Santander SWOT Analysis / Matrix

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SWOT analysis is a vital strategic planning tool that can be used by Santander managers to do a situational analysis of the company . It is a useful technique to analyze the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Santander is facing in its current business environment.

The Santander is one of the leading companies in its industry. Santander maintains its dominant position in market by critically analyzing and reviewing the SWOT analysis. SWOT analysis a highly interactive process and requires effective coordination among various departments within the organization such as – marketing, finance, operations, management information systems and strategic planning.

The SWOT Analysis framework facilitates an organization to identify the internal strategic factors such as -strengths and weaknesses, & external strategic factors such as - opportunities and threats. It leads to a 2X2 matrix – also known as SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the Santander to develop four types of strategies:

SO (strengths-opportunities) Strategies
WO (weaknesses-opportunities) Strategies
ST (strengths-threats) Strategies
WT (weaknesses-threats) Strategies

SWOT Matrix Strategies Objective

The core purpose of SWOT matrix is to identify the strategies that a firm can use to exploit external opportunities, counter threats, and build on & protect Santander strengths, and eradicate its weaknesses.

Step by Step Guide to Santander SWOT Analysis

Strengths of Santander – Internal Strategic Factors

As one of the leading companies in its industry, Santander has numerous strengths that enable it to thrive in the market place. These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. Based on Fern Fort University extensive research – some of the strengths of Santander are –

Highly successful at Go To Market strategies for its products.
Strong Brand Portfolio – Over the years Santander has invested in building a strong brand portfolio. The SWOT analysis of Santander just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
Strong distribution network – Over the years Santander has built a reliable distribution network that can reach majority of its potential market.
Highly skilled workforce through successful training and learning programs. Santander is investing huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.
Strong dealer community – It has built a culture among distributor & dealers where the dealers not only promote company’s products but also invest in training the sales team to explain to the customer how he/she can extract the maximum benefits out of the products.
Strong Free Cash Flow – Santander has strong free cash flows that provide resources in the hand of the company to expand into new projects.
Superb Performance in New Markets – Santander has built expertise at entering new markets and making success of them. The expansion has helped the organization to build new revenue stream and diversify the economic cycle risk in the markets it operates in.

Weakness of Santander – Internal Strategic Factors

Weakness are the areas where Santander can improve upon. Strategy is about making choices and weakness are the areas where a company can improve using SWOT analysis and build on its competitive advantage and strategic positioning.

Days inventory is high compare to the competitors – making the company raise more capital to invest in the channel. This can impact the long term growth of Santander
Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
Financial planning is not done properly and efficiently. The current asset ratio and liquid asset ratios suggest that the company can use the cash more efficiently than what it is doing at present.
High attrition rate in work force – compare to other organizations in the industry Santander has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
The profitability ratio and Net Contribution % of Santander are below the industry average.
There are gaps in the product range sold by the company. This lack of choice can give a new competitor a foothold in the market.
Investment in Research and Development is below the fastest growing players in the industry. Even though Santander is spending above the industry average on Research and Development, it has not been able to compete with the leading players in the industry in terms of innovation. It has come across as a mature firm looking forward to bring out products based on tested features in the market.

Opportunities for Santander – External Strategic Factors

Organization’s core competencies can be a success in similar other products field. A comparative example could be - GE healthcare research helped it in developing better Oil drilling machines.
Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in bank the company can invest in new technologies as well as in new products segments. This should open a window of opportunity for Santander in other product categories.
New environmental policies – The new opportunities will create a level playing field for all the players in the industry. It represent a great opportunity for Santander to drive home its advantage in new technology and gain market share in the new product category.
Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Santander’s products thus providing an opportunity to the company - either to boost its profitability or pass on the benefits to the customers to gain market share.
New trends in the consumer behavior can open up new market for the Santander . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Santander an opportunity to enter a new emerging market.
The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Santander to increase its profitability.
The new technology provides an opportunity to Santander to practices differentiated pricing strategy in the new market. It will enable the firm to maintain its loyal customers with great service and lure new customers through other value oriented propositions.

Threats Santander Facing - External Strategic Factors

New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Santander in those markets.
Rising raw material can pose a threat to the Santander profitability.
Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Santander
Intense competition – Stable profitability has increased the number of players in the industry over last two years which has put downward pressure on not only profitability but also on overall sales.
The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
The demand of the highly profitable products is seasonal in nature and any unlikely event during the peak season may impact the profitability of the company in short to medium term.

Limitations of SWOT Analysis for Santander

Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its share of limitations.

Certain capabilities or factors of an organization can be both a strength and weakness at the same time. This is one of the major limitations of SWOT analysis . For example changing environmental regulations can be both a threat to company it can also be an opportunity in a sense that it will enable the company to be on a level playing field or at advantage to competitors if it able to develop the products faster than the competitors.
SWOT does not show how to achieve a competitive advantage, so it must not be an end in itself.
The matrix is only a starting point for a discussion on how proposed strategies could be implemented. It provided an evaluation window but not an implementation plan based on strategic competitiveness of Santander
SWOT is a static assessment - analysis of status quo with few prospective changes. As circumstances, capabilities, threats, and strategies change, the dynamics of a competitive environment may not be revealed in a single matrix.
SWOT analysis may lead the firm to overemphasize a single internal or external factor in formulating strategies. There are interrelationships among the key internal and external factors that SWOT does not reveal that may be important in devising strategies.

Weighted SWOT Analysis of Santander

In light of the above mentioned limitations of the SWOT analysis / matrix, corporate managers decided to provide weightage to each internal strength and weakness of the firm. Organizations also assess the likelihood of events taking place in the coming future and how strong their impact could be on company's performance.

This method is called Weighted SWOT analysis. It is better than doing simplistic SWOT analysis because with Weighted SWOT Analysis Santander managers can focus on the most critical factors and discount the non-important one. It also solves the long list problem where organizations ends up making a long list but none of the factors deemed too critical.

Limitation of Weighted SWOT analysis of Santander

This approach also suffers from one major drawback - it focus on individual importance of factor rather than how they are collectively important and impact the business holistically.

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Example of Weighted SWOT Analysis

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SWOT Worksheet & Template

If you like to do your own SWOT analysis or want to make your own Weighted SWOT SWOT matrix then feel free to download Fern Fort University SWOT Analysis Template.

References / Citations & Bibliography

M. E. Porter, Competitive Strategy(New York: Free Press, 1980)
A. D. Chandler, Strategy and Structure (Cambridge, Mass.: MIT Press, 1962)
O. E. Williamson, Markets and Hierarchies(New York: Free Press, 1975);
L. Wrigley, Divisional Autonomy and Diversification (PhD, Harvard Business School, 1970)
R. E. White, Generic Business Strategies, Organizational Context and Performance: An Empirical Investigation, Strategic Management Journal7 (1986)