Waste Management: Strategic Analysis

Waste Management: A Strategic Case Analysis

Company History

External Analysis

General Environmental Analysis

Demographic Segment

Economic Segment

Political/Legal Segment

Socio-Cultural Segment

Technological Segment

103.1.6 Global Segment

103.1.7 Summary of General Environmental Analysis

113.1.8 Driving Forces

123.2 Industry Analysis

123.2.1 Description of the Industry

123.2.2 Industry Dominant Economic Features

133.2.3 Market Size

133.2.4 Market Growth Rate

143.2.5 Industry Trends

153.2.6 Five Forces Analysis

173.2.7 Industry Key Success Factors

184.0 Internal Analysis

184.1 Organizational Analysis

194.1.1 Corporate Mission

194.1.2 Products and Services

194.1.3 Leadership

204.1.4 Organizational Culture

Structure

204.1.6 Strategy

214.1.7 Summary of Organizational Analysis

214.2 Analysis of Firm Resources

214.2.1 Tangible Resources

224.2.2 Intangible Resources

234.2.3 Summary of Firm's Resources

234.3 Capabilities

244.3.1 Value Chain Analysis

254.3.2 Core Competencies and Sustainable Advantages

254.3.3 Summary of Firm's Capabilities

264.4 Financial Analysis

264.4.1 Valuation Analysis

264.4.2 Growth Analysis

274.4.3 Profitability Analysis

274.4.4 Financial Strength Analysis

284.4.5 Management Efficiency Analysis

284.4.6 Summary of Financial Analysis

295.0 Strategic Issues Analysis

295.1 Critical Challenges

305.2 Resources and Capabilities

315.3 Strengths and Weaknesses Analysis

325.4 Opportunities or Threats Analysis

346.0 References

List of Figures

Figure 3-1: United States Population Growth, 1900-2010 5

Figure 3-2: U.S. Resident Population by State 6

Figure 3-3. United States GDP Growth 7

Figure 3-4: Waste Management Revenue 14

Figure 3-5: The Five Forces 15

Figure 4-1: Waste Management Value Chain 24

1.0 Executive Summary

Waste Management is one of the largest waste companies in the United States. They comprise nearly 25% of the market when it comes to comprehensive management of waste and the utilization of environmental services (Waste, 2014). The company has achieved much since its creation in 1971, but there are challenges ahead that it must address in order to continue to be successful. If it wants to remain one of the leaders in the waste management industry, the company must continually evaluate the strengths and weaknesses it has in order to prepare itself more clearly for the opportunities and the threats that will come its way.

This study will conduct a thorough analysis of Waste Management based on both its external and internal environment. That will allow the company to see what future market occurrences will be and how the strategies it currently has can and should be aligned to address those occurrences. There are several key points that will also be discussed, including key success factors for the industry, resources, driving forces, and company capabilities. Additionally, there will be a comprehensive analysis that will show how the company can handle future challenges from both internal and external environments. The goal of that analysis is to show that there are major challenges of which Waste Management must be aware. Then the company's core competencies will have to be identified so that its capabilities and resources can be examined. Putting this all together will give an indication of how prepared the company is to handle anything that comes its way.

The study also addresses the weaknesses, threats, opportunities, and strengths that will allow the company to make changes to its strategy and face challenges properly. Results show clear insight for the company's capabilities and how Waste Management can address any issues along its path.

2.0 Company History

2.1 Background

Waste Management was founded in 1971 by Dutch immigrants. It went public that same year, and by the following year it was buying up a number of smaller companies to make a conglomerate (Waste, 2014). There were 133 acquisitions made in 1972, and the company managed $82 million in revenue. There were 600,000 residential accounts that belonged to the company, along with 60,000 industrial and commercial accounts (Waste, 2014). Ontario and Quebec were part of the company's territory, along with 19 states. During the 1980s, Waste Management was able to acquire Service Corporation of America, which made it the largest waste hauler in the United States. Starting in 1992, the accounting at Waste Management became questionable, and this continued through 1997 (Waste, 2014).

