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Sumitomo (Conglomerate) SWOT Analysis / Matrix
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SWOT analysis is a vital strategic planning tool that can be used by Sumitomo (Conglomerate) managers to do a situational analysis of the company . It is a handy technique to analyze the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Sumitomo (Conglomerate) is facing in its current business environment.
The Sumitomo (Conglomerate) is one of the leading firms in its industry. Sumitomo (Conglomerate) maintains its prominent position in market by critically analyzing and reviewing the SWOT analysis. SWOT analysis an immensenly interactive process and requires effective coordination among various departments within the company such as – marketing, finance, operations, management information systems and strategic planning.
The SWOT Analysis framework helps 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 called SWOT Matrix.
The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix enables the managers of the Sumitomo (Conglomerate) 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 main purpose of SWOT matrix is to identify the strategies that an organization can use to exploit external opportunities, counter threats, and build on & protect Sumitomo (Conglomerate) strengths, and eradicate its weaknesses.
Step by Step Guide to Sumitomo (Conglomerate) SWOT Analysis
Strengths of Sumitomo (Conglomerate) – Internal Strategic Factors
As one of the leading firms in its industry, Sumitomo (Conglomerate) has numerous strengths that help 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 Sumitomo (Conglomerate) are –
- Strong Brand Portfolio – Over the years Sumitomo (Conglomerate) has invested in building a strong brand portfolio. The SWOT analysis of Sumitomo (Conglomerate) just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
- Automation of activities brought consistency of quality to Sumitomo (Conglomerate) products and has enabled the company to scale up and scale down based on the demand conditions in the market.
- Successful track record of developing new products – product innovation.
- Strong distribution network – Over the years Sumitomo (Conglomerate) has built a reliable distribution network that can reach majority of its potential market.
- Good Returns on Capital Expenditure – Sumitomo (Conglomerate) is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
- Highly successful at Go To Market strategies for its products.
- Highly skilled workforce through successful training and learning programs. Sumitomo (Conglomerate) 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.
- Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
Weakness of Sumitomo (Conglomerate) – Internal Strategic Factors
Weakness are the areas where Sumitomo (Conglomerate) can improve upon. Strategy is about making choices and weakness are the areas where an organization can improve using SWOT analysis and build on its competitive advantage and strategic positioning.
- Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
- High attrition rate in work force – compare to other organizations in the industry Sumitomo (Conglomerate) has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
- Investment in Research and Development is below the fastest growing players in the industry. Even though Sumitomo (Conglomerate) 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.
- Limited success outside core business – Even though Sumitomo (Conglomerate) is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
- Not very good at product demand forecasting leading to higher rate of missed opportunities compare to its competitors. One of the reason why the days inventory is high compare to its competitors is that Sumitomo (Conglomerate) is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
- Not highly successful at integrating firms with different work culture. As mentioned earlier even though Sumitomo (Conglomerate) is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
- 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.
Opportunities for Sumitomo (Conglomerate) – External Strategic Factors
- 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 Sumitomo (Conglomerate) to drive home its advantage in new technology and gain market share in the new product category.
- Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Sumitomo (Conglomerate) to capture new customers and increase its market share.
- The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Sumitomo (Conglomerate) to increase its profitability.
- The new technology provides an opportunity to Sumitomo (Conglomerate) 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.
- 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 Sumitomo (Conglomerate) in other product categories.
- New customers from online channel – Over the past few years the company has invested vast sum of money into the online platform. This investment has opened new sales channel for Sumitomo (Conglomerate). In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
- Government green drive also opens an opportunity for procurement of Sumitomo (Conglomerate) products by the state as well as federal government contractors.
- New trends in the consumer behavior can open up new market for the Sumitomo (Conglomerate) . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
Threats Sumitomo (Conglomerate) Facing - External Strategic Factors
- No regular supply of innovative products – Over the years the company has developed numerous products but those are often response to the development by other players. Secondly the supply of new products is not regular thus leading to high and low swings in the sales number over period of time.
- 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.
- Liability laws in different countries are different and Sumitomo (Conglomerate) may be exposed to various liability claims given change in policies in those markets.
- Rising raw material can pose a threat to the Sumitomo (Conglomerate) profitability.
- As the company is operating in numerous countries it is exposed to currency fluctuations especially given the volatile political climate in number of markets across the world.
- Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Sumitomo (Conglomerate) in those markets.
- New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
- Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
Limitations of SWOT Analysis for Sumitomo (Conglomerate)
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 Sumitomo (Conglomerate)
- 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 Sumitomo (Conglomerate)
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 Sumitomo (Conglomerate) 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 Sumitomo (Conglomerate)
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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SWOT Worksheet & Template
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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)