Environmental and Internal Analysis of Sturm, Ruger, & Co

Executive summary
Internal Analysis Part
The company has a clear vision statement based on the company’s corporate responsibilities and gun users. The vision statement raises awareness about using guns through educational programs. The company sets safety criteria for the betterment of users;
the company has not set a mission statement; however, the aspects of the mission can be extracted from the vision statement. Sturm believes in serving shareholders, promoting customers’ and employees’ interests, and improving the brand’s reputation.
Based on Porter’s Five Forces Model, The threat of new entrants is low because new businesses need massive investment in research and development and capital before launching their brands. These all factors lead to a low threat for new entrants. The threat of rivalry is high because there is an intense rivalry in the US gun industry as, on average, 3.5 million firearms are produced annually. Over 465 arms and ammunition makers and over 50,000 weapon traders in the USA. Sturm is the only firearms manufacturer in its niche market, and there are no known close substitute products. Therefore, it gives the company a significant advantage over potential competitors. Buyers have the power to contact any competitor, offering them their desired outcomes on their terms and customization requirements. The company enjoys a strong position in the firearms industry, limiting the threat of new entrants and ensuring that suppliers cannot extract significant price concessions from the company. It leaves consumers as the main bargaining power in terms of pricing.
Based on SWOT Analysis, The major strengths include a firm brand name, a wide variety of products, a loyal customer base, and a well-known reputation for quality. It offers quality products and a loyal customer base, making it easier for Sturm Ruger to penetrate new markets and grow its business. However, the company relies on firearms sales, a volatile and highly competitive industry. Another weakness is that Sturm Ruger does not have a strong presence in key overseas markets. The company should focus on technological innovation and spend a significant amount on research and development. Any non-compliance with these standards would lead to severe risks and penalties, which will lead to a risk of expensive lawsuits. In addition, the company regulates authorities like the Bureau of Alcohol and Firearms. Finally, there is a shortage of skilled labour force, making it challenging to attract a talented workforce with the right skills.
To improve the market share and market recognition, the company concentrates on affordability and convenient access to goods internationally. There are four alternative courses of action recommended for the business based on which best-suited alternative is chosen. The first alternative is the expansion through e-commerce penetration. E-commerce allows companies to reach a wider audience through traditional marketing methods. The second alternative is mergers with other businesses for market development in Asia. The company should focus on developing new products that will appeal to the Asian market and create a marketing strategy that focuses on the unique needs of the Asian market. The third alternative recommended is the diversification in other businesses like knives and other cheap weapons to improve the business profitability. The fourth alternative recommended is market penetration, where the company can emphasize intense marketing in the US to penetrate the market.
Environmental Analysis
In the following sections, we will analyze and detail the environment in which Sturm, Ruger & Co. exists in. Understanding the external environment is key to understanding the true scope of the company. We will scan, monitor, forecast, and assess the external environment. This environmental analysis will be used to determine industry analysis, corporate analysis, competitive advantage, alternative course of action, and final recommendation for the case.
Demographics
The demographic segment is concerned with a population’s size, age structure, geographic distribution, ethnic mix, and income distribution. Sturm Ruger is an American-based company, so it is imperative to do a demographic analysis of the American population. Starting with population size, the United States has approximately 439 million people. The United States is going to be one of the five most populated countries in the world by 2050. In terms of age trends in the population, the US has 16.5% of people over the age of 65 and is predicted to reach 23% by 2036. The demographic that Sturm Ruger is specifically catering to are people who buy firearms in America. The breakdown for firearm owners in the American population is as follows:
Overall, 30 % of Americans own guns. Of all gun owners in the US, 32% of gun owners own only one gun, whereas 37% own 2-4 guns, and 29% of gun owners own more than 5. It is clear that the customer profile for gun owners in the US is predominantly middle-aged white men who are Republican. Also, there is a greater likelihood that if someone is a gun owner, they own multiple.
Sturm Ruger also has specific demographics within their company. Their company is comprised of 21
Internal Analysis
Mission and Vision
The vision of the company can be described as:
Strum, Ruger & Co aims to be the “arms maker for the responsible citizen.” The scope of our success is defined by serving shareholders, customers, and employees ethically, promoting customers’ and employees’ interests, and preserving the brand’s reputation.
In line with its vision, the company claims to believe in raising awareness of gun use through educational programs and its own mediums (Bogers et al., 2019). The company also believes in designing safety criteria for the betterment of users; however, those skeptical of the company believe that it is another form of product advertisement. Additionally, its repurposed new mission statement could then be:
“Sturm, Ruger & Co., Inc. is one of the nation’s leading manufacturers of rugged, reliable firearms for the commercial sporting market. The only full-line manufacturer of American-made firearms, Ruger offers consumers over 400 variations of more than 30 product lines. For more than 60 years, Ruger has been a model of corporate and community responsibility.” (Hitt et al.,2019, p.c. 199).
Industry Identification and Analysis using Porter’s Five Forces
The Threat of New Entrants: Low
The firearms industry is highly regulated and has high barriers to entry. Sturm has a firm brand name and a large customer base, which makes it difficult for new competitors to break into the market. Additionally, the company has a well-established distribution network, discouraging new entrants, and its low price approach which puts a barrier against new entrants to offering high-quality products at low prices (Noah, 2021). New businesses need massive investment in research and development before launching their brands. These factors lead to a low threat for new entrants.
The Threat of Rivalry: High
There is an intense rivalry in the US gun industry as, on average, 3.5 million firearms are produced annually. Alone in the USA, there are over 465 arms and ammunition makers and over 50,000 weapon traders. The famous rivals are Smith & Wesson, Remington Arms, Olympic Arms, Bushmaster Firearms, DPMS Panther Arms, Colt’s Manufacturing Company, Beretta, FN Herstal Heckler & Koch IWI Kalashnikov Concern (Siegel & Leih, 2018). That is why businesses like Sturm have to create a sustainable distinction to perform better and succeed in the market.
The Threat of Substitutes: Low
Sturm is the only firearms manufacturer in its niche market, with no known substitute products. Therefore, it gives the company a significant advantage over potential competitors. Businesses have limited risk when high conversion costs with a loyal customer base. However, in easily affordable substitutes, the company needs to struggle to get brand loyalty from customers. However, overall this threat is minimum (Hitt et al., 2019).
Bargaining Power of Buyers: High
Customers are likely to pay a premium for Sturm, Ruger & Co products because of its better quality products and reliable services. Many close competitors offer quality products and deliver weapons at lower prices (Hitt et al., 2019). Hence, buyers have the power to contact any competitor offering them their desired outcomes in their terms and customization requirements.
Bargaining Power of Suppliers: Low
There are several suppliers in the industry providing raw materials for guns and arms. As a result, suppliers are unlikely to extract significant price concessions from Sturm. In addition, many firms provide the raw material at a low price; most of these suppliers are from Eastern countries, and arms companies can negotiate with them in their terms and conditions, limiting suppliers’ bargaining power (Mullenix, 2020).
Overall, the company enjoys a strong position in the firearms industry, limiting the threat of new entrants and ensuring that suppliers cannot extract significant price concessions from the company. It leaves consumers as the main bargaining power in terms of pricing. Therefore, Sturm is seen as a relatively low-threat business sector.
Table 1: Porter’s Five Forces
Force