There were a number of things done during that period of time that were unacceptable from an accounting standpoint, as the company worked to make itself look much better than it actually was when it came to revenue. A new CEO took over in 1997, and had the accounting practices reviewed. He found the discrepancies and in 1998 the company made the largest accounting restatement in history, adjusting its earnings by $1.7 billion dollars. In 1999 the company brought in new people to help it recover. New technologies have been implemented, along with new safety standards and practices for its day-to-day operations. In 2008, Waste Management tried to buy Republic Services, Inc., which was their main competitor, but the bid was withdrawn later that same year. The economic crisis in 2009 required Waste Management to restructure and reduce its workforce (Waste, 2014). Since that time the company has been growing again, but doing so cautiously because of the continued difficulties with the economy throughout the country and the world.

2.2 Purpose of This Study

This particular study has an important purpose. It is designed to analyze both the internal and external factors and environments that affect Waste Management in order to see the key factors to success and the driving forces behind the company. Those factors and forces will be analyzed in order to assess them against the capabilities and resources of the company. That can help the company determine whether it is truly ready to face challenges that come its way, or whether there are changes that have to be made in order to be properly prepared for issues in both the internal and external environment. The company must learn to overcome its challenges, but that cannot be easily done until it can be seen whether the Waste Management has the proper tools to do that now, or whether it must acquire more tools in order to make it more successful overall.

3.0 External Analysis

The external analysis focuses on the macro-environment faced by an organization (Armstrong, 2006). This can often influence the decisions that the organization makes. There are two things that have to be analyzed externally -- the general environment as a whole, and the industry itself. Only then can all the issues surrounding the company be properly seen and fully addressed in the best way possible.

3.1 General Environmental Analysis

An analysis of the general environment is designed to assess and scan the external trends and forces that impact not only the industry, but the organization and the market. The data from the analysis can be used to help the company prepare and stay settled in an environment that is increasingly competitive. There are several segments of the general environment that have to be considered in an analysis. These include socio-cultural, global, technological, economic, demographic, and political/legal.

3.1.1 Demographic Segment

The waste management industry reaches nearly everyone in the developed world. Because of that it is important to focus on the demand for waste management and environmental services, and how they are both affected by the population of an area. The growth of any given population is affected by many things, and in turn that growth also affects many things -- including the need for waste management services. The waste management industry is one that is very focused on the logistics of making sure waste is picked up on schedule and disposed of properly, so it is important to track trends in population in order to know where more (and fewer) services may be needed.

Having this information will help Waste Management determine where it needs to place most of its focus, in order to remain a strong contender in its chosen industry. More residential areas can mean a higher demand, but so can more industrial and commercial areas. Because there are big differences in how many waste services will be needed between commercial/industrial and residential locations, Waste Management must focus on dividing them in order to really understand where its services can be best utilized. However, before it can do that it has to track the growth of the actual population in order to have a better idea of how much growth and development is going to be seen overall.

Without having the proper knowledge based on growth and development, a company like Waste Management can end up losing out on waste services people need because it was not focused on the population growth in a way that allowed it to plan ahead and be ready for that growth. Trying to catch up to the growth after the fact can really pave the way for other companies to step in and overtake Waste Management. Figure 3-1 shows that the population of the United States has continued to increase over time, and all indications are that it will continue to do so.

Figure 3-1: United States Population Growth, 1900-2010. Source: www.immigrationeis.org

It is also important to address the population of residents of the United States by state, because that will help Waste Management determine what states it wants to operate in and what it needs to do in order to be successful. The states in which it does well are states where it should remain, but understanding the population numbers for all the states can help Waste Management decide which other states it wants to focus on. These need to be states where it can acquire enough market share to make things viable for it as a company, and where the population and demand for services will continue to increase. Figure 3-2 provides a United States map with population information.

Figure 3-2: U.S. Resident Population by State. Source: txsdc.utsa.edu

As Waste Management focuses on the population growth throughout the United States and in specific states, there are also other factors at work of which it must be aware. Population is important. It is the lifeblood of what Waste Management does. However, there is more to the issue and just a strong population is not enough to ensure success for any waste management company.

