Ecolab Inc.’s Internal and External Analysis

Subject: Company Analysis
Pages: 6
Words: 1778
Reading time:
7 min
Study level: Bachelor

Introduction

Ecolab, Inc. is a large-sized American company that specializes in providing water, purification, cleaning technologies, and hygiene. The brand also realizes business in hygiene products, the enhancement of cleaning, sanitizing, and infection prevention. The company broadcasts its performance in several markets involving food, healthcare, industrial, oil, and gas areas. The services of Ecolab are aiming to promote rational usage of water, energy, and food. Regarding the stock pricing of the company, before the 15th of January 2022, the value was $226 (Reuters, 2022). However, for the last month, there was clear evidence of a drop, and currently, the stock price is at $180.97, and this data is presented in Figure 1 below. (Reuters, 2022).

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The history of Ecolab's stock price
Figure 1. The history of Ecolab’s stock price

This stock price change does not indicate the competitive position of the firm in the market, and it does not reflect the lowering of its indicators. Most likely, at the beginning of 2022, the Federal Reserve increased interest rates to stagnate inflation which caused an overall drop in the stock market (“US Federal Reserve,” 2022). This was especially evident in firms with a high price-earnings ratio, which is Ecolab, Inc. To estimate the firm’s value and performance and to prove the hypothesis mentioned above, this assignment will further focus on internal and external analysis of the company. The internal analysis will be used with the help of McKinsey 7-S, and external analysis will be realized using PESTEL assessment.

Internal Analysis

This Assessment using the McKinsey 7-S model will provide an insight into the company’s organization and general structure. The company’s strategy represents an extensive approach in developing a broader service to the customers and leaving sustainability the core of their business plan (Unites States Security and Exchange Commission, 2021). The firm plans to offer a larger range of goods to the clients and names its strategy in a slogan “Circle the Customer – Circle the Globe.” The major intention of such a plan is for future improvements, growth, investment increase, and general success. The company has more than three million customers globally and provides the best services for them by uniting innovative solutions, data-driven insights, and expert service shown in Figure 2 below.

The Ecolab approach
Figure 2. The Ecolab approach

These strategic acquisitions lead to the ongoing diversification of the firm’s products and services and a consequent expansion. Stating itself as a global leader, Ecolab Inc’s plans focus mostly on additional expansion with saving the quality of service. Ecolab also emphasizes the customer and his needs by selling innovative products and chemicals to the competitors at a significantly higher price than to the clients.

The organizational structure includes at least 120 separate customer service centers. The corporate hierarchy is a matrix with proper communication between the sectors which simplifies the employee’s access to the information and fastens the process of making decisions without extra time spent on bureaucratic moments. However, the firm has many departments in different markets due to the vast service Ecolab provides. The departments involve Food & Beverage Processing, Food Safety Specialties, Healthcare Department, Institutional Department, Kay Chemical, Life Sciences, Nalco Water, Pest Elimination, Pure Force, and Textile Care Department. The interaction between the sectors is high, and the corporation has some projects involving several experts of various expertise to participate in a task. Each department has a vertical leadership structure containing positions from a president through the financial manager, executive vice presidents, executive senior presidents, to managers and workers assigned to one product or service. Regarding the dynamics between the team members, Ecolab encourages working in groups and team-oriented tasks. It is expected from employees that they cooperate and simplify the process of communication with customers by having a great communication net between each other.

The company’s systems are separated for the proper functioning of each department and providing efficient service to the customers. The firm has a developed technical infrastructure of the company that puts its workflows on the next level and helps achieve the goals more efficiently. For instance, in 2019, Ecolab introduced s cloud-based digital platform ECOLAB3D to reduce water usage and enhance benefit performance (“Ecolab launches ECOLAB3D,” 2019). The platform gathers data from control and monitoring systems, analyzes operations, proposes solutions, and creates alerts on critical occasions. The corporation also invested in innovative and emerging technologies such as mixed reality tools with a transformative result in the energy segment (Casey, 2020). The profit of the system is the fast transfer of the visual image to the group of engineers helping monitor the operations, better assess risks, and improve the work efficiency (Casey, 2020). The system is installed within one and a half-day and due to its transmit abilities is highly in demand during pandemic times (Casey, 2020). Such innovations help connect with a team of professionals using their expertise without traveling and additional costs.

Ecolab puts special attention into the skills of its employees recruiting people with various backgrounds, experiences, individuals of unique cultures. The company finds it most essential to encourage the workers to realize their full potential, provide training and resources to help this development. Ecolab rewards and accelerates the careers of its top performers. The company searches for humans that are ambitious, creative, hard-working, and ready to improve their knowledge whilst working in Ecolab. The corporation believes that a 70-20-10 model for learning and development is most efficient when 70% of education is realized at the working place, 20% with coaches and mentors, and 10% via formal training (Ecolab, 2021). The company demands high vocational and technical skills while recruitment and proposed ongoing educations on new materials.

