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National Australia Bank SWOT Analysis / Matrix
Essays, Term Papers & Research Papers
SWOT analysis is a strategic planning tool that can be used by National Australia Bank managers to do a situational analysis of the organization . It is a handy technique to understand the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) National Australia Bank is facing in its current business environment.
The National Australia Bank is one of the leading organizatations in its industry. National Australia Bank maintains its prominent position in market by carefully analyzing and reviewing the SWOT analysis. SWOT analysis a highly 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 enables 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 National Australia Bank 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 primary purpose of SWOT matrix is to identify the strategies that a firm can utilize to exploit external opportunities, counter threats, and build on & protect National Australia Bank strengths, and eradicate its weaknesses.
Step by Step Guide to National Australia Bank SWOT Analysis
Strengths of National Australia Bank – Internal Strategic Factors
As one of the leading organizations in its industry, National Australia Bank 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 National Australia Bank are –
- Highly successful at Go To Market strategies for its products.
- Successful track record of integrating complimentary firms through mergers & acquisition. It has successfully integrated number of technology companies in the past few years to streamline its operations and to build a reliable supply chain.
- Strong Brand Portfolio – Over the years National Australia Bank has invested in building a strong brand portfolio. The SWOT analysis of National Australia Bank just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
- Strong distribution network – Over the years National Australia Bank has built a reliable distribution network that can reach majority of its potential market.
- Successful track record of developing new products – product innovation.
- Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
- Highly skilled workforce through successful training and learning programs. National Australia Bank 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.
Weakness of National Australia Bank – Internal Strategic Factors
Weakness are the areas where National Australia Bank 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.
- 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 National Australia Bank is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
- The profitability ratio and Net Contribution % of National Australia Bank are below the industry average.
- Limited success outside core business – Even though National Australia Bank is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
- The company has not being able to tackle the challenges present by the new entrants in the segment and has lost small market share in the niche categories. National Australia Bank has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
- 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 National Australia Bank has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
- Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, National Australia Bank needs to put more money in technology to integrate the processes across the board. Right now the investment in technologies is not at par with the vision of the company.
Opportunities for National Australia Bank – External Strategic Factors
- 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 National Australia Bank. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
- Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for National Australia Bank to capture new customers and increase its market share.
- Decreasing cost of transportation because of lower shipping prices can also bring down the cost of National Australia Bank’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.
- 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.
- Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of National Australia Bank.
- New trends in the consumer behavior can open up new market for the National Australia Bank . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
- The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as National Australia Bank to increase its profitability.
- 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 National Australia Bank in other product categories.
Threats National Australia Bank Facing - External Strategic Factors
- Rising raw material can pose a threat to the National Australia Bank profitability.
- New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
- Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of National Australia Bank
- Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
- Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for National Australia Bank in those markets.
- Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
- Imitation of the counterfeit and low quality product is also a threat to National Australia Bank’s product especially in the emerging markets and low income markets.
- New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
Limitations of SWOT Analysis for National Australia Bank
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 National Australia Bank
- 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 National Australia Bank
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 National Australia Bank 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 National Australia Bank
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)