3.1.2 Economic Segment

Critical economic factors are important to consider when building or continuing a company. These can influence a company's performance in the market, and the behavior of the market itself. How much money people are spending on food and other items equates to how much waste they are producing in many cases. With that in mind, a strong economy means a strong waste collection business, of which Waste Management wants to be the leader. In order to understand how an economy is doing there are several economic indices that can be examined. The most logical one, however, is the GDP. Figure 3-3 provides the United States GDP (Gross Domestic Product) information.

Figure 3-3. United States GDP Growth. Source: www.floatingpath.com

3.1.3 Political/Legal Segment

Political and legal issues are highly important when it comes to any type of business, especially those that are carefully regulated by the government. Unlike food and related industries, waste management is not strongly regulated when it comes to companies picking up the waste created by residential and commercial/industrial accounts. However, there is one area where regulation is very important, and that is in what happens to the waste once it has been collected by the company. The Environmental Protection Agency (EPA) is conscientious about landfills and related sites, and Waste Management must work closely with that agency in order to make sure rules and regulations are not being broken (EPA, 2014).

Additionally, there are other regulations that have to be addressed, the majority of which are local and state, as opposed to federal. If Waste Management wants to continue to remain near or on the top of the pyramid when it comes to companies that handle waste collection and environmental issues, it must abide by all of the regulations in the areas in which it does business. Keeping up with all of these and how they can and do change can be nearly a full-time job, but it is a vital component of the work that the company does in waste collection and disposal.

3.1.4 Socio-Cultural Segment

Society and culture in developed and developing countries shows continued interest in waste removal from homes and businesses. This is very true for the United States, where billions of dollars are spent every year to ensure proper waste pickup for companies and individuals. Large companies and industrial areas produce a great deal of waste that has to be disposed of properly, but even standard households create waste that has to be collected at regular intervals. Most people do not think too much about what happens to waste once it leaves their trash cans, but Waste Management and other companies that make waste their business have to think carefully about it in order to make sure they are focused on the right things and that they continue to provide both the society and the culture with what they want and need in waste removal services.

3.1.5 Technological Segment

Technology is a big part of the waste management industry. People who see the waste trucks go by on their scheduled routes and collect from the bins may not see it as a job that requires technological skill, but the coordination of such a large-scale operation absolutely requires technology in order to be successful. Waste Management has fleets of trucks in all of the states and cities where the company operates. These trucks are assigned to specific drivers, and there are particular routes driven on certain days. Additionally, there are parts of the country where people in the same neighborhood get trash pickup on different schedules. One person may get a pickup once per week, while the person next door to them may get his or her trash picked up once per month or once every two weeks.

Knowing which routes to run on which days and whose trash to pick up on those days on those routes is highly important. Handling all of that requires a computer and software system that allows the company to address all the issues related to waste collection and management from a central location. Additionally, there have to be branch locations in each city or town where the company does business, and these must tie in to the main location for billing and scheduling purposes. Because there is so much to coordinate from drivers learning their routes to central billing issues, it is important that Waste Management have and use the latest in technology in order to remain relevant in the marketplace. A lapse in technology could easily cause a problem for the entire company.

3.1.6 Global Segment

The global segment is not one that Waste Management needs to be deeply concerned with, mostly because it is not a truly global company. It operates mostly in the United States, as well as some in Canada and Puerto Rico. It does not have plans, for example, to expand to Europe or other nations. With that in mind, Waste Management can keep its sights firmly set on being (and staying) close to home. That can allow it to more fully develop what it offers to customers in the United States, as opposed to spreading itself too thin by attempting to take on a myriad of other countries. Not only do these other countries already have waste collection services, it would be difficult for Waste Management to break into the market and may not provide the financial results the company is looking for. There would be no real advantage to the company, overall.

3.1.7 Summary of General Environmental Analysis

The general environmental analysis indicates that there are specific events and trends of which Waste Management must be aware both now and in the future. The growth of the population is one of those trends, as well as where that population decides to live and work. More populous areas of the country should be a focus for Waste Management, because there are more opportunities for growth there. That is also true for areas where there is a high level of commercial and industrial development, since it is very important that these areas have proper waste disposal. While Waste Management is not interested in going global, it should be aware that there may be companies in other countries that are interested in making a move into the United States' waste management market. These would-be competitors could make changes to the demographics Waste Management currently has, and should be watched with careful consideration.

