Liberty Interactive SWOT Analysis / Matrix

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

The Liberty Interactive is one of the leading firms in its industry. Liberty Interactive 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 organization 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 helps the managers of the Liberty Interactive to develop four types of strategies:

  • SO (strengths-opportunities) Strategies
  • WO (weaknesses-opportunities) Strategies
  • ST (strengths-threats) Strategies
  •  WT (weaknesses-threats) Strategies
Liberty Interactive swot analysis / matrix

SWOT Matrix Strategies Objective

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

Step by Step Guide to Liberty Interactive SWOT Analysis

Strengths of Liberty Interactive – Internal Strategic Factors

As one of the leading companies in its industry, Liberty Interactive 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 Liberty Interactive are –

  • Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
  • Superb Performance in New Markets – Liberty Interactive 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.
  • Strong Brand Portfolio – Over the years Liberty Interactive has invested in building a strong brand portfolio. The SWOT analysis of Liberty Interactive just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
  • 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 – Liberty Interactive has strong free cash flows that provide resources in the hand of the company to expand into new projects.
  • 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 Liberty Interactive has built a reliable distribution network that can reach majority of its potential market.
  • Successful track record of developing new products – product innovation.

Weakness of Liberty Interactive – Internal Strategic Factors

Weakness are the areas where Liberty Interactive 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.

  • Investment in Research and Development is below the fastest growing players in the industry. Even though Liberty Interactive 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.
  • 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.
  • High attrition rate in work force – compare to other organizations in the industry Liberty Interactive has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
  • 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.
  • Limited success outside core business – Even though Liberty Interactive is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
  • 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 Liberty Interactive
  • Not highly successful at integrating firms with different work culture. As mentioned earlier even though Liberty Interactive is successful at integrating small companies it has its share of failure to merge firms that have different work culture.

Opportunities for Liberty Interactive – External Strategic Factors

  • Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Liberty Interactive’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.
  • 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 Liberty Interactive in other product categories.
  • The new technology provides an opportunity to Liberty Interactive 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.
  • Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Liberty Interactive.
  • New trends in the consumer behavior can open up new market for the Liberty Interactive . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
  • 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 Liberty Interactive to drive home its advantage in new technology and gain market share in the new product category.
  • The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Liberty Interactive to increase its profitability.
  • 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 Liberty Interactive. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.

Threats Liberty Interactive Facing - External Strategic Factors

  • Liability laws in different countries are different and Liberty Interactive may be exposed to various liability claims given change in policies in those markets.
  • 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.
  • Rising raw material can pose a threat to the Liberty Interactive profitability.
  • New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
  • New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
  • 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.
  • Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
  • Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Liberty Interactive   in those markets.

Limitations of SWOT Analysis for Liberty Interactive

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 Liberty Interactive
  • 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 Liberty Interactive

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 Liberty Interactive 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 Liberty Interactive

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)