Michaels Cos. SWOT Analysis / Matrix

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

The Michaels Cos. is one of the leading organizatations in its industry. Michaels Cos. 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 organization 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 called SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix enables the managers of the Michaels Cos. to develop four types of strategies:

  • SO (strengths-opportunities) Strategies
  • WO (weaknesses-opportunities) Strategies
  • ST (strengths-threats) Strategies
  •  WT (weaknesses-threats) Strategies
Michaels Cos. swot analysis / matrix

SWOT Matrix Strategies Objective

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

Step by Step Guide to Michaels Cos. SWOT Analysis

Strengths of Michaels Cos. – Internal Strategic Factors

As one of the leading firms in its industry, Michaels Cos. 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 Michaels Cos. 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.
  • Strong Free Cash Flow – Michaels Cos. 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 Michaels Cos. has built a reliable distribution network that can reach majority of its potential market.
  • Successful track record of developing new products – product innovation.
  • Highly successful at Go To Market strategies for its products.
  • Superb Performance in New Markets – Michaels Cos. 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 Michaels Cos. has invested in building a strong brand portfolio. The SWOT analysis of Michaels Cos. 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.

Weakness of Michaels Cos. – Internal Strategic Factors

Weakness are the areas where Michaels Cos. 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.

  • Investment in Research and Development is below the fastest growing players in the industry. Even though Michaels Cos. 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.
  • Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Michaels Cos. 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.
  • 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.
  • Limited success outside core business – Even though Michaels Cos. is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
  • The profitability ratio and Net Contribution % of Michaels Cos. are below the industry average.
  • High attrition rate in work force – compare to other organizations in the industry Michaels Cos. 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 Michaels Cos. – External Strategic Factors

  • Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Michaels Cos. to capture new customers and increase its market share.
  • 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.
  • Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Michaels Cos.’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.
  • The new technology provides an opportunity to Michaels Cos. 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 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 Michaels Cos.. 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 Michaels Cos. to increase its profitability.
  • The market development will lead to dilution of competitor’s advantage and enable Michaels Cos. to increase its competitiveness compare to the other competitors.
  • New trends in the consumer behavior can open up new market for the Michaels Cos. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.

Threats Michaels Cos. Facing - External Strategic Factors

  • The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards 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.
  • 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 raw material can pose a threat to the Michaels Cos. profitability.
  • Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
  • Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
  • 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.
  • Liability laws in different countries are different and Michaels Cos. may be exposed to various liability claims given change in policies in those markets.

Limitations of SWOT Analysis for Michaels Cos.

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 Michaels Cos.
  • 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 Michaels Cos.

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 Michaels Cos. 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 Michaels Cos.

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

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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)