industry, however not as good as the competitor.
Gross Profit Margin: Sonoco is spending less to produce goods than its competitor, however it is still not up to the mark with the industry.
Net Profit Margin: Sonoco's Net Profit Margin is comparable to the industry as well as its competitor. However, Sonoco has a better grasp over its expenses and has a more effective tax strategies than the industry and its competitor.
Return on Equity: Sonoco's investment is not paying off as well as the industry or the competitor.
Ratio AnalysisReturn on Assets: Sonoco's assets are being used more effectively than the industry and the
competitor.
Effective Tax Rate: Sonoco has a better tax management practices than the competitor.
Current Ratio: Sonoco has more short-term cash than short-term debt. It is not where is should
be, but it is still better than the industry and the competitor.
5-year Revenue growth: Sonoco's growth is not as good compared to the industry, but it is
better than the competitor.
Ratio Analysis and RecommendationsInvestment returns: Sonoco is able to utilize its assets effectively, however it is not meeting the
investment returns that it should.
Financial: As seen in the analysis, Sonoco has a higher current ratio and a lower debt-to-equity ratio
than its competitor. Depending on various factors, it can be indicative that Sonoco’s competitor is
funding more projects to expand its business.
Management Efficiency: Sonoco’s management is more efficient than the industry and the
competitor in most aspects. However, Sonoco should look into better staffs to increase efficiency up
to the industry standards to remain competitive.
Sonoco: Competitive Advantage Differentiation Advantage:
Valuable customer relationship
Latest barrier technology (IPS)
Consumer-friendly opening system
Highly Profitable loyal customer base
360-degree Customized Solutions
Multiple packaging solutions
Premium quality packaging
Sustainable Advantage:
Long-term profitability and viability
Building positive brand images
Active Member of Sustainable Packaging Coalition
Rainforest Alliance’s Smart Wood Chain-of-Custody certification
Harvested wood products from well-managed forests
In-house Sustainability Council
Implementing Sonoco Recycling
Key Aspects Sustainability: Cost and Profitability
Maximizing efficiencies in production
Conserving recourses and reducing sources
High-cost to maintain
Controlling costs by reusing and renewing raw
materials
Long-term profitability
Cost saving scope for the investors
Sonoco: Promoting Sustainability
Sustainable advantage: Competitive distinction in
the marketplace
Ensuring positive economic growth and
profitability
Re-envisioning Sonoco: 45.2% total return in 2013
Educating and persuading customers about
sustainability
Key Aspects Sonoco: Innovation, and Globalization
Introduced IPS (Innovative packaging solutions)
to adopt latest technology
Operates in 85 countries
41 industrial manufacturing facilities and 6
paper mills in Europe
International sales and income growth in 2013
Innovation, and Globalization:
Changing supply chains
Customers shifting their manufacturing
facilities
Overseas Competition
High-cost to invest in latest technology
High-cost of operation and management
Conclusion Overall, Sonoco is doing better than the industry, but not as
good as the competitors.
The management should take necessary steps in order to hold
the market share.
Promoting sustainable advantages can be profitable for the
company.
Creating performance targets and management incentives can
be he helpful for the company.
To remain competitive, it is essential for Sonoco to focus on
maximizing productivity of its business.