Univar SWOT Analysis / Matrix

Essays, Term Papers & Research Papers

SWOT analysis is a vital strategic planning tool that can be used by Univar 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) Univar is facing in its current business environment.

The Univar is one of the leading firms in its industry. Univar maintains its dominant 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 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 Univar 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 an organization can use to exploit external opportunities, counter threats, and build on & protect Univar strengths, and eradicate its weaknesses.

Step by Step Guide to Univar SWOT Analysis

Strengths of Univar – Internal Strategic Factors

As one of the leading firms in its industry, Univar 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 Univar are –

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.
Highly successful at Go To Market strategies for its products.
Strong Free Cash Flow – Univar has strong free cash flows that provide resources in the hand of the company to expand into new projects.
Strong distribution network – Over the years Univar has built a reliable distribution network that can reach majority of its potential market.
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 – Univar is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
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.

Weakness of Univar – Internal Strategic Factors

Weakness are the areas where Univar 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.

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. Univar has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
Limited success outside core business – Even though Univar 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 Univar 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 Univar 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.
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 Univar is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
The profitability ratio and Net Contribution % of Univar are below the industry average.

Opportunities for Univar – External Strategic Factors

Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Univar’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.
Government green drive also opens an opportunity for procurement of Univar products by the state as well as federal government contractors.
Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Univar.
The new technology provides an opportunity to Univar 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.
The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Univar to increase its profitability.
Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Univar to capture new customers and increase its market share.
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 Univar to drive home its advantage in new technology and gain market share in the new product category.
The market development will lead to dilution of competitor’s advantage and enable Univar to increase its competitiveness compare to the other competitors.

Threats Univar Facing - External Strategic Factors

Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
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 Univar 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.
Rising raw material can pose a threat to the Univar profitability.
The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
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.
Liability laws in different countries are different and Univar may be exposed to various liability claims given change in policies in those markets.

Limitations of SWOT Analysis for Univar

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 Univar
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 Univar

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 Univar 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 Univar

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)