NiSource SWOT Analysis / Matrix

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

The NiSource is one of the leading firms in its industry. NiSource 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 company 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 NiSource 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 main purpose of SWOT matrix is to identify the strategies that an organization can utilize to exploit external opportunities, counter threats, and build on & protect NiSource strengths, and eradicate its weaknesses.

Step by Step Guide to NiSource SWOT Analysis

Strengths of NiSource – Internal Strategic Factors

As one of the leading organizations in its industry, NiSource 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 NiSource are –

Highly skilled workforce through successful training and learning programs. NiSource 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.
Successful track record of developing new products – product innovation.
Strong Brand Portfolio – Over the years NiSource has invested in building a strong brand portfolio. The SWOT analysis of NiSource just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
Strong Free Cash Flow – NiSource has strong free cash flows that provide resources in the hand of the company to expand into new projects.
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 distribution network – Over the years NiSource has built a reliable distribution network that can reach majority of its potential market.
Good Returns on Capital Expenditure – NiSource is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
Superb Performance in New Markets – NiSource 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.

Weakness of NiSource – Internal Strategic Factors

Weakness are the areas where NiSource can improve upon. Strategy is about making choices and weakness are the areas where a firm can improve using SWOT analysis and build on its competitive advantage and strategic positioning.

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.
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 NiSource
The profitability ratio and Net Contribution % of NiSource are below the industry average.
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.
Investment in Research and Development is below the fastest growing players in the industry. Even though NiSource 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 NiSource is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
High attrition rate in work force – compare to other organizations in the industry NiSource has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.

Opportunities for NiSource – External Strategic Factors

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 NiSource in other product categories.
The new technology provides an opportunity to NiSource 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.
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 NiSource.
New trends in the consumer behavior can open up new market for the NiSource . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for NiSource 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 NiSource 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 NiSource to increase its competitiveness compare to the other competitors.

Threats NiSource Facing - External Strategic Factors

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.
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.
New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for NiSource in those markets.
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.
Rising raw material can pose a threat to the NiSource profitability.
Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of NiSource

Limitations of SWOT Analysis for NiSource

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 NiSource
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 NiSource

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 NiSource 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 NiSource

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)