3.1.8 Driving Forces

The driving forces are those forces that have the power to change a company's strategy by creating new challenges for that company to address (Armstrong, 2006). The scenarios the company has to handle may change, or there may be other types of challenges on which the company must focus. Because these challenges can appear and change quickly and because they can strongly affect how things are done in any given industry, companies should identify these forces as quickly as possible so they can be planned for and addressed. There are two main driving forces that can affect Waste Management: customer preferences and the overall costs of doing business. Both will affect Waste Management's ability to do business.

Customer Preference

Customers can be very particular about what they want. Something that was important to them yesterday may not be important tomorrow. Additionally, what matters to customers in one area of the country may not be as important to customers in another area. Because that is the case, each and every customer matters and the trends these customers follow also matter. Waste Management has to pay close attention to customer preferences in order to make sure they are handled correctly and that customers are offered what they need at their convenience and at a reasonable price. If customers do not receive these things, they may elect to go with the competition.

Costs of Doing Business

Any company that is focused on doing business knows that it can be expensive. The costs of doing business can also change rapidly. Most notably for Waste Management, these are the costs of fuel for their trucks and the fees they pay to dump the waste from those trucks. Both must be monitored, and both can cause a loss in profits and/or a hike in rates.

3.2 Industry Analysis

It is important to provide a thorough analysis of the waste collection and environmental services industry in order to examine and address several different factors that affect Waste Management as a company. Analyzing these issues will allow the company to address the strategy it currently uses and determine whether a change is necessary in order to stay ahead of its main competition.

3.2.1 Description of the Industry

The waste management and environmental services industry provides collection of waste from trash and refuse bins belonging to individuals, as well as commercial and industrial dumpsters throughout the developed world. The industry is responsible for making sure that waste is collected properly and on time, and that it is dropped off in the proper, designated areas. These are generally landfills and other waste collection places. Many companies in the industry also handle recycling, so they can reduce the amount they put into landfills and help to protect the planet. They can also make money from recycling in order to help offset some of the costs of doing business.

3.2.2 Industry Dominant Economic Features

The dominant economic feature of the waste collection industry is the fluctuations that are seen in the economy itself. When people are doing well and the economy itself is successful, there are more people who spend money. They buy new things and get rid of the old ones, and they also generally eat better -- and often more, as well. They may get take-out food or go out to eat more often. As a by-product of all of these things, they create more waste that companies in the industry must collect. That is good news for the companies in waste management, because they see more accounts and more revenue. Overall, they are able to do better when there are more people needing and wanting their services. It places increased demand on them, but that is offset by more profits.

3.2.3 Market Size

Billions of dollars each year are spent on waste management and environmental services in the United States. That is very important to note, because the market size expands along with the population. As the population grows, so does the need for more waste management services. It is a cycle that is very important, and that is vital to the success and continued growth of companies like waste management. With the continuing expansion of the market, it is easy to see that Waste Management has nowhere to go but up if the company is able to manage itself correctly.

3.2.4 Market Growth Rate

The revenue generated from waste management experiences very slow growth. Because of that, companies like Waste Management need to focus on keeping the market share they have and gaining even more market share so they are able to see more success. Figure 3-4 shows the revenue generated from waste management from 2004 to 2011 in billions of U.S. dollars. It is easy to see from the graph that the growth has been nearly non-existent. That can seem frustrating, but it does not have to be. It indicates that the growth has not been negative, overall, which is important for Waste Management and any other company that is interested in being successful in that particular industry. Additionally, it also shows that there is room mostly for growth when it comes to market share, which is what is needed considering the growth of the overall industry is largely stagnant. Since the industry is not expanding rapidly, Waste Management must focus on finding new ways to add to its own share of the market and make more money.

