The AllerClean Pest Control

The AllerClean Pest Control

• Introduction (Company Background)

The AllerClean Pest Control is a privately-owned corporation which provides services to commercial, industrial and residential consumers throughout Southern California. The company was established in 1997; however, the current owner acquired the 100% ownership about four years ago. The company is a family owned business and utilizes ten technicians and four office staff members. The company’s client portfolio is consisting of 67% of commercial/industrial, and 33% of residential clients. The AllerClean practices the second branch of the structural pest control, which primarily deals with household pests excluding fumigation with poisonous or lethal gasses. Company’s core concept is to provide outstanding personalized services to its customers with high integrity and care to benefit its clients’ needs. Company’s primary objective is to keep its customers happy while providing the most effective services.

As a small business, AllerClean’s fastest response time and flexibility are the core competencies for building a relationship with property management companies. Company’s primary strategy is to develop and retain a strong relationship with property management companies because each company sends about 1 to 50 apartment and commercial buildings such as strip malls, restaurants, and shopping centers. The company mainly relies on current customer referrals. The primary distribution channels are property management companies, and the most prominent mean of the distribution is its technicians, who act as the company’s ambassadors while serving clients. One of the critical strengths of the corporation is that all employees are treated as members of a family, which increases their loyalty to the corporation; furthermore, technicians are not micromanaged, which allows them to self-control their daily routes.

• Industry Analysis

The Pest Control industry in the United States (US) is in the growth phase of its life cycle. In this phase the industry is expanding its revenue, competing in a fiercer environment, enhancing the level of product development, and an increase in employment. The Pest Control industry provides services to residential, commercial, and governmental, i.e., nonprofit segments of the market. The residential sector is the largest sector of all, which is about 68% of the market, and the commercial sector is 28.4%. The industry offers services such as extermination and control of insect, mosquito, termite, rodent and other services, including pest control service, predominantly outdoor pests, as well as birds.

Due to the high demand of the prevention of pests across the United States, the Pest Control Industry experienced steady growth over the past five years and predicted to reach about 2.8% to $14.2 billion, including 2.4% growth in 2018 (IBISWorld, 2018). The three major players in the industry are ServiceMaster Global Holding Inc., Rentokil Initial, and Rollins Inc. and their combined market share is about 28.8%, and 71.2% of the market is highly fragmented with the presence of small players (Appendix 1, Industry Major Players). Other factors that contribute to the growth of the industry are an increase in per capita disposable income; the higher per capita income will increase consumers spending in professional pest control services. Also, the projected growth rate is explained by the growing proportion of housing sales and residential construction. Furthermore, the demand from hospitality industry has significant effect to the need for the pest control services. As the health code regulations require mandatory periodic inspections for hotels and motels the demand for pest control services is also expected to grow. With the overall upstream economy, the average industry profit margin is expected to account 10.6% in 2018.

Environmental concerns also play a significant role in industrial operations. Businesses are challenged to adopt non-chemical but highly effective products which won’t be harmful to the environment. The increase in government regulations forces companies to develop eco-friendly products to adhere to consumers concerns. The eco-friendly products are highly used in sensitive areas such as food services, healthcare facilities, and stranded animals.

Based on the factors stated above, the Pest Control industry is expected to experience a sharp growth in the next five years. Based on the forecasts the revenue is estimated to grow at an annualized rate of 1.7% to $15.5 billion over the five years to 2023 (IBISWorld, 2018). As a result of the anticipated growth rate, the number of enterprises in the industry is also expected to grow by 2% over the five years to 2023. However, profit margins will gradually decrease, estimated 10.5% revenue in 2023, the gradual revenue decrease is directly correlated to the increasing cost of pesticides, fuel, and wage expenses. Higher employment in the industry will be the primary cause for the increased wages which is anticipated to grow at an annual rate of 2% to $6 billion (IBISWorld, 2018).

• Company Analysis
  1. SWOT
     1. Strengths
     2. Weaknesses

• Opportunities

1. Threats