Porter’s Five Forces Analysis of S&P Global
|Industry||Financial Data Services|
|Headquarters||New York City, US|
|Revenues||US$ 12.38 billion, 2021 (Non GAAP)
US $11.84billion,2022 (Non GAAP)
|Profit||US$ 3.76 billion, 2022 (Non GAAP)
US$ 4.13 billion, 2022 (Non GAAP)
|Competitors||Dow Jones,Bloomberg ,Thomas Reuters|
Headquartered in NewYork, United States the S&P Global reached the 417th place in the Fortune 500 List for FY 2022 and 698th by Forbes Global 2000 Year 2022,is one of leading Financial Insights providing company with a record revenues generation of US$ 12.38 billion in FY 2022.The Company has net assets of worth US$ 61.78 billion as of FY 2022.The main services S&P is providing are Market Intelligence, Commodity Insights, Mobility and Indices.
Today we are going over Porter’s Five Forces Analysis for S&P Global.
S&P Global Porter’s Five Forces Analysis
Porter’s Five Forces Analysis is used to determine the competition and profit margin in the Industry and guide the company’s to keep strategizing its operations in a better competitive position. It is invented by Professor Micheal E. Porter in 1979,at Harvard Business School.
S&P Rivalry among Existing Competitors
- S&P Global Business Segments& Revenue Analysis FY 2022 and FY 2021:
The S&P Company experienced a 4% revenue decline in FY 2022 with a revenues of US$ 11.84 billion while the revenues were US$ 12.38 in FY 2021.The Business Operations effected mainly due to Ukraine Russia war invasion and S&P Global has one of the major teams after U.S and India is across UK and Europe specially after the merger with IHS Market in early 2022.
The S&P Company is operating in 6 business segments out of which 4 major segments are as follows Market Intelligence with a revenue generated of US$ 4.1 billion in FY 2022 while US$ 3.9 billion in FY 2021.The Other Segments included Commodity Insights generated US$ 1.78 billion in FY 2022 while US$ 1.65 billion in FY 2021, Mobility generated US$ 1.35 billion in FY 2021 while US$ 1.20 billion in FY 2022,Indices generated US$ 1.35 billion in FY 2022 while US$ 1.25 billion in FY 2021.
- S&P Global Revenues Streams & Geographical Revenues : The S&P Global is generating almost 60% of the revenues from U.S with a US$ 6.65 billion in FY 2022, while European Region is the second biggest market with a 23% of revenue share with US$ 2.59 billion in FY 2022.The other regions included Asia with 11% with US$ 1.24 billion and Rest of the World with 6% with US$ 0.685 billion in FY 2022.
- S&P Global Revenues Streams: For reporting purpose the revenue streams are divided into following streams Subscription which comprises of 55% of the total revenue with a record revenue of US$ 6.20 billion, Non-Subscription Transaction Revenue comprises of 16% with a US$ 1.80 billion ,Non-Transaction Revenue comprises 15% with US$ 1.64 billion , Asset- Linked Fees with 8% with US$ 0.86 billion, Sales Usage-based royalties with 3% with US$ 0.28 billion and Recurring Variables with 3% with US$ 0.38 billion.
- Rivalry with Existing Market Players Bloomberg: Bloomberg is one of the leading financial information company with highly digitalize and tech connectivity, providing services from economic outlook to financial insights even through digital publishing to podcast and radio technology. The company gave a record revenue of US$ 12.2 billion in FY 2022 as declared by Forbes.
The Company is operating through following business segments Bloomberg Professional, Bloomberg News, Bloomberg Radio and Bloomberg Businessweek.
S&P Global Threat of New Entrants
- Global Financial Data Servicing Industry:The Global Financial Advising Industryfor Asset Management is standing at US$ 119.0 Trillion as of 2023 with a compounded yearly growth rate is 5.94% .So it is a prospective industry specially for firm looking for diversion and having strong IT background or IT and Research backed companies may try to enter the market.
- Joint Services with BloombergOne of the strategy S&P Global is practicing is to offer joint services or shared the cost of services providing for example S&P Global offered a joint service of Credit Rating through S&P Global Market Intelligence’s CreditWire Services on Bloomberg Professional Platform for early access to research services and credit ratings.
S&P Bargaining Power of Suppliers
- Efficient Supply Chain (Management & Distribution of Data)& Engineering Solutions of S&P Global : Efficient Supply Chain is one of most critical aspect for the success like S&P Global whose major task is to collect, analyses and distribute data. For handling the Supply Chain S&P Global has an “Engineering Solutions” department which manages S&P Global business operations also provide consulting services to outside companies as well.Engineering Solutions provides services from invention of new technologies to research tool development and product design with offerings. It also provides AI based decision engines for better productivity.
- Supplier Diversity & Inclusion: The S&P Global has taken a lot of consideration at every step of it’s vetting the suppliers with different supported solutions like “Know Your Third Party (KY3P)” .Also the company has launched it’s Supplier Diversity Program as well for minority and women owned businesses.
S&P Bargaining Power of Buyers
- Market Capitalization & Broad Market Index : S & P Global has a Broad Market Index (BMI) as of 296.57 as of FY 2022 which need a minimum 100 million market capitalization and more than 50 million yearly trading value.
- Digital Medium Presence – Customer Engagement : Presence on Digital Mediums also show customer engagement and it’s association with a brand which is an area for S&P Global to develop in comparison to it’s competitors like Bloomberg like S&P Global has 0.372 million followers on their LinkedIn Page while Bloomberg has 1.68 million followers on their official page.
S&P Threat of Substitute Products or Services
- Digital Currency Revolution – CryptoWith the advancement of digitalization and changing trends Crypto Currency is expected to be the most dealt future digital currency and medium of transaction and savings both. S&P developed S&P Crypto Indices for major listed crypto currency for performance evaluation.
- Acquisition and Joint Servicesto Absorb Market Diversion: S&P Dow Jones indices LLC is owned by 23% by CME, which is related to future crypto market. The future-based cryptocurrency indices is also a well-developed area of S&P Global and expected to lead the market in near future.
- Forbes, S&P Global , Available at Forbes
- Fortune 500, S& P Global .Available at Fortune 500
- S&P Global ,Annual Report 2022
- S&P, Our History
- Statista Financial Advisory – Worldwide Statista. [online] Available at Statista
- S&P Global Market Intelligence Credit Wire on Bloomberg .Available at S&P Global
- Forbes, Bloomberg Profile. Available at Forbes
- Bloomberg, LinkedIn
- S&P Global LinkedIn
- S&P Digital Assets, Cryptocurrency
- S&P Global, Facts. Available at Statista
- Statista (April 4, 2023), Annual Performance of the S&P Global Broad Market index (USD) from 2005 to 2022 Statista. [online] Available atStatista
- Statista (April 4, 2023),Revenue of S & P Global from 2008 to 2022 (in million U.S. dollars)Statista. [online] Available at Statista
- S&P Supplier Management. Available at S&P Global
- S&P Global Supplier Diversity Program. Available at S&P