Figure 3-4: Waste Management Revenue. Source: www.thediv-net.com

3.2.5 Industry Trends

Current trends in the industry indicate that more people are moving toward less waste produced by their households and their companies. With that in mind, Waste Management and related companies may really struggle to keep the level of profit and market share they have now. That can be difficult for companies, but only if they do not adapt to change. With adaptation comes the realization that some things need to change, though, and that the company has to determine what those changes need to be in order to move forward and remain successful. Without change, the company will stagnate. With less waste being produced, the industry is also moving toward more recycling in an effort to keep profits high and meet the demands of consumers.

3.2.6 Five Forces Analysis

Michael Porter's Five Forces Model has largely been used to assess industries and their attractiveness (Porter, 2008). It provides information on the five forces that affect businesses and industries, so they can be analyzed as they relate to a particular company and where it is (and wants to be) in the market. Figure 3-5 shows the Five Forces at work, and addresses all of the areas that have to be considered by any company.

Figure 3-5: The Five Forces. Source: Porter, M.E. (2008). The Five Competitive Forces that Shape Strategy. Harvard Business Review, 86(1), 78-93.

Threat of New Entrants -- This is one of the most important aspects for Waste Management to consider. While the company is the largest waste management and environmental services business in the United States, that does not mean it has a monopoly on the industry. There are other companies in the United States that provide the same services, and there are other companies in other countries that also provide the same services. At any point in time these companies could decide to move into the industry in bigger ways. Additionally, companies that are not in the industry may appear, and if they can offer customers what they want at good prices they may end up taking some of the business away from Waste Management and growing market share.

Power of Suppliers -- The suppliers for a company like Waste Management mainly focus on those who provide fuel, trucks, and the actual waste bins and dumpsters that are used by the company and placed in strategic areas. If any of these suppliers disappear or close up shop, or if they decide to raise their rates by a significant amount, they can cause difficulties for the companies they supply. Waste Management needs to be aware of the fact that suppliers hold a great deal of power and that things could change rapidly.

Power of Buyers -- Buyers (i.e. customers) also have a great deal of power. If they decide they are not happy with the service they are receiving or they determine that they are paying too much, they will choose a different company. Because of that, it is important that Waste Management not lose sight of the value the customers bring to their company. Were it not for the customers, the company would not be able to make any money and would struggle to stay afloat, so it is vital that customers are clearly recognized as being the lifeblood of the company and not just a way to get money. Once customers are only seen as money-makers, they will cease to be important and the company will not treat them properly.

Power of Substitutes -- There are other companies in the same industry, and many people have a choice between Waste Management and at least one other option. Because they have a choice, they may determine they do not want to work with Waste Management for a particular reason. That could be from something they have heard about the company from others, or it could be from a bad experience they have had with the company in the past. Of course, it could also simply be that the customer has used the other company before and likes it, or because the other company charges less or offers a schedule the customer likes better. No matter why a customer chooses a substituted, Waste Management must be aware that substitutes can be used and that there may not always be something that can be done to win back that particular customer.

Intensity of Rivalry -- Rivalries between Waste Management and other companies are important. While there is no need or call for game playing in a professional industry, there are companies that are more focused on getting customers in ways that are not as appropriate. These rival companies may become problematic for Waste Management due to some of their tactics, and that is something the company will have to be aware of. By setting itself apart and taking the high road when it comes to gaining customers, Waste Management is more likely to continue to be an industry leader.

3.2.7 Industry Key Success Factors

The industry is very competitive, and there are several key factors for success within it. These include an understanding that low profit margins are going to be expected. When there are enough customers, however, those lower margins are not an issue because the company makes up for it in volume. Additionally, the supply chain needs to be strong so that customers get their waste pickups as expected. Fuel shortages and trucks that do not operate properly are not acceptable. The company must also consider acquisitions and whether it wants to continue to grow and develop in the future. If it does, the company will need to make sure it acquires other companies and more supplies at a reasonable price and at a reasonable rate of speed in order to be successful and not over spend.

4.0 Internal Analysis

Just like an external analysis, an internal analysis can provide a great deal of information on the company, the industry, the challenges faced, and other factors that have to be addressed. It will help the company understand how it is positioned against other companies. This section will look at the value chain of the company and its competitive advantages. This will help to provide a better understanding of the capabilities and the company's resources in order to handle the competition.

