Neiman Marcus Group SWOT Analysis / Matrix

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

The Neiman Marcus Group is one of the leading companies in its industry. Neiman Marcus Group 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 enables the managers of the Neiman Marcus Group 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 a firm can utilize to exploit external opportunities, counter threats, and build on & protect Neiman Marcus Group strengths, and eradicate its weaknesses.

Step by Step Guide to Neiman Marcus Group SWOT Analysis

Strengths of Neiman Marcus Group – Internal Strategic Factors

As one of the leading organizations in its industry, Neiman Marcus Group 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 Neiman Marcus Group are –

• Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
• Automation of activities brought consistency of quality to Neiman Marcus Group 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 Neiman Marcus Group has built a reliable distribution network that can reach majority of its potential market.
• Good Returns on Capital Expenditure – Neiman Marcus Group is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
• Successful track record of developing new products – product innovation.
• Strong Free Cash Flow – Neiman Marcus Group 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.
• Highly skilled workforce through successful training and learning programs. Neiman Marcus Group 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 Neiman Marcus Group – Internal Strategic Factors

Weakness are the areas where Neiman Marcus Group 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.

• Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Neiman Marcus Group needs to put more money in technology to integrate the processes across the board. Right now the investment in technologies is not at par with the vision of the company.
• 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.
• 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. Neiman Marcus Group has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
• 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 Neiman Marcus Group
• 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.
• Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
• 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.

Opportunities for Neiman Marcus Group – External Strategic Factors

• Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Neiman Marcus Group.
• 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 Neiman Marcus Group. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
• 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 Neiman Marcus Group to drive home its advantage in new technology and gain market share in the new product category.
• Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Neiman Marcus Group’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 Neiman Marcus Group in other product categories.
• 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.
• Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Neiman Marcus Group to capture new customers and increase its market share.
• New trends in the consumer behavior can open up new market for the Neiman Marcus Group . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.

Threats Neiman Marcus Group 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.
• 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.
• Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Neiman Marcus Group
• New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
• Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
• Rising raw material can pose a threat to the Neiman Marcus Group profitability.
• The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those 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 Neiman Marcus Group

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 Neiman Marcus Group
• 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 Neiman Marcus Group

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 Neiman Marcus Group 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 Neiman Marcus Group

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)