ASPHALT INDUSTRY COMPETITIVE ANALYSIS Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Asphalt industry Competitive Analysis Case Study Solution

SWOT Analysis

Strengths

The strengths for the asphalt industry is that its products are the most commonly used in the development of roofs of homes as well as in the manufacturing of driveways and parking lots in the United States. The overall residential construction is expected to increase during the year 2016 which will improve the industry revenue. The downfall in the oil prices during the past year has significantly reduced asphalt’s expenses.Asphalt is responsible for the construction of the infrastructures in the United States by the account of 90%. The government of the U.S usually prefers asphalt industry for the construction of roads, parking lots in the U.S. The roads built by asphalt are cheaper to build, easier to repair and safer to drive on as compared to concrete roads.

Weakness

The weakness for the asphalt industry is it is difficult to export the product for long distances as it the transportation cost is higher. The overall revenue earned by the asphalt industry through exporting is about 2.2%. Concrete lasts longer than asphalt which causes a major weakness in the industry. The reduction in the oil prices also causes the revenue of asphalt industry to decrease. Many cracks happened from using asphalt and ruts emerged during hot weather. Most of the asphalt requires resealing in every two years.

Opportunity

The opportunity for the asphalt industry is fore casted by IBIS World in which the use of asphalt will significantly increase in the market. The reason is that the construction of residential and non-residential houses is expected to increase. The improvement in the technology also improves the quality and reduces the cost of asphalt three groups which are paving mixtures, tar roofing and roofing and pitches. The profit margins are greatly impacted by the effective cost control on the manufacturing of asphalt.

Threat

The threat which poses to the asphalt industry is that the government would prefer concrete or cement on the construction of roads as the lifespan is much longer than asphalt. But due to asphalt being inexpensive than cement and concrete, the government prefers to use asphalt for reducing cost in the development of infrastructure. The reduction in the oil prices which are expected to decrease over the year is also a major threat for asphalt industry. Although asphalt industry benefits in the reduction of oil prices which causes less cost in materials but it also decreases its overall revenues. People preferences have also become a threat for asphalt Industry as they prefer to roofing alternatives such as tiles, metal or clay which is more expensive than asphalt.

PESTLE Analysis

Political

The political factors which impact the asphalt industry are that when the raw asphalt is produced through the crude oils, it emits gases and other air pollutions. Due to this, heavy policies and regulations are made regarding controlling the emission from asphalt companies. The asphalt facilities can also release toxic and leak chemical. In order to protect the environment, the agency had made suggestions for the construction of proper asphalt and having machinery which reduces emissions and pollutions. In some of the states, the asphalt industry is charged with an annual emission fee such as one of the states is California, and in some states, it is forbidden for building asphalt facilities to protect the environment. There is some political risk involved when exporting asphalt to other countries.

Economical

The asphalt industry completely relies on the economic growth of the country. Its high growth and revenuesrely on the economic pace of the country. The construction sector was highly impacted due to financial crises which occurred in the year 2011 and resulted in the decline of demand for industrial products. As the economic conditions improve, the government generates more tax revenues from the people. These tax revenues are used for the construction and improvement of the infrastructure of the country. This leads to the demand for asphalt to increase in the asphalt paving for the state and local road projects. The economy of the U.S is fore casted to get much better in the year 2021 which will result in an overall increase in the demand for asphalt industry.

Social

The social factor has caused some significant impacts on the asphalt industry as the changes in the people’s preferences have been causing a decrease in the demand for asphalt. The increase in people’s wages and improvement in their purchasing power have caused them to switch to other asphalt alternatives. Such as people now prefer to roof by tiles, metal and other materials to improve the look of their houses which is more expensive than asphalt. The other paving materials are also better than asphalt as their lifespan is much longer and also makes the climate warmer with having flexible designs and are easy to shovel snow from roofs.

Technological

The improvement in the technology has played a vital role in the growth and controlling the cost for the asphalt industry. The improvement in the technology has led to better productivity and also reduced the overall costs for the asphalt manufacturers. For any asphalt company to survive in the current market, it is important to have the proper machinery which reduces its manufacturing cost, reduces pollution emission and improves the quality of asphalt. The advanced technology has also caused the asphalt manufacturing to expand the product offering. The vast majority of the roads require asphalt to be heated to high temperatures, for this it requires good machinery which consumes less petroleum, saves operators money and benefits the environment.

Legal

The legal factors which affect the asphalt industry are the rules and policies which are set for concerning the environmental law. Nowadays, every person is paying attention towards global warming. Most of the states’ governments have started to intervene on the businesses which have been polluting the environment by setting rules and policies. Policies established by the government on the asphalt industries suggest the use of machines that generate fewer emissions.

ASPHALT INDUSTRY COMPETITIVE ANALYSIS Harvard Case Solution & Analysis

Environmental

Asphalt industries have a bad reputation for damaging the environment by heating up the planet. This heat is generally reflected back to the atmosphere and trapping the heat affects the global warming. The government has taken steps towards the asphalt industries such as setting up proper machine and equipment with advanced technology that would cause less damage to the environment..............

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