4.1 Organizational Analysis

In order to understand Waste Management, one must know the corporate structure it has. That can provide a lot more insight into the company. The headquarters for the company are in Houston, Texas. The company has a number of different services, including waste, yard debris, recyclables, hazardous materials collection, dumpster rental, hauling, portable toilet rental, treatment and disposal, and security services. Because the company does so much, it is a national organization with 43,500 employees (Waste, 2014).

There is both a CEO and CFO, and the company also makes the PACK-RAT and Bagster products. Wheelabrator Technologies, Inc. is a subsidiary of the company, as it continues to branch out (Waste, 2014). With $14.4 billion in revenue, the company is a major player in the waste management and environmental services industry, which is a growing industry in North America as the population continues to grow (Waste, 2014).

4.1.1 Corporate Mission

The company's mission is to take what most people would see as waste and generate value from it (Waste, 2014). By partnering with communities and customers, Waste Management is able to address recycling and renewable in a way that reduces waste, keeps costs down, and still provides customers with everything they need.

4.1.2 Products and Services

Waste, yard debris, recyclables, hazardous materials collection, dumpster rental, hauling, portable toilet rental, treatment and disposal, and security services are all offered by the company, as well as Bagster and PACK-RAT products (Waste, 2014). These products and services can be used together or separately, depending on what a person really needs. Some of them are acceptable for commercial and industrial use, and many are designed for residential applications. The company has positioned itself in such a way that it can provide a great deal of value to both commercial and residential customers, which is one of the ways it has been able to build the level of market share it currently has.

4.1.3 Leadership

The leadership of the company consists of CEO David P. Steiner and CFO Robert G. Simpson (Waste, 2014). Both of these men are instrumental in addressing any and all issues that Waste Management faces, so they can focus on making sure the company moves forward. Waste Management has a dedication to being the best in the business, and also to taking care of its customers the right way. Because of the good leadership the company has, it is able to move in the right direction consistently instead of struggling like some of its competitors that do not seem to understand that customers can and do need to come first. Because the leaders of waste management understand this principle, the company is better positioned to remain viable far into the future.

4.1.4 Organizational Culture

The organizational culture of Waste Management is very important. The company has a culture that is focused on the customer, but also on the teamwork that is seen between the leadership and the employees. Because the company focuses on operating as much like a family as possible, the majority of employees feel valued and important. When people feel like they matter to their employers, they want to consistently do better. That, in turn, means that they treat others better and that customers get what they need from the company. Without an organizational culture that fosters the value of teamwork and the value of the individual, customers would not receive treatment that offered them as much quality.

4.1.5 Structure

The company structure is not complex. There is a CEO and a CFO, and then levels of management. It is a structure that avoids complexity deliberately, so that everyone knows who he or she should be answering to. That means there is no confusion, and when there is no confusion things can move forward much more easily. That is beneficial to the company as a whole, and also to the customers of that company who need to know who they should contact with problems and who also need to know that there are options available to them to get prompt service from someone who can actually handle their issue for them.

4.1.6 Strategy

Waste Management's strategy is to be the best. The company does that through a focus on the customer, because it understands that the only way to have a good company is to care about the people that company helps. By supporting the company and the community, Waste Management is able to keep a strong market share. It is a company that cares about more than the bottom line, and that is focused on more than just profit. While that does not mean the company does not care about revenues, it does mean the company understand that if it treats people well the revenues will follow. Chasing money is not necessary, because the money will come to the company as a by-product of doing the right thing.

4.1.7 Summary of Organizational Analysis

Overall, the main focus of the company is the customer, with the teamwork the company offers to its employees being a close second. That is very important to recognize, because it is one of the best ways for a company to become and remain successful. Companies that only care about profits often find that those profits lessen over time, because customers do not like the treatment they receive. When a company focuses on the customer first, everything else will fall in line.

