Component 1 (External analysis)

1. Introduction

External analysis of a company also refers to the environmental analysis of a company that assesses the business objectives and tracks the recent business changes. It also helps to analyze the business market, economic trend and the recent changes in business environment to pre[are a business to become adaptable to change. This component of this study is based on the external analysis of Thermax Ltd that addresses the change within their business. This study aims to perform several analyses like PEST and Porter’s five forces in order to understand the external environment of the business of Thermax Ltd.

2. PEST analysis of Thermax Ltd.

PEST analysis of a company is a determinant factor of the survival scope and success of a business. Proper PEST analysis helps to address political, economical, social, and technological factors of a country affecting or benefiting the company (Aparcana, 2017). Thermax is a company that is known to be one of the biggest dealers of environmental and engineering products.

• Political factors: The political environment of the UK is unstable due to a lot of corruption hence implementing the industry 4.0 technique in order to make their business stable. As mentioned by Barbara et al. (2017), the government of the UK counts taxes based on the category of the business industries. Therefore, adapting the industry 4.0 technique Thermax Ltd. can get additional support from the advocacy of the politics of the UK. These are some vital factors that can benefit or affect the company if the right strategy or technique cannot be implemented properly.
• Economical factors: Foreign direct investment is gradually increasing in the economy of the UK. Therefore, the application of the Industry 4 technique can increase the productivity of Thermax Ltd. by increasing their annual interest rate. However, the economy of the UK is still recovering from the recession of 2008/2009 and it has adversely affected the rate or exportation of Thermax Ltd (Dunn et al. 2018). Thermax Ltd. has been successful to maintain its annual revenue of $40 million as its annual interest rate is high.

Figure 1: PEST analysis

(Source: Hastig and Sodhi, 2020)

• Social factors: The population of the UK is dense and increasing, the UK has almost 64.1 million inhabitants. Such a dense population has given the engineers on Thermax Ltd. the motivation to supply more electrical accessories. As per the opinions of Giacomin et al. (2019), if the company implements Industry 4.0 technique it can meet the high market demand to obtain their business aim.
• Technological factors: The UK has one of the most efficient IT and science expertise and hence the implementation of Industry 4.0 can be easy for the engineers of Thermax Ltd. The implementation of Industry 4.0 technique can accelerate the profit margin of Thermax Ltd. by 15% by building effective technological strategies (Gurung et al. 2018). Industry 4.0 helps the company with the application of crowd sourcing, cloud technology, and automation operations to generate finer engineering and energy solutions. [Refer to appendix 1]

2. Porter’s five forces analysis

• The threat of new entrance (low): Thermax Ltd. has adopted a strategy of marketing its products with the procedure of cyber-physical Through this implementation, the company is alleged to successfully store the customer data from their purchase history. As suggested by Lakhwani et al. (2017), the company has successfully maintained its position and reputation in the market. It is not easy for the new entrances to take over the business of Thermax Ltd that easily. However, companies like Seng Electric have begun the preparation to compete with Thermax Ltd.
• The threat of substitute (high): The products that Thermax Ltd. produces and manufactures are Energy and engineering solutions. Their products are quite popular amongst the consumers as they are efficient and reliable. As per the views of Leslie et al.(2020), there are various companies that do the production and manufacturing of the same goods and services. Therefore it is a high threat for the business of Thermax Ltd. that they can be highly challenged by their substitutes.

Figure 2: Porter’s five forces

(Sources:  Montagnino, 2017)

• Bargaining power of supplier (low): Thermax Ltd. belongs to the engineering industry and they have the facility to produce their raw materials. Therefore, the company is way less dependable on their suppliers for their production process. Thermax Ltd. produces all the raw materials regarding their energy-based products on their own hence they are not dependable on any other supplier (Osei-Kyei and Chan, 2017).
• Bargaining power of customers (moderate): It is the nature of a customer to find cheaper products without an intention to compromise with the quality of the product. There are several companies that produce energy solutions like Thermax Ltd. Hence Thermax needs to set their pricing points by analyzing the demand of their customers (Hastig and Sodhi, 2020).
• Competitive rivalry (high): In recent times Thermax Ltd. has various competitors like ABB, Voltus, and Fontus. As per the opinion of Potter and Urquhart, (2017), these companies have relatively lower revenue than Thermax Ltd. that is approximately $20 million. Thermax Ltd. has increased its revenue from $20 million to $39 million by implementing Industry 4.0 practice.

3. Developing survival and success factors for the industry survival factors

A company can create survival factors by advancing its technological base. Thermax Ltd. can implement an automation process with the help of industry 4 techniques and it can help them fulfill the achievement of the company.

Figure 3: Development of survival and success factors for the industry

(Source: Xavier et al. 2017)

• Development of skills: Thermax Ltd. in order to work with the new technology needs to educate their employees for efficient performance. Lack of knowledge in employees regarding any new installment of technology can be harmful to the company and its performance. According to the views of Aparcana (2017), the employees of Thermax Ltd. have started learning regarding the automation process, IIoT system that can help them work on Industry 4.0
• End-to-End encryption: Thermax Ltd. has applied industry 4.0 techniques to provide end-to-end security factors. As per the suggestion of Dunn et al. (2018), after examining the traffic of the networking system the automation process has been implemented in the business. To maintain the authenticity of the information and to encrypt them the cyber-physical system has been developed. Thermax Ltd. has carried out the IIoT system in order to protect the company data.
• Operating model: Thermax Ltd. is supervising its operational model to describe its automation process. As per the view of Giacomin et al. (2019), Thermax Ltd. in order to explain their business model innovation is creating various concepts on the operating models. The company plans to apply this model and the conceptions under the industry 4.0 techniques.

Success factors

The population of the UK is increasing drastically and it is the perfect opportunity and time for Thermax Ltd. to implement the industry 4.0 techniques. Due to the increasing population of the UK, the company can fulfill the demands of their suppliers. As mentioned by Leslie et al. (2020) the analysis of Porter’s five forces can help the company to get a better idea regarding their markets and the competition. The company can apply the industry 4 techniques in order to analyze their various external factors to fulfill the engineering techniques. Implementation of such tactics can help the company build a strong strategy against their rivals so that Thermax can gain the maximum profit by competitive strategy and automation process.

5. Conclusion

It can be concluded from the study that Thermax Ltd. is implementing industry 4.0 techniques in order to make their business more profitable in the future. It can be also seen from the research that is done over here gives a clear understanding regarding the external analysis. It mainly brings about changes in the environment. From the research, it can be also understood that there are political, legal, social, environmental, legal factors that are also understood from the research done over here. There is also a plan made over here in the research regarding the development of the Thermax Company. Porter’s five force analyses are also done over here in order to show the competition level of the Thermax Company in the country. The success factor of the company is also elaborated over here in the research done. It is very important to understand the competitive gain of the company of Thermax in order to make positive indulgence of the company which is also understood over here in the research.

Reference

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