Cognizant Technology Solutions SWOT Analysis / Matrix

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

The Cognizant Technology Solutions is one of the leading organizatations in its industry. Cognizant Technology Solutions maintains its prominent 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 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 known as SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the Cognizant Technology Solutions 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 central purpose of SWOT matrix is to identify the strategies that a firm can utilize to exploit external opportunities, counter threats, and build on & protect Cognizant Technology Solutions strengths, and eradicate its weaknesses.

Step by Step Guide to Cognizant Technology Solutions SWOT Analysis

Strengths of Cognizant Technology Solutions – Internal Strategic Factors

As one of the leading companies in its industry, Cognizant Technology Solutions 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 Cognizant Technology Solutions are –

• 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.
• Good Returns on Capital Expenditure – Cognizant Technology Solutions is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
• Strong Brand Portfolio – Over the years Cognizant Technology Solutions has invested in building a strong brand portfolio. The SWOT analysis of Cognizant Technology Solutions 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 Cognizant Technology Solutions products and has enabled the company to scale up and scale down based on the demand conditions in the market.
• Highly successful at Go To Market strategies for its products.
• High level of customer satisfaction – the company with its dedicated customer relationship management department has able to achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.
• Strong distribution network – Over the years Cognizant Technology Solutions has built a reliable distribution network that can reach majority of its potential market.
• Highly skilled workforce through successful training and learning programs. Cognizant Technology Solutions 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.

Weakness of Cognizant Technology Solutions – Internal Strategic Factors

Weakness are the areas where Cognizant Technology Solutions 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.

• Not highly successful at integrating firms with different work culture. As mentioned earlier even though Cognizant Technology Solutions is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
• Limited success outside core business – Even though Cognizant Technology Solutions is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
• High attrition rate in work force – compare to other organizations in the industry Cognizant Technology Solutions 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 Cognizant Technology Solutions are below the industry average.
• 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.
• The marketing of the products left a lot to be desired. Even though the product is a success in terms of sale but its positioning and unique selling proposition is not clearly defined which can lead to the attacks in this segment from the competitors.
• 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 Cognizant Technology Solutions is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.

Opportunities for Cognizant Technology Solutions – External Strategic Factors

• Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Cognizant Technology Solutions to capture new customers and increase its market share.
• Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Cognizant Technology Solutions an opportunity to enter a new emerging market.
• 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 Cognizant Technology Solutions.
• New trends in the consumer behavior can open up new market for the Cognizant Technology Solutions . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
• Government green drive also opens an opportunity for procurement of Cognizant Technology Solutions products by the state as well as federal government contractors.
• The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Cognizant Technology Solutions to increase its profitability.
• The market development will lead to dilution of competitor’s advantage and enable Cognizant Technology Solutions to increase its competitiveness compare to the other competitors.

Threats Cognizant Technology Solutions Facing - External Strategic Factors

• Rising raw material can pose a threat to the Cognizant Technology Solutions profitability.
• 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.
• 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 Cognizant Technology Solutions   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.
• Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Cognizant Technology Solutions
• Imitation of the counterfeit and low quality product is also a threat to Cognizant Technology Solutions’s product especially in the emerging markets and low income markets.
• 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.

Limitations of SWOT Analysis for Cognizant Technology Solutions

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 Cognizant Technology Solutions
• 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 Cognizant Technology Solutions

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 Cognizant Technology Solutions 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 Cognizant Technology Solutions

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

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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)