Extensive SWOT Analysis of Cummins – An American Multinational Corporation

Quick Stats on Cummins

Founder	Clessie Lyle Cummins, J Irwin Miller
Year Founded	1919
Origin	Columbus, Indiana, U.S.
No. of Employees	57,000+
Company Type	Public
Market Cap	$28.698 Billion (2022)
Annual Revenue	$19.811 Billion (2020)
Net Income/ Profit	$1.811 Billion (2020)

 

Products & Services by Cummins

• Engines
• Filtration
• Power generation
• Fuel cell systems
• Turbochargers
• Commercial vehicles

Competitors of Cummins 

• Rockwell Automation
• John Deere
• Caterpillar Inc.
• Detroit Diesel
• Eaton

As now we have a better understanding of Cummins, let’s look into the SWOT Analysis of Cummins.

SWOT Analysis of Cummins

A SWOT analysis identifies a company’s strengths, weaknesses, opportunities, and threats. A proven and true management paradigm that allows Cummins to compare its business and performance with competitors and the industry as a whole.

So let us go ahead and first have a glance at the strengths of Cummins from the SWOT analysis of Cummins.

Strengths of Cummins

Your organization’s strength is something that makes it stand out from the rest. It can be a competitive advantage that sets it apart from its competitors. Some of the strengths of Cummins are as follows

• Distribution Network: Cummins has over 58000 employees. It has more than 600 company-owned and independent distributors, as well as nearly 7,200 dealers, and serves 190 countries and territories.
• Veteran Experience: Cummins has been operating since 1919 and the multinational company has got significant expertise in its area its current and new customers can easily trust the company’s credibility due to its 103 years of experience.
• Several Businesses: Cummins commenced its businesses in several areas i.e. engine, power systems, components, distribution etc from which if one business fails, Cummins can attain its revenue streams from another business.
• Necessity Industry: Cummins has subsidiaries in turbo technology for diesel engines, power systems, generators and these commodities are nevertheless a necessity in today’s industry which ensures that the industry is always profitable and has a bare chance to see losses.
• China & India Operations: Cummins has major market shares in two of the biggest Asian regions i.e. India and China which in itself is one of the strengths of Cummins. Cummins operates in these regions through several joint ventures and mergers.
• Automation of Activities: Automation of activities has given rise to the density of quality of Cummins products and has permitted the company to scale up and scale down based on the demand conditions in the market.
• Outstanding Results in New Markets: Cummins has developed competence in entering and succeeding in new markets. The expansion has allowed the company to diversify its revenue streams and reduce economic cycle risk in the markets it serves.

Weaknesses of Cummins

Weaknesses are the areas where the company is lacking behind and needs improvement. Let’s have a look at the weaknesses of Cummins:

• Environmental & Social Impacts: The organization has been accused of polluting and harming the environment by not doing enough to become green and save the ecosystem. The company has reported a total of 595 kt CO2e emissions.
• Strong Government Regulations and Policies: There are strong government rules and regulations that make operational efficiency low and create a hindrance in the working of a company.
• Low Presence: Cummins is depended most probably on the US market which exposes it to face the risk of economic slowdown and government regulations.
• More Investment in New Technologies: As the company embarks on its next phase of expansion, it needs to invest in new technologies that can help it achieve its goals. Currently, investment in technology does not meet the ideas that a company has.
• Investment in Research and Development: Investment in Research and Development is below the rapidly growing players in the industry. Even though Cummins is consuming above the industry average on Research and Development, it has not been able to compete with the leading players in the industry regarding innovation.

Opportunities for Cummins

Opportunities refer to the chances of the progress of the company in future. Let’s have a look at the opportunities for Cummins:

• Economic Development: Economic development and rising consumer spending, after years of economic decline and slow growth rate in the industry, is Cummins’s opportunity to capture new customers and expand its market share.
• Increasing Greener Demand: The accelerated demand for cleaner and greener energy drives also opens up the possibility of purchasing Cummins products by the government and federal government contractors.
• Global Expansion: Cummins is known for entering new markets and conquering them and hence, expansion to new locations and countries other than India & China is always an opportunity for the firm. 
• Need for Sustainable Development: The world has started to prefer brands that support environmental health. Cummins’s current mission and vision clearly state that it is working its way towards greener energies and emerging sustainable technologies which, if pursued correctly can give the firm a huge advantage.
• Stable Free Cash Flow: Stable free cash flow gives opportunities to empower contiguous product segments. With extra cash in the bank, the company can empower new technologies as well as in new product segments.

Threats to Cummins

Threats are the issues that can cause problems to the company in future. Let’s have a look at some of the threats to Cummins:

• 2022 Russia & Ukraine War: The 2022 war between Russia & Ukraine can significantly affect the businesses of Cummins because the products that Cummins manufacture i.e. generators, turbochargers, vehicles & fuel cell systems require diesel and fuel to operate and Russia is one of the major producers of gas & fuel. The war between the two nations is causing price hikes of commodities that are one of the essential raw materials for Cummins and similar businesses like Cummins.
• Eco-friendly Fuel: If the dependability on renewable energy and non-conventional sources of energy increases then the company may face a large drawback as their products are not environment friendly.
• Climate Changes: As energy demand is increasing, carbon dioxide emission in production as well as upstream is expected to increase which needs to be under control for Cummins. Cummins has to find ways to reduce the emission of carbon dioxide or else Cummins has faced increasing costs and strict regulation. 
• Political Volatility: Oil and gas have been a very important subject of discussion between many countries for the last century. Energy demands and production are always surrounded by politics. Cummins has the disadvantage of becoming a victim of political development in the future.
• Intense Competition: Increased competitors’ technologies and profit stability have increased the competition in the industry over the last two years which has put downward pressure on not only profit but also sales.

This ends our detailed SWOT analysis of Cummins. Let us conclude our learning below.