This relatively inefficiency has certainly not hurt Waste Management, though, judging by the other aspects of its financial performance.
Analysis of External Environment
While nationwide there are 15,000 firms in the waste services industry, in any given market Waste Management will have only a small handful of competitors. Most of these are relatively small, being either local or regional players. Republic is one of the only competitors with a size and scale anywhere approaching that of Waste Management. Competition in any given market can vary in intensity, but competition for high stakes bids -- such as civic or large institutional bids -- can be intense. Bids are almost always based on price, highlighting the need for cost control in this industry.
The customers are waste services range from municipalities to institutions to manufacturing firms with special disposal needs that municipal services cannot meet. Remediation services also have a wide range of clients, looking for waste management solutions that cannot be handled by conventional means (removal of asbestos, oil spills, etc.). Many customers typically have high buying power as they represent large components of an area's business. Only recently have firms like Waste Management been able to counter that buying power.
The suppliers to the industry are the equipment suppliers. For trucks, dumpsters and other basic equipment, the suppliers are large industrial concerns that can dictate prices and terms to most industry players (the top firms excepted). For remediation services, however, technology is more specialized, which means that there are few suppliers and they can command a premium for their products (Hoover's, 2009).
The strategic allies of this industry are the governments in the regions in which the company operates and any potential landfill operators as well. Governments have a specific need to provide waste management services to their communities, in order to maintain the cleanliness of those communities. The governments may be responsible to waste collection contracts, but also are valuable partners in working towards broader waste management solutions and may have influence over landfill operators as well. For firms involved in waste collection, the landfill operator is a vital strategic partner. The waste collection companies work with landfill operators every day in order to move the waste from its home site to a storage location.
The main body of regulation affected the waste management industry are environmental laws. These laws dictate the degree of care that is required for the disposal of a wide range of goods. This includes case law, which sets the bounds of liability in anti-dumping cases (Koncept Analytics, 2009). Waste management firms use these laws and potential liability to help drive their own business, but they must also work within the confines of those laws in order to ward off legal difficulties themselves. Environmental laws can also impact how much waste is produced, impacting the upside growth of the waste services industry.
Sources of Funding
Waste Management's primary source of funding is through debt. There are three main reasons for this. The first is that the company has a strong position with respect to liquidity -- they have better liquidity ratios than those of their competitors. The second is that they are not in a strong position to issue more equity. Without growth to fuel interest in an equity offering, Waste Management would simply dilute the value of its stock by issuing more equity. Lastly,...
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