HD Supply Holdings SWOT Analysis / Matrix

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SWOT analysis is a strategic planning tool that can be used by HD Supply Holdings managers to do a situational analysis of the company . It is an important technique to analyze the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) HD Supply Holdings is facing in its current business environment.

The HD Supply Holdings is one of the leading organizatations in its industry. HD Supply Holdings maintains its dominant 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 firm such as – marketing, finance, operations, management information systems and strategic planning.

The SWOT Analysis framework facilitates 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 HD Supply Holdings to develop four types of strategies:

  • SO (strengths-opportunities) Strategies
  • WO (weaknesses-opportunities) Strategies
  • ST (strengths-threats) Strategies
  •  WT (weaknesses-threats) Strategies
HD Supply Holdings swot analysis / matrix

SWOT Matrix Strategies Objective

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

Step by Step Guide to HD Supply Holdings SWOT Analysis

Strengths of HD Supply Holdings – Internal Strategic Factors

As one of the leading companies in its industry, HD Supply Holdings 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 HD Supply Holdings are –

  • Highly skilled workforce through successful training and learning programs. HD Supply Holdings 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.
  • Highly successful at Go To Market strategies for its products.
  • Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
  • Strong Free Cash Flow – HD Supply Holdings has strong free cash flows that provide resources in the hand of the company to expand into new projects.
  • Automation of activities brought consistency of quality to HD Supply Holdings products and has enabled the company to scale up and scale down based on the demand conditions in the market.
  • Strong distribution network – Over the years HD Supply Holdings 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.
  • Strong Brand Portfolio – Over the years HD Supply Holdings has invested in building a strong brand portfolio. The SWOT analysis of HD Supply Holdings just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.

Weakness of HD Supply Holdings – Internal Strategic Factors

Weakness are the areas where HD Supply Holdings 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.

  • High attrition rate in work force – compare to other organizations in the industry HD Supply Holdings has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
  • Limited success outside core business – Even though HD Supply Holdings is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
  • Investment in Research and Development is below the fastest growing players in the industry. Even though HD Supply Holdings 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.
  • 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.
  • The profitability ratio and Net Contribution % of HD Supply Holdings are below the industry average.
  • Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
  • 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 HD Supply Holdings is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.

Opportunities for HD Supply Holdings – External Strategic Factors

  • Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided HD Supply Holdings an opportunity to enter a new emerging market.
  • Government green drive also opens an opportunity for procurement of HD Supply Holdings products by the state as well as federal government contractors.
  • 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 HD Supply Holdings. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
  • The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as HD Supply Holdings to increase its profitability.
  • 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 HD Supply Holdings.
  • The new technology provides an opportunity to HD Supply Holdings 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.
  • 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 HD Supply Holdings to drive home its advantage in new technology and gain market share in the new product category.

Threats HD Supply Holdings 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.
  • Imitation of the counterfeit and low quality product is also a threat to HD Supply Holdings’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.
  • Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
  • Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of HD Supply Holdings
  • Rising raw material can pose a threat to the HD Supply Holdings 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.
  • Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.

Limitations of SWOT Analysis for HD Supply Holdings

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 HD Supply Holdings
  • 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 HD Supply Holdings

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 HD Supply Holdings 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 HD Supply Holdings

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)