Smith Group PLC: External Analysis Of The United Kingdom

Smith Group PLC
Student’s Name
Institutional Affiliation
Smith Group PLC
Introduction
It was first established in 1851 as a family clock and watch business by Samuel Smith. In 1944 the company formed S. Smith & Sons (Motor Accessories) having four divisions in its operations (English clocks, motor accessories, industrial instruments and aircraft instruments). Later in 1958, S. Smith & Sons’ aircraft instruments merged with Kelvin and Hughes to form marine and aviation divisions in its portfolio. In the same year the company acquired Portland and Surgical Plastic Company. In 1960, the company established the industrial division which was to focus on industrial instruments.
July 2008, the company acquired Triasx which manufactures wireless communication components. In addition, its Detection division opened a production plant in Germany as an attempt to meet the global demands for X-ray scanners in the same month of July. In September 2008, the group made a decision to sale its eight acre operational site in Basingstoke, Hampshire for £16 million and its Medical division developed a wireless blood pressure monitor that used the Bluetooth technology. This unique device was to change the way medical practitioners treat patients who are in critical conditions. Later in that month, Smith Group’s interconnect division secured long-term contracts worth £225 million on the US military communications programmes. Smith Group acquired Zhejiang Zheda Medical Instrument in November 2008.
In the start of 2009, Smith Group won another big maintenance contract worth £8 million with Talisman Energy (UK) which is an oil and gas exploration company. Additionally, it achieved its objective of opening new headquarters in central London.
The group provides products and services in medicine, communication, contraband detection, and energy sectors in more than 55 countries across the globe. The group has its main operations in North America, UK and Europe. The group has four main divisions that makes its portfolio of products and services. They include Medical, detection, flex-tex, interconnect and john crane. The group operates with several companies in different sectors and four government agencies across the world.
Smith Detection division produces and designs the best sensors that are used in detecting explosives, contrabands, narcotics, chemical agents, weapons, biohazards and explosives. This division has proved to be helpful to a wide range of customers in transportation, military, emergency responding, critical infrastructure and borders and ports sections. This sections are the potential customers who seek services from this division. Custom authorities, homeland security, and security authorities are the agencies that this division provides its services to. It also provides a wide range of services to airport security in UK, UK defense ministry and US Transport Security Administration (TSA).
John Carne is another division that contributes to Smith Group’s profits. This division provides its services and products to process industries such as pharmaceutical, mining, chemical, pulp and paper, oil and gas companies. Its primary customers include Shell, Elliot, Solar Turines, Qatar gas, China petroleum, Mitsubishi and many more.
The medical division supplies medical devices and equipment across the world. Some of the products provided by this division include safety devices, medication delivery that help in the treatment of chronic conditions such as diabetes and cancer as well as other diseases. This division has operations in more than twenty countries and range of distribution channels across the world. Another division that adds a wide range of products and services to Smith Group’s portfolio is Flex-Tek. This division is mainly concerned with providing components that heat and move fluids to construction, medical, industrial and medical sectors. It also provides fluids for motor sports, commercial aircraft and hydraulic applications. Its manufacturing facilities are located in China, UK, Mexico, Malaysia, India and France. Its primary customers include Hoover, Carrier, Boeing, Airbus, Panasonic, Whirlpool, Dyson, and Electrolux. The interconnect division, provides electronic and radio frequency equipment and sub-systems that are used in connecting, protecting and controlling critical systems.
Macro Environmental Factors
Political/Legal
UK’s Climate Change Act and other environmental policies is placing the general industrial sector under strict regulations. These heavy regulations may cripple the industry. Consequently, the recent Brexit came with many problems such as lack of harmonisation across the continent weakening UK’s political stability. Under this uncertain political conditions, the general industrial sector is likely to be affected. Smith Group has maintained a good relationship with various governments such as UK, China, USA and Russia. The group is directly involved in national security matters of the United States and UK. It has also secured several contracts from various governments since it provides services and products for detection, aviation, and medical and other various sectors and businesses (Smith Group, 2014). Due to this, the group ensures that there is fair dealing with governments for the sustainability of its operations. It also ensures that confidentiality issues are maintained as well. The political changes that are being witnessed across the world starting with Brexit may result in the group losing some of its contracts since the new governments may decide not to continue working with Smith Group. These changes may also result in changes in government policies and tax rates that are likely to affect the group’s performance (Dataquarks.com).
Economic Factors
Being an international organization, Smith Group exports most of its products every year and with Brexit, the group’s export costs are expected to increase due to added tariffs which are likely to aggravate their expenses and lower its profitability (Ross & Meakin, 2017). Brexit created a chaotic foreign exchange market condition resulting in the devaluation of the GBP and EUR currencies. This will affect the group’s external investment to a certain extent.
Social and Cultural Factors
Smith Group has its operations in different countries with varying social and cultural backgrounds. Due to this, the group must ensure that it maintains the cultural and social values of the countries in which it is operating. The general industrial sector has potential influence on the environment, therefore, the group has to initiate policies that are aimed at reducing the influence it has on the environment due to its operations.
Technological Factors
Smith Group has a technology innovation team that strives to unveiling ways in which the group can improve the quality of its products and services as well as introduce new ones that will enable it to gain a competitive advantage over its competitors. Consequently, Smith Group has made great progress in devising equipment with high technology especially the wireless blood pressure monitor that uses the Bluetooth technology and other X-ray scanning machines. This advancements has enabled it to win various contracts in the US (Smiths.com)
Legal Factors
The group’s operations may result in law suits either from customers, employees or its subsidiaries. Some of these law suits may involve, labor issues with its employees or complaints from its customers. These legal issues may result in big losses that will have a negative effect on the group’s profitability. An example is the John Crane, Inc. litigation that has been hunting the group for over 30 years now (Smiths.com). Therefore, t...