4.2 Analysis of Firm Resources

Waste Management has many resources at its disposal. It is very important to analyze these resources, because they are what makes up the company and gives it the high level of value it has in the marketplace. These resources are the strengths of the firm, and they are what can be used in order to implement the strategies that the company plans to use to meet the challenges it faces in the marketplace. There are two types of resources. One is tangible and the other is intangible. Both are significant.

4.2.1 Tangible Resources

Tangible resources are those that can be touched and that are considered to be physical resources. All of the trucks and equipment Waste Management owns, rents, or leases are excellent resources the company can use to conduct its business. One of their biggest resources, though, is the people they employ. With so many different workers in a number of areas of the country and of the industry, Waste Management has a truly diverse workforce that can be difficult to beat. That resource is highly valuable, and made even more valuable because of the dedication the people have to the company. By treating the resource well and focusing on teamwork, the company is able to strongly benefit from the people who work for Waste Management and everything those people bring to that role.

Another tangible resource is the financial strength Waste Management has. With $2.116 billion in operating income in 2013 and $21.1 billion in total assets, the company is a very strong financially and able to weather many storms. Unlike smaller companies that might not be able to get through difficult times, Waste Management should not have financial trouble if the company has some minor setbacks or difficulties. Since surviving the accounting issues and scandal in the 1990s, the company has continued to grow and develop its financial base in an open and honest manner, ensuring it is able to continue as a leader in the industry.

Of course, there are also many technological resources at the disposable of Waste Management, allowing it to remain coordinated even though it is such a large company and is spread across so much of the country. That coordination is extremely important, since companies that have good technology and are able to remain strong and bonded because of it are much better able to get through any difficult times they face. With the latest in hardware and software to keep everyone organized and the trucks moving as they should, Waste Management has an advantage over smaller operations that may not have the technology to keep everything focused.

4.2.2 Intangible Resources

Some resources are intangible. These are things that cannot be physically touched, but that are still highly valuable in the running of a company. Because they are so important to what the company can and should be doing, they matter greatly when assets and resources are counted. For Waste Management, the biggest intangible is the reputation the company has in the community. With such a large organization, there is always the concern that things will go wrong and people will stop liking the company or appreciating what it can do for them. That is something any company wants to avoid, although it is generally not possible to please everyone all the time.

The Human Resources (HR) department at Waste Management is another intangible resource that matters to the company. While the physical aspects of the department are certainly important, the intangible resources are the most important because they allow the company to continue to grow and develop successfully. The respect that employees have for one another and the work ethic they possess are all a part of human resources. Those are very important and contribute to the value of the company, but it is difficult to quantify or measure these things.

4.2.3 Summary of Firm's Resources

In summary, Waste Management has both tangible and intangible resources at its disposal. These resources are both significant to the value of the company and are both needed in order to make the company successful. They are highly important, and will be used in conjunction with each other. Because the company understands the value and the benefits of both tangible and intangible resources, it has been able to position itself as a leader in the waste management industry.

4.3 Capabilities

The capabilities of any organization are the abilities, skills, and expertise of the company as a collective (Armstrong, 2006). The resources and the people who use them have to come together effectively in order to make sure the company works at its full capability. When that takes place, there is much more value added to the company and what it can offer to its customers. That keeps it from getting entrenched in issues between itself and competitors, and makes the company more valuable in the eyes of its customers, as well. Customers may not know much about the tangible resources and the assets that a particular company has. Those issues are not something they think about.

However, they can tell others about the capabilities of the company because those are something they see first-hand when the company performs a service or provides a good for them. Waste Management has numerous capabilities, and that is one of the ways the company provides a great deal of value for customers.

4.3.1 Value Chain Analysis

The value chain is an important part of any company. Figure 4-1 shows this value chain in terms of waste management.

Figure 4-1: Waste Management Value Chain. Source: complexcitywaste.wordpress.com

As can be seen, the real value is not in collecting the waste, but in what can be done with what has been collected. Waste Management is able to make money off of the collected waste because much of what it collects is not actually waste in the true sense. It can be recycled or reprocessed in some way that allows the company to receive value from it.