Threat

The Threat of New Entrants

Low

The Threat of Rivalry

High

The Threat of Substitutes

Low

Bargaining Power of Buyers

High

Bargaining Power of Suppliers

Low

Corporate Analysis (SWOT Analysis)
The corporate analysis is conducted by analyzing the business’s external (opportunities and threats) and internal (strengths and weaknesses) position.
Strengths
There are many strengths that Sturm Ruger has as a company. These strengths include a firm brand name, a wide variety of products, and a loyal customer base(Hitt et al., 2019). Sturm Ruger also has a strong financial position, with a stable cash flow and a low debt, which provide a solid foundation for future growth. Overall, it has many strengths that make it an attractive company to invest in. For example, the company has a well-known reputation for quality products and a loyal customer base, making it easier for Sturm Ruger to penetrate new markets and grow its business (Hitt et al., 2019). The company operates in a volatile industry but has a strong reputation for quality products. The company has a well-known reputation for quality products and a loyal customer base, making it easier for Sturm Ruger to penetrate new markets and grow its business (Hitt et al., 2019).
Weaknesses
There are also a few weaknesses that Sturm Ruger faces. One drawback is that the company relies on firearms sales, a volatile and highly competitive industry (Hitt et al., 2019). Another disadvantage is that Sturm Ruger does not have a strong presence in key overseas markets. In addition, the company does not have a powerful marketing and digital media presence, making the business fragile compared to its competitors (Hitt et al., 2019).
Opportunities
The company should focus on technological innovation and spend a significant amount on research and development (Berquist et al., 2018). Secondly, the company should strive for NRA membership, impacting a significant political and legal clout. NRA would assist the business in promoting the right to bear arms (Berquist et al., 2018).
Threats
Any change in the regulatory framework and the introduction of stricter regulations have severely threatened firearms businesses. Any non-compliance with these standards would lead to severe risks and penalties, which will lead to a risk of expensive lawsuits. The company regulates authorities like the Bureau of Alcohol and Firearms. There is a shortage of skilled labour force, making it challenging to attract a talented workforce with the right skills (Berquist et al., 2018). An increased number of direct and indirect competitors are a considerable threat to the business in sustaining and expanding the customer base. The deteriorating economic conditions like COVID-19, Brexit, and unstable economic conditions have caused a severe risk to customers’ spending patterns and purchasing power. Moreover, it leads to negative publicity and criticism and affects the brand image. Similarly, globalization has negatively impacted cultural diversity and impacts an organization with low cultural intelligence (Berquist et al., ...