Hypothesis Setting And Data Collection: Globalization

Discuss about the Hypothesis Setting and Data Collection for Globalization.

 

Background Information

Sherwin-Williams is a US-based company focused on the manufacture and supplies of painting products within the United States and the rest of the world. According to their sales statistics in 2016, more than 85% are from the United States. This percentage has been increased from 78.5% in 2012, leading to the declining focus on marketing and sales of the painting product to the rest of the world. The local focus on the sales and marketing of Sherwin-Williams might have been propelled by the high costs of marketing and distribution. The widening gap between the local and international sales of Sherwin-Williams products is a marketing issue that should be solved before the company is out of controlled to the global market.

Globalization of the painting products would is a perfect marketing strategy that can ease the force used to sensitize the local customers. Case studies can be used to compare the company with other companies that have focused on international marketing and have successfully succeeded in their business. Therefore, Sherwin-Williams should target on improving the sales made on international markets. Opening branches in different areas across the globe can be among the strategies of the relieving the company from distributional costs. Comparing the sales distribution of PPG Industries and Sherwin-Williams, the former has a better global marketing and sales distribution. PPG’s success on the international market has been enhanced by its strategic distribution of outlets in different parts of the globe. For instance, PPG Industries have 156 manufacturing sites with 45 of them in the United States and distributed over 19 states. There are other 14 sites located across other 10 countries within America, 64 in Europe, Middle East and Africa and 33 in Asia Pacific. This perfect marketing strategy eases the distribution process of the products and reduces their costs (PPG, 2014).

The distribution of Sherwin-Williams’ manufacturing sites has been centred within United Stated with few stretched in Canada. This limits the ability of the company to sell and market its products in other potential markets like Europe, Asia, Middle East and Africa. This pulldown to Sherwin-Williams has given other companies such as PPG industries the opportunity to dominate the international markets. One of the main disadvantage that Sherwin-Williams have in the market is the fact the US painting products market is highly competitive. Failure to explore other potential market reduces the chances of making more profits for the benefit of the company. We can assume that the painting companies originating from the United States and are performing better that Sherwin-Williams make more sales internationally. Also, it can be tested and proved whether such companies have more outlets and distributional centres outside the US compare to Sherwin-Williams (Pci, 2017).

Hypothesis

The hypothesis is based on the facts that Sherwin-Williams’ international sales performance is shrinking, hence endangering the future of their products on the global market.

1. Paint manufacturing industries performing better than Sherwin-Williams have higher international sales.
2. Paint manufacturing industries performing better than Sherwin-Williams have more international outlets compared to Sherwin-Williams
3. The percentage of sales contributed by the international markets for competitors of Sherwin-Williams is has an increasing trend.

The type of data to be collected

All the hypothesis stated above are to be tested using discrete and continuous data. The first hypothesis is directed to the sales levels between Sherwin-Williams and the other companies that had performed better in the latest market survey. The research will be conducted to obtain the local and international sales then make performance comparisons. According to Coatings World (2017), Sherwin-Williams was the third-best performer in the paint and coating industry in 2017 with PPG industries and AkzoNobel taking the first and second positions respectively. Therefore, all the hypothesis will be answering by performing comparisons between PPG industries, AkzoNobel and Sherwin-Williams. The second hypothesis will be answered by profiling the number of manufacturing sites within and outside the United States for the three companies. Business investors believe that market returns are determined by a number of finances invested. Therefore, the amount of capital invested in the marketing strategies to determine whether there is a correlation with the level of sales. Lastly, the proportion of the sales contributed to the international market will also be quantified determine whether it is a significant contributor to their market performance.

How the data will be collected

Secondary data will be collected from the 2016 annual reports of the respective companies. This will ensure that the collected data is valid and does not have errors. The reports will be obtained from their official websites. A thorough search will be conducted on the reports to extract all the required information. In cases where some of the required information and data are not available, online search from other validated sources will be performed to obtain the missing data. Based on the sources of the information, it will be certain that the extracted information will have high internal validity and adequate to answer the hypothesis. After extracting the data from the reports, it will be entered into Microsoft Excel and the required analysis and plotting conducted. The graphs and tables will then be transferred to the report to assist in answering the hypothesis and research questions.

Discussion

Comparing the international sales levels

Figure 1: Net sales

Figure 1 above shows that PPG industries make more sales on other international markets than in North America. This indicates that the company has invested much of the other continent than its origin. AkzoNobel which is located in Netherlands seems to be balancing between the sales from Europe, Middle East & Africa with those from other countries. There does not seem to be a lot of difference between the sales obtained in 2014, 2015 and 2016. Sherwin-Williams seems to be performing poorly from other international markets as compared to the other two. This confirms and answers the first hypothesis by affirming that the best performing paint companies make more sales in the international platform in comparison with Sherwin-Williams (PPG, 2014).

Manufacturing sites’ distribution

Figure 2: Manufacturing sites and stores distribution

PPG Industries seem to have a better distribution of outlets across the globe than AkzoNobel and Sherwin-Williams. This is a clear indication that the companies with a better balance of outlets across the globe are more likely to make more sales. PPG industries perform better compared to Sherwin-Williams and AkzoNobel. Therefore, we conclude that distributing the braches and outlets effectively enhances sales by reducing costs of transports and widening the range of potential customers. Sherwin-Williams should increase the number of outlets in areas like Europe, Middle East and Africa to widen their markets. Although this kind of investment has high risk, their return on investment is certain.

Figure 3: Local versus Internationals Sales

The third hypothesis states that the contribution of international sales to the total sales should be increasing because of the new investments and business ventures. However, according to obtained data, there is no much difference between 2014 and 2016. Sherwin-Williams’ sales obtained from other countries seem to be decreasing significantly, which might lead to full investment on the American market, hence abandoning the others.

Limitations

• Access to real data

The main challenge for this study was acquiring data that can be used to obtain sufficient statistical evidence to prove the hypothesis. There is a greater chance that some of the difference could not be developed because there was not enough data to perform the analysis.

• It was not possible to determine the amount of capital invested in marketing by the paint manufacturing company. This would have been a great opportunity to determine whether there is a relationship between the amount spent on marketing and the net sales or profits.

Recommendation

More research should be done to determine the effect of investing in international market as opposed to concentrating on the local market.

References

AkzoNobel. (2017). Annual Report 2015 | AkzoNobel. Akzonobel.com. Retrieved 16 October 2017, from https://www.akzonobel.com/for-investors/all-reports/annual-report-2015

Coatings World. (2017). 2017 Global Rankings of the TOP manufacturers of paints and coatings.. Coatings World. Retrieved 15 October 2017, from https://www.coatingsworld.com/issues/2017-07-01/view_features/2017-global-rankings-of-the-top-manufacturers-of-paints-coatings-adhesives-and-sealants

Pci. (2017). 2016 Global Top 10 and PCI 25: Top Paint and Coatings Companies. Pcimag.com. Retrieved 16 October 2017, from https://www.pcimag.com/articles/102264-global-top-10-and-pci-25-top-paint-and-coatings-companies

PPG. (2014). PPG PAINTS, COATINGS AND MATERIALS: OUR COMPANY - PPG - Paints, Coatings and Materials. Corporate.ppg.com. Retrieved 15 October 2017, from https://corporate.ppg.com/Our-Company/Facts-About-PPG.aspx