4.3.2 Core Competencies and Sustainable Advantages

By using core competencies to create sustainable advantages, Waste Management has positioned itself ahead of the competition in many areas. These competencies are not easily substituted or imitated, and they have to be able to be used on a variety of products and projects. They are a part of the core of the organization, as opposed to something that is being used only on a particular aspect of a project. When compared to the competition, the strategic strength of a company lies in that company's core competencies. One of the core competencies of Waste Management is the size of its network. By being present in so many cities across numerous states in the country, Waste Management is a popular choice of waste management and environmental services for a number of people. That makes it a company that is able to do much more than its smaller competitors. That core competency is a vital one for the company, and one on which it focuses strongly in order to remain viable and ahead of its competition as much as is possible in a competitive industry.

4.3.3 Summary of Firm's Capabilities

Overall, the most important capability of the firm is its ability to work with both its employees and its customers in an effort to provide everyone involved with what they need and want from the company. Waste Management is also highly focused, which allows it to remain strong when other companies in the industry may be struggling. That is a highly important aspects of the business.

4.4 Financial Analysis

The financial analysis of a company is an excellent way to provide insight into stability and market growth, along with where the company is located in the industry and where it will likely be located in the future. By looking at the financial statements of the company, investors, company leaders, and financial analysts can find any issues and/or address concerns they have. They can also determine whether a restructuring of costs is necessary in order for the company to remain strong. All of the figures reported here will come from Yahoo! Finance as reported on March 5, 2014.

4.4.1 Valuation Analysis

To determine and evaluate the true value of the company, a valuation analysis is necessary. Several financial ratios are a part of that analysis, and help to provide the best insight into the performance of the company. By taking a careful look at its performance, more can be determined regarding its value. Metrics that are used include the price/earnings ratio, the price/book value, and the enterprise value. The price/earnings, or P/E ratio for Waste Management is 19.24. The price/book value is 3.37, and the enterprise value is 2.34. These are all strong when compared with the industry averages and the values of other companies within the industry.

4.4.2 Growth Analysis

Analyzing the growth of a company is vital, because one must know how the company is likely going to perform in the future in order to be sure as to whether the company will be a good investment or whether it is best avoided. The long-term growth rate for Waste Management is projected to be 7.00, which is impressive in an industry that does not see strong growth for the majority of companies.

4.4.3 Profitability Analysis

It is also vital to take a look at the profitability of a company, as investors do not want to put any money into a company that will not be profitable in the future. Companies that do not make good profits do not pay good dividends. Fortunately for Waste Management and those who want to invest in it, the company is growing every year. Its profits are also growing, as the company is taking on new accounts and acquiring more customers. Some of that growth is offset by the need for more workers and equipment to meet the demand, but the growth has still been steady. Dividends in 1998 were one cent, while dividends in February of 2014 were 0.375. While this is not a large jump, it represents steady growth in a difficult industry, which is important to investors considering the company.

4.4.4 Financial Strength Analysis

How solvent and liquid a company is provides a good marker of that company's financial strength. By examining these issues, a person can determine how quickly a company could pay its debts and how fast it would be able to turn assets into cash. If a company has all of its assets tied up in things that are not liquid, it can struggle to pay its bills and obligations easily even though it has numerous assets when compared with its liabilities. With a strong current ratio and an equally strong quick ratio, Waste Management shows that it is financially strong and can meet the obligations it has with relative ease.

Additionally, it has a debt/equity ratio of 1.792. This is higher than the other companies in its industry, but not so significantly higher that there is a problem with the company. Since it has been growing and expanding, it is logical that the debt to equity ratio would be a bit higher than its competitors.

4.4.5 Management Efficiency Analysis

The management efficiency analysis is a marker of how efficiently a company uses the assets it has in an effort to see sales rise. There are several areas that can be considered in that analysis, such as inventory turnover and assets turnover. These are a bit more difficult to address with Waste Management because it is a service company. Since it does not provide goods to customers for the most part, and instead provides services that customers pay for, addressing inventory is not something that can be easily done. For the inventory it does have, though, efficiency is key. Since the company is engaged in waste management activities that require processing of materials to reuse and recycle, it is a company that understands how to be efficient with the resources given to it. The very nature of its business and the industry provides it with the tools it needs for management efficiency.