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Ecolab’s style is seen in its code of conduct that is available in twenty-seven languages and shapes the company’s daily performances. The code shapes all the aspects of human rights and requires the employees to report any risks and issues connected with safety and comfort in working place. Code of conduct also involves ethical questions, legal standards, and compliance (Ecolab, 2021). The code also applies to all workers in Ecolab not depending on their position in the hierarchy.

The company cares about its staff and implements talent management strategies, uses human resources for decision-making, and develops rewards systems for the most successful and efficient employees. Ecolab proposes a diverse and inclusive environment to the workers, constantly engages them in training and career development opportunities (Ecolab, 2021). Due to the firm’s scale and the number of countries it works with, the company tries to recruit people from local communities in senior management teams. Such moves help Ecolab understand better local needs and improve the performance in these areas.

The company’s shared values include the mission to become the chief global innovative firm of cleaning, sanitation, and maintenance of products, systems, and services. The core values of Ecolab are environmental wholeness, integrity, and accountability (Ecolab, 2021). The objectives involve social responsibility by providing support to local communities; accessibility by providing equal access to water, sanitation, and hygiene solutions; and quantity by enabling positive recurring water benefits.

External Analysis

The external analysis of the company will be realized via the PESTEL assessment tool. Political considerations are essential in estimating each company regarding its future growth and development. The major idea of Ecolab focuses on providing the population with clean water, sanitation, and hygiene products and making these procedures most efficient and cyclical. Despite the fact of slow popularization of environment-friendly approaches, the fashion of caring about the environment spreads globally. People and governments put more attention to ration water use, garbage recycling, and managing air and water pollution. That means that the company’s strategy and values have positive opportunities in receiving more support from the state in the future. However, in developing countries, such issues as corruption, bureaucracy interference, and political instability might impact the successful implementation of Ecolab’s values.

Economic factors such as inflation rate, interest rate, exchange rate, and stability of the country’s currency are shaping the macroeconomics of the state Ecolab is willing to cooperate with. Before implementing the cleaning products industry, Ecolab should access how popular this business is in the country, how many potential competitors it might have, and if the government can interfere in the free market. If the country’s population is interested in the business products and the approximate rate of the consumption of goods.

Social issues that must be considered by Ecolab are demographics, the class structure of the population, education level, especially education in the framework of an environment-friendly approach. The population in its majority has to share values and attitudes with Ecolab as the culture of the country and its beliefs might impact the organization and its performance. The corporation has to understand the potential customers and provide the service they expect, enjoy, and demand.

Technological aspects that might impact Ecolab’s development are the level of digital progress of Ecolab and the country of partnership. As it was mentioned above, Ecolab puts special stress on developing innovative products allowing them to grow and become more efficient. If a new partner does not have enough recourses to install technological products the Ecolab uses on daily basis, it might be hard to cooperate with it. The digital innovations might be simple to install; however, the impact on the value chain structure might be poor.

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Environmental aspects impacting Ecolab’s performance are the laws regulating environmental pollution regarding recycling, air and water pollution, endangered species regulations. The general attitude of the government and population toward ecological products and saving environment strategies, the use of renewable energy in the state, or the absence of any innovative ways of energy production. Moreover, the weather and climate change in the area might interfere in some performances of Ecolab and demand supplementary tools to make the work more stable and efficient.

Legal issues that can impact Ecolab’s performance are the legal institutions in the countries that provide robust protection of intellectual property, copyright, and patents. Ecolab should double-check the possibility of law discrimination, rule change, employment rule protection in the county in which market Ecolab is planning to enter. Health, safety, and human rights rule-following are central aspects of Ecolab’s conduct code, and these issues must be protected by the state’s legislative units.

Conclusion

Thus, Ecolab Inc. is a leading company developing water purification technologies, hygiene, cleaning, sanitizing products for more than 3 million customers all over the world. The company’s internal analysis via the McKinsey 7-S approach disclosed the company’s structure, strategy, systems, skills, style, staff, and shared values. The external analysis of the company in this paper was implemented with PESTEL and showed major factors and aspects Ecolab should consider when expanding the business or realizing it currently in various states.

References

Casey, J. P. (2020). Ecolab uses mixed reality to improve power plant cooling systems. Power Technology. Web.

Ecolab. (2021). Corporate responsibility report 2020. Web.

Ecolab launches ECOLAB3D cloud-based digital platform to reduce water use. (2019). Water technology. Web.

Reuters. (2022). Ecolab Inc. Ecl.N. Web.

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US Federal Reserve indicates increase in interest rates as inflation rises. (n.d.). Web.

United States Security and Exchange Commission. (2021). Form 